27Dec

FCA fines network’s CEO and director of risk, with a ban for the CEO

Charles Palmer, the majority shareholder and chief executive of Standard Financial Group; and director and de facto CEO of its main subsidiary Financial Ltd, has vowed to fight the fine and ban imposed on him by the Financial Conduct Authority (FCA) by appealing to the Upper Tribunal.

In their Decision Notice, the FCA gives details of its intention to fine Mr Palmer £86,691, and ban him from holding any significant influence function in the future, over issues regarding the suitability of advice given by the group’s appointed representatives (ARs). Standard Financial Group had two network subsidiaries – Financial Ltd and Investments Ltd.

40,000 clients are said to have been exposed to “significant risk” as a result of the group’s failure to ensure the ARs were adequately supervised, and that the suitability of their advice was adequately monitored. Many clients were advised to invest into high risk Unregulated Collective Investment Schemes (UCIS).

The group is conducting its own review of its past UCIS business, and as of July 16 2015, 94% of cases reviewed had been found to involve potentially unsuitable advice.

Mr Palmer commented:

“After all the time and money spent on this FCA investigation of Financial Ltd there was just one single allegation of substance against me.”

Whatever the outcome of the appeal, this case highlights the need for principals to ensure they adequately monitor their ARs, and also highlights how the FCA can take action against individuals as well as their firms.

Principals can always expect to be held accountable for the actions of their ARs, and need to impose strict rules on how they can conduct business. Yet in this case, the FCA says the group’s ARs were allowed “a high level of flexibility and freedom as to how they could operate.” They were allowed to use their own fact finds, customer risk profilers and research systems, and the ARs were not required to seek the approval of the group’s compliance function before using documents of their own design.

According to research by law firm RPC, 51% of the FCA’s fines in 2015 were levied against individuals.

Back in 2010, Mr Palmer accepted a £49,000 fine from the FCA’s predecessor, the Financial Services Authority, for failing to ensure that Financial Ltd’s advisers gave suitable advice on pension switch transactions. However, the latest fine relates to the period between February 2010 and December 2012.

In 2014, the FCA punished Financial Ltd and Investments Ltd by prohibiting them from taking on new ARs for a period of 126 days. The FCA found numerous issues with the group’s recruitment, training, supervision and file checking of its ARs. These failings also led to the compliance director Stephen Bell being banned and fined £33,800.

The FCA has now also fined the group’s former risk director, Paivi Grigg, the sum of £14,807 for risk management failings. However. Ms Grigg does not intend to appeal.

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.

23Dec

Confusion between UK and EU over mortgage prisoners

Confusion reigns as the European Union (EU) and the Financial Conduct Authority (FCA) appear to be blaming each other over the mortgage prisoners issue.

Mortgage prisoners are those trapped on an unfavourable mortgage deal, and who would be unable to re-mortgage to a cheaper deal because they would fail the stricter affordability checks imposed by the FCA’s Mortgage Market Review (MMR) in April 2014. This could have created an undesirable situation where customers were told ‘you can’t afford a new mortgage; so you need to stay on your existing, more expensive mortgage deal, that was granted to you when affordability checks were less strict. Even though the new deal is cheaper we can’t allow you to take it out’.

Hence, the FCA allowed lenders to grant re-mortgages where no additional borrowing was being considered, and where the repayments were lower, regardless of whether the client would have passed the new affordability checks. Not all lenders are allowing customers to make use of this, but that is a separate issue – at present the FCA’s rules definitely allow this exemption to be used.

Under MMR, in normal circumstances lenders are required to assess mortgage applications on whether the borrower would still be able to afford the repayments if base rates rose to 6%.

It has been widely reported in the financial press that the EU’s Mortgage Credit Directive would end this exemption. The Directive’s provisions will come into force on March 21 2016, and according to numerous reports, will stop lenders granting new deals to mortgage prisoners, thus forcing them to remain on the more expensive arrangement. The Directive theoretically still allows mortgage prisoners to re-mortgage with the same lender, but in practice this is unlikely to occur, as lenders will not have an incentive to make an offer of this kind.

However, a statement from the European Commission has cast doubt on these press reports. The statement reads:

“Reports that British homeowners are being prevented from getting a cheaper deal when they re-mortgage are clearly a cause for concern.

