21Nov

Are Suitability Reports too Complex?

FCA technical specialist suggests many suitability reports are too complex

What to include and what not to include in a suitability report (or suitability letter, reasons why letter, demands and needs statement etc) can be a thorny issue for many financial advisers. Striking the balance between a document that is so long that the customer does not read it at all; and a document that does not cover the necessary breadth of issues to protect the adviser can be very difficult.

Rory Percival, a technical specialist at the Financial Conduct Authority (FCA), has suggested that many firms over-react and put more into these reports than the regulator requires.

Speaking to the Personal Finance Society conference, he remarked:

“We have been saying for years that suitability reports need to be improved. In many, perhaps most, cases we see suitability reports that seem to be geared to the firm’s purposes as a defensive measure from potential future claims from the Financial Ombudsman Service, rather than designed to communicate with clients.”

Mr Percival then added:

“You need to explain recommendations in a way that clients understand,” and summed up the regulator’s opinion by saying: “We continue to find [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][reports] to be too long, poorly structured, and unengaging.”

Mr Percival’s words though may have highlighted the real problem, which is that compliance requirements are often dictated by the theoretical possibility that any case could eventually result in a complaint, on which the Financial Ombudsman Service will adjudicate. ‘If it’s not written down, it didn’t happen’ is a common mantra in the compliance arena.

The FCA factsheet on suitability reports simply state that the following items need to be included:

  • The reasons for the recommendations, and how these recommendations address the customer’s objectives
  • The risks associated with the recommended products
  • The costs and charges of these products
  • Whether advice was offered in all areas, or whether focused or limited advice was offered
  • Where the recommended product replaces another product, a like for like comparison of what the two plans can offer in terms of features, risks, costs etc

The factsheet does address the issue of the length of the reports, and suggests that one possible solution may be to include general technical information in an appendix at the end of the report.

Examples of good practice, according to the FCA, include:

  • Highlighting key points in bold
  • Quoting the client’s own words from the review meeting when explaining client needs and objectives
  • Preparing the report in advance of the presentation meeting, and discussing it with the client at that meeting

The last of these differs from the traditional approach, where the suitability report was something that was sent after the advice process had completed.

Above all, whether they are long or short, reports should use plain English, avoiding jargon wherever possible, and must comply with FCA Principle 7, which requires that client communications are “clear, fair and not misleading”.

Unfortunately, given the number of different products which independent advisers can offer, and the need to tailor reports to the individual circumstances of each client, it is not feasible to expect the FCA to produce report templates that firms can use.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

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19Nov

Financial Conduct Authority Imposes Record Fines

FCA imposes record fines on banks over forex manipulation

In November 2014, financial regulator the Financial Conduct Authority (FCA) imposed its largest ever fines on five banks, after they were found to have manipulated the foreign exchange markets.

UBS was fined £233,814,000, Citibank £225,575,000, JPMorgan Chase £222,166,000, The Royal Bank of Scotland (RBS) £217 million and HSBC £216,363,000. This makes for a total fine of £1.1 billion for the five institutions combined from the UK regulator.

UBS was fined an additional CHF 134 million by the Swiss regulator, FINMA; while the Commodity Futures Trading Commission in the United States fined the banks a combined total of $1.4 billion – $310 million each for JP Morgan and Citibank, $290 million each for UBS and RBS and $275 million for HSBC. The Office of the Comptroller of the Currency in the US fined Citibank and JP Morgan $350 million each, whilst also fining Bank of America (who were not fined by any other regulator) $250 million. This takes the combined fine for the six banks to $4.3 billion.

Investigations into Barclays regarding this matter are ongoing.

Traders at the banks are said to have manipulated a market known as the ‘G10 spot FX market’, while the banks themselves failed to provide adequate training to these traders, or to supervise their activities sufficiently.

