UK: Regulatory Round-Up - Summer Update 2016

Last Updated: 12 August 2016
Article by Greg Standing

The regulatory experts at Gowling WLG provide their bite size overviews of the major legal and regulatory developments and news for the consumer, asset and automotive finance sectors

Brexit reaction

Reaction to Brexit vote

In the immediate aftermath of the Brexit vote, the Governor of the Bank of England, the Director General of the FLA and the FCA each issued statements reacting to the vote. Common themes included the emphasis that the short term effects of Brexit would be minimal and that, for the meantime, the message was very much 'business as usual'.

This was followed by a statement on 29 June by the business secretary, Sajid Javid. In this Mr Javid emphasised that the UK remained a member of the EU and the single market and that government would look to maximise the opportunities afforded by Brexit whilst simultaneously ensuring that this access is protected.

Speech by the Governor of the Bank of England

Following on from this, on 30 June Mark Carney gave a second speech stressing that "the question is not whether the UK will adjust but rather how quickly and how well".

He went on to reemphasise that the Bank of England has a plan in place to support jobs and growth during the looming period of uncertainty, but that monetary policy would not be able to fully offset the negative shock to the economy caused by the Brexit vote.

Other news

FCA review of crowdfunding cites regulatory arbitrage as key concern

The FCA has carried out a post-implementation review of the crowdfunding rules which were introduced in 2014. The review looks into both loan-based and investment-based crowdfunding, and highlights a number of concerns with the P2P sector.

Foremost among these is the fear that the 'blurred lines' between loan-based crowdfunding and other business models creates the risk of regulatory arbitrage. This review is seen as a reaction to concerns amongst financial services providers regarding imbalances in the regulatory system.

The deadline for responses is 8 September.

Eurofinas releases new publication

The European Federation of Finance House Associations, Eurofinas, released a publication entitled 'Helping Borrowers with their Financial Situation' on 14 June.

In the document, Eurofinas sets out a number of initiatives to assist consumers with the budget, including a budget tool called Monitorata, and a service website for consumers called 'Kredit mit Verantwortung' (Credit with Responsibility), a not-for-profit website explaining key features of responsible lending and borrowing.

New corporate offence of failing to prevent the criminal facilitation of tax evasion

The Government has released draft legislation and guidance for a proposed new offence of failing to prevent the criminal facilitation of tax evasion. The new law will have three stages:

  1. Criminal tax evasion by the taxpayer (legal or natural persons) under existing criminal law;
  2. Criminal facilitation of this offence by an associated person;
  3. Failure by the relevant body (to take appropriate action).

This facilitation could be done by a person acting in the capacity of a person associated with the corporation, defined as 'someone acting on its behalf'.

BACs produces summary of Q1 survey of fraud in Direct Debit Guarantee scheme

The body responsible for ensuring the integrity of the Direct Debit system, BACS, has produced a summary of the findings of a Q1 survey on the level of fraudulent abuse of the Direct Debit Guarantee scheme. It found that abuse occurred in around 22% of Direct Debit indemnity claims, representing 9% of the value of those refunded Direct Debits.

Complaints handling changes took effect on 30 June

New complaint handling changes came into effect on 30 June. The most important changes are:

  • Extending the 'next day business rule' for less formal complaint handling to three business days;
  • A new 'summary resolution communication' in relation to FOS rights and a new complaints return, which will require firms to send data to the FCA twice a year; and
  • The requirement to report all complaints including those handled within three days.

FCA regulated fees and levies

Following feedback on CP16/9 and 'made rules', the FCA has announced that there will be no change to minimum fees for limited permission and full permission firms, nor to the variable fee for limited permission firms but an increase to the 2014 full permission variable fee of £0.78 by £0.52 to £1.30 (68%).

