FSA – IMPLEMENTING ASPECTS OF THE FINANCIAL SERVICES ACT 2010

The Financial Services Act 2010 received Royal Assent on 8 April 2010. It contains a broad range of measures affecting the way in which the Treasury, the Bank of England and the FSA work together. It alters the FSA statutory framework by amending the Financial Services and Markets Act 2000 (FSMA).

The FSA have now published CP10/11 the target audience for which includes:

• Authorised firms and unauthorised persons – in particular those whose business may have an impact on UK financial stability;

• Individuals who are carrying on or may carry on controlled functions without FSA approval;

• Individuals who engage or would consider engaging in short selling;

• Individuals who provide services in relation to short selling; and

• Professional advisers to any of the above persons.

The proposals in this CP on FSA new disciplinary and enforcement powers will also be of interest to consumers and consumer groups, to the extent that they relate to the FSA credible deterrence approach to enforcement.

The CP contains proposals on:

• The new short selling disclosure rule-making power;

• New disciplinary powers to impose: suspensions and restrictions on firms and approved persons; penalties on persons that perform controlled functions without approval; and financial penalties on persons who breach short selling prohibition rules or short-selling disclosure requirements;

• A new power to gather information and documents that are relevant to UK financial stability from certain authorised and unauthorised entities; and

• Amendments to our fees rules to enable the FSCS to recoup its management costs when acting on behalf of other compensation schemes from FSCS levy payers if it is unable to recoup those costs from the relevant compensation scheme and to reflect Special Resolution Regime funding changes.

Responses are due by 25 June 2010 and FSA expect to issue a Policy Statement in July.


Source: Financial Services Authority

FSA Website

FSA – TOUGH ACTION AGAINST POOR COMPLAINTS HANDLING BY BANKS

The Financial Services Authority (FSA) is taking tough action after finding weaknesses in five banks handling of customer complaints. As a result of the review, five banks are undertaking major changes to the way they deal with complaints and two of the five banks have been referred to enforcement for further investigation.

The review looked at several banking groups responsible for over 70% of the complaints firms receive and report to the FSA and over 60% of those resolved by the Financial Ombudsman Service (FOS).

It found poor standards of complaint handling within most of the banks assessed, including:

• A lack of senior management engagement and accountability for the delivery of fair complaint handling;

• Poorly designed staff incentive schemes that made branch staff reluctant to pay redress to customers, even in situations where the bank was at fault;

• Poor quality complaint handling by staff in branches and general call-centres leading to inadequate investigations, poor decision making as to the outcome of the complaint and unsatisfactory correspondence with customers;

• Complaint handling procedures that led to staff issuing multiple, repetitive responses to customers, forcing them to restate their complaint a number of times in the face of ongoing negative responses from the bank;

• The failure of banks to learn from previous complaints and to make changes to prevent similar complaints arising in the future.

Importantly, the FSA did find examples of good and compliant practices in parts of some of the banking groups assessed. This demonstrates it is possible for banks to handle high volumes of complaints and deliver fair outcomes for consumers.

To assist all firms in meeting its requirements, the FSA has published a complaints handling file review template, which firms may wish to use to help them assess if their complaint handling is achieving fair outcomes for customers.

The FSA is also reviewing whether it needs to make changes to its existing rules on complaint handling and will be publishing its proposals in the third quarter of this year.


Source: Financial Services Authority

FSA Website

Do you and your team have the time or skills to deal with complaints?

We do – we deal with the Financial Ombudsman Service (FOS), third party complaint handling companies and directly with customers for a number of high profile clients.

We offer a service that takes the pain out of complaints – we can design an end to end process and provide the skilled resources to support your firm.

Call now on 0207 645 8808 or visit our website to find out what we can offer.

TCC Website

FSA – LIFE INSURANCE NEWSLETTER

Ken Hogg, Director, Insurance Sector has authorised production of his first life insurance newsletter since he took up his appointment last year.

The contents include:

• An introduction by Ken Hogg
• FSA view of key risks
• Solvency II
• Internal Models
• Quantitative Impact Study
• Stress and scenario testing
• Review of with profits regime
• Mutual insurers with with-profits funds
• Enhanced capital notes
• Resilience benchmarking
• Reinsurance and INSPRU
• News round up
• New conduct regulation strategy
• Implementing the Walker Review
• Publishing complaints data
• New framework for financial penalty setting
• A fairer fee structure
• Retail Distribution Review
• Enforcement
• Events


Source: Financial Services Authority

FSA Website

FSA – GENERAL INSURANCE NEWSLETTER

Ken Hogg, Director, Insurance Sector has authorised production of his first general insurance newsletter since he took up his appointment last year.

The contents include:

• An introduction by Ken Hogg
• Gearing up for Solvency II
• Internal models
• Quantitative Impact Study 5
• Stress and scenario testing
• Key risks for general insurers
• Update on the Competition Commission’s PPI reforms
• Update on the FSA’s Payment Protection Insurance reforms
• Threshold conditions (TC4)
• Climate change – focus on flood related cover
• Client money and assets
• Third Party Capture
• Resilience benchmarking
• Recent enforcement cases
• Upcoming events
• Round-up of other news: New conduct regulation strategy; A fairer fee structure; Implementing the Walker Review; Publishing complaints data; Retail Distribution Review; New framework for financial penalty setting


Source: Financial Services Authority

FSA Website

Would you like to keep your staff fully up to date with the latest industry and company news?