Dealers at different banks shared confidential information and co-ordinated trades, often using online chatrooms. Many attempts were made to confect an artificial demand for a currency, thus pushing up its price. The FCA final notices are full of examples of crude messages in which traders congratulated themselves on their activities, such as “have that my son” and “that worked nice mate.” When one trader believed a colleague at another bank had failed to co-operate, he wrote “u are useless…How can I make free money with no ******* heads up.”

The issues continued over a period of almost six years, from January 2008 to October 2013, and given how recently this practice continued, it calls into question previous claims from banks to have cleaned up their act. October 2013 is also more than a year after banks including RBS, UBS and Barclays were fined by the FCA for manipulation of the LIBOR interest rate.

The FCA has also launched a remediation programme across the banking industry, where banks will be required to make changes to their practices and procedures, and where senior management will need to provide attestations to the regulator confirming that the necessary work has been done.

Martin Wheatley, chief executive of the FCA, said:

“The FCA does not tolerate conduct which imperils market integrity or the wider UK financial system. Today’s record fines mark the gravity of the failings we found and firms need to take responsibility for putting it right.”

Ross McEwan, chief executive of RBS, said:

“To say that I am angry about this misconduct is an understatement. What this has shown me is that we have had people working in this bank that did not know right from wrong – or worse, didn’t care about the distinction. This small number of people put their interests ahead of that of their clients. When the Board and my management team first found out about these allegations last year we immediately instructed our legal and compliance teams to give their full cooperation to the authorities to get the bottom of the issues.”

Mr McEwan added:

“Those who have been found lacking in conduct or accountability terms will be dealt with appropriately, including through claw back, award forfeiture, or through formal disciplinary procedures. There is no place for this misconduct at the RBS I am building with my colleagues and I apologise to all of our customers.”

The Serious Fraud Office and the US Department of Justice have commenced criminal investigations into the traders’ activities, while the spectre of litigation to recover losses suffered by bank customers was raised by a number of lawyers.

“The fines alone are not sufficient, and there is plenty more work for the regulator to do to ensure that those customers affected are properly compensated,” said Stevie Loughrey, a lawyer at London firm Carter-Ruck. “The fines will offer no comfort whatsoever to those bank customers who have suffered significant losses,” he added.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

17Nov

Payday Loans Price Cap from January 2014

Price cap level confirmed for payday loans

The Financial Conduct Authority (FCA) has announced the final details of the price cap which will apply to payday lenders from January 2 2015.

Essentially, the details remain unchanged from the July 2014 consultation paper. For all loans offered by firms who meet the FCA’s definition of ‘high cost short-term credit’, interest will be capped at 0.8% per day. This means that a customer borrowing £100 for 30 days and who repays on time cannot be asked to pay more than £24 in interest. No matter how many times a loan is rolled over, or how late payment is made, no borrower can ever be asked to repay more in interest and charges than the amount of their loan. The maximum default fee will be £15.

The Government announced plans to introduce the cap in November 2013, but left it to the regulator to decide the level of the cap.

The price cap will be reviewed in the first half of 2017.

The FCA estimates that 70,000 people – 7% of current payday loan borrowers – will be unable to obtain a loan from next year as a result of the cap.

In the FCA press release, chief executive Martin Wheatley said:

“I am confident that the new rules strike the right balance for firms and consumers. If the price cap was any lower, then we risk not having a viable market, any higher and there would not be adequate protection for borrowers.
“For people who struggle to repay, we believe the new rules will put an end to spiralling payday debts. For most of the borrowers who do pay back their loans on time, the cap on fees and charges represents substantial protections.”

However, Mr Wheatley’s comments to BBC Radio 5 Live’s breakfast show were more strident. Reacting to suggestions that all but a few lenders would cease trading as a result of the cap, he said:

“I don’t think we’d have a problem if there was a lot less than [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the current 70 or so active payday lenders] … provided that what was left was actually treating people responsibly.”

