30Jun

FCA asks for feedback on consumer access to travel insurance for cancer patients

The Financial Conduct Authority (FCA) has launched a Call for Input, seeking views on the specific issue of the provision travel insurance to customers who have cancer, or who have experienced cancer in the past.

The key issues the FCA wishes to get feedback on are:

  • The issues firms face when providing travel insurance to current or former cancer patients
  • The difficulties consumers experience in finding suitable travel insurance, given their cancer diagnosis
  • Examples of innovative practices currently being employed by firms
  • Ways in which better consumer outcomes could be achieved

The call for input closes on September 15 2017, and the FCA promises to publish a feedback statement summarising the responses before the end of the year.

Customers with pre-existing medical conditions undoubtedly present a higher risk in any form of health insurance, but insurers need to consider whether it is really likely that the applicant would need to seek treatment as a result of their condition during a short holiday. The BBC cited the example of a nurse with breast cancer who was quoted £2,800 for travel insurance for a trip to Dubai.

Getting away on holiday can of course sometimes provide valuable benefits to people who have undergone gruelling treatment. For people who have had the worst possible news, i.e. that their cancer is terminal, a final ‘dream’ holiday can sometimes be the best possible tonic.

Lynda Thomas, chief executive of Macmillan Cancer Support, commented:

“Every day we hear from people who are having trouble accessing travel insurance. They may have been quoted sky-high prices, had their cancer excluded from cover or had to deal with endless phone calls or mountains of paperwork in order to apply for a policy.”

The insurers’ trade association, the Association of British Insurers (ABI), recommended that consumers who had experienced cancer approached a specialist provider.

ABI head of conduct regulation James Bridge said that travel insurance was “widely available for people who have long-term and serious health conditions”.

Mr Bridge added:

“Insurers are always striving to find new ways to develop products that are affordable and accessible, regardless of circumstances.”

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:

“Being able to access financial services is critical for people to fully participate in society. We hope that this will encourage discussion on access issues to examine the challenges for firms and consumers.”

“Given our previous findings in this area, we see this as a critical time to fully explore these issues and consider potential solutions.”

Mr Woolard backed up his comments in a speech on the subject, where he said:

“Cancer sufferers are left with a pretty dire choice. Travel and pay the inflated premium, cancel the trip altogether, or travel at risk.”

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.

28Jun

FCA calls on firms to make MiFID II permission applications urgently

The Financial Conduct Authority (FCA) has highlighted that, in effect, there are only a few days left for affected firms to make applications for authorisation and/or variations of permission under the European Union’s Markets in Financial Instruments Directive II (MiFID II).

Although MiFID II does not come into force until January 3 2018, firms who need to vary their permissions as a result of the Directive have been asked to submit these applications by July 3 of this year. The FCA says that firms must meet the July deadline in order to ensure that their applications can be considered and approved by next January. Submitting by July 3 should also hopefully ensure that firms have time to provide additional information in support of their applications should the regulator require this.

In its press release on this subject, the regulator says:

“Most applications are not complete when they are submitted. Firms who have not already done so should therefore submit applications as a matter of urgency to help us identify as soon as possible what, if any, further information is needed to complete the application. We cannot guarantee that any application which is only complete after 3 July 2017 will be determined by 3 January 2018.”

The FCA adds that firms that continue to do business without the necessary permissions come January 2018 will be committing a criminal offence.

Firms that may need to make a variation of permission application as a result of MiFID II include investment firms seeking to extend their permissions in order to operate Multilateral Trading Facilities (MTFs) or Organised Trading Facilities (OTFs). Any individual or firm currently carrying out high frequency trading (HFT), and who is not currently authorised as an investment firm by the FCA, will need to be authorised as such under MiFID II.

MiFID II will introduce a requirement to disclose all product and other charges to investors upfront; a different definition of independent financial advice; an increased emphasis on assessing clients’ capacity for loss before giving investment advice; and new rules on the receipt of inducements. Its implications for advisory firms could be far reaching, and could have an impact in areas such as:

  • Resolution of conflicts of interest
  • Complaints resolution
  • Handling of client assets
  • Inducements and payments to third parties
  • Suitability of advice
  • Provision of information to clients

Earlier suggestions that the legislation would require all financial advisory firms to tape conversations with clients have now been dismissed – keeping a written record of the conversation will suffice instead.

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.