FCA Regulation update

On 15 June the FCA hosted an event providing updates on its supervisory and policy work. Various issues were discussed, including:

  • An update on authorisations;
  • Supervision and what it will mean for newly authorised firms;
  • An update on the expected reporting dates for Thematic Reviews on Staff Remuneration (Q3 2016) and Early Arrears (Q4 2016);
  • Background information on the work of the Unauthorised Business Department; and on-going consumer credit policy work covering remuneration of credit brokers;
  • Credit worthiness and affordability research and the use of default notices in guarantees.

Financial Ombudsman Annual Review

The Financial Ombudsman Service's 2015/2016 Annual Review has been published. It revealed that the Ombudsman took 1,631,955 enquiries from customers, one in five of which went to a more detailed investigation. 75% of people whose complaints were resolved rated the service positively.

Interestingly, the report revealed that more than half of the total number of complaints received involved four banking groups - while 4,076 financial businesses accounted for just 3% of complaints.

European Parliament Report on securitisation and publication of the Financial Stability Board's shadow banking peer review

A Working Document on the European Commission's proposed simple, transparent and standardised (STS) securitisation framework was published on 19 May. The G20's Financial Stability Board (FSB) has also issued a report making a number of recommendations to the FSB and FSB jurisdictions, including establishing a systematic process involving all relevant domestic authorities to assess the shadow banking risks posed by non-bank financial activities or entities. The report also discusses removing impediments to cooperation and information sharing between authorities including on a cross-border basis.

FCA publishes Policy Statement giving feedback to main issues from consultation paper on Consumer Credit

In Policy Statement 16/15, the FCA has provided feedback on Consultation Paper 15/33 'Consumer credit: proposals in response to the CMA's recommendations on high-cost short-term credit (HCSTC)'.

The Policy Statement includes final rules for price comparison websites which compare HCSTC products, which come into force on 1 December 2016. Other areas covered include quotation searches and the role they can play across the wider consumer credit markets.

The FCA has agreed to undertake joint research, in collaboration with the BBA and UK Cards, on the extent to which recent market innovations in quotation search tools facilitate the ability for consumers to shop around, and identify areas for further enhancements.

Call for Evidence on improving consumer switching

The Government has produced a Call for Evidence on Improving the Consumer Landscape and Quicker Switching. Among other things, the document examines how switching suppliers can be made quicker across all sectors, including mortgages.

One of the proposals considered is whether the current typical period of four to seven weeks to switch a mortgage could be reduced to seven days.

General Data Protection Regulation finalised

The General Data Protection Regulation was finalised and must be implemented by 25 May 2018 (on the assumption that the UK's withdrawal from the EU has not completed by this date).

The Regulation contains a number of onerous obligations which will take some time to prepare for. This includes expanding the territorial reach of data protection legislation to data controllers and processors outside the EU who are monitoring the behaviour of EU subjects, or offering goods and services to the EU.

The Department of Culture Media and Sport will lead the implementation process, which is expected to include a consultation in the autumn.

Money Advice Service issues revised 2016/17 business plan

Following on from the March 2016 Public Financial Guidance Review recommendation that the Money Advice Service (MAS) be replaced with a new, slimmed-down Money Guidance Body, the Money Advice Service has launched its revised 2016/17 business plan.

The plan focuses on developing robust evidence of 'what works' to improve financial decisions, through innovative trials and pilots delivered by third-party organisations. The plan also looks at ensuring that the transition to the new body is as effective as possible, in co-ordination with the Treasury and the FCA.

Revised FLA Business Finance Code approved

At the FLA's AGM on 17 May 2016 the revised Business Finance Code was approved, along with the associated guidance and non-bind guidance for intermediaries. The Code contains five key commitments:

  • Treat customers fairly and follow all relevant laws and regulations;
  • Take reasonable steps to encourage responsible trading between intermediaries and customers;
  • Provide customers with appropriate and timely information about the business finance agreement, including the options available at expiry or termination, in a manner which is clear, understandable and not misleading;
  • Provide effective and accessible customer service throughout the period of the finance agreement;
  • Operate an effective complaints procedure and ensure this is transparent and easily accessible for customers.