“This has been linked to the introduction of the Mortgage Credit Directive, but there is nothing in that directive which should prevent consumers changing their existing mortgage to a cheaper one.

“It seems that the problem may lie with how the UK’s new affordability tests are being applied. These stricter tests come from the UK’s Mortgage Market Review, not EU legislation. We suggest that those concerned about what’s happening take up the issue with mortgage providers or the relevant British authorities.”

This EU statement effectively says it is the FCA that is creating the problem, but the UK regulator responded by saying:

“The implementation of the Mortgage Credit Directive (MCD) means that, from 21 March 2016, an affordability assessment will be required if a lender takes on an existing borrower from another lender.

“While an unfortunate consequence of the MCD, it is likely to affect a very small number of borrowers.”

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.

21Dec

ICO issues ‘stop now’ order to CMC that has already been fined by MOJ

Firms need to comply with the requirements of both their main industry regulator, and those of the data protection watchdog, the Information Commissioner’s Office (ICO).

In August 2015, the Claims Management Regulator at the Ministry of Justice (MoJ) fined Aurangzeb Iqbal £220,000 for making large numbers of unsolicited marketing calls regarding hearing loss claims. Many of those he contacted were registered with the Telephone Preference Service (TPS), or claimed that they had previously informed the firm they did not wish to receive further marketing calls.

The ICO has now taken its own action. It has issued Mr Iqbal with a ‘Stop Now’ order, instructing him to stop making unsolicited calls. If a Stop Now order is breached, it could lead to criminal prosecution.

Mr Iqbal, who trades as The Hearing Clinic and whose premises are in Derby, is appealing against the MoJ fine. It is unclear at present whether he will appeal against the ICO’s sanction.

The data protection regulator says that Mr Iqbal’s firm made false statements to consumers telling them that they had worked in noisy environments, made concerning statements to the effect that they could be at risk of hearing loss, sometimes made multiple calls to the same household, and engaged in aggressive sales tactics.

The ICO conducted a three month monitoring exercise on Mr Iqbal and offered him advice on how to comply with the legal requirements, but the watchdog still received some 278 complaints about his marketing practices.

Andy Curry, the ICO’s Group Enforcement manager said:

“Aurangzeb Iqbal had every chance to improve his practices in line with the law. Our team provided advice and guidance and yet the complaints kept coming in.

“The Claims Management Regulation Unit has already fined Aurangzeb Iqbal but our enforcement notice should stop him from making any more nuisance calls.

“We believe complaints about this type of hearing claims call are on the rise and we do have more enforcement action in the pipeline. This should send a clear message to these companies that they must operate in line with the regulations or face the consequences.”

It is a breach of the European Union’s Privacy and Electronic Communications Regulations to make marketing calls to consumers who have registered with the TPS, or who have informed a firm that they wish to opt out of communications of this nature.

In recent weeks the ICO has taken a number of actions in its fight against nuisance calls and texts. It fined two suppliers of call blocking software – Nuisance Call Blocker Ltd and Telecom Protection Service Ltd – £90,000 and £80,000 respectively, for making marketing phone calls to individuals registered with the TPS; and fined claims manager UK Money Solutions £80,000 for sending unsolicited marketing texts. It also wrote to more than 1,000 list brokers asking them to provide details of their arrangements for ensuring consumers give consent to their data being processed, and of the arrangements they have in place for ensuring TPS registered customers are not contacted.

The ICO closely assists the MoJ in regulating the claims management industry.
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.

18Dec

Debt management application refused by FCA on grounds of fee structure and competence

The Financial Conduct Authority (FCA) has published Final Notices for a number of consumer credit firms who have failed to satisfy the regulator that they have the necessary competence to become fully authorised. The latest of these concerns Big T Media Limited (trading as New Start Debt Solutions), who have seen their debt management authorisation application rejected. The firm, based in Nelson, Lancashire, failed to convince the FCA that their fee structure was appropriate, in addition to the concerns identified regarding the competence of the sole director, Mr M Ali.

Firstly, the Notice says that the level of income the firm expects is unclear, with the application predicting “annual income from debt management activities” of £20,000, but “total income from sales fees” as £571,000.

