Our regulatory experts provide their monthly bite size overviews of the major legal and regulatory developments and news for the consumer, asset and automotive finance sectors.
FCA delays commencement of new complaint handling reporting
The Financial Conduct Authority (FCA) has published a handbook notice announcing that they have decided to delay the commencement of their new complaint handling reporting requirements. The January 1 2016 commencement date has been put back to 30 June 2016.
Complaints reporting periods starting on or before 29 June 2016 will use the current rules and forms and will not need to report complaints which they consider to be resolved by close of the business day. After this date, firms will need to comply with the new rules which will entail.
European Data Protection Regulation agreed
Agreement has been reached on the new European Data Protection Regulation. Pending a vote before the Parliament in the New Year, the new Regulation will come into force in early 2018, two years after it is formally adopted. It will create a set of uniform rules across Europe, meaning that multi-nationals will only have to deal with one regulator.
One of the most notable aspects of the new Regulations is that potential fines for infringement could amount to up to 4%.
See an alert on this from Wragge Lawrence Graham & Co's data protection experts here.
Supreme Court decision in ParkingEye Limited v Beavis and Cavendish Square Holdings BV v Talal El Makdessi [2015] UKSC67
The Supreme Court has handed down a judgment with far-reaching implications in the case of ParkingEye Limited. In this case the defendant had tried to argue that the a penalty charge in a parking dispute was unenforceable at common law as a penalty. The Supreme Court upheld the decision of the Court of Appeal, dismissing the appeal, and set out a new rule for deciding if a clause is a penalty. This is good news for those that have long argued that the old test for penalties was outdated.
See our alerts on the case here:
FCA looks to change PPI complaint handling rules
The FCA is looking for views on its proposal to introduce a new rule that would set a deadline of two years for consumers to make Payment Protection Insurance (PPI) complaints. The FCA also proposes to lead a communications campaign to inform consumers of the deadline.
The consultation also suggests that new rules and guidance on the handling of PPI complaints should be issued in the light of the Plevin case, on which more from WLG below:
The deadline for the consultation is 26 February 2016. The full consultation can be read here.
New reporting template for Bankers' Automated Clearing Services (BACS) fraud
Reacting to concerns around the lack of reporting in place to indicate the scale of fraudulent abuse of Direct Debit Guarantee scheme, BACS has in conjunction with Financial Fraud UK developed a 'standard form' for reporting fraudulent abuses under the scheme. They are initially looking for responses during Q1 and Q2 2016 as part of a trial.
BACS has also introduced a guidance template for banks helping staff to decide when claims should be investigated further.
Delay to implementation of Online Dispute Resolution
As part of the implementation of the Alternative Dispute Resolution Directive, all businesses that sell or provide goods or services online to consumers were to be required to provide a link to the European Commission's Online Dispute Resolution platform by 9 January 2016. This date has now been postponed to 15 February 2016 to give some member states extra time to implement the directive.
The UK implementing regulations stipulate that UK businesses have to have complied with this deadline by 9 January 2016, however the Department for Business, Innovation & Skills (BIS) have assured businesses that no enforcement action will be taken as firms will now naturally be unable to comply with that deadline.
Barclays hit with largest ever fine for financial crime failings
Barclays has been fined £72,069,400 by the FCA for its poor handling of financial crime risks and failing to minimise the risks relating to a £1.88bn transaction that Barclays arranged in 2011 and 2012. The transaction involved a number of politically exposed persons and therefore Barclays should have exercised a higher level of due skill, care and diligence.
The FCA however did not make a finding that the transaction in fact involved financial crime.
Joint paper on Open and Competitive Markets
A joint paper has been produced by HM Treasury and BIS on the approach to encouraging open and competitive markets. Some areas will be of particular interest, such as those considering an extension to the Funding for Lending Scheme, renewed focus on making terms and making conditions clearer for consumers to understand and a review of Price Comparison Websites by the Competition and Markets Authority.
The joint paper can be read here.
Review of trade associations suggests merger
A bank-commissioned review has published a further report setting out their final recommendations, namely for a merger of four existing bodies , the British Bankers' Association (BBA), the Council of Mortgage Lenders, Payments UK and the UK Cards Association. It is also envisaged that the Asset Based Finance Association (ABFA) might join at a later stage, and that a 'close partnership' would be forged with the UK Payments Administration and Financial Fraud Action UK.
The full report can be read here.
FCA publishes Quarterly Consultation Paper
The latest Quarterly Consultation Paper published by the FCA contains suggested amendments to CONC and change reporting requirements in relation to financial crime.
The FCA is proposing to introduce a financial crime return for the first time. This is to enable them to meet standards set by the Financial Action Task Force. The new return will be administered through the GABRIEL system and will require firms to provide information on the following areas:
- the location of their customers
- the jurisdictions that the firm has business in that it considers pose a high risk
- the resources the firm allocates to tackling financial crime
- the number of suspicious activity reports the firm files with the authorities
- sanctions and asset freezes
- the firm's general views on which are the most prevalent types of fraud
The only firms that will fall out of scope will be consumer credit firms with a turnover below £5m.
The changes to CONC set out in Chapter 8 of the consultation include changes to:
- financial promotions (representative example)
- financial promotions (representative APR)
- financial promotions (community organisations)
- credit broker fees
- credit and store cards
- peer-to-peer platforms
- distance marketing
- high Net Worth exemption
- self-employed agents
- credit broker fees
Other than proposals relating to Training and Competence and the Listing Rules (which run until 4 January 2016), the consultation is open until 4 February 2016. The full consultation can be found here.
FCA publishes Occasional Paper No 11 on mortgage affordability assessments
The FCA has released a new occasional paper presenting research for the Mortgage Market Review in three potential mortgage affordability metrics: debt service ratio (DSR), an expenditure-adjusted DSR and a quality of underwriting score. It concluded that an expenditure-adjusted DSR was likely to offer the most valuable method for informing future mortgage policy development.
The full paper can be read here.
Government sets out G20 Beneficial Ownership Implementation plan
The Government has released an implementation plan setting out how they propose to implement the G20 High Level Principles on Beneficial Ownership Transparency agreed at the Brisbane G20 summit in 2014.
The report states that the UK will implement the commitments in 2017 through new UK Money Laundering Regulations.
The full report can be read here.
House of Lords approves changes to Financial Services and Markets Act (FSMA)
Two amendments to the FSMA 2000 have been approved by the House of Lords committee, the first clarifying who can enforce a credit agreement on behalf of a lender, either by administering the agreement or collecting debts. The second amendment amends section 27 of FSMA on dealings through unauthorised persons.
FCA consults on protection for SMEs
A discussion paper entitled 'Our Approach to SMEs as Users of Financial Services' has been released by the FCA in response to concerns regarding the treatment of SME business by some financial services firms.
The conclusion of the paper is that some factors, such as complex products, limited choice, and poorly managed expectations may be particularly troublesome for SMEs and expose them to risk.
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