House of Commons Committee of Public Accounts (PAC) publishes report into Financial Services mis-selling

The report criticises the Financial Conduct Authority, HM Treasury and Financial Ombudsman Service for being too slow in taking responsibility for the PPI mis-selling episode and makes six recommendations for further action, namely:

  • HM Treasury and the Ministry of Justice should report publicly on the effectiveness of their actions in reducing the role of claims management companies in PPI compensation;
  • By the end of July 2016, the Financial Services Ombudsman should set out publicly a clear timetable for reducing and ultimately eliminating its backlog of PPI claims;
  • The FCA should outline the actions it will take to improve cultures in financial services firms, and report to us on their effectiveness in a year's time;
  • The FCA should set out what more it will do ensure firms check consumer understanding of the products they purchase and of their rights to claim compensation, particularly for vulnerable consumers;
  • HM Treasury and the FCA should develop 'real-time' indicators of the extent of mis-selling;
  • HM Treasury should outline a timetable for proposing legislation to give the NAO access to information.

Details of enforcement actions in Q1 2016 taken by the Claims Management Regulator

The Claims Management Regulator has released details of its latest enforcement action and live investigations taken against Claims Management Companies in the first three months of 2016.

The report reveals that in the first quarter of 2016 the regulator took the following action:

  • 13 investigations started
  • 1 licence cancelled
  • 84 warnings issued
  • 75 audits carried out
  • 299 visits conducted

FCA Occasional Paper on access to financial services in the UK

The FCA has released an Occasional Paper on Access to Financial Services in the UK.

It looks to engender discussion and 'foster a culture of access and inclusion throughout retail financial services'. Whilst recognising that consumers do not have an absolute right of access to financial services, the paper identifies a number of issues which may affect consumers' ability to access such services.

These include product complexity, quality of communication, physical barriers to access, poor digital literacy and limited internet access.

Report into cyber crime released

The CityUK cyber taskforce has released a report into cyber crime, which sets out an action plan to make the financial and professional services in the UK more aware and resistant to cyber-attack. It highlights three types of attack: against individuals, firms and the financial system.

The report also lists a number of actions and recommendations, including a ten-point cyber check list for boards.

FCA publishes feedback statement on responsible lending in the mortgage market

The FCA has released Feedback Statement 16/3 on its earlier Call for Input on Competition in the Mortgage Market. In the statement, the FCA reveals that it has decided to undertake a targeted market study focused on consumers' ability to make effective choices. There will also be three other pieces of follow up work looking specifically at the themes emerging from the Call for Feedback:

  • Contributing to the next phase of the Council of Mortgage Lenders (CML) and Which? work on the transparency of mortgage fees and charges, with the aim of ensuring that relevant concerns raised by stakeholders during the CfI are appropriately taken into account;
  • Acting on specific aspects of the FCA's current regulatory regime where there is a case for change to improve competition - and considering the effect of our regulatory regime in the course of our planned competition work; and
  • Working with industry to increase competition law awareness in the sector.

In case you missed it...

Gowling WLG's lawyers give their one-stop shop on all things Brexit at our Brexit Untangled page, where you will find detailed insight from lawyers in a wide of range of different sectors.

Greg Standing considers the particular implications of Brexit on the automotive sector in his most recent update. Greg has also recently written on the new General Data Protection Regulation and the recent developments on increased accountability of individuals in finance services firms.

Our latest insolvency litigation briefing considers Hosking & McKay (as joint liquidators of Hellas Telecommunications (Luxembourg) II SCA (In Liquidation) v Slaughter & May (a firm), in which it was held that liquidators cannot have expenses already agreed by administrators to be assessed by the court. You can also see the May update here.

The case of Brookman v Welcome Finance Services Limited, which looks at quantifying redress for failure to disclose PPI commission, is the subject of an update by Greg Standing previously published in Motor Finance magazine.

Last month's finance litigation briefing looks at the case of Nelmes v NRAM PLC on an unfair relationship following non-disclosure of commission payment, as well as other cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.