A High Court judgement handed down last week confirms that a claimant who accepts a final decision from the Financial Ombudsman Service is bound by it and will not subsequently be able to bring a civil claim in relation to the same matter.

 

The FOS process has many advantages over civil court proceedings in that it provides consumers with a voluntary, quick, free and informal dispute resolution service. However, FOS processes are not as rigorous as those of a court and FOS is free to reach its decisions based on what an Ombudsman considers to be fair and reasonable; although the law needs to be taken into account, an Ombudsman does not have to apply it. For these reasons, the FOS’ binding award limit is £100,000 although this is under review: FSA has proposed that it should be increased to £150,000 from January 2012.

 

The decision brings clarity to an issue that had not previously been tested in the courts, specifically whether a complainant can accept a FOS award and then subsequently sue in the civil courts for additional losses. This will be of relevance in complaints where losses exceed £100,000. In such cases, a complainant has a choice when deciding whether to accept an Ombudsman’s award, to either take the redress awarded by the Ombudsman, subject to the maximum awardable sum of £100,000, or to reject the decision and pursue a claim in the civil courts in order to make a full recovery without limit. What he cannot do is accept the FOS award and then seek the balance at court.

 

Source: Financial Ombudsman Service

 

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.

 

 

Source: The Consulting Consortium

 

The Office of Fair Trading (OFT) has published a detailed report setting out its findings from its review of barriers to entry, expansion and exit in retail banking. This review, launched in May 2010, builds on previous work in the sector, namely the 2008 market study on personal current accounts and the Competition Commission’s 2002 investigation into SME banking. The OFT received evidence from, and discussed the issues with, over fifty different parties including banks, building societies, recent and prospective entrants, industry bodies and consumer groups.

 

In summary, the OFT has found that although new firms have entered the sector recently and more are expected to do so, new entrants face a number of obstacles in establishing a presence on the market, recovering start-up costs and expanding their market shares in retail banking. Whilst new entrants are able to obtain the required regulatory authorisations and establish the necessary infrastructure to offer retail banking products, the OFT found that they face a number of difficulties in attracting personal and SME customers.

 

The OFT examined four aspects of personal and SME banking where there may be potential barriers:

 

• Regulatory requirements and processes

• Access to essential inputs

• The ability of new entrants to attract customers and achieve scale

• Issues around the existing market.

 

Source: Office of Fair Trading

 

Paperwork – electronic or otherwise – can be a drain on firm’s resources. Authorisation and compliance are necessary to remain fully functional in these changing markets.

 

Why drain valuable resources that could be servicing clients and earning income when we have the necessary skills to draw up all your compliance documents?

 

 For further information on our compliance manuals service, including AML manuals, please call 020 3008 6020 or email info@theconsultingconsortium.com

 

Source: The Consulting Consortium

 

The FSA has said that due to the Committee of European Banking Supervisors (CEBS) taking longer than expected to publish its final remuneration guidelines, which are now not expected until 11 or 12 December, there will be a knock-on effect on the publication of the revised Remuneration Code. FSA does not now expect to publish this until mid-December, shortly after the final CEBS guidelines. This is because the FSA’s revised Remuneration Code has to take CEBS principles into account and so cannot precede them.

 

However, the FSA has indicated that the revised Remuneration Code will still come into effect on 1 January 2011 and there will be no further relaxation of requirements for firms already within the scope of the Remuneration Code. Firms who are only brought within the Remuneration Code on 1 January 2011 will still have until 1 July 2011 to comply with the rules, subject to transitional provisions.

 

FSA has indicated that it will issue guidance on “proportionality” earlier, in about two weeks’ time. This will enable most firms affected by the Remuneration Code to have an idea of the extent to which they will be affected by the rules and plan effectively, as it seems likely that most firms may not be too concerned with the hotly contested provisions where the FSA is waiting for CEBS to pronounce so long as they are only required to comply proportionately.

 

Source: Financial Services Authority

 

Ken Hogg, Director of the FSA Insurance Sector, introduced his newsletter stating:

 

“In the last edition of the Life Insurance Newsletter I briefly mentioned regulatory reform. To reiterate, our objectives will continue as they stand today, so your current responsibilities to the FSA will also continue. The Government consultation on the new regulatory structure ended last month. We continue to work with the Bank of England and Her Majesty’s Treasury and a clear timetable has been established for the design of the new organisations and the implementation of that design in shadow from early next year.”