We have designed, with the help of our partners, branded web based newsletters and news flashes for a number of high profile clients.

Call now on 020 7645 8808 for an introduction to this brilliant communication strategy or visit our website.

TCC Website

ABI – FASTER COMPENSATION FOR PEOPLE INJURED IN ROAD ACCIDENTS

Around half a million people injured in road accidents will receive compensation they are entitled to much more quickly under a streamlined compensation process that came into force on 30 April. The ABI has been campaigning for some time for a simpler, speedier and more cost-effective compensation system.

The changes will cut the average time taken to settle a personal injury claim following a road accident from two years to no more than nine months. They will apply to claims occurring after 30 April.

The changes, announced by The Ministry of Justice last September, will apply to motor personal injury claims valued between £1,000 to £10,000 – almost 80% of all motor personal injury claims. The changes involve three stages for each claim: collation of information to submit the claim; the claimant representative gathering evidence for the claim, and a final stage if no agreement can be reached on the claim value.

Under the new process:

• Challenging time limits for insurers and legal representatives will ensure speedy progress of claims. For example, an insurer must decide on liability within 15 working days of being notified of the claim.

• Standardised claim forms will reduce duplication of information.

• Legal costs will be fixed which will reduce the current legal bills that are adding an extra 10% to motor premiums paid by all motorists.

Nick Starling, the ABI’s Director of General Insurance and Health, said:

“These changes will not only mean quicker compensation for many, but will also reduce the level of legal costs that all motorists ultimately end up paying for through their motor premiums. We expect that these changes will be the start of wider ranging reforms to ensure that more claimants benefit from a simpler and speedier compensation process, and we would like to see this new process extended to cover employers’ liability insurance claims.”


Source: Association of British Insurers

ABI Website

FOS – OMBUDSMAN NEW INDUSTRY-WIDE STEERING GROUP MEETS

The newly-established industry steering-group, set up under these arrangements, met for the first time today. This high-level steering group is chaired by Sir Christopher Kelly, chairman of the Financial Ombudsman Service, and comprises the following senior executives from key financial services institutions:

• Deanna Oppenheimer, chief executive, Barclays UK retail banking

• Helen Weir, group executive director – retail, Lloyds Banking Group

• Brian Hartzer, chief executive officer, RBS UK retail banking

• Keith Morris, chairman and chief executive, Sabre Insurance

• John Pollock, group executive director (protection and annuities), Legal & General

• David Richardson, managing director (life and health), Swiss Re

• David Stewart, chief executive, Coventry Building Society

• Simon Hudson, chief executive, Tenet Group

This group discusses high-level strategic issues relating to complaints and the ombudsman service – such as major trends in workload and specific topics (for example, significant case issues and the mechanisms for handling "mass claims").

As part of the ombudsman's more formal industry-liaison arrangements, a new wider cross-sector industry panel has also been established – to replace the three sectoral liaison-groups for banking, insurance and investment that have provided a channel for more formal communication between the ombudsman and the industry over the last few years.

The ombudsman service has also reviewed the structure for liaising more formally with consumer groups. This has resulted in setting up a forum for representatives from a wide range of consumer bodies, to discuss complaints-handling and ombudsman issues. This forum is due to meet for a second time in May 2010.


Source: Financial Ombudsman Service

FOS Website

FOS – OMBUDSMAN NEWS EDITION 85 PUBLISHED

This edition, published on 29 April, covers the following topics:

• Recent banking, insurance and investment complaints from consumers living in rural communities;

• An expanded Q & A section covering some recent developments in our casehandling process;

• The ombudsman’s consumer-outreach work; and

• Chief executive and chief ombudsman, Natalie Ceeney, on her first month at the ombudsman service – and some challenges ahead.


Source: Financial Ombudsman Service

FOS Website

FSCS – CAN HELP CONSUMERS CLAIM UP TO £50,000 IN COMPENSATION

A Press Release issued on 26 April advises the following:

Consumers could claim up to £50,000 if they have lost money as a result of their dealings with any of the investment firms the Financial Services Compensation Scheme (FSCS) has recently declared in default. The FSCS is the UK’s statutory compensation scheme for customers of authorised financial services firms. It does not charge consumers for using its service.

Declaring a firm in default is the final part of a process in which a firm regulated by the Financial Services Authority has been found by the FSCS to be unable, or likely to be unable, to pay claims against it. This means that customers who have lost money as a result of dealings with one of these firms might be able to make a claim for compensation to the Scheme.

“It is important that we let customers know that we may be able to help if they have lost money and the firm cannot pay. The FSCS’s existence as a fund of last resort for consumers helps to maintain confidence in the sector by providing assistance to individuals who have suffered a financial loss who otherwise would have nowhere to turn,” says Alex Kuczynski, interim Chief Executive.

The FSCS pays up to a maximum of £50,000 per person per firm for claims against firms declared in default on or after 1 January 2010. The maximum level of compensation for claims against firms declared in default before 1 January 2010 is 100% of the first £30,000 and 90% of the next £20,000 up to £48,000 per person per firm.

The types of investment claim that the FSCS usually handles relate to advice. For example, if somebody has been advised to buy an investment product such as an endowment policy, but it was unsuitable for them and they have lost money as a result of the advice they received.


Source: Financial Services Compensation Scheme

FSCS Website