FSA – ASSESSMENT AND REDRESS OF PPI COMPLAINTS

On 29 September the FSA published CP09/23 - The assessment and redress of payment protection insurance complaints', which proposed new guidance and rules for the fair handling of PPI complaints.

These proposals stemmed from the FSA's serious concerns about the fairness with which firms have assessed consumer complaints about past PPI sales, which have significantly increased in recent times.

The FSA has received a large number of detailed responses to its proposals and, as a result of the time it will take to examine and respond, the FSA will now issue the policy statement early in the new year.

The FSA continues to engage with relevant stakeholders and will consider any further comments received until the end of the year.

Firms remain obliged to treat PPI complaints fairly in the interim (under the existing requirements in the DISP module of the FSA handbook) and complainants not satisfied with the response to their complaints that they receive from firms can refer their cases on to the FOS.


Source: Financial Services Authority

FSA Website

FSA – REGULATORY TREATMENT OF ENHANCED CAPITAL NOTES

FSA has written to the ABI regarding the regulatory treatment that would apply for insurance companies that may hold the new Enhanced Capital Notes (ECNs) that have recently been issued by Lloyds Banking Group.


Source: Financial Services Authority

FSA Website

FSA – LISTING REGIME REVIEW

The FSA's Consultation paper 09/28 is entitled 'Listing Regime review: Consultation on changes to the listing categories consequent to CP09/24'. It was published in November 2009. Comments should reach FSA by 4 January 2010.

Over the last two years FSA has carried out a review of the structure of the Listing Regime. The overall purpose of this review has been to ensure that there is greater clarity of the Regime’s structure and the obligations on issuers under it.

One of the principal amendments was to restructure the regime into two segments, premium and standard – ‘premium’ being a listing that meets the more stringent superequivalent standards and ‘standard’ being a listing that meets EU-minimum standards.

FSA has reviewed the characteristics of certain securities currently on the UKLA Official List to decide whether they are equity securities that are able to meet the full set of super-equivalent obligations that constitute a Premium Listing. They then determined whether any changes to the Listing Rules are needed to align the requirements so that the differentiation between the Premium and Standard Listing segments is clear.

This exercise revealed that some types of equity securities that were previously considered Primary Listed securities are not able to comply with all the super-equivalent obligations of a Premium Listing and are therefore not eligible under the model that has previously been consulted upon and agreed.

The proposed changes will mean that a very small number of securities that were previously considered as having a Primary Listing but that do not meet the requirements for a Premium Listing when the new structure comes into force on 6 April 2010, will fall into one of the Standard Listing categories.

These include securities convertible into equity shares, options, subscription warrants, and non-voting classes of equity shares.

In addition, FSA is clarifying that the result of the prior consultation was that there was no Premium Listing category for preference shares, so they are proposing to remove certain legacy super-equivalent obligations that currently apply to them and define their place under the new regime.


Source: Financial Services Authority

FSA Website

FSA – SPEECH ON FIGHTING FINANCIAL CRIME

Margaret Cole, Director, Enforcement and Financial Crime Division, FSA addressed the British Bankers Association on 19 November 2009. The speech covered the following topics:

• The role of FSA as “gatekeeper” of the UK financial system

• FSA’s core activity of supervision

• Enforcement and criminal prosecutions

• Strategy in terms of unauthorised business


Source: Financial Services Authority

FSA Website

FSA – KEYNOTE ADDRESS ON MORTGAGE REGULATION

Lesley Titcomb, Director of Small Firms and Contact Centre, FSA made the Keynote address to the European Mortgage Federation's annual conference on 19 November 2009.

The speech covered addressing the problems, consumer protection and commission intervention, and concluded:

“In conclusion, we are all – the Commission, firms and regulators – aiming for the same thing. We want markets that are responsible and reliable in future, and we want to restore consumer confidence and choice. This makes it understandable that the Commission is considering what action it might take on responsible lending and borrowing. But it is a time of great change to the regulatory landscape.

It is vital that any policy thinking takes full account of the various initiatives going on internationally, at a European level and nationally. Indeed, I would go further. Given the extent of existing interventions, there are good grounds for assessing the effectiveness of these initiatives before deciding on what further action, if any, to take. This will provide the strongest evidence base for demonstrating the added value of further intervention.”


Source: Financial Services Authority

FSA Website

FSA – SPEECH ON DELIVERING CONSUMER OUTCOMES

On 18 November, Sheila Nicoll, Director of the Conduct Policy Division, FSA addressed The Tax Incentivised Savings Association (TISA) - Annual Conference on Conducting Business with Consumers – Delivering the best outcomes.

The speech covered:

• Retail Distribution Review

• Platforms

• Disclosure

• Banking and product regulation

and concluded “As Hector Sants said earlier this month, we are now firmly into the realm of making judgements about judgements taken by firms and how they affect consumers. This does not just cover business models and incentives, but also the products that they sell.”


