Welcome to this month’s Regulatory Round-Up, which summarises the FCA’s announcements and other regulatory information we have circulated during May.
Overview
In the last few weeks we have seen a stream of publications in advance of the four week ‘purdah’ for the EU Referendum. While the FCA is not bound by the same restrictions as Government policy makers during this period, it is anticipated that there might be a lull in the flow of announcements over the next few weeks.
Following concerns raised by members about delays in the authorisation process, we wrote to the FCA pressing for improvements. This month we had a very constructive meeting with senior officials about the necessary changes to how they communicate with firms, so that lenders know exactly where they are in the process. We will circulate further information on this shortly.
This month we responded to the FCA’s Call for Input on what should happen to the 160+ provisions which remain in the Consumer Credit Act, together with all the linked secondary legislation. The review presents an ideal opportunity to identify which provisions are no longer necessary in the 21st Century credit markets and to include the remainder in CONC (as far as is possible). A single comprehensive rulebook will help firms with compliance. Swift action is also needed to deal with those provisions which do not work well for lenders or consumers, such as prescribed Statutory Notices, modifying agreements and the unenforceability sanctions. We will be meeting with the FCA and HM Treasury to discuss priorities for change.
Over the past 12 months, quotation searches have been mentioned in a number of FCA publications. Together with the BBA and UK Cards Association, we have agreed to assess the extent to which quotation search tools currently help consumers shop around, and identify any areas for improvement. This might lead to new industry standards. We want to ensure that all FLA members who provide quotation searches (or who are interested in doing so) are involved in this project. Please can you let Hanifa (Hanifa.Teladia@fla.org.uk) know if you would like to be kept updated.
The next FLA Regulation Conference is only a week away on 7 June 2016. With speakers from the FCA and sessions covering FCA supervision, the Senior Managers’ Regime (and how it will apply to consumer credit), Unfair Contract Terms and the new Data Protection Regulation, we hope you can join us.
FLA emails issued in May 2016
All these emails can be found on the Members’ Section of the FLA website – www.fla.org.uk. If you do not have access to the website, please contact Hanifa.Teladia@fla.org.uk.
EU General Data Protection Regulation is finalised – 4 May 2016
The General Data Protection Regulation (GDPR) has been finalised and must be implemented by 25 May 2018. The Department of Culture, Media and Sport is leading the implementation process, which is expected to include a consultation in the Autumn. We were pleased to secure a number of amendments to the final text, which recognise the way in which data is used within financial services.
What is the FCA’s “Regulatory Sandbox”? – 11 May 2016
The FCA has now opened its ‘Regulatory Sandbox’ – described as “an environment that enables firms to test their products and services in a virtual space without entering the real market.” Firms wishing to take part will need to meet specified criteria, which have now been published.
MAS revised Business plan 2016/17 – 12 May 2016
The Money Advice Service (MAS) has published a revised Business Plan for 2016/17 in the light of the Public Financial Guidance Review recommendation (in March 2016) that MAS be replaced with a new, slimmed-down Money Guidance Body.
Claims Management Regulator: Enforcement Actions Q1 2016 – 13 May 2016
The Claims Management Regulator has released details of its latest enforcement action and live investigations taken against Claims Management Companies in the first three months of 2016.
Suspicious Activity Reports: Reporter Booklet – 13 May 2016
The latest SARs Reporter Booklet has been published, which contains a summary of feedback and illustrative case studies from law enforcement agencies on how they use SARs intelligence. We are also responding to the current consultation on proposed changes to the SARs regime, which closes on 2nd June.
Claims Management Companies – PAC Report on Financial Services Mis-Selling – regulation and redress – 13 May 2016
The House of Commons Committee of Public Accounts (PAC) has published a report into Financial Services mis-selling – regulation and redress. The Report criticises the Financial Conduct Authority, HM Treasury and Financial Ombudsman Service for being too slow in taking responsibility for the PPI mis-selling episode and makes six recommendations for further action.
Competition and Responsible Lending in the Mortgage Market – 16 May 2016
The FCA has published Feedback Statement 16/3 on its earlier Call for Input on Competition in the Mortgage Market and the results of a Thematic Review(16/4) of Responsible Lending. Chapter 5 of the Responsible Lending Review includes some useful pointers on what the FCA expects to see when firms assess affordability. The FLA’s Secured Lending Group and Mortgage Compliance Working Group will be considering the findings.
Chancellor writes to mortgage lenders – 17 May 2016
The Chancellor, George Osborne, has written to lenders following the publication of the FCA’s Thematic Review of Responsible Lending (see above). The letter notes that ‘It is vital that consumers who want to access a cheaper deal are able to do so’.
Making the UK financial and professional services sector more resilient to cyber attack – 17 May 2016
The CityUK Cyber taskforce has launched a report which aims to raise the awareness of cyber crime and sets out an action plan to make the UK financial and professional services sector more resilient to cyber attack. The report identified three categories of attack: against individuals, firms and the financial system. It lists a number of actions and recommendations, including a ten-point cyber Check-List for Boards. A speaker from CiSP/CERT UK will be presenting at the FLA’s next Financial Crime Forum on 23rd June 2016.