The next issue of concern was that the firm’s advisers were not considering all debt solutions that may be suitable for a particular customer, and that customers were being placed into repayment plans regardless of their circumstances.

The confusing information regarding fees arose because the only charge referred to in the firm’s application was 17.5% of the monthly repayment. However, the firm’s Terms and Conditions refer to charges of £25 and £50 per month being levied, subject to these not exceeding a set percentage of the client’s disposable income. In an interview with the FCA, Mr Ali described the fee structure in a different way once again, as 41% of the monthly repayment for the first six months.

Mr Ali applied to carry out the compliance oversight function at Big T, but the FCA said he had never previously worked in the debt management sector and had not undergone any relevant training. He was unable to satisfactorily answer a number of questions the FCA asked in order to assess his competence. He was also unable to explain why a manager’s job description included duties such as “make recommendations to determine credit amounts” and “setting and changing credit lines/limits”, when the firm was not applying for permission to lend money.

The procedures the firm provided for areas such as compliance monitoring, staff training and assessment of suitability of advice were also very brief and did not provide the level of detail the FCA wants to see in an authorisation application. The firm also gave no details of its arrangements for holding client money.

Regarding Mr Ali’s previous experience, his CV says he was marketing director of another firm between 2007 and 2010, yet Companies House records show the firm was not incorporated until 2011. He also claimed to hold two qualifications for which the FCA could not find any record of their existence, and when challenged he then said he did not hold the qualifications but was interested in attaining them.

Big T Media has chosen not to appeal the FCA decision to the Upper Tribunal.

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.

16Dec

Smallest advice firms paying more than a quarter of income towards regulation

As part of its campaign to highlight the rising cost of regulation, one of the major financial advice trade associations has revealed that some smaller firms are seeing more than one quarter of their turnover disappear in regulatory costs.

The Association of Professional Financial Advisers (APFA) surveyed almost 400 firms and found that the average firm spent 12% of its turnover on regulation in 2014. It is estimated that the industry’s total regulatory bill for the year was £475 million, up from £460 million in 2013, and that the average client pays £160 in fees towards a firm’s regulatory bill.

APFA is even encouraging its members to disclose this £160 average cost to their clients, in the form of a disclosure statement which ends with the following:

“For the 2014/2015 period the Association of Professional Financial Advisers (APFA) has estimated, across the profession, that the cost to each client for the regulatory costs that a firm like ours incurs is £160.”

The research found that firms with turnover of less than £100,000 are forced to spend an average of 28% of their turnover on regulation.

The Association hopes that its findings will influence the Financial Conduct Authority (FCA) and the Treasury as they pursue the Financial Advice Market Review (FAMR), a wide-ranging review of access to financial advice. The Treasury has already promised that the Review will “facilitate the establishment of a broad based market for the provision of financial advice to all consumers.” At present, firms inevitably have to pass on the costs of regulation to their customers in the form of higher fees, and some consumers may be priced out of financial advice as a result.

APFA director general Chris Hannant commented:

“Based on advice firm responses, our research shows that each client is still paying hundreds of pounds every year to cover the cost of regulation. At a time of heightened policymaker concern about what measures are required to broaden consumer access to professional financial help, it is vital that radical steps are taken to reduce costs and make advice more affordable to those who need it.

“APFA will continue to urge politicians and regulators to use the FAMR as an opportunity for reform. Advisers can be more proactive and transparent in highlighting how much of their bill is simply to cover regulatory costs.”

Examples of regulatory costs incurred by firms include:

• Authorisation fees to their regulator, the FCA – these rose by an average of 8%, and by up to 11% for some firms, in the most recent financial year
• Salaries of staff and/or fees to external consultants who manage their internal compliance;
• Training costs to ensure advisers maintain competence
• Examination fees for staff sitting professional qualifications
• Levies to fund the Financial Ombudsman Service, the Pension Wise guidance service, the Money Advice Service and the Financial Services Compensation Scheme – the last in particular has risen significantly in recent years
• Professional indemnity insurance premiums
• The time spent reviewing regulatory documents, such as rule changes, policy documents and consultation papers

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.

14Dec

FOS announces plans and budget for the financial year – authorised firms fees to remain unchanged

Faced with considerable increases in their levy to fund the Financial Services Compensation Scheme, and in their authorisation fees to the Financial Conduct Authority (FCA) and their professional indemnity insurance premiums, authorised firms may be cheered by the announcements made by the Financial Ombudsman Service (FOS) in early December 2015.

