FCA fines Barclays and former trader for gold fixing failures: FCA has fined Barclays £26,033,500 for failing to adequately manage conflicts of interest between itself and its customers, and for systems and control failings in relation to Gold Fixing that provides a benchmark price for trading. The failings took place between 2004 and 2013. It has also fined and banned a bank's former trader, Daniel Plunkett. FCA found that Mr Plunkett had exploited weaknesses in the bank's systems and controls to seek to influence the Gold Fixing on 28 June 2012. As a result he profited at a customer's expense, with the bank not making a payment to the customer of nearly US$4 million, although it subsequently compensated the customer in full. FCA found the failings particularly poor as the market was on notice of the potential for conflicts of interest around benchmarks at the time, and because the then Financial Services Authority had just fined the bank for other benchmark-related failings.
- Mr Plunkett was a director on the Precious Metals Desk with responsibility for pricing products linked to the price of precious metals and managing the bank's risk exposure to those products. During the 3:00p.m. Gold Fixing on 28 June 2012, he placed certain orders with the intent of increasing the likelihood that the price of gold would fix below the "Barrier", so that the bank would not have to pay its customer, and Mr Plunkett’s book profited by US$1.75 million (excluding hedging). When the customer asked for an explanation, Mr Plunkett provided an untrue account to both the bank and FCA. FCA fined Mr Plunkett £95,600 and banned him from the industry.
- FCA found Barclays breached Principles 3 and 8 between June 2004 and March 2013. It found it did not have in place appropriate policies, procedures, training or reporting mechanisms to manage its risks in participating in the Gold Fixing. It also found the bank failed to manage conflicts of interest between itself and its customers.
Both the bank and Mr Plunkett settled at an early stage, resulting in a 30% discount on the total proposed fines. (Source: FCA Fines Barclays and Former Trader for Gold Fixing Failures)
FCA reports on claims management: FCA has published the results of its thematic review on insurers' management of household and retail travel claims. Its review showed:
- many insurers handle claims to their customers' satisfaction. 20% of respondents said they had felt like complaining at some stage of the process but fewer than half of those actually did so. Over half of those that went on to make a complaint were dissatisfied with the way it was handled;
- insurers are inconsistent in how they categorise and capture information from calls which are not claims;
- communications between insurers and claimants was generally good but insurers could do more to keep consumers updated during the course of the claim, especially in complex claims involving a number of parties or experts;
- customers found policies long and unclear;
- fraud is a key concern but some insurers deal with investigations more sensibly than others;
- insurers should reflect on what claims staff say to customers about the impact of a claim on their renewal premium; and
- insurers could improve communications with customers over options available for claims settlement, for example where consumers wish to use their own builder rather than the insurer's own.
(Source: FCA Reports on Claims Management)
FCA finds conflicts in insurance intermediation: FCA has published the results of its thematic review into how intermediaries arranging general insurance for SMEs manage conflicts of interest. FCA wanted to understand whether payment from insurers influenced the intermediary to recommend an insurer against the customer's best interest. It found that intermediaries acting as agent for both customer and insurer are more exposed to conflicts of interest. Some intermediaries had not constructed management and control frameworks and relied largely on disclosure, which itself could be generic and unlikely to meet customers' information needs. Although the review focused on the seven largest intermediaries, FCA expects all general insurance intermediaries to reflect on how they manage conflicts of interest and to make any necessary changes. (Source: Commercial Insurance Intermediaries)
FCA publishes regulation round-up: FCA has published its May 2014 regulation round-up. Commenting on the entry into force of the Mortgage Market Review changes at the end of April, it notes that essential expenditure checks are common sense. FCA also reminds firms of its ongoing visits to smaller banks in the course of a thematic review into their anti-money laundering controls, and links to its guidance on the issue. (Source: Regulation Round-Up May 2014)
Tribunal upholds Hannam guilty of market abuse decision: The Upper Tribunal (Tribunal) has upheld FCA's finding that Martin Hannam had committed market abuse when disclosing inside information in two e-mails. (Source: Tribunal Upholds Decision of FCA)