Russell Hamblin-Boone, chief executive of the trade association the Consumer Finance Association, commented on the possible negative implications of the cap by saying:

“We’ll inevitably see fewer people getting fewer loans from fewer lenders. The fact is, the demand is not going to go away. What we need to do is make sure we have an alternative, and that we’re catching people, and that they’re not going to illegal lenders.”

But some campaigners thought that the FCA had not gone far enough, pointing out that customers who repay their loans on time will notice very little difference. Stella Creasy MP, a long standing critic of payday lenders, said:

“Today’s news will be welcomed as an early Christmas present for Britain’s legal loan sharks. This cap is just £1 lower than their current charges.
“We’ve warned regulators this cap needs to be much lower to really change the behaviour of these companies, but today’s announcement shows they are still not listening. Other countries are much stronger at taking on these companies.”

The FCA has made regulation of payday lending a high priority since it assumed responsibility for the sector in April 2014. Action of one form or another has already been taken against Wonga, Dollar Financial and The Cheque Centre.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

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16Nov

CMC Fined Over Nuisance Calls

ICO fines CMC over nuisance calls

In September 2014, information watchdog the Information Commissioner’s Office (ICO) handed a fine of £70,000 to Paignton-based claims management company (CMC) EMC Advisory Services Ltd (Emcas), after hundreds of customers complained about its nuisance calls.

Between March 1 2013 and February 28 2014, 562 complaints were made to the Telephone Preference Service about a third-party marketing firm used by Emcas. The marketing firm failed to check whether customers had opted out of receiving marketing calls before making contact.

A further 68 complaints were made to the ICO about calls made directly from Emcas. Around half the complainants say that the CMC ignored previous instructions not to call them. One of these customers even alleged that the company had informed him directly that they would ignore his request for the calls to stop.

The calls reportedly continued after the company had been warned by the ICO regarding its practices.

Emcas offers a wide ranging claims service, offering to help with complaints about investments, packaged bank accounts and endowments, as well as payment protection insurance (PPI).

Head of Enforcement at the ICO, Stephen Eckersley, commented:

“Getting other businesses to make marketing calls on your behalf does not absolve you of your legal responsibilities. EMC Advisory Services Limited has received today’s penalty because they fundamentally failed to understand the law and didn’t act on our warning. The result was that hundreds of people continued to receive nuisance calls due to their actions.”

A spokesman for EMCAS said:

“We aim to ensure that we only contact people who have given their permission for us to do so. However, between March 2013 and February 2014, this aim was not met for a small percentage of our customers, and we failed to prevent some unwanted calls from being made; for this, we offer our sincerest apologies.
“Since the ICO findings were first brought to our attention in February, we have made significant changes to our business to ensure that we only contact people who have explicitly consented to receive such communication.”

The Claims Management Regulator at the Ministry of Justice has now commenced its own investigation into Emcas.
The action was brought under the existing Privacy and Electronic Communications (EC Directive) Regulations 2003, which requires the ICO to demonstrate that the calls caused ‘substantial damage or substantial distress’. The watchdog believes that the cumulative effect of this volume of calls does indeed meet this test.

In late October 2014, the Government announced plans to make it easier to punish firms who make nuisance calls. Under the new plans, fines can be imposed simply because the communications cause ‘annoyance, inconvenience or anxiety’.
Emcas was previously ordered by the Advertising Standards Authority (ASA) to change a misleading advertisement which stated that one in four investments had been mis-sold. Wakefield-based financial adviser Neil Liversidge successfully argued to the ASA that the ‘one in four’ statistic only applied to banks and not to firms such as his own.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

13Nov

FCA’s Interim Permission Update

FCA updates its web information about interim permission

At such an important time for credit firms, it is vital that those practising in this area check the website of the Financial Conduct Authority (FCA) on a regular basis.

The interim permission page, as of the November 5 update, highlighted a number of important issues.