27Jun

FCA proposes changes to advice requirements for pension transfers

The Financial Conduct Authority (FCA) has issued proposals for new guidance on pension transfer advice, i.e. where clients are recommended to move funds out of occupational pension schemes.

The FCA says its consultation paper has been issued in response to “the increased demand for pension transfer advice”, and the fact that “since the introduction of the pension freedoms in April 2015, consumers have more options available to access their pension savings.”

Pension transfer business is undoubtedly a high-risk area, and advisory firms that carry out these transactions must ensure they have rigorous procedures to ensure suitability of advice. All transfer advice must for example be checked by a pension transfer specialist who has the skills and experience to determine whether the advice is suitable, and who holds a specialist pension qualification such as G60 or AF3.

Proposals contained in the regulator’s consultation paper include:

¥ Where the transfer would involve a transfer or conversion of safeguarded benefits, the advice needs to be given in the form of a personal recommendation, and it will not be acceptable for firms merely to provide general guidance. Safeguarded benefits include: defined benefit (final salary) schemes, guaranteed annuity rates, deferred annuity rates, guaranteed basic annuities and guaranteed minimum pensions
¥ A removal of the formal rule saying that advisers must initially assume that any transfer will be unsuitable for their client. However, the paper still says that “it remains our view that keeping safeguarded benefits will be in the best interests of most consumers.”
¥ Expanded rules on how firms should assess suitability of advice. The FCA proposes that an assessment of suitability should encompass: the role safeguarded benefits play in providing the level of income a client expects or needs, whether the investments in the receiving scheme meet the client’s risk profile, and the way in which funds will be accessed by the client following any transfer
¥ A transfer value analysis must include a comparison showing the value of the benefits being given up

The consultation also invites comments on what the appropriate qualification and experience requirements for a pension transfer specialist should be, although no formal new rules are proposed on this issue at this time.

The consultation closes on September 21, so firms wishing to express their views on these proposals must reply to the FCA within the next three months. The FCA says it will then issue its new rules on pension transfers in early 2018.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said:

“Defined benefit pensions, and other safeguarded benefits such as guarantees, are valuable so most consumers will be best advised to keep them. However, we recognise that the environment has changed significantly, so we want to ensure that financial advice considers the customer’s circumstances in full and recognises the various options now available to them.

“Our new approach should better equip advisers to give the right advice so that consumers make well informed decisions.”

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.

26Jun

Mortgage broker is jailed for forging signature

Dundee mortgage adviser Greig Thomson has been jailed for nine months after pleading guilty to forging his mother’s signature on a mortgage application. The potential consequences of failing to act with integrity as a financial services professional can certainly be severe.

Dundee Sheriff Court heard that Mr Thomson only took out the £180,425 mortgage loan in May 2007 to impress his girlfriend. However, his actions only came to light when lender GMAC-RFC re-possessed the property in 2014, and then commenced proceedings to recover the £80,000 debt that remained outstanding. Mr Thomson first defaulted on his payments only two months after taking out the mortgage.

As Mr Thomson’s mother Maureen was named on the application, the lender started pursuing her for the debt, however it later became clear that the signature on the application was not hers. It is understood that Mr Thomson had been turned down for a mortgage in his own name as lenders considered he presented too much of a risk, given that he had only just started his own business as a mortgage broker.

Mr Thomson pleaded guilty to a charge of “uttering a forged signature on a mortgage application as genuine.”

In passing sentence, Sheriff Alastair Brown described Mr Thomson’s actions as a “gross breach of trust”, and that “nothing short of a prison sentence” was appropriate in this case.

Sheriff Brown added:

“It appears that you were motivated by a desire to be seen as a person of significant standing and substantial success.

“What you did, in essence, was to undermine the system. You knew you were acting dishonestly and criminally. Working in the regulated sector, you abused that position.
“Those in regulated positions who are tempted to abuse that position must understand they are walking towards the door of prison.

“The fact this crime of dishonesty was committed from an officer with a computer and a desk rather than at the dead of night with a pair of gloves and a jemmy doesn’t make a difference to the court.”

Mr Thomson’s counsel attempted to argue that their client was a man of good character with no previous convictions, and said that he had always intended to return the funds.

Mr Thompson has not worked in the mortgage sector since 2014.

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.

23Jun

FOS annual review – payday complaints soar again, while PPI still accounts for half the cases

The Financial Ombudsman Service (FOS) has published its annual review for the 12 months to March 31 2017, and once again payment protection insurance (PPI) complaints accounted for more than half of its workload. This type of insurance has dominated the financial services complaints landscape in recent years, and in the 2016/17 financial year, 168,769 of the 321,283 new complaints were about PPI, accounting for 52.5% of the total.