The Future of the Consumer Credit Act – FLA Response – 18 May 2016
We have submitted a detailed response to the FCA on its review of what should happen to the remaining 167 provisions of the Consumer Credit Act and associated secondary legislation. We will be meeting the FCA and HM Treasury in June to discuss it. The FCA is expected to provide an update on progress in Q4 2016.
FCA Occasional Paper on Financial Inclusion – 24 May 2016
The FCA has published an Occasional Paper on Access to Financial Services in the UK which discusses the reasons for barriers to access and financial exclusion. It aims to stimulate discussion and ‘foster a culture of access and inclusion throughout retail financial services’. Whilst recognising that consumers do not have an absolute right of access to financial services, the paper identifies a number of issues which may affect consumers’ ability to access such services. These include product complexity, quality of communication, physical barriers to access, poor digital literacy and limited internet access.
Government consults on Improving Consumer Switching – Including Mortgages – 25 May 2016
The Government has published a Call for Evidence on Improving the Consumer Landscape and Quicker Switching. The second part of the document explores how switching suppliers can be made quicker across all sectors – including mortgages. The Government is keen to explore whether the current typical period of 4-7 weeks to switch a mortgage could be reduced to 7 days.
Quotation searches and FCA’s final proposals in response to the CMA recommendations on high-cost short-term credit – 26 May 2016
The FCA has published Policy Statement 16/15, providing feedback to the main issues arising from Consultation Paper 15/33 Consumer credit: proposals in response to the CMA’s recommendations on high-cost short-term credit (HCSTC). The PS includes final rules for price comparison websites which compare HCSTC products: these come into force on 1 December 2016. Paragraphs 2.41 to 2.47 of the PS look at quotation searches and the role they can play across the wider consumer credit markets. We have agreed to undertake joint research, in collaboration with the BBA and UK Cards, on the extent to which recent market innovations in quotation search tools facilitate the ability for consumers to shop around, and identify areas for further enhancements.
FLA – Business Finance Code – For Information – 26 May 2016
The revised Business Finance Code, its Guidance and the non-binding guidance for intermediaries were approved at the FLA’s Annual General Meeting (AGM) on Tuesday 17 May 2016.
European Parliament Report on Securitisation and publication of the Financial Stability Board’s Shadow Banking Peer Review – 26 May 2016
On 19 May, a Working Document was published on the European Commission’s proposed simple, transparent and standardised (STS) securitisation framework. We are working with a number of other UK and Brussels-based trade bodies and organisations to develop a joint approach on the high-level issues. The G20’s Financial Stability Board (FSB) has issued a report makes a number of recommendations (outlined on pages 7-8) to the FSB and FSB jurisdictions.
Vulnerability Roundtable Discussion on 9 June 2016 – 26 May 2016
Following the success of our previous roundtable and the continuing engagement by members on vulnerability issues, we are proposing to hold a further session for members at 10:30am on Thursday 9 June 2016, at the FLA offices.
Financial Ombudsman Publishes Annual Review – 27 May 2016
The Financial Ombudsman Service has published its Annual Review for 2015/2016. This email provided a brief summary of the key figures and trends identified by the FOS, which dealt with 1,631,955 initial enquiries and complaints from consumers – about 5,000 each working day. This represents a reduction of approximately 10% on the previous year.
Unfair Contract Terms – 31 May 2016
The FCA has updated the information on its website relating to unfair contract terms. The regulator acknowledges their previous guidance remains in place for contracts entered into up to 30 September 2015.
Amendments to CONC
The FCA has now made changes to the Consumer Credit Sourcebook (CONC) consulted on in Quarterly Consultation 11 (Chapter 8 of CP 15/42). The Consumer Credit (Amendment No 3) Instrument 2016 comes into force for some changes on 31 May 2016 and for the remainder on 1 July 2016. The changes cover the following areas:
Distance Marketing in relation hire agreements and cancellation
Financial Promotions: representative example (deregulation in respect of promotions that have no interest or charges)
Financial Promotions: representative APR
Financial promotions: deregulation relating to community finance organisations (CFOs)
Peer to Peer Platforms
Credit cards and store cards (deregulation of requirement to give at least 30 days’ notice before a variation in interest rate takes effect.)
Credit broking fees
High net worth exemption
Self-employed agents
Consumer Credit Directive
The EU Commission has confirmed that Article 4 of the Consumer Credit Directive requires the provision of the standard information in advertising only where there is an indication of interest rate or any figures relating to the cost of the credit.
FLA Vulnerability Hub – New information added to the Hub this month included “Addressing financial abuse” – a joint report published by Citizens Advice and the British Bankers’ Association. The Hub can be found on the Members Only section of the FLA website.
FCA Updates
Regulation Round-up
FLA meetings in June 2016
2 June – NaVCIS Review Group
2 June – Motor Finance Fraud Group
7 June – Technology and Business Group
9 June – Vulnerability Roundtable
13 June – Brokers and Intermediaries Group
14 June – Healthcare Group
15 June – Litigation Forum
15 June – CMC Working Group
16 June – CFD Management Committee
16 June – Secured Lending Group
22 June – MFD Management Committee
23 June – Financial Crime Forum
27 June – Credit Committee
29 June – General Insurance Group
Events
7 June 2016 – FLA Regulation Conference
9 November 2016 – Financial Crime Conference – Save the date