FCA publishes Business Plan

In its Business Plan for the 2019/20 financial year, the Financial Conduct Authority (FCA) says it has eight major priorities. Five of these are shorter term issues, which are:

  • Ensuring Brexit is implemented in a way that delivers on the regulator’s statutory objectives: maintaining market integrity, protecting consumers and encouraging effective competition – all this does of course assume that Brexit will indeed occur at some point during this financial year
  • Improving firms’ culture and governance, which encompasses the regulator applying the Senior Managers and Certification Regime to all authorised firms from December 9 2019, as well as scrutiny of firms’ remuneration practices
  • Monitoring the effectiveness of the practices firms use to ensure fair treatment of customers, with particular emphasis on the quality of information they provide to prospective and current customers, and on pricing practices
  • Further work on developing operational resilience at authorised firms – this mainly refers to cybersecurity and other technology-related issues
  • Making better use of technology and data to combat financial crimes such as money laundering and scams

Three longer term priorities are:

  • Examining what the regulatory framework of the future might look like
  • Ensuring innovation and the use of data work in consumers’ interests
  • Looking at issues posed by the different requirements of different generations

Andrew Bailey, FCA Chief Executive, said:

“Dealing with Brexit will be the most immediate challenge we face. But this plan also commits us to a stretching programme of work across the financial sector.

“In order to ensure we are a regulator that continues to serve the public interest, we need to adapt to the ever-changing environment. This is why the future of regulation is a key priority in this year’s Business Plan. We will be leading a debate about this with stakeholders so that we can keep pace with the developments taking place in the markets that we regulate and in wider society.”

Mr Bailey’s foreword to the Business Plan mentioned a number of additional issues, including:

  • Protection of vulnerable consumers, with specific reference to “proposed important changes to overdraft charges” and “those newly able to access their defined contribution pensions, who may be especially susceptible to unscrupulous or ill-advised investments”
  • The PPI deadline of August 29, and here he promises “a final burst of activity starting in early summer” in the FCA campaign to alert consumers to this deadline

The issues the FCA will focus on in specific market sectors includes:

  • Investment management – new requirements for asset managers; and a continued focus on stewardship
  • Retail lending – proposals to reform the overdraft market; initiatives examining possible substitutes for high cost credit; research into possible drivers of unaffordable lending; and the conclusion of work on retained Consumer Credit Act Provisions
  • Pensions – assessing competition in the non-workplace pensions market; improving firms’ practices in relation to defined benefit transfers; working with other organisations to ensure effective implementation of the pensions dashboard
  • Retail investment – an additional review of the suitability of advice firms are providing; analysing the impact of the Retail Distribution Review and Financial Advice Market Review; considering potential new rules for peer-to-peer lending firms
  • Retail banking – ensuring the Payment Services Directive and Open Banking are introduced securely; and promoting the PPI deadline
  • Insurance and protection – improving signposting and access to insurance for consumers
  • Wholesale markets – overseeing compliance with the Market Abuse Regulation; working with other organisations on a replacement for LIBOR; and monitoring compliance with the Markets in Financial Instruments Directive

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


FCA reports a fall in overall complaint numbers

For the first time since the complaints reporting requirements were changed back in 2016, the Financial Conduct Authority (FCA) has reported a fall in the number of complaints being made to the firms it supervises.

There were 3,910,000 complaints in the second half of 2018, down 5% from the equivalent figure of 4,130,000 recorded in the first half of the year.

3,181 firms reported receiving one or more complaints between July and December, which is still a fairly small proportion of the firms that fall under the FCA’s jurisdiction. Only 231 firms reported 500 or more complaints, and these firms collectively were responsible for 98% of the total number of complaints.

It comes as no surprise that payment protection insurance (PPI) was again the most complained about product, accounting for around 40% of all complaints. However, the PPI complaints total fell by more than the average – the FCA data reveals that complaints about this product fell from 1,720,000 in the first half of the year to 1,580,000 in the second half – a fall of 8%. The firms that have had to deal with ‘bogus’ PPI complaints, where consumers (or their claims management companies) allege that the firm mis-sold PPI to them even though no policy existed, will have been cheered by the news that they can exclude from their complaints return any complaints where it was established that the complainant had not purchased a PPI policy from the firm. The fall in PPI numbers in part reflects this rule change.

