The Financial Ombudsman Service Annual Review

On 15 May 2019, the Financial Ombudsman Service (FOS) published its annual review 2018/2019.  FOS reported (among other complaints) an 89% rise in complaints about consumer credit.

The high-cost short-term lending (HCSTL) sector remains on FOS’s radar.  It continues to hear from customers, who it says, have had trouble after being lent money and who’ve been left to struggle with unsustainable and persistent debt.  

FOS is concerned that businesses are still failing to assess a customer’s affordability and aren’t learning enough from the complaints its resolved.  To help businesses, FOS is publishing its decisions (https://www.ombudsman-decisions.org.uk) setting out its thinking on these types of complaints. Of particular note, is complaints arising out of loans taken out a long time ago. FOS says it’s taking the time to explain to lenders the questions they should ask before telling customers it’s too late to complain.

Given the Financial Conduct Authority’s recent interventions and FOS’s concerns, the HCSTL sector remains high on the agenda for now.

The Annual Review: https://annualreview.financial-ombudsman.org.uk

FCA publishes research report on buying mortgages without advice

On 7 May 2019, the UK Financial Conduct Authority published a report it had commissioned by Revealing Reality on the way consumers buy regulated mortgages without advice.

There’s some interesting findings from the research including:

– execution-only customers generally understood they wouldn’t receive any advice on the mortgage;

– there was a lack of understanding (both for advised and non-advised sales) of the documentation given to customers;

– the difference between an advised and a non-advised sale was not generally understood;

– repetition helps make sure the customer understands the message;

– customers don’t like the look and feel of disclosure documents; and

– plain English, bullet points and Q&As, help get your message across better.

If you’re drafting mortgage documentation, this is likely to be a helpful bit of research. Depending on the outcome of Brexit, there may be an opportunity to simplify some of the documentation and procedures to tackle some of the problems found in this research.

Payment Systems Regulator consults on a specific direction on the implementation of the confirmation of payee service

On 9 May 2019, the UK Payment Systems Regulator (the PSR) published its response to the first consultation on the proposed implementation of the confirmation of payee service, and published a new consultation on a specific direction on the implementation of the service.

After considering the feedback, the PSR has refined its approach. It has decided to give a specific direction to Lloyds Group, Barclays Group, HSBC Group, Royal Bank of Scotland Group, Santander Group and Nationwide Building Society (being the six largest payment services providers).

The proposed effect of the specific direction is to require:

From 31 December 2019: the directed PSPs must respond to compliant confirmation of payee requests; and

From 31 March 2020: the directed PSPs must send confirmation of payee requests and present responses to their customers.

The consultation period ends on 5 June 2019.

FCA publishes undertaking given by James Brearley & Sons Limited about the fairness of a term allowing it to immediately end a contract

On 9 May 2019, the UK Financial Conduct Authority published an undertaking given by James Brearley & Sons Limited about a term allowing it to end a contract by giving “written notice at any time”. 

The FCA considered such a term was potentially unfair under Regulation 5(1) of the Unfair Terms in Consumer Contracts Regulations 1999 and Section 62(4) of the Consumer Rights Act 2015.

The firm agreed to stop using the term and replace it with a term saying it needed to give a customer twenty business days’ notice if it wanted to stop providing the services to them.

Information Commissioner’s Office fines Hall and Hanley Limited £120,000 for instigating the sending of almost three and a half million spam direct marketing texts

On 3 May 2019, the UK Information Commissioner’s Office (the ICO) issued a monetary penalty notice (otherwise known as a fine) of £120,000 to Hall and Hanley Limited for sending unsolicited texts about potential payment protection insurance complaints to individuals.

The ICO decided Hall and Hanley Limited had breached Regulation 22 of the Privacy and Electronic Communications (EU Directive) Regulations 2003 (PECR) by instigating the sending over three and a half million unsolicited texts to individuals between January and June 2018. Whilst Hall and Hanley Limited did not send the text messages, the ICO was satisfied it was the instigator of those messages (and it did not have a valid consent to send them).

This is another example of the ICO using its powers under the PECR to issue significant monetary penalty notices to firms. For another example, see our earlier blog post.

Banking (Consumer and Small Business Protection) Bill 2017-19 has its first reading in the House of Commons

On 7 May 2019, the UK House of Commons had its first reading of a private members’ bill, sponsored by Charlie Elphicke MP, called the Banking (Consumer and Small Business Protection) Bill 2017-19.

There is little information on the detail at this stage: Parliament’s website says the Bill is “being prepared for publication”. But the summary is interesting: “A Bill to make provision to enable consumers to transfer mortgages between providers; to prohibit the sale of mortgage debt to unregulated entities and the foreclosure of certain loans; to establish financial services tribunals; and for connected purposes

There may, of course, be overlap with the UK Financial Conduct Authority’s consultation paper on helping so called ‘mortgage prisoners. Private Members’ Bills are also notoriously difficult to pass into law. It’ll therefore be interesting to keep a close eye on the Bill’s progression.