The independent complaints adjudication body revealed its plans and budget for the 2016/17 financial year at this time. The headline announcement as far as financial services firms are concerned is that once again the case fee has been frozen at £550, and again it will only be paid on a firm’s 26th and subsequent FOS case in any financial year, meaning that the vast majority pay no case fees at all.

Payment protection insurance (PPI) has dominated the FOS’s workload in recent years, and the organisation is still budgeting based on an expected 170,000 complaints about this product in 2016/17. It had budgeted for 150,000 PPI complaints in 2015/16, but now expects to receive 180,000 in the 12 months to March 31 next year.

The FCA has proposed a PPI complaints deadline in 2018, after which customers will be unable to submit new complaints. However, given the often significant time span between the complaint being submitted and the FOS making a final decision, it is conceivable that the product could form a significant part of the FOS caseload for the next six years. The introduction of the deadline could also cause PPI complaints to spike in the short term as consumers perceive that time is running out to complain.

The FOS has also underestimated its packaged bank account (PBA) complaint volumes. It now expects 40,000 PBA complaints in 2015/16, compared to the original budget for 30,000. Its budget for 2016/17 in this area covers just 15,000 new complaints.

The FOS is budgeting for 30,000 non-PPI insurance complaints and 15,000 pension/investment complaints in 2016/17.

The overall budget – the total cost of running the FOS – is expected to reduce slightly in 2016/17 to £223.2 million. The estimated final cost for 2015/16 is £227.2 million.

Authorised firms also contribute towards the ‘compulsory jurisdiction levy’, as well as paying individual case fees. The levy is expected to rise to £24.5 million in 2016/17, up from the existing £23.3 million, but it is impossible to know at this stage what the impact will be on the levy contribution made by individual firms. The FCA will publish more details on this in March 2016.

Chief ombudsman Caroline Wayman commented:

“We’re planning for another busy year at the financial ombudsman service – as the high level of complaints we’ve seen in recent years stabilises and we make good progress resolving cases ever more quickly and effectively.

“To help us do this, we’re working increasingly closely with financial businesses to continue to manage the impact of large volumes of complaints – and to plan for the inevitable volatility that can always impact the world of complaints.

“I’m confident that the foundations we’ve established in recent years – through investing in our people, our systems and the way we work – will give us the flexibility, efficiency and resilience to handle the challenges that the future might hold.”

A consultation on the FOS plans continues until February 2 2016.

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.

11Dec

MOJ imposes largest fine yet for nuisance calls

On November 27 2015, the Claims Management Regulator at the Ministry of Justice (MoJ) imposed its fourth fine on a claims management company (CMC). The penalty of £850,000 imposed on Zahier Hussain – who trades as National Advice Clinic, the Industrial Hearing Clinic or the Central Compensation Office – is the largest fine imposed to date by the MoJ, after it gained the power to fine companies 12 months previously.

Mr Hussain‘s firm, based in Oswaldtwistle, Lancashire, made almost six million calls between October 2014 and April 2015 about compensation for hearing loss. Many of these calls were made to consumers who had registered with the Telephone Preference Service (TPS), and almost 2,000 complaints were received about these practices. The firm’s conduct has been described as “blatant and shocking” by a Government minister.

The MoJ says the firm also breached its rules relating to: record keeping; obtaining leads and referrals; and making introductions to solicitors.

Kevin Rousell, head of the MoJ’s Regulation Unit, said of Mr Hussain‘s conduct:

“This company’s cold-calling campaign was deliberate and sustained, and a flagrant breach of our marketing requirements. They showed an alarming disregard for the misery their tactics can cause, particularly to elderly and vulnerable people. The size of this penalty demonstrates how seriously we take this issue – nuisance calls will not be tolerated.”

Justice Minister Lord Faulks added:

“Nuisance calls are a real scourge to households, and people have simply had enough. I am pleased the regulator has imposed such a substantial fine for such blatant and shocking behaviour. This follows other large fines and the removal of over a thousand licenses from claims management companies since 2010. The government is committed to protecting the public from this nuisance – that at best wastes people’s time and at worst causes significant distress.”