Firms new to consumer credit, or existing FCA-authorised firms wishing to add credit to their permitted activities, can submit credit authorisation applications now. However, existing holders of interim permission can only apply to upgrade to full permission or limited permission during a defined three month period. When this three month period commences depends on the type of business the firm carries out, and in some cases, on their postcode as well. For some firms, the application period has already commenced, and the process will be complete for all firms by March 31 2016.

Interim permission was automatically granted to all former holders of Consumer Credit Licences who wished to continue trading and who met certain conditions. But now these firms must complete the comprehensive FCA authorisation process, which involves supplying a great deal of information about the firm and its intended activities.
Regardless of when a firm’s application period is though, it must keep the FCA informed of any significant changes which occur during the interim permission period. The Consumer Credit Interim (CCI) System, accessible via the FCA website, can be used to update basic details such as address or telephone number.

It is also important that the FCA knows who a firm’s nominated ‘contact’ at an interim permission firm is. If the designated contact wishes to pass this role on to a colleague, they must log in to the system and make the necessary changes. If the named contact has left the firm, then the firm should contact the FCA immediately for advice on how to proceed.

This CCI system can also be used if a firm wishes to reduce the number of activities for which it holds interim permission. However, if a firm wants to add additional areas to its list of permitted credit activities, then it must submit an authorisation application.

Firms are also reminded that if they hold interim permission they cannot have any appointed representatives (ARs) – other firms or persons who are not FCA-authorised, but who are subject to supervision by an authorised firm for regulatory purposes.

If a holder of interim permission becomes an AR in the longer term, then they can cancel their interim permission via the CCI system.

Holders of interim permission who do not wish to upgrade their authorisation are asked to inform the FCA of their intentions. Not only should they cancel this permission via the CCI system before ceasing to trade, they should also inform the FCA via email to application.period@fca.org.uk. Firms to whom this applies will need to ensure that they cease trading immediately once their permission lapses.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

11Nov

Swinton Hit with Large Fines and Bans from FCA

FCA hits former Swinton bosses with large fines and bans

In early November, the Financial Conduct Authority (FCA) imposed fines and bans on three former senior executives of Manchester-based insurer Swinton Group.

Former chief executive Peter Halpin was banned from holding the same role in financial services in the future, and was fined £412,700. Former finance director Anthony Clare and former marketing director Nicholas Bowyer were both banned from holding significant influence functions, and were fined £208,600 and £306,700 respectively.

Mr Halpin and his colleagues were said to have demonstrated ‘a lack of competence’. In 2013, Swinton was fined £7.4 million for mis-selling of add-on insurance policies. Failings identified at that time included: not telling customers policies were optional, failing to provide sufficient information about the policies, not carrying out sufficient compliance monitoring and adopting an ‘aggressive sales strategy’.

The FCA has now determined that Mr Halpin, as chairman of the firm’s Compliance Board, was personally responsible for failing to ensure that sufficient management information was obtained regarding these sales, information which could have allowed the firm to identify compliance issues more readily.

In addition to his finance duties, Mr Clare held overall responsibility for compliance oversight. He is also said to have failed to identify issues with compliance monitoring and management information regarding the add-on policies.

Mr Bowyer did not hold a compliance role, but his marketing role gave him overall responsibility for the design and promotion of the mis-sold add-on products. The FCA says that he failed to appreciate that as a director, he had a responsibility to ensure customers were treated fairly at all times.

Mr Clare and Mr Bowyer were also said to have encouraged a ‘sales-focused culture’ at Swinton. Back in 2009, the insurer was fined £770,000 for mis-selling of payment protection insurance.

The action serves as a reminder that the FCA can take action against individuals who hold Approved Person roles, as well as against the firms themselves.

Tracey McDermott, director of enforcement and financial crime at the FCA, said: “A culture was allowed to develop within Swinton that pushed for high sales and increased profit without regard to the impact on the firm’s customers. We expect firms to put customers at the heart of their business. These three directors should have recognised the risk to customers and redressed the balance so that the drive to maximise profits did not jeopardise the fair treatment of customers.”