Against the trend of falling complaint numbers, credit card complaints were 10% higher in the second half of the year and this reflects other data from the FCA and Financial Ombudsman Service (FOS) which shows that complaints about many areas of consumer credit are rising rapidly. Firms that are only authorised to carry out consumer credit activities are still not included in the regulator’s official complaints statistics, as some smaller firms in this sector have not yet been asked to submit their first full annual complaints return.

The latest data also suggest firms are becoming more efficient at resolving complaints. In the second half of 2018, 37% of all complaints were closed within three working days, up from 35% in the first half of the year. The proportion closed within eight weeks rose from 92% to 95% – in normal circumstances firms should complete their investigations into a complaint within eight weeks, and if they cannot do so, they must write to the customer to explain the delay, and to give them the chance to refer the matter to the FOS. The proportion of PPI complaints closed within eight weeks rose from 89% to 97%.

PPI redress in the second half of the year was £1.99 billion, down from £2.31 billion. Total redress for all product areas was down from £2.57 billion to £2.26 billion.

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

“It is encouraging to see that complaint figures have dropped and firms are dealing with complaints more quickly.

“We expect firms to continue to focus on ensuring their customers are well served and that they respond quickly where consumers complain.”

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


FSCS chief highlights key issues in his final speech

Mark Neale made his final speech as chief executive of the Financial Services Compensation Scheme (FSCS) when he addressed the UK Finance Retail Banking Conference.

Mr Neale acknowledged that in his nine years in office, the FSCS has paid out £3.3 billion in compensation, and that these costs were initially borne by the industry (via levies on regulated firms), but that ultimately much of this cost would have been passed on to consumers. However, whilst he acknowledged that the nature of a competitive market meant that firms would on occasion become insolvent, he was disturbed to report that around £2 billion (approximately 60%) of this compensation was paid as a result of mis-selling of products such as payment protection insurance, death bonds and overseas property funds. He suggested that this situation had arisen as many consumers find financial products hard to understand, and often don’t even want to try to understand them. Instead, these consumers rely on firms to give them good advice and support, and these firms have not always risen to the challenge.

Here, Mr Neale commented:

“When an adviser comes along – regulated or unregulated – and offers the beguiling prospect of great returns at no risk from death bonds, or overseas property, or storage pods, consumers sub-contract the decision with relief.”

The FSCS chief then said that another reason why his organisation had been forced to step in so often was that small firms typically hold little in the way of capital resources, and that while they may have had professional indemnity insurance, these policies often carried an excess that was greater than the firm’s capital level. As a consequence, some firms may have failed simply because they received a smaller number of mis-selling claims.

Another hard-hitting comment he made here was that “consumers are too ready to trust unscrupulous or incompetent advisers who do not have the financial resources to put right the harm they do.”

Some solutions for the future suggested by Mr Neale included:

  • Providers should design less complex products, allowing the average person to understand them
  • Financial education should be better targeted
  • The regulators could increase the capital resources requirements, but not by so much that it leads to significantly more business failures
  • Advisory firms could form networks or partnerships, and thus make it easier to meet quality control standards
  • The limit on the protection afforded by the FSCS to those saving for their retirement could be increased significantly – here he said that “in the new world, our customers will tend to have more complex claims and more will often be at stake”
  • The regulators could prohibit more complex products from being promoted to mainstream consumers

On May 4, Mr Neale will be succeeded at the helm of the FSCS by Caroline Rainbird, who has held the posts of managing director of regulatory affairs and director of corporate services at RBS, and chief financial officer at ABN Amro.

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


Money & Pensions Service chief and chair talk about their in-tray at the new guidance body

On April 8 2019 it was announced that the UK’s new single financial guidance body would be called the Money and Pensions Service. It assumes responsibility for the debt and general financial guidance previously provided by the Money Advice Service, The Pensions Advisory Service and Pension Wise.

The chairman of the new organisation will be familiar to many within the financial services industry. Sir Hector Sants was Chief Executive Officer of the Financial Conduct Authority from July 2007 until February 2010 and then became the regulator’s Managing Director until June 30 2012. In 2013 he was appointed as Head of Compliance, Government and Regulatory Regulation at Barclays, but he left this position after a short time due to ill health. He returned to work in 2015 at US consultancy firm Oliver Wyman.