Back in 2012, the firm’s activities were highlighted on the BBC TV programme Panorama.
The other fines imposed by the MoJ in the past year were:

• £567,423 to Rock Law Limited regarding irregularities in its contracts with clients
• £220,000 to Aurangzeb Iqbal, who traded as The Hearing Clinic, also for making millions of unsolicited marketing calls to TPS registered consumers and others about hearing loss compensation
• £91,845 to Complete Claim Solutions Limited for unsolicited calls regarding personal injury claims

The MoJ press release concerning the fine also highlights that 300 CMCs were stripped of their authorisation during 2014.

The Government has commissioned a wide-ranging review of the regulatory system for CMCs. Reacting to this fine, Rob Cummings, general insurance manager at the Association of British Insurers, called for tougher regulation by saying:

“The continuing high levels of nuisance calls and speculative claims some CMCs are responsible for demonstrate the urgent need for a regulatory regime which is fit-for-purpose.”
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.

09Dec

FCA cautions firms against outsourcing advice

The Financial Conduct Authority (FCA) has warned firms not to outsource their provision of advice to unauthorised third parties. The regulator is especially concerned about this in areas such as pension transfers (moving funds from an occupational pension scheme to a personal pension scheme) and pension switches (moving funds from one personal pension scheme to another).
It is a criminal offence under the Financial Services and Markets Act 2000 to give financial advice, or to carry out a range of other activities, without being authorised by the FCA. In respect of investment and pension advice, this requirement applies to both the firm and to the individual adviser, who both require separate authorisations.
However, whilst technically it would be the third party that was committing the offence, this warning from the regulator highlights that the firm carrying out the delegation would still be held responsible. Any client detriment that results from poor advice by the unauthorised third party would be the responsibility of the authorised firm. The FCA statement also raises the possibility of firms being subject to enforcement action if they improperly delegate their activities, and says some firms and individuals are already under investigation for this.
Pension transfers and pension switches are regarded as high risk areas by the FCA, due to the risks of being advised to switch without sufficient justification, the possibility that the client might be switched into high risk investments or the risk of the client falling victim to a fraud or scam.
The regulator gives the example of a firm it identified which was outsourcing its entire advice process to an unauthorised third party, and many clients were being placed into Self Invested Personal Pensions with high risk underlying investments as a result.
The FCA statement says:
“Delegating regulated advice to an unauthorised party will not mean that the firm can avoid liability or regulatory action for unsuitable advice. If approached in regard to this type of activity, we urge authorised firms to consider the significant implications that entering into this type of arrangement could have on their professional reputation and future livelihood.”
The statement ends by warning firms that improper delegation could pose a significant risk and could have implications for their professional indemnity insurance. The FCA also asks that any firm that is approached by an unauthorised third party reports the matter to them under their Principle 11 obligation to communicate openly with their regulator.
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.

07Dec

FCA holds ‘Now you’re authorised’ webinar for credit firms

On November 20 2015 the Financial Conduct Authority (FCA) conducted a webinar for newly authorised consumer credit firms. Andrew Kay from the Supervision team led the webinar, accompanied by colleagues from Supervision and the Firm Contact Centre helpline.

The first important point made was that the FCA has a supervision programme designed to assess whether firms are meeting the regulator’s Threshold Conditions, and whether they are treating their customers fairly. Supervision may be conducted via audits of individual firms, or via a thematic review – a review of standards at a range of firms regarding one specific issue. This active monitoring was said to be the main difference firms may notice, given that the former consumer credit regulator, the Office of Fair Trading, was very much a reactive regulator.

Other differences firms may notice include:

• The FCA has stronger enforcement powers to fine and/or ban individuals and firms
• Firms need to keep the FCA updated regularly – the regulator requires firms to complete periodic data returns of financial and non-financial information; and to notify them of any significant adverse events affecting the firm, such as financial problems, significant rule breaches, purchases or sales of loan books and significant data loss. Notifications of significant events should be made via the Notification Form on the FCA website, and firms were asked in the webinar to register for the GABRIEL electronic data returns system if they have not already done so. Firms who fail to complete regulatory returns on time will first be fined, and risk losing their authorisation if the submissions remain outstanding. Changes to basic information, such as a firm’s contact details or changes in its approved persons, should also be notified via the FCA’s Connect system
• Firms are expected to conduct internal compliance monitoring, identify issues of concern themselves and take steps to put matters right

With regard to the most important rules firms need to follow, the panel asked firms to look initially at the 11 Principles for Business, a set of generic criteria all regulated firms must meet. These include: the need to treat customers fairly; the need to ensure all communications are clear, fair and not misleading; and the need to co-operate with the FCA. Firms were then advised to look at the relevant sections of the Consumer Credit section of the Handbook, and if relevant, at the Client Assets section regarding the handling of client money.