Mr Halpin said of the FCA action:

“I sincerely regret any possible unintended detriment suffered by customers. I acted in good faith at all times and it is of some significant comfort that the Regulator did not impugn my integrity, nor find that my conduct was improperly motivated by incentive arrangements.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

07Nov

Scale of Problem with PayDay Loan Broker Fees

RBS highlights scale of problem with payday brokers

In late October 2014, Royal Bank of Scotland (RBS) revealed that it was receiving hundreds of calls each day from RBS and NatWest customers upset about payday loan broker fees having been taken from their account. At the height of the problem, as many as 800 such calls were being received on a daily basis. The number has now fallen to 250, although RBS thinks this figure may increase again around Christmas time.

Customers using a payday loan broker may be charged a fee, typically £50 to £75, by that firm, even if they don’t manage to find a suitable lender. The broker may also pass customer details to other brokers or other types of firm, and these firms may also levy their own fees.

According to an article in the Times newspaper, the brokers may pass details on to lenders as well, and sometimes the lenders will deduct a fee even though they fail to offer the customer a loan.

NatWest gave details of one man who did manage to obtain a £100 payday loan via a broker, but who was charged £700 in fees. In August 2014, the BBC reported that one woman had £700 in fees taken by ten different firms, and who did not receive a loan in return.

Sometimes the brokers mislead customers into believing that they lend money themselves.

RBS said it has ended its payment arrangements with some 20 brokers, and urged customers to contact them as soon as possible should they discover that they have had unexpected fees debited from their account.

Terry Lawson, Head of Fraud and Chargeback for RBS said:

“Since July, we’ve seen large numbers of customers incurring charges they don’t expect when using a payday loan broker. At its height, we were getting more than 800 calls a day on unexpected fees, but we’re pleased to say we’re seeing this decrease on account of the actions we’re taking to help stop these sharp practices.”

RBS has called on the regulator, the Financial Conduct Authority, to take firm action against broker firms that fail to treat customers fairly. The sector has also attracted the attention of the Competition and Markets Authority, which is reported to be considering introducing a requirement for brokers to give a starkly worded ‘health warning’, along the lines of: “We sell your application details on the best terms for us, rather than you.”

The Financial Ombudsman Service received 11,405 complaints about credit brokers between April 1 and September 30 2014, compared to 6,375 for the entire 12 months to March 31 2014. Of these 6,375, almost two thirds were settled in the customer’s favour.

Senior ombudsman Juliana Francis said:

“It’s disappointing to see that more and more people are being misled into thinking that these credit broking websites will get them a loan. In too many of the cases we sort out, no loan is provided and people’s bank accounts have been charged a high fee, often multiple times. If money has been taken from your account unfairly or without warning, the good news is the Ombudsman is here to help. Give us a call and we’ll help you quickly get things sorted.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

05Nov

Fines Handed Out Over Back Door Commission

FCA fines Sesame over back door commission arrangements

Financial advisers unsure as to the exact meaning of the commission ban, as introduced by the Financial Conduct Authority (FCA) in its Retail Distribution Review (RDR), would do well to read the regulator’s judgement of October 30 2014 against Sesame Ltd.

Sesame, the UK’s largest financial adviser network, has been fined £1,598,000, after it was found that providers could only secure a place on Sesame’s provider panel if they agreed to purchase at least £250,000 per annum of services from other companies in the Sesame group. In other words, Sesame’s choice of which providers made it onto the panel was not solely driven by the interests of their clients. The FCA described the deals as a ‘pay to play arrangement’.

Sesame’s actions were considered to constitute a breach of FCA Principle 8: “A firm must manage conflicts of interest fairly”, as well as a breach of the specific rule in COBS 2.3.1, which says that payments received, other than standard fees or commissions, must be disclosed to clients and must not affect the firm’s ability to act in the best interests of clients.