 

“Until then, we will focus on delivering the policies and reforms required to ensure stronger, more proactive regulation, including our work on proportionate, intensive and intrusive supervision. “As the Solvency II Quantitative Impact Study (QIS5) exercise comes to a close, I’d like to thank those who participated for your efforts. All firms that took part should be in a much stronger position to move to the new regime.”

 

The following topics are also included in the Newsletter:

 

• With-profits mutuals

• Solvency II

• Gender Directive

• Transfers of Business

• Money Market Funds

• Dedicated web pages for smaller insurers

• RDR: Pure Protection Policy Statement

• Controls over Appointed Representatives

• Bribery Act 2010

• With-profits Consultation Paper

• Recent enforcement cases

• Recent speeches

 

Source: Financial Services Authority

FSA Website

Ken Hogg wrote a similar introduction to his General Insurance newsletter which covered the following topics:

 

• Gender Directive

• Solvency II

• Payment Protection Insurance

• Transfers of Business

• Legal expenses insurance

• Insurance Mediation Directive (IMD)

• RDR: Pure Protection Policy Statement

• FSA and firms reach agreement on MPPI

• The Bribery Act 2010

• Controls over Appointed Representatives

• Dedicated web pages for intermediaries

• Recent speeches

• Recent enforcement cases

 

Source: Financial Services Authority

 

Ken Hogg, Director, Insurance Sector, FSA addressed the Marketforce and Institute of Economic Affair's (Future of General Insurance conference) on The Regulatory Priorities for 2010. He focussed his remarks on the regulatory priorities for the general insurers and intermediaries operating in the retail space, although the lessons for the General Insurance (GI) market as a whole are similar.

 

He stated that FSA’s desire ,in particular, was to promote an environment in which firms are motivated to continuously improve their risk management and meet consumer expectations.

 

He went on to outline what robust risk management means in the context of:

 

• the current environment for the GI market, including Delegated Aithorities and Errors and Omissions;

• Solvency II;

• Consumer Protection Strategy, PPI and volcanic ash; and

• The emerging regulatory structure in the UK and Europe.

 

Source: Financial Services Authority

 

At the launch of two major pieces of independent research on the potential impact of the FSA’s responsible lending proposals, CML director general Michael Coogan called on the FSA to make an early announcement before the consultation deadline of 16 November that it will reconsult on a new draft of responsible lending rules, with a full and complete impact analysis.

 

Such an announcement would enable respondents to the consultation to respond far more constructively and to forge a path with the regulator to achieving the right regulatory outcomes, in the knowledge that the FSA is listening to the evidence, and aware that the rules as currently drafted are well-intentioned, but flawed and impractical.

 

The two new sets of research findings, by economic research consultancy Oxera and by economic and social research consultancy Policis, have been funded by the CML but are independent in their assessments. They, along with the other evidence produced by the CML itself, should give the FSA pause for thought as they bring together a wide range of evidence that suggests there would be a range of negative, unintended outcomes from the implementation of the FSA’s policy and proposed rules as currently drafted.

 

Michael Coogan reflected:

 

“The FSA, like the industry, needs to have a clear steer from the coalition government about what type of regulatory structure is needed to support housing policy and deliver systemic stability in the mortgage market in the 21st Century… Before we go much further on the MMR, or the restructuring of regulatory bodies, we need Ministers to be clear about their intentions.”

 

“Whether they want regulation to protect the vulnerable minority, or give an opportunity to the majority to achieve their aspirations. They can do both by allowing free access to the market to responsible borrowers, but establishing an effective safety net for the few who have difficulties due to changes in their lives. This is not the approach which the FSA has taken due to its limited focus on its conduct risk strategy.”

 

“When we know what the government wants the regulator to achieve, we and FSA officials will be in a better position to deliver the sustainable market for all participants which is flexible for consumers. These two outcomes reflect a shared vision by the FSA and lending industry. The CP proposals have blurred that vision to a point where neither outcome will be delivered by CP 10/16 as drafted. If you agree, write to the FSA, your local MP and relevant Ministers.”

 

Source: Council of Mortgage Lenders

 

The ombudsman service's online technical resource has been further expanded with information about the ombudsman's general approach to banking transfers, payments and cheques.

 

Source: Financial Ombudsman Service