Sir Hector has already given two speeches on his new role. Both speeches were entitled ‘The role of the Money and Pensions Service in supporting customers in personal finance’.

Speaking to the Retail Banking Conference of UK Finance in March 2019, he highlighted the importance of the Service’s work, given that:

  • 9 million (more than one sixth of the total of 52 million) UK adults are in problem debt
  • 11 million (more than one fifth) have less than £100 in savings
  • 3 million (almost half) do not feel confident making decisions about financial products and services

He therefore listed his organisation’s objectives as including:

  • Convincing policymakers in government and elsewhere to treat financial well-being as a top priority, so that its awareness in society was at a level comparable to that of mental and physical health
  • Ensuring everyone who needs pensions guidance has access to it
  • Ensuring free assistance is available for everyone with a debt problem
  • Providing sufficient support for everyone whose financial distress impacts their mental and physical health

At the PMI – Pensions Aspects Live Conference in April 2019, he addressed many of the same areas, but also spoke of his vision to create “a society where everyone makes the most of their money and pensions.”

The CEO of the Money and Pensions Service is John Govett, who has previously worked for a number of organisations in the public, private and charity sectors.

Mr Govett’s first speech in his new role was at the Service’s official launch event, and he began by stating the organisation’s ambitious aims:

“We want to be the place to go to for combined money guidance, debt support, pensions guidance, pension freedoms and then also a pensions non-commercial dashboard.”

He said that “financial wellbeing is increasingly recognised as one of the biggest socio-economic challenges that our society needs to crack” and commented on the figure of almost nine million people in problem debt that had been mentioned in earlier speeches by Sir Hector. However, Mr Govett added that only around one quarter of these people sought help for their difficulties.

Sir Hector had commented in general about the more than 20 million people who don’t feel confident making financial decisions in general, but Mr Govett revealed that 22 million people did not feel that they knew enough to plan effectively for their retirement.

Mr Govett said that the Service will deliver assistance via a number of channels, including: the web, webchat, phone and face-to-face. He described his five priorities as:

  • Streamline and simplify – delivering organisational efficiencies as the three previous organisations are integrated
  • Listen and engage – the Service is running a series of “listening events” in ten cities around the UK and talking to up to 1,000 people from all sectors
  • Invest and grow – improving the capacity, quality and efficiency of his organisation’s offering, and investing in new front-line staff
  • Innovate and test – developing new insights to understand consumer needs at different life stages
  • Build and strengthen – developing a customer focused culture amongst the Service’s staff

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



Debt charity sounds the alarm over guarantor loans

Debt advice charity StepChange has revealed that the number of people contacting it for help with issues related to guarantor loans is 35 times higher than was the case six years ago.

In 2012, when the guarantor loans sector was much smaller than it is now, only 635 people contacted the charity about this type of loan. The figure was around 16,500 in 2017 and 22,281 in 2018, meaning that the number of times a guarantor loan holder sought assistance rose by 35% in just 12 months.

In 2012, less than one in 300 of those contacting StepChange owed money on any guarantor loans, but in 2018 the proportion had increased to around one in 15. Where people had guarantor loans, they represented more than one third (36.3%) of their total debt, up from 19.1% in 2012.

In mitigation, lenders have pointed out that the sector has grown massively in recent years, and that many firms signpost customers in arrears to StepChange, however the figures still represent a massive increase by any measure.

Peter Tutton, StepChange’s head of policy, said that he wanted the Financial Conduct Authority (FCA) “to keep a close eye on where this small but growing part of the market may be creating problems for consumers – whether they are the original borrower or the guarantor.”

The FCA has expressed its concern over the number of loans on which guarantors are being asked to make payments. Guarantors are required to make the payments if the main borrower is unable to pay, or to make up the payment to the required level if the main borrower can only make a part payment. Furthermore, the guarantor is required to take on the entire loan should the main borrower default.

The FCA has said it believes that many people sign up to be guarantors without realising just how likely it is that they will be required to make payments, so it may well be the case that the regulator will announce new rules for guarantor lenders in the near future. FCA supervision boss Christopher Woolard has also been briefing the media, suggesting that guarantor loans will soon be subject to a price cap, similar to that which already exists for payday loans and rent-to-own arrangements.

