FCA finalises complaints and call charges changes: FCA has made new rules:
- extending the "next business day rule", that allows firms to handle complaints less formally, without sending a final response letter, to allow them to do so by the close of three business days after the date of receipt;
- requiring firms to report to FCA all complaints, including those handled within three business days;
- requiring firms to send complainants a summary resolution communication following the resolution of complaints handled by the close of the third business day after receipt, which will, among other things, tell the complainant its rights to complain to the Financial Ombudsman Service (FOS);
- that limit the cost of calls consumers make to firms to a maximum basic rate; and
- improving the complaints return that firms sent to FCA.
The main changes take effect on 26 October in relation to call charges, and the changes on the next business day rule, complaints reporting and requiring firms to send a summary resolution communication come into force on 30 June 2016. (Source: FCA Finalises Complaints and Call Charges Rules)
FCA consults on cash savings holder remedies: FCA has published feedback on remedies for cash savings account holders, and is consulting on how to make it easier to switch accounts in future. FCA proposed four categories of remedy:
- "disclosure remedies" addressing how to give consumers sufficiently clear and targeted information at the right time so that they can easily and quickly compare their savings accounts with alternative ones and know how to switch if they want to do so;
- "switching remedies" that will make the process of switching savings accounts as easy as possible so that it does not put consumers off moving their money to another savings provider or to another savings account with the same provider;
- "convenience remedy" of making it easier for firms to provide a way for consumers to view and manage accounts with different providers in one place. This remedy is designed to remove some of the advantages larger providers currently have; and
- "sunlight remedy" of transparency of interest rates paid to longstanding customers, in particular how providers are reducing interest rates on variable rate savings accounts the longer a consumer holds the account.
The consultation covers some of FCA's proposed disclosure and switching remedies. It plans to consult on the other disclosure remedies once it has completed some trials. FCA wants to see seven-day switching for the vast majority of cash-ISA transfers (except for those involving the very smallest providers), from January 2017. For the other remedies, FCA plans to implement the convenience remedy when it implements the revised Payment Services Directive (PSD 2) from 2017 and says it expects firms to comply with PSD 2 requirements as early as possible. Finally, it plans an 18-month trial of publishing information on the lowest interest rates firms pay on open and closed easy access and easy access cash-ISA savings accounts, and will then assess the effectiveness of this. The consultation includes draft Handbook changes, mainly to the Banking Conduct of Business Sourcebook (BCOBS) which FCA proposes bringing into force in July 2016. FCA asks for comment by 12 October. (Source:FCA Consults on Cash Savings Holder Remedies)
FCA speaks on wholesale conduct risk: Tracey McDermott has spoken on FCA's expectations of firms around wholesale conduct risk. She focused on the Fair and Effective Markets Review and the Senior Manager Regime with reference to:
- solutions to rebuild reputation and embed cultural change;
- firms needing to ask themselves some hard questions about how they identify and manage conduct risks – she outlined five key questions that firms should address; and
- creating a system in which individuals, as well as firms, can be held accountable for their actions.
(Source: FCA Speaks on Wholesale Conduct Risk)
Cash Genie agrees redress scheme with FCA: FCA has announced it has agreed a consumer redress scheme with Ariste Holding Limited, trading as Cash Genie. The scheme will provide over £20 million redress to more than 92,000 customers for unfair practices which took place since Cash Genie started business in 2009. The firm self-reported several failings to FCA in 2014 and, following further review, has agreed to:
- write off or refund fees and charges which it should not have added to customer accounts;
- write off or refund rollover interest where the firm rolled over customers’ loans inappropriately;
- refund payments it took without authorisation, and write off all outstanding balances on accounts affected by this practice; and
- write off or refund interest and fees added to customers’ accounts after the point at which the firm should have provided customers with an annual statement.
FCA finalises performance risk guidance: FCA has published its finalised guidance on the risks to customers from performance management at firms. The guidance addresses the inherent risk that poorly executed performance management can encourage or drive mis-selling because of pressure to meet targets and/or corporate objectives. FCA noted that middle managers are most likely to suffer conflicts. It says it is not its business to tell firms how to manage performance but the guidance sets out how firms can manage the risk of mis-selling. The guidance suggests best practices that firms might put in place. (Source: FCA Finalises Performance Risk Guidance)
FCA reports on unauthorised transactions: FCA has released its findings from its thematic review into fair treatment of consumers who suffer unauthorised transactions. The investigation focused on current accounts and credit cards. FCA found that:
- firms are generally complying with their legal obligations and making a good effort to ensure fair outcomes for customers. Most tended to favour the customer when reviewing claims and there was no evidence that any firms were declining claims on the basis of "customer non-compliance" with complex security protocols;
- generally, firms seemed to be aiming to balance the need to consider claims on a case-by-case basis with consistent decision making. However, there were some issues with some of the content of account terms and conditions; and some fairly minor problems around how some firms organise their decision making, such as a lack of clear policies for complex cases and a heavy reliance in a small number of firms on experienced staff; and
- consumers recognise that protections are in place in the event of an unauthorised transaction. But consumers do not always know how the protections apply to them and tend to make assumptions about what their basic rights are. They also face obstacles when remembering multiple PINs and/or passwords, which may lead to them storing or sharing them.
FCA also found that consumers who had experienced an unauthorised transaction appreciated their provider immediately adopting and maintaining a supportive stance, as well as dealing with their claim promptly
FCA publishes benchmarks review: FCA has published its thematic review into oversight and controls in financial benchmarks. The review covered all benchmarks except LIBOR and the FX benchmarks that had already received or are currently the subject of regulatory review and redress. FCA visited 12 banks and brokers to look at lessons learned from past misconduct. The review found that although all firms had made changes in their approach to benchmark activities, there are a number of areas where more progress is needed and no firm had fully implemented all necessary changes. Generally, FCA found uneven progress with varying levels across different benchmarks and activities. Overall, banks had more structured and fully developed programmes to improve oversight and controls around benchmark activities than brokers. FCA also noted a lack of urgency, inconsistent benchmark identification, conflict of interest issues and a trend towards withdrawal from certain benchmarks without due appreciation of the consequences. The report identifies six key messages for firms:
- a need to ensure they identify all activities that constitute a benchmark activity or could affect a benchmark;
- senior management need to act quickly to improve any outstanding gaps in their approaches to benchmark activities;
- firms need to strengthen governance and oversight of benchmark activities;
- firms should continue to identify, raise awareness of and manage conflicts of interest in relation to benchmark activities;
- firms must establish robust controls and oversight for any in-house benchmarks being used; and
- when exiting benchmark activities, firms must give due consideration to the wider impact of their actions.
FCA also provides background explanations, and examples of good and poor practice in dealing with the issues it identified. FCA now wants all firms to consider their practices in light of the report and IOSCO standards and is following up with individual firms which formed part of the review. (Source:Financial Benchmarks: Thematic Review of Oversight and Controls)
FCA produces AIFMD transparency Q&A: FCA has published a Q&A for firms containing important information on transparency reports under Annex IV of the AIFMD. It provides guidance on submitting accurate, consistent and complete data. (Source: Important Information for AIFMD Annex IV Transparency Reporters – Submitting Accurate, Consistent and Complete Data)