Insurance briefing is a round-up of legal and business developments published on Out-Law.com.
The main topics we're focusing on this week are:
Consumers with payment protection insurance (PPI) policies may be entitled to compensation if they have not been told that their ongoing premium payments include an element of commission, under new FCA proposals. The FCA has published for consultation new guidance clarifying its position on complaints involving regular premium PPI. The new guidance, if it comes into effect, would require firms to assess whether or not repeated commission payments were disclosed to the customer on an ongoing basis, and not merely at the point of sale; and whether customers should be compensated for this. "It is good that the FCA is thinking about clarifying the dispute resolution rules (DISP) for Plevin related complaints," said regulatory financial services contentious expert Jonathan Cavill of Pinsent Masons. "Firms have been left in the dark with this knotty area of the Handbook and in particular the application of the DISP rules in circumstances around repeated commission payments.With the long stop date fast approaching, the FCA is working hard to ensure that customers with legitimate complaints have chances to be compensated. Firms will need to ensure that their systems and controls are sufficient to handle ongoing rule changes and any increased complaints and compensation which may flow from the proposed changes".
A new directory of those working in financial services will be introduced alongside the existing financial services register, the FCA has announced. The directory will list both senior managers, who are approved by the FCA, and staff certified by their firms as being 'fit and proper' under the Certification Regime, the FCA said. The directory will be publicly accessible, so both consumers and other firms will be able to check the "status and history" of financial services staff and perform user-friendly searches, for example by location, according to the regulator. Financial regulatory expert Michael Ruck of Pinsent Masons said that the new system would raise questions about the extent to which the public and the FCA could seek to rely on a directory of individuals including those certified as fit and proper by their employers, rather than by regulators. "The FCA will have determined that those who hold senior manager roles are fit and proper, but will be unsighted on those who are certified. Should a customer rely upon the FCA's directory and not be treated fairly by a certified individual, to what extent can the FCA be held accountable - and would this undermine the existence of the directory itself?"
EU financial services firms will be able to continue their activities in the UK for a "time-limited period" after Brexit, even in the absence of agreement on a formal transitional period, the UK Treasury has confirmed. It also intends to give legal powers to the UK regulators which will allow them to phase in any changes impacting on EU firms operating in the UK in the event of a 'no deal' Brexit scenario, according to a newly-published document. These powers mean that financial firms can proceed on the assumption that the implementation period agreed in principle between the UK and EU will run until December 2020, it said. Banking expert Tony Anderson of Pinsent Masons said that the measures set out in the announcements were "sound contingency planning recognising the distinct possibility of a no-deal Brexit with no implementation period taking effect from 29 March 2019. It will be crucial in this scenario, however, that a time limited period of sufficient duration is permitted to occur to create temporary permissions and recognition regimes for preserving financial stability both here and in the European Union," he said. "Let's hope the political will supports this."
Predictions of a record year for the bulk annuity market in 2018 are likely to be fulfilled, as trustees and sponsors make the most of favourable pricing to reduce pensions risk, an expert has said. Pensions expert Robert Tellwright of Pinsent Masons said 2018 had been as good as expected for the market. "The large volume of deals already written this year suggests that commentators were right to be bullish about the prospects for the bulk annuity market in 2018," Tellwright said. "Insurance pricing continues to be favourable, making the transfer of pension risk an increasingly viable option for many schemes. This will be welcome news for those corporate sponsors who have invested heavily in their pension schemes over recent years – a transfer of their pension liabilities could have a significant effect on their free cash flow and their ability to invest in the future growth of their business."
Plans to open a new court in London to specialise in resolving cases concerning cyber crime, fraud, and economic crime have been welcomed by legal experts, who believe the move reflects the scale of cyber-related crime businesses are dealing with. Earlier this week, the Ministry of Justice and HM Courts & Tribunals Service announced that a new 18 courtroom premises on the site of Fleetbank House in London is to be built. Planning permission is still to be obtained and funding arrangements finalised, but the court is due to be completed in 2025. David McIlwaine of Pinsent Masons, an expert in cyber and IT disputes, said: "This gives a clear indication of the expected increase in claims that will arise, presumably in response to the heightened prevalence of cyber attacks and the augmented amount of regulation through the General Data Protection Regulation (GDPR) and the Network and Information Security (NIS) Regulations."
ANALYSIS: New laws introducing increased funding options for civil claims in the Scottish courts, as well as allowing solicitors in Scotland to enter into damages-based agreements (DBAs) and speculative fee agreements (SFAs), have now been finalised. The Civil Litigation (Expenses and Group Proceedings) (Scotland) Act ('the Act') implements some of the recommendations of a review by former sheriff principal James Taylor, published in September 2013. The provisions in the Act will be implemented on a phased basis, with the detail to be confirmed in future secondary legislation. There will be concerns in some sectors of the potential consequences of some of the measures introduced: for example, insurers will want to be satisfied that the proposal to allow qualified one way cost shifting is properly thought through. On QOCS, the issue, as always, is to balance a topical focus on access to justice with not tilting the playing field too much without adequate safeguards. DBAs are in many ways the most controversial as opponents argue they make the lawyer a litigant and remove his or her objectivity.
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