One organisation that appears to have sensed the way the wind is blowing is Goldman Sachs. The investment banking giant has advised bondholders at one guarantor lender to sell their bonds, citing concerns over the risks in the firm’s loan book and the likelihood of regulatory action against lenders in the coming months and years.

A spokesperson for this lender said:

“StepChange are the people most likely to see our customers as we advise anyone in arrears to seek the valuable holistic advice they provide. Customers more than 30 days in arrears only represent 5% of our net loan book.”

So, the message for the UK’s 15 or so guarantor lenders is clear. Firstly, they need to make sure they carry out rigorous credit and affordability checks on all main borrowers and guarantors. Then they need to make sure guarantors know exactly what they are signing up for. Lastly, for the loans that have already been approved, firms need to make sure they handle any complaints fairly and offer redress where the checks may not have been done properly in the past.

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


Administrators confirm customers of failed payday lender won’t get full compensation

Administrators KPMG have confirmed what was almost certain to have been the case anyway – that customers with valid complaints against two failed payday lenders will not be able to claim anything like 100% of the compensation they deserve.

The parent company of the two lenders entered administration on February 25 2019. Although the administrators appointed by KPMG have successfully concluded a sale of the business and the majority of its assets to another firm, and although this firm has purchased some of the failed company’s outstanding loan book, this does not provide any assistance to anyone with an outstanding complaint against the failed lenders, or to anyone who was considering making a complaint. The purchasing firm did not purchase the failed parent company as a company or legal entity.

There is some positive news for those with outstanding loans with the failed firm, as their accounts have been frozen, and no further interest and charges will accrue.

As payday lenders, and all other consumer credit firms, are not covered by the Financial Services Compensation Scheme (FSCS), the only option for anyone with a complaint against the lender is to contact KPMG and ask to be registered as an unsecured creditor of the firm.

Unfortunately, KPMG has confirmed that the hundreds of thousands of individual customers who might have been due compensation will not receive the same amount as they would have done had their complaint been upheld either by the firm when it was still solvent, or by the Financial Ombudsman Service (FOS). Additionally, there is at present no timescale on when these reduced compensation payments might be made.

KPMG’s statement says:

“The Joint Administrators will contact creditors in advance of announcing an unsecured distribution, when further details are known. Unfortunately, as the Companies have entered administration and have significant redress and other creditor liabilities, unsecured creditors with valid claims will only receive a partial payment of their claims.”

Meanwhile, consumers considering complaining about their payday loan with any other lender are being advised to make their claims soon, as more than one lender has failed in recent months, and more may follow, given the risks that exist in their loan books.

Some politicians have voiced their concerns over the fact that customers of payday lenders do not have any recourse to the FOS or FSCS, but any changes to the compensation system may take some years to come to fruition.

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


New rules to protect mortgage prisoners

The Financial Conduct Authority (FCA) has announced new proposals to assist ‘mortgage prisoners’ – borrowers who are up-to-date with their payments but who still cannot re-mortgage to a cheaper deal. A consumer might become a mortgage prisoner for a number of reasons:

  • Their original mortgage was granted before more stringent affordability requirements were introduced in the FCA’s Mortgage Market Review, meaning that they would fail the affordability assessment if they applied for a new cheaper deal
  • They have a mortgage with a firm that no longer accepts new business
  • They have a mortgage with a firm that is not authorised by the FCA

The issues concerning the 10,000 mortgage prisoners who were with lenders who are still active have already been addressed, as in late 2018 they should have received a letter from their lender highlighting alternative mortgages offered by the same lender that they may be eligible to switch to.

The latest proposals from the FCA are however designed to assist the 140,000 or so mortgage prisoners who fall into the latter two categories. The regulator has indicated that it is happy for lenders to adopt a more ‘proportionate’ approach to assessing mortgage affordability where a customer is up to date with their repayments and is not seeking to increase the amount borrowed. Essentially the ‘proportionate’ test would require the lender to ensure that:

  • The customer has maintained their mortgage payments throughout the previous 12 months, and
  • The re-mortgage would lead to them paying lower interest rates and monthly repayments, at least during any initial ‘offer period’

There will be no need for lenders to apply the same affordability criteria as they would to new purchasers, and there will be no need to carry out stress testing on mortgage prisoners either. Stress testing requires lenders to ensure that prospective borrowers would still be able to afford their repayments were interest rates to rise.