The FCA pointed out that in 2004, its predecessor, the Financial Services Authority (FSA), issued a ‘Dear CEO’ letter to firms, in which it highlighted that the receipt of payments should not be a condition for inclusion on a provider panel. In June 2012, the FSA’s RDR newsletter warned firms not to solicit payments in order to secure distribution arrangements. The FCA than issued finalised guidance on the issue in January 2014 which stated unambiguously:

“where an advisory firm operates a panel of providers, the inclusion of providers on the panel should not be influenced by the provider’s willingness and ability to purchase significant services from, or provide other benefits to, the advisory firm”

Tracey McDermott, director of enforcement and financial crime at the FCA, said:

“Firms must place customers at the heart of their business. Our reforms were designed to ensure advice is based on what is best for the client not the adviser. Firms can have had no doubt about the outcomes we were looking for here. Sesame’s approach to inducements, in the face of a clear position from the regulator, undermined the rules in order to look after its own interests.”

Sesame chairman John Cowan commented:

“We recognise that the arrival of the RDR introduced a step change in regulation and heralded a new relationship between product providers and distributors. As the market leader, we should have been more responsive to the wind of change blowing through our industry.”

However, it is unclear just how many of these agreements will need to remain in force, at least until 2016, on the grounds that they are legally binding contracts.

This is the fourth occasion on which Sesame has been fined by the FCA or FSA. In 2004, it was fined £290,000 for failing to satisfactorily monitor the activities of an appointed representative; in 2007, the penalty was £330,000 for complaints handling issues relating to structured capital at risk products; and in 2013 it was fined £6.2 million for failing to ensure the suitability of advice to invest in Keydata products and other investment products. The fine for this latest misdemeanour was increased as a result of their previous disciplinary record.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

03Nov

Bank’s Enormous Reserves for PPI Mis-selling

Lloyds PPI compensation reserve tops £11 billion, and Barclays provision reaches £5 billion

In late October 2014, Lloyds Banking Group was forced to increase its provision for mis-sold payment protection insurance (PPI) to more than £11 billion, while Barclays Bank’s provision passed the £5 million mark.

Lloyds – which includes TSB, Bank of Scotland and Halifax – increased its compensation reserve by £900 million to £11.3 billion. Analysts from Citigroup have predicted that it will eventually need to allocate a further £1 billion, and chairman George Culmer said he had not ruled out further increases. The group has reported that its PPI complaints increased slightly in the third quarter of 2014 when compared to the previous three months, bucking a recent trend. It also announced plans to cut 9,000 jobs and close 200 branches.

Barclays set aside another £170 million, having announced a £900 million increase as recently as July, and these increases now take the bank’s total PPI bill to £5.02 billion. Barclays also announced that it had set aside £500 million to cover potential fines resulting from rigging of the foreign exchange markets.

Around the same time, Royal Bank of Scotland (RBS), which includes NatWest, increased its PPI provision by £100 million to £3.3 billion. RBS has also allocated £400 million for foreign exchange fines.

HSBC’s provision was increased by £353,000 in the latest round of increases, and their total stands at £2.46 billion. Santander’s provision is £900 million, as of early November 2014, meaning that the five largest banking groups have collectively set aside almost £23 billion to cover PPI claims.

These figures show that, although overall PPI complaint volumes have fallen in recent months, the firms that sold PPI are still expecting to have to settle many more claims. The Financial Ombudsman Service (FOS) received 56,869 new PPI complaints in the period from April to June 2014, and while this figure rose fractionally to 57,094 between July and September, the final figure for the financial year is set to be well below the 399,939 complaints made in the 12 months to March 2014.

Latest data from the regulator, the Financial Conduct Authority (FCA), shows that 1,236,899 PPI complaints were made in the first half of 2014, a fall of 11% when compared to the second half of 2013. These figures are based on returns from firms who receive 500 or more complaints in a six month period. 24 firms are said to be responsible for 96% of the PPI complaints.