The final PPI complaints total was down by around 10% when compared to the previous year, with the overall number of complaints falling by around 6%.

Claims management companies (CMCs) are still responsible for a large proportion (84.5%) of the PPI cases received by the FOS. CMCs appear to be less active in pursuing packaged bank account (PBA) claims, however, with only 37.5% of the year’s PBA complaints being made via a CMC, down from 62% in the previous year. The overall number of PBA complaints is down by 54% in 2016/17 when compared to 2015/16.

Payday loan complaints rose by 227% from 3,216 in 2015/16 to 10,529 in 2016/17. In 2014/15, there were only 1,157 complaints made to the FOS about these loans, so complaint numbers have risen by a factor of nine in just two years.

The overall number of consumer credit complaints rose by 89% to 25,984 – large increases have also been recorded in the numbers of complaints being received about instalment loans (up by 318%) and guarantor loans (up by 182%). These figures should serve as a warning to credit firms from all sectors – your customers are increasingly willing to make a complaint about you, and if you can’t demonstrate that you are treating your customers fairly, then you could end up having to pay significant sums in compensation when complaints are settled.

Although just 0.5% of the complaints received during the 12-month period were made against independent financial advisory firms, advisers would do well to note certain statistics from the FOS review. Complaints about pensions, including Self Invested Personal Pensions (SIPPs) are on the increase. Issues over the SIPP advice he was given were central to the recent claim made against his financial adviser by former England footballer Alan Shearer. The BBC pundit has reached an out-of-court settlement after launching a £9 million damages claim against his adviser Kevin Neal and pensions firm Suffolk Life.

As regards the separate statistics regarding how many complaints the FOS upheld during the financial year, 64% of SIPP complaints were decided in the complainant’s favour, while for payday loans the uphold rate was 59% and for PPI it was 53%. Across all product areas, 43% of complaints were upheld.

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.

22Jun

FCA director warns of more senior manager investigations in a speech

Jamie Symington, Director of Investigations at the Financial Conduct Authority (FCA), addressed the Legal Week Banking Litigation and Regulation Forum in June 2017. He warned the senior managers of authorised firms that they may be subject to additional scrutiny, by commenting:

“We need an approach to investigation that will meet the challenges of supporting the embedding of the culture [of senior management accountability]. This means that generally where there are grounds for investigating a matter, there will be a need to investigate the role of senior management in the conduct issues that arise.”

Mr Symington acknowledged that this new focus on the conduct of senior managers will inevitably lead to the FCA conducting more investigations than was previously the case.

Mr Symington began by stressing that an FCA investigation is not necessarily a pre-cursor to enforcement action, and that an investigation is simply the regulator’s way of trying to find out what happened in any given situation.

Next, he quoted from the Green report into the collapse of HBOS, and Mr Symington remarked that Andrew Green QC had some hard-hitting things to say about the circumstances in which the FCA should commence an investigation. Green suggested that the regulators had previously only commenced investigations where they already believed they had a reasonable chance of being able to take enforcement action, when instead they should be using the results of their investigation to discover if enforcement action was necessary.

The FCA director then acknowledged that his organisation had certain responsibilities in this regard, commenting:

“We need to state clearly what we expect of firms. We need to improve how markets operate. We must work to prevent harm occurring. And we must help to put things right when they go wrong.”

He also acknowledged that evaluating the degree of harm during an investigation was always going to be a judgement call, and would never be an exact science.

Next came his comments on the responsibilities of senior management to promote the right corporate culture, and to prevent wrongdoing within their firms.

Mr Symington added on this subject:

“As set out in our recent business plan, our foremost cross-sector priority is to improve culture and governance in firms. We see culture change as the key aim of our work on individual accountability which is why the Senior Managers Regime for deposit takers and the forthcoming Senior Managers & Certification Regime for all other firms are key work streams in our Business Plan.”

He concluded by stressing that the FCA remained impartial in all of its investigations, saying that:
“What we do expect, is … to get to the heart of the matter and the truth of what happened as quickly as possible. We will investigate with objectivity and rigour. Our response will be fair and proportionate in all circumstances. So we expect firms to appreciate that is it often also in their best interests that we do get to the heart of the matter quickly and support us in doing so.”

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.