However, the FCA proposals do acknowledge that some mortgage prisoners will be too ‘high-risk’ for the more relaxed rules to be applied. These include those who:

  • Are not up-to-date with repayments
  • Have a mortgage that represents a high proportion of the property value
  • Are in negative equity

Additionally, the proposals do not do anything to assist any mortgage prisoner who might want to re-mortgage for a higher amount for any reason, for example because they require additional funds for home improvements or to consolidate other debts.

The new rules will also require inactive lenders and administrators of entities not authorised for mortgage lending to contact customers who might meet the definition of a mortgage prisoner, and to inform them that they may be able to re-mortgage to a more beneficial arrangement with an active lender.

The FCA consultation on the proposed new rules ends on June 26, and the regulator will publish final new rules in a Policy Statement in late 2019.

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

“We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners – who are currently unable to switch. That is why we are acting now to help remove potential barriers in our rules. These changes should make it easier for consumers to get a more affordable mortgage.”

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


FOS publishes latest complaints data on individual firms

The latest data from the Financial Ombudsman Service (FOS) on the complaints received by individual firms shows that, as the claims deadline approaches, some firms are still fighting to resolve large numbers of payment protection insurance (PPI) complaints.

In the second half of 2018, Bank of Scotland customers referred 15,705 PPI complaints to FOS, and the third highest figure for this product was the 11,606 PPI complaints for Lloyds Bank, which is part of the same group as Bank of Scotland. In second place is Financial Insurance Company Limited (FICL) with 13,809 new PPI complaints. FICL was acquired by insurance giant AXA 2018, and the insurer is in dispute with former FICL parent company Genworth over exactly how much of the legacy PPI costs should be borne by the former owner.

Other high street banks seem to have made more progress in resolving PPI issues, as the FOS received less than 2,000 new PPI complaints about Royal Bank of Scotland and NatWest during the six-month period. The figure for Clydesdale Bank was as low as 277.

In the banking and credit category, the highest number of new complaints was the 5,717 received about payday lending group Cash Euronet, ahead of TSB in second place on 5,547. Barclays, Lloyds Bank and NatWest all had more than 3,000 cases in this category, as did another short-term lending company called Gain Credit.

When we look at complaints about general insurance (excluding PPI), the only firms with more than 1,000 new cases at FOS are UK Insurance – which underwrites on behalf of many well-known insurance brands – and Aviva.

In the investment category, Barclays is well ahead on 324 new complaints, with the next highest being Cofunds on 153. Most of the other places in the top 10 in this category are occupied by high street banks.

In the life & pensions category, Aviva’s 381 new cases is well ahead of second-placed Prudential, which had 210.

When we look at the cases resolved by the FOS in the same period, the average uphold rate was 28%. However, TSB has an overall uphold rate of 89%, and many of the short-term lending firms had around 60% of their cases decided in favour of the customer.

Specifically, in the banking and credit category, TSB’s figure rose to 90%, again followed by some of the payday lenders at around 60%.

The overall PPI uphold rate has fallen to 20%, however some firms still had high uphold rates, including credit provider NewDay (65%) and lender ShopDirect (63%).

The average uphold rate for investments was 35%, but Cofunds scored 63%, Interactive Investor Services 61% and Barclays 52%.

The average uphold rate for life and pensions was 24%, but Barclays had 66% of its complaints in this category upheld, well ahead of second-placed Aviva on 30%.

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


FCA warns investors that IFISA investments may not be protected

When they were launched, Innovative Finance ISAs (IFISAs) were heralded as the exciting new way to invest, with the money ultimately being invested in products like mini-bonds or growth industries such as peer-to-peer investments.

However, recent events have prompted the Financial Conduct Authority (FCA) to issue a warning about these products. The regulator says:

  • Although IFISAs are generally high-risk, some firms are marketing them alongside cash ISAs, suggesting that some IFISAs are being taken out by mass market customers who are not sophisticated investors
  • The investments may not be protected by the Financial Service Compensation Scheme (FSCS) so customers may lose the money invested if their provider fails
  • Anyone considering investing in an IFISA should carefully consider where their money is being invested before purchasing

In December 2018, the FCA ordered a firm to withdraw all of its existing marketing materials in relation to its Fixed Rate ISA or Bond. This became necessary as the regulator observed that the firm’s Bonds did not qualify to be held in an ISA account, and that consequently investors were being misled by being told the interest they earned would be tax free.