According to FCA figures, the amount of PPI compensation paid by these 24 firms in August 2014 (the most recent month for which figures are available) was £312.8 million. This amount is more than 10% lower than for any other month in 2014, and is also the lowest monthly figure since September 2011.

The FOS will still consider PPI complaints, even though it is now six years or more since most of these policies were sold. It will look at a complaint if it is ‘three years from when the consumer knew, or could reasonably have known, they had cause to complain’. So PPI complaints can still be made, as many PPI policyholders did not realise just how unsuitable their insurance was, and in some cases were unaware they even had the cover. However, the FOS has reported that many of the PPI complaints it receives at present concern how the financial firm calculated its redress offer, rather than whether the plan was suitable.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

02Nov

Crackdown on Nuisance Calls and Texts

Crackdown on nuisance calls proposed

In late October 2014, the Government announced plans to make it easier for the Information Commissioner’s Office (ICO) to punish firms who make nuisance calls.

The data protection watchdog currently has the power to impose fines of up to £500,000 for sending unsolicited texts or making unwanted calls, but can only act if there is evidence that the communications have caused ‘substantial damage or substantial distress’. Under the new plans however, fines can be imposed simply because the communications cause ‘annoyance, inconvenience or anxiety’. Email communications and recorded calls are also included in the plans, which involve amending the Privacy and Electronic Communications (EC Directive) Regulations 2003.

This will bring the law on nuisance calls and texts in line with the current powers given to telecommunications watchdog Ofcom regarding silent phone calls. Ofcom currently has the power to act if these calls cause ‘annoyance, inconvenience or anxiety’.

Ofcom research shows that 84% of households receive at least one nuisance call during a four week period. According to a report in the Daily Mail, 58% of Britons how feel uneasy about answering the phone as a result of the problem. There have also been many reports of companies calling people who are registered with the Telephone Preference Service.

Previously, the ICO has been prevented from taking action against companies because of the need to prove damage or distress. The ICO for example lost an appeal to the First-tier Information Rights Tribunal, brought by the owner of Tetrus Telecoms after his company had originally been fined £300,000 by the ICO. The Tribunal disagreed with the ICO’s claim that the cumulative effect of sending lots of nuisance texts had resulted in ‘damage and distress’.

According to the ICO, had this proposed change been in force between April 1 2012 and November 30 2012, then a further 50 companies could have been subject to enforcement action.

Explaining the rationale behind the proposed change, Culture Secretary Sajid Javid MP said:

“Being called day after day may not be ‘substantially distressing’, but that doesn’t make it acceptable. I want to make it easier for companies to face the consequences of ignoring the law and subjecting us to calls or texts we have said we don’t want.”

Information Commissioner Christopher Graham said: ‘The public clearly want to see a stop to nuisance calls and texts. We welcome this proposed change in the law which will enable the ICO to make more fines stick, sending a clear message to the spammers and scammers that the rules around cold calls and spam texts must be followed.

“The majority of rogue marketing firms make hundreds, rather than thousands, of calls and the nuisance is no less a nuisance for falling short of the ‘substantial’ threshold. This change means we could now target those many companies sending unwanted messages – and we think consumers would see a definite drop off in the total number of spam calls and texts.”

The consultation on the proposals closes on December 7 – replies should be sent to the Department of Culture, Media and Sport at the address in the consultation document, and the plans could become law as early as March 2015.

Financial firms who are regulated by the Financial Conduct Authority are already subject to tighter rules on sending unsolicited marketing communications, but the proposals could have an impact on claims management companies, or on any other company that currently sends unsolicited texts or makes unsolicited calls. The Claims Management Regulator at the Ministry of Justice said in September 2014 that it had warned seven companies over this practice, and was investigating another six companies.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.