21Jun

CMC boss prosecuted over calls to illegally obtain data

A former manager of a claims company has been fined by the courts after pleading guilty to making ‘blagging’ calls.

Blagging calls are where contact is made by someone using a false identity in order to obtain information. In this case, employees of Liverpool-based UK Claims Organisation Ltd claimed to be from solicitors’ firms when phoning insurers to try to obtain personal data and information about policyholders’ road traffic accidents. Once the data had been obtained, the company intended to sell the information to solicitors for use in personal injury cases.

The prosecution also alleged that the company had illegally obtained data from a car hire firm prior to making the calls to insurers.

Joseph Walker, a manager at UK Claims Organisation at the time, was convicted of unlawfully obtaining personal data under section 55 of the Data Protection Act in a hearing at Liverpool Magistrates Court. He was fined £2,000, and was also required to pay the prosecution’s legal costs of £1,600, plus a £15 victim surcharge.

Two employees of UK Claims Organisation had already been fined at Liverpool Magistrates Court back in November 2016 over this matter.

Kayleigh Billington was fined £320, plus a payment of £250 to cover costs and a victim surcharge of £20.
Lesley Severs was fined £250, plus a payment of £400 for costs and a victim surcharge of £20.
Mr Walker, who now resides in Australia, did not answer a summons to attend the November hearing, and was only arrested in May of this year when he paid a visit to the UK on holiday. Mr Walker was arrested on board the plane at Heathrow before he had even set foot on UK soil, and was led from the aircraft in handcuffs.
Elizabeth Denham, head of the data protection regulator the Information Commissioner, said:

“Blagging calls are one of the many disreputable and dishonest tactics we see being used by rogue firms. People’s personal data has real monetary value and this practice shows the lengths some people and organisations will go to in order to get hold of it. We are happy the court has recognised the seriousness of the offence by imposing a fine.”

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.

20Jun

FCA denies it is to raise payday loan cap

The Financial Conduct Authority (FCA) has denied reports that it is to significantly raise the payday loan price cap, which has now been in force for two and a half years.

The latest story first broke on June 11, when payday lender Quick Loans posted on its website that it was to return to the lending market. As a justification for the firm’s decision, the firm’s article confidently predicts that, from the start of 2018, the FCA will make two major changes to the price cap.

Quick Loans says that, from this date, the existing initial cost cap of 0.8% per day – equivalent to £24 on a £100 loan with a 30-day term – is to be raised by somewhere between 33% and 50%, so interest payable on a £100 loan could be capped at anywhere between £32 and £36. It also claims that the existing rule preventing borrowers from repaying more interest and charges than the amount they have borrowed is to be significantly altered. The article asserts that, next year, lenders will be able to charge borrowers twice the amount of their loan in interest and charges.

The third part of the existing price cap is a limit of £15 on default fees, but the article did not suggest that this was to be altered.

The June 11 article said:

“We have become aware that the FCA have been shocked at the number of lenders that left the industry, the lenders that are currently on the brink of leaving the industry and by the rise in more costly types of lending – including illegal loan sharks.

“We have been told, as have other lenders, that the cap is going to be relaxed from £24 per hundred to £32-£36 per hundred on January the 1st 2018.

“There is also due to be an increase in the total cap of the loan from a ceiling of 100% of the loan, to 200%. At present, the total charges by a lender including late repayments and interest cannot be more than 100% of the original loan – this is to change.”

An FCA statement in response to the article read:

“This article is complete fiction and does not reflect our position. The FCA’s review of high-cost credit, including the effects of FCA regulation on the payday lending market, is continuing and we will publish a feedback statement later in the summer setting out our views and next steps.”

Undeterred, Quick Loans published another statement on its website just two days after the original article, in which the firm re-stated its belief that the cap would be raised. The second article says:

“We stand by the fact that it is industry common knowledge that the cap is rising.

“Around September the FCA will make a statement and people can then make their own minds up about how accurate we were. We don’t have a reputation of being wrong.”

It is acknowledged by the FCA that they are reviewing the price cap, and that they will make a statement on this later in the year. Until such time as any new announcement is made, payday lenders remain subject to all three parts of the price cap.

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.

16Jun

ICO issues monthly roundup for firms

The e-newsletter of the Information Commissioner’s Office (ICO) for June 2017 addresses a number of important issues for firms of all types.

Firstly, the data protection regulator comments that, in the financial year 2016/17, it received more reported data protection breaches and fined more firms than ever before.