Firms were asked to retain records so that they can be easily accessed when the FCA wishes to monitor the firm. This may include customer files, documented procedures and recordings of client phone calls (if available). Firms wanting to see examples of the scope of an FCA thematic review were asked to look at the reports from the recent reviews into high cost short-term credit (which includes payday lending) and the quality of consumer credit advice.

Another warning issued to firms was that, while their authorisation with the FCA is for an indefinite period, any firm that wishes in due course to branch out into areas of credit for which it not currently authorised will need to complete a Variation of Permission application before commencing the new activity.

The panel also reminded firms to disclose on their stationery and website that they were ‘authorised and regulated by the Financial Conduct Authority’. Firms are not permitted to use the FCA logo in any circumstances.

The issues covered in the webinar apply equally to firms whose main activity is not financial services, but who may still act as a lender or credit broker, for example.

The FCA Contact Centre is available throughout office hours to assist with regulatory queries firms may have. They can be contacted by phone or by email. The webinar also highlighted the existence of the FCA’s e-learning package relating to regulatory returns.

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.

03Dec

FCA consults on PPI cut off and on commission complaints

The Financial Conduct Authority (FCA) has commenced a consultation into two significant changes it is proposing to make regarding payment protection insurance (PPI): a ‘time bar’ or deadline on when complaints about the product can be made, and new rules that will allow complaints to be made regarding the size of the commission paid on PPI policies. The latter follows the recent Supreme Court judgement in the case of Plevin v Paragon Personal Finance.

The FCA has still not proposed an exact date in 2018 for its PPI deadline. But consumers will be entitled to have their complaint assessed if the authorised firm sends its acknowledgement letter prior to the deadline.

At present, the Financial Ombudsman Service (FOS) will consider any PPI complaint made within six years of the sale, or if later, within three years of a customer realising they may have a problem with their PPI. These timescales will not be extended as a result of these proposals, so if a customer’s existing right to complain expires in 2017, then this will remain the case. Likewise, all customers who are dissatisfied with their firm’s adjudication of the complaint will still have only six months to refer the matter to FOS, regardless of when the firm’s final response is sent.

Some PPI policies are still being sold today, even though the sector is far smaller than was the case in the 2000s, and the policies being sold at present are typically regular premium plans offered by specialist insurers. The consultation acknowledges that the product continues to be sold, by saying that any plans sold after a certain date in 2016 will be exempt from the deadline.

The deadline will only apply to complaints made about the sale of PPI, so complaints regarding administration and claims handling, for example, are not affected by these proposals.

Regarding commission payments on PPI, the FCA proposes that where firms failed to disclose the size of the commission payment, and where the commission amount was sufficiently large to create an ‘unfair relationship’ under contract law, that firms should be required to pay compensation to customers who complain. This redress would comprise the amount by which the commission on the plan exceeded 50% of the premium, plus the interest paid on this excess, plus an additional 8% of the total of these two elements.

There is no requirement to conduct a historic review of previously rejected PPI complaints regarding this issue. In addition, firms will not need to uphold commission-related complaints if they have already paid full redress on a mis-selling claim regarding the same policy. These types of complaints must also be made prior to the deadline.

The consultation document suggests that the proposed 50% threshold may yet be altered. However it is unlikely there will be any significant changes to the proposals regarding either the 2018 deadline or the rules on handling commission-related complaints.

The consultation ends on February 26 2016.

The 18 firms that sold 90% of the PPI policies have also been informed that they will need to fund a £42.2 million campaign – to take place in 2016 – aimed at raising public awareness of the deadline, and at informing customers of how they can check if they have had PPI. This campaign will involve TV commercials, billboards, direct marketing and digital advertising.

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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