Additionally, the FCA commented that:

  • Whilst the firm’s promotions were highlighting that the underlying investments were not regulated by the FCA, and that the bonds were not protected by the FSCS, these warnings were given much less prominence than the statement about the firm being authorised and regulated by the FCA
  • The warning about past performance not being a guide to future performance was only stated in a footnote
  • The statement “LOOKING FOR HIGHER RETURNS THAN THE HIGH STREET” was given higher prominence than the balancing statement, which was “Investing is bonds means your capital is at risk and payments are not guaranteed if borrowers default”

Since this intervention by the FCA, the firm has entered administration, and it is now up to the administrators to decide if investors will get any of their money back, as for this type of investment there is no FSCS protection. While the firm in question may have been authorised by the FCA, the specific activity of issuing mini-bonds is not a regulated activity.

Administrator Finbarr O’Connell told the BBC Radio consumer finance programme Money Box that the bondholders might expect to get no more than 20% of their money back, and that they might have to wait up to two years to receive it.

FSCS chief executive Mark Neale also appeared on the same programme, and commented:

“I think there is a confusion there. The company was regulated for the purposes of giving advice but not for the purposes of selling the bonds and I am quite sure some consumers were misled by that.”

Certain individuals associated with the firm are now being investigated by the Serious Fraud Office, and the FCA has ordered an independent investigation into two specific issues:

  • Whether the existing regulatory system adequately protects retail purchasers of mini-bonds
  • Whether the FCA adequately supervised the firm

The episode has prompted FCA chief executive Andrew Bailey to write another letter to all authorised firms, highlighting that even if a financial promotion concerns unregulated products, the authorised firm must still ensure that it complies with all relevant FCA promotions rules.

The saga also serves as a warning to all authorised firms to ensure that their promotions meet the ‘clear, fair and not misleading’ test, and that key information is not being hidden in small print or obscured in some other way.

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


ICO fines pension company over marketing activities

A pensions company based in Sevenoaks in Kent has become the latest firm to be fined by the Information Commissioner’s Office (ICO) for engaging in illegal marketing practices. The data protection regulator says that the firm was responsible for “a serious contravention of Regulation 22 of the Privacy and Electronic Communications (EC Directive) Regulations 2003.”

The ICO says that the firm was responsible for the sending of 1,942,010 unsolicited emails promoting its services. These emails were sent over a 12-month period commencing on October 31 2016.

The firm used the services of a marketing agent, who in turn made use of third party email providers to carry out hosted marketing campaigns that advertised the services of the pensions firm.

The email providers obtained their consent via various consumer websites, which meant that the recipients of the pension firm’s marketing emails had no previous relationship with the pension company. At no time did the terms and conditions and privacy policies of these websites name the pensions firm as one from which consumers might receive marketing communications.

Under Article 22, email marketing communications can only be sent to people who have given explicit advance consent to receiving them, and this requirement still applies if a firm uses a third party to conduct marketing on its behalf. The wording the ICO uses is that this consent must be “freely given, specific and informed, and involve a positive indication signifying the individual’s agreement. The law also says that consent will not be valid if the consent statements refer generically to unspecified “third parties”, “partners” etc.

There is a partial exemption from the advance consent requirement where all of the following apply:

  1. The firm has obtained the individual’s contact details during the process of a sale, or negotiations regarding a possible sale
  2. The marketing being carried out by the firm concerns similar products and/or services to the product/service which was being offered in point 1
  3. The recipient was provided with a simple means of opting out of marketing communications when their contact details were initially collected
  4. The recipient did not exercise their opt out right in point 3

The firm co-operated with the ICO investigation and the fine will be reduced to £32,000 if it pays before April 23 and does not exercise its right of appeal to the First-Tier Tribunal (Information Rights).

Andy White, Director of Investigations and Intelligence at the ICO said:

“Spam email uses people’s personal data unlawfully, filling up their inboxes and promoting products and services which they don’t necessarily want.

“We acknowledge that [name of firm] took steps to check that their marketing activity was within the law but received misleading advice. However, ultimately, they are responsible for ensuring they comply with the law and they were in breach of it.

“The ICO is here to provide businesses with guidance about electronic marketing and data protection, free of charge. The company could have contacted us and avoided this 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


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