Information Commissioner Elizabeth Denham used the newsletter to repeat her plea, made on May 25 of this year, for firms to ensure they are ready for the implementation of the European Union’s General Data Protection Regulation. This comes into force on May 25 2018, and the ICO has published a guide detailing 12 steps firms should take in preparation for its implementation.

Ms Denham commented:

“If your organisation can’t demonstrate that good data protection is a cornerstone of your business policy and practices, you’re leaving your organisation open to enforcement action that can damage both public reputation and bank balance. But there’s a carrot here as well as a stick: get data protection right, and you can see a real business benefit.”

Next, small and medium sized firms were reminded that they can request a one-day visit or a telephone consultation from the ICO, designed to assist firms with understanding their obligations regarding information security, records management, requests for personal data and other data protection issues.

In the light of the recent ransomware attack which affected the National Health Service, the newsletter also reminds firms and other organisations that they have a responsibility to keep the personal data they hold safe and secure. The bulletin includes a link to the ICO’s guidance on the issue of ransomware, and how to guard against these types of attacks.

Finally, the bulletin highlights some of the enforcement action the ICO has taken against firms whose electronic marketing practices breached the law. These included:

• A £100,000 fine for Onecom Limited for sending millions of spam texts about mobile phone upgrades
• A £40,000 fine for Concept Car Credit Limited, who sent hundreds of thousands of marketing texts about car finance and cars for sale, without checking that the recipients had actively consented to receiving the messages
• A £50,000 fine for Brighter Home Solutions Ltd for making marketing calls to individuals registered with the Telephone Preference Service. The firm was also served with a notice meaning it could face prosecution if it fails to improve its data protection compliance practices
• A record £400,000 fine for Keurboom Communications Ltd, which made almost 100 million automated marketing calls without seeking the prior consent of the recipients

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.

15Jun

BBA principles to improve access for vulnerable customers

The banks’ trade association, the British Bankers’ Association (BBA) , has published a list of nine high-level principles which it intends its members should follow in order to improve outcomes for customers in vulnerable circumstances.

• Sensitive, flexible response – When customers seek help and support, firms should treat them sensitively and flexibly and be responsive to their needs
• Effective access to support – Customers should be able to access practical, jargon-free information from their bank, and should also be informed about other organisations from which help may be available
• One-stop notice – customers should not need to keep reminding their bank about the specific circumstances that make them ‘vulnerable’ – the bank should have records of this and should be aware of the situation every time they deal with that particular customer
• Specialist help available – Customers should have access to specialist support to help them make informed choices in light of their vulnerability. Where customers require regular or ongoing assistance in such circumstances, firms should consider providing dedicated points of contact
• Easy for family and friends to support – Firms should make it easy for a friend or family member to help in managing the affairs of a vulnerable customer
• Scam protection – Customers at increased risk of falling victim to scams and swindles need greater protection from their bank
• Customer focused reviews – Firms’ evaluation and monitoring procedures should be focused around obtaining a positive outcome for the customer
• Industry alignment – The industry should, via the financial services trade associations and other bodies, work together to improve outcomes for customers in vulnerable situations
• Inclusive regulation – Regulators should provide more support to individual financial services firms and the wider industry to assist them in achieving better outcomes for vulnerable customers

The BBA will now take the following steps:

• The BBA’s Retail Policy Committee Vulnerability Sub Group will examine the recommendations with a view to implementing these within a realistic timeframe
• Other organisations will now consider incorporating some of these recommendations within their own codes of practice. Such bodies include the Lending Standards Board, who operate their own Lending Code, will bring the achievement of improved customer outcomes within their monitoring regime
• The BBA’s Consumer Panel will conduct a review in 12 months’ time to see what progress has been made in implementing the recommendations

Although the BBA’s recommendations relate specifically to the banking sector, all authorised firms should be aware of the need to have procedures in place to ensure vulnerable customers are treated fairly. Many of the nine principles listed above could be equally relevant to financial advisers, consumer credit firms etc. Customers may be ‘vulnerable’ due to any number of factors, which include:

• Financial difficulties
• Lack of experience of financial products and services
• Learning difficulties
• Mental or physical health issues
• English not being their first language
• Poor spoken and/or written communication skills in general
• Poor literacy and/or numeracy
• A major lifestyle change caused by bereavement, divorce or unemployment

The Financial Conduct Authority defines a vulnerable consumer as “someone who, due to their personal circumstances, is especially susceptible to detriment, particularly when a firm is not acting with appropriate levels of care.”

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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