Welcome to the first Regulatory Round-Up of 2015 which provides a quick recap on recent FCA announcements, the regulatory emails we have circulated during January and a list of FLA meetings scheduled for February.
During our meetings with the FCA this month, the regulator has confirmed that there will be two consultations in 2015 on potential changes to the Consumer Credit Rule Book (CONC). The first (due in February) is expected to seek feedback on the FCA’s new broker rules published last December, affordability assessments in the guarantor loan sector and the use of Continuous Payment Authorities in collections cases. The consultation will also focus on issues which need ‘tidying-up’ because the rules were finalised so quickly last year. In addition, we understand the paper will identify other issues for general discussion which may then be included in a second consultation paper in July 2015. These are likely to include how lenders assess affordability and credit worthiness, as well as broker remuneration. The FCA is currently undertaking research looking at affordability assessments and broker remuneration and good consumer outcomes are already under the spotlight in other FCA-regulated markets. The FCA have said they would value further discussion with the FLA on these issues, prior to drafting the next consultation paper.
February will also see the publication of the FCA’s work on how firms should be assisting vulnerable customers and improving the way in which they communicate with consumers (Smarter Disclosure).
The fourth ‘landing slot’ for authorisation applications is now underway and it is clear that firms are continuing to face some challenges with the system ranging from the FCA requesting duplicate information (even though it has already been included in the firm’s Business Plan) through to inconsistent advice being provided by the FCA’s Contact Centre. We will continue to raise these issues with the FCA in a bid to improve the process. Many thanks to members for your feedback on this.
The Government has now published the legislation required to introduce the Mortgage Credit Directive by March 2016, and the FCA is due to publish the final rules in Spring 2015. We will be running Workshops for our members in the secured lending market to assist with implementation, as the timeframe is very tight.
The FCA’s Credit Card Market Study is in the ‘research and analysis’ phase with firms now having received data requests from the regulator. On 13 February, we have been invited to an FCA briefing on progress and our Credit Card Working Group will be overseeing our response to the Study. The FCA’s Interim Report on the Study will be published for consultation in Q3 2015.
Our first FCA Regulation conference in 2015 will be held on 18 March at The British Library. The presentations will focus on ‘What does ‘Good’ like?’ in terms of compliance with FCA regulation, covering subjects such as governance structures, oversight of brokers and third parties and all the latest developments from the FCA on vulnerable consumers and authorisation. Over 100 delegates have registered so far and we hope you can join us.
Financial Services Trade Associations
A Working Group made up of representatives of some of the larger banks has published a consultation paper suggesting the creation of a single, new trade body in place of some existing trade associations. The paper concentrates on the work of the BBA and a small number of other associations in the retail and commercial banking markets, and the FLA is briefly mentioned. In responding to the paper, we will make the point that organisations like the FLA exist to represent markets whose voices would be at risk of not being heard in a larger and broader organisation. Those markets include a wide variety of lenders other than the big banks (over 60% of the FLA’s members are not banks of any kind). While it must be sensible to try to minimise overlaps and maximise cooperation among trade bodies, a single over-arching organisation could be an expensive and time-consuming way of doing so. If you would like to discuss the banks’ paper, please contact Stephen Sklaroff. (Stephen.Sklaroff@fla.org.uk)
FLA emails issued in January 2015
FOS publishes its proposed plan and budget for 2015/2016 – 6 January 2015
The Financial Ombudsman Service has published its proposed plan and budget for the next financial year (2015/2016) for public consultation – together with an update on numbers for the current financial year (2014/2015).
Suspicious Activity Reports (SARs) Annual Report 2014 – 7 January 2015
The latest Suspicious Activity Reports (SARs) Annual Report has been circulated to members. The report acknowledges that the SARs Regime continues to face challenges, with the number of SARs submitted continuing to increase. This is at the same time as law enforcement capacity has stayed static.
Financial Ombudsman Service Workshop on motor vehicle complaints – 8 January 2015
The Financial Ombudsman Service (FOS) is holding a half-day Workshop at its Canary Wharf offices on the afternoon of Thursday 26th February. The Workshop is aimed at businesses which provide finance for vehicles, such as loans and hire purchase, and which receive complaints from customers who are unhappy about the quality of the vehicle they’ve bought or when things go wrong. Booking details are included in the email.
Potential Changes to the debt management landscape – 8 January 2015 – email attached
This email updates members on our discussions with the FCA on the implications for both customers and lenders should Debt Management Companies (DMCs) cease trading or otherwise fail to obtain authorisation from the FCA.