Source: Financial Services Authority

FSA Website

ABI - CONCERNS OVER QUEEN'S SPEECH RUSHED CHANGES

The 2009 Queen’s Speech includes several issues in which the insurance industry and its customers have an interest.

Financial Services Bill

Maggie Craig, the ABI’s acting Director General, said:

“We understand the need to legislate on the agreements made at the G20 and EU. However, this Bill should not be a catch-all for the wrong type of regulation. We should be wary of the principle that the state should set an individual’s pay package, not the market.

“The changes to the FSA’s powers on consumer redress are of profound importance, and we are alarmed this is being rushed through without proper consultation with industry. This is too important not to get right. We are also worried over moves to court- based collective redress. Pushing the UK toward a US litigation culture would create costs for consumers and businesses that far outweigh the benefits.

“We support today’s announcement to improve consumer knowledge of financial services. Insurers have long worked to develop the public’s financial education.”

Long-Term Care

“It is regrettable that the Personal Care at Home Bill undermines the Government’s own Social Care Green Paper, published as recently as July. That Green Paper set out a range of funding options for both at-home and residential care, but today’s announcement seems to undermine the funding options set out in it.

“The insurance industry wants to be part of the solution and deliver the best and most cost-effective long-term care. But this needs clarity and certainty from the Government, which piecemeal polices do not provide. We urge the Government to ensure that any new proposals include insurance industry involvement particularly as the Government’s own Insurance Industry Working Group report recently advocated this sort of partnership.”

Flood and Water Management Bill

“Managing the UK’s rising flood threat better is crucial for the five million properties at risk of flooding. It is also essential to ensure that flood insurance remains widely available. We welcome this Bill which should represent an overhaul in flood management, which we have long campaigned for. Its progress into law should be a priority.”


Source: Association of British Insurers

ABI Website

ABI – NEW SIPP GOOD PRACTICE GUIDE

The ABI and AMPS, the Association of Member Directed Pension Schemes, have launched new Good Practice Guidance for Self Invested Personal Pension (SIPP) providers.

The guidance gives providers examples of best practice in writing customer and adviser literature, to ensure that the types of SIPP, their features and, importantly, their charging structures are described clearly and accurately.

Maggie Craig, the ABI’s Acting Director General, said:

"With SIPPs becoming an increasingly important part of the pensions landscape, it is vital that advisers and consumers fully understand what these contracts do, who they are appropriate for and how much they cost.

The guidance gives model definitions of the most important terminology used within SIPPs. It also states that providers should clearly set out all the charges associated with SIPPs, in a simple menu format. The language used throughout customer literature should be clear and simple, and be in plain English. This guidance will help to ensure that the product is understood better by customers and advisers and that it is targeted at those for whom it is an appropriate long-term savings vehicle.”

Martin Cadman, AMPS Committee member, said:

“This guidance has been agreed following extensive consultation with AMPS, the ABI and other interested parties. AMPS, the ABI and all our members are dedicated to improving the clarity of customer literature and the overall transparency of SIPPs.

We want to ensure that consumers and advisers understand what SIPPs do, who they are appropriate for and how much they cost. We believe that this guidance goes a long way towards achieving this and we will be working with our members to implement it in full.”


Source: Association of British Insurers

ABI Website

CML – GROSS MORTGAGE LENDING UP 5% IN OCTOBER

October gross mortgage lending was an estimated £13.5 billion, a 5% rise from £12.9 billion in September but down 27% on £18.5 billion in October 2008, according to the Council of Mortgage Lenders. This is typical seasonal activity between September and October - the average monthly rise over the last decade has been 5%.

The annual comparison should start to improve a little in the coming months as underlying lending volumes dropped sharply in the latter part of 2008 and early 2009.

The October outcome is in line with our updated forecast for gross lending of around £141 billion for 2009 as a whole. The CML expect some seasonal slowdown over the remainder of this year.

In the CML market commentary, CML economist Paul Samter observes:

“There has been a significant change in the type of lending taking place from the start of the year. House purchase activity has picked up significantly. In contrast, remortgaging has dropped to decade-low levels as many borrowers have little incentive to refinance when they move onto low reversion rates, and others find themselves unable to do so due to equity constraints. The coming months are likely to be dominated by seasonal factors rather than underlying change.”


Source: Council of Mortgage Lenders

CML Website

FOS – OMBUDSMAN NEWS

Edition 81 has been published and covers the following topics:

• Complaints about debt collecting businesses

• Mortgage case studies involving disputes over valuations

• A welcome to money transfer operators, covered by the ombudsman service since 1 November 2009

• The chief onbudsman on how the backload of work is being tackled and getting tough on slow responders.


Source: Financial Ombudsman Service

FOS Website