CMA publishes a draft order on changes to private motor insurance – 9 January 2015
In September 2012 the Office of Fair Trading (OFT) referred the supply or acquisition of private motor insurance (PMI) and related goods and services in the UK to the Competition Commission (CC) for investigation and report. On 1 April 2014, the CC joined with the competition and certain consumer functions of the OFT to form the Competition and Markets Authority (CMA), which published its final report into PMI in September 2014. The CMA has published a draft order setting out how it will introduce its proposed changes. Comments are invited by 6th February and the CMA proposes to publish the final order in March.
Recent Discussions with the FCA – 9 January 2015 – email attached
This email updated members on recent discussions with the FCA and indicates where some of the regulator’s work on consumer credit is likely to be concentrated in Q1 and Q2 2015. It will be of interest to all FLA members.
MAS publishes response to its draft Financial Capability Strategy for the UK – 12 January 2015
The Money Advice Service (MAS) has published a response to the recent consultation on their draft Financial Capability Strategy for the UK. MAS state that there was particular support for a collaborative approach, the need for evaluation to be embedded into any interventions, and for work to be undertaken on children and young people, older people in retirement and the ease and accessibility of financial services.
European Update – 16 January 2015 – email attached
This email updated members on a broad range of EU issues and provides a look ahead to possible European initiatives in 2015.
Eurofinas Executive Briefing on EU developments
Review of debt relief orders and the bankruptcy petition limit – 19 January 2015
In October 2014 FLA responded to the Government’s review of debt relief orders and the bankruptcy petition limit (see attached). The Government has now published its proposals. The maximum amount of debt that can be covered by Debt Relief Orders (DROs) will increase from £15,000 to £20,000 – these are a low cost alternative to bankruptcy for those with very low assets and income and debt which they are unable to pay. The Government is also increasing the minimum level of debt for which someone owed money can force a person into bankruptcy from £750 to £5,000. The limits were last revised in 1986.
FCA’s Consumer Spotlight – 19 January 2015
The FCA has published an updated version of its Consumer Spotlight which looks at how people in the UK deal with money and financial services, with a particular focus on the capabilities and potential vulnerabilities of different groups. The FCA has been using Consumer Spotlight to build a deeper understanding of financial services customers, their attitudes and behaviours, and what influences them when they make financial decisions. Other organisations, including regulated firms, can explore this information to learn more about how the regulator views the retail financial services consumer landscape
FCA issues ‘Dear CEO’ letter to High Cost Short Term firms – 21 January 2015 – email attached
The Financial Conduct Authority has issued a letter setting out its expectations for those firms involved in high-cost, short-term lending. Although the focus of the letter is quite specific to those firms, and the FCA will be writing to them directly, the FCA has confirmed that there are more general messages that may be relevant to the wider consumer credit market.
Queries raised with the FCA – 22 January 2015
This email updated members on feedback from the FCA regarding Directors and the need to be Approved Persons and updating disclosures under GEN once firms are fully authorised.
Secured Lending Update – 22 January 2015
This email updated members on a number of current issues affecting second charge lending, including queries raised on the authorisation process for second charge lenders and consultations by the European Banking Association on credit worthiness, arrears and foreclosure. The FLA will be responding to these.
Mortgage Credit Directive – 26 January 2015
The Government has published its response to the recent consultation on the implementation of the Mortgage Credit Directive, together with revised legislation. The MCD must be implemented by 21 March 2016, and at the same time second charge lenders will need to implement the majority of MCOB.
Competition and Markets Authority consults on Unfair Terms guidance – 27 January 2015 – email attached
The Competition and Markets authority (CMA) is consulting on new guidance for businesses on unfair terms to coincide with the introduction of the Consumer Rights Act expected to come into force in October 2015. The Consumer Rights Act will largely consolidate existing unfair terms legislation but will also introduce some new requirements. The guidance is intended to explain the changes and assist firms in ensuring that terms are transparent and fair. The FLA will be responding to this consultation.
FCA Consumer Credit Update
FCA Regulation Round-Up
FLA Meetings in February 2015
4 February – Regulatory Reform Working Group – Review of the CCA provisions
5 February – AFD Meeting and Lunch
12 February – AFD Risk and Fraud Group
17 February – AVCIS Review Group
27 February – Motor Finance Fraud Group
FLA Conferences 2015
FCA Regulation: What Does ‘Good’ Look Like? 18 March 2015 – The British Library
Automotive Financial Crime Conference – 21 April 2015
Asset Finance Conference: Helping Britain Work – 18 June 2015