Author: Russell J Kelsall

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FCA’s published board minutes show a review of its legal risk appetite

The UK Financial Conduct Authority has recently published the minutes for the board meeting held on 29 April 2021. Firms may be interested to see that the board was briefed on “concerns around whether the [FCA] has sufficient appetite for taking legal risks”.

The FCA’s board “recognised that legal risk was one of many factors to be considered when deciding on the appropriate action for the FCA to take”. It therefore supported proposals to “recalibrate the degree of legal risk the organisation is willing to take, how to implement this in practice and the inclusion of legal risk appetite/tolerance in the FCA’s Own Risk framework”.

It remains to be seen what impact this recalibration will have on the FCA’s approach to enforcement. But firms will need to remain alive to any changes to the FCA’s risk appetite.

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Payment Systems Regulator consults on its proposed five year strategy

On 10 June 2021, the UK Payment Systems Regulator (the PSR) published a consultation paper setting out its proposed five year strategy.

The PSR proposes to focus on four key strategic outcomes:

– All users should have access to payment services that meet their needs in terms of functions, quality, cost and other relevant factors.

– Users’ interest must be adequately protected when using payment systems so that they can use systems and services with confidence.

– Payment systems should be designed and operated to enable effective competition in the provision of payment services.

– Payment systems should be efficient and commercial sustainable.

The consultation period ends on 10 September 2021. The PSR aims to publish its finalised strategy before the end of 2021.

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Money and Pensions Service releases beta version of its MoneyHelper website

On 7 June 2021, the Money and Pensions Service published a press release saying it had released a beta version of the MoneyHelper website to share with partners and stakeholders. The website’s release will allow MaPS to continue gathering feedback and testing before its launch to consumers by 30 June 2021.

Until the MoneyHelper site goes live to consumers, MaPS’ existing websites and services will continue to be accessible.

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FCA publishes information for borrowers who have LIBOR linked mortgages

On 11 June 2021, the UK Financial Conduct Authority published a new webpage giving information to borrowers who have LIBOR linked mortgages.

The webpage says:

– LIBOR is used to calculate “some interest rates” for mortgages and is coming to an end in 2021;

– if the mortgage is LIBOR linked, the lender “may need to amend its terms and conditions to change the way the interest rate is calculated”. If it does so, the lender will tell the customer (and may ask for consent to make the change);

– the new reference rate of interest could be the Bank of England base rate. But when replacing the reference rate, firms should treat their customers fairly; and

– there may be some cases where a change does not happen before the end of 2021. The FCA plans to consult on providing a temporary solution for certain products, which may include mortgages, that have not changed by that time (but such a solution will be “time-limited”).

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FCA publishes updated information sheets (to be used from 25 October 2021)

On 24 March 2021, the UK Financial Conduct Authority published updated consumer credit information sheets for arrears and for defaults. These new information sheets must be used from (and including) 25 October 2021. The current information sheets should continue to be used up to (and including) 24 October 2021.

For copies of the new information sheets, please visit: https://www.fca.org.uk/firms/information-sheets-consumer-credit.

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ASA publishes a ruling upholding four out of five grounds for a complaint against Money Advisor

On 5 May 2021, the Advertising Standards Authority published a ruling against Money Advisor Limited t/a Money Advisor. The complaints related to the claims made on how debts could be ‘written off’.

The ruling records that a TV advertisement for Money Advisor, seen in January 2021, included a voiceover stating “When you’re in debt it’s hard to know where to turn; you can feel trapped by it, you can’t see a way out. Call Money Advisor for help” (with the on-screen text giving examples of debts which had been ‘written off’) (called ‘ad (a)’). Money Advisor’s website also featured a banner with the logo and name of the Money Advice Service (called ‘ad (b)’).

The following complaints were upheld:

– The claim that “We could help you write-off 100 percent of your unaffordable debt” in ad (a) was misleading and could not be substantiated. No evidence was submitted to show that Money Advisor could provide such help.

– Ad (a) misleadingly implied Money Advisor could provide debt advice when it did not have permission from the FCA to do so.

– The claims “Call Money Advisor for help” and “We could help you write-off 100 per cent of your unaffordable debt” in ad (a) were misleading because they suggested Money Advisor provided the service and did not make clear that they passed on leads to third party insolvency practitioners.

– The use of the Money Advice Service name and logo in ad (b) misleadingly suggested an association with that service. The Money Advice Service logo appears “directly underneath a number of five start customer reviews” and this appeared to link the positive customer reviews with the Money Advice Service.

The ASA therefore decided that ad (a) must not be broadcast again, and ad (b) must not appear again in the form complained about.

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FCA publishes website reminding consumer credit firms of Brexit changes

On 13 April 2021, the UK Financial Conduct Authority published a webpage reminding consumer credit firms that:

– Brexit changes to pre-contractual information (a final ‘au revoir’ to the SECCI and ECCI!); and

– information for firms subject to CONC 2.7.2R(4)(a),

must be implemented by 31 May 2021.

The end of the transitional provisions mean the post-Brexit disclosures must be used from 1 June 2021.

If pre-contractual information (formerly the SECCI or ECCI) disclosed under Section 55(1) of the Consumer Credit Act 1974 is non-compliant then the agreement is unenforceable without the Court’s permission (see Sections 55(2) and Section 127(1)(za) of the Consumer Credit Act 1974).

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FCA publishes extended finalised guidance: ‘Cancellations and refunds: Helping consumers with rights and routes to refunds’

On 1 April 2021, the UK Financial Conduct Authority published a press release and extended finalised guidance (aimed mainly at insurance providers, and credit and debit card providers) on helping consumers with rights and routes to refunds.

The FCA had published finalised guidance in October 2020, but this was due to lapse on 2 April 2021. The extended finalised guidance takes effect from 2 April 2021 and, unlike the earlier guidance, “remains in place during the exceptional circumstances arising out of Covid-19 until varied or revoked”.

The guidance for credit card and debt card providers says:

– The FCA expects credit and debit card providers to handle section 75 and chargeback claims “in a reasonable timescale”, and FCA reminds firms of their obligations to treat customers fairly.

– If there are delays in processing claims, the FCA expects firms to clearly explain the reason for the delay.

– If a credit or debit card provider declines a consumer’s section 75 or chargeback claim, the FCA expects they should “explain the reasons for this clearly and fairly and explain any further options that the customer might have. This might include checking to see if they are covered under a policy of travel insurance, including policies held as part of a packaged bank account”.

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FCA urges Claims Management Companies and High Cost Lenders to work better together

On 31 March 2021, the UK Financial Conduct Authority published a news story encouraging claims management companies (‘CMCs’) and high cost credit lenders (‘HCC lenders’) to work better together.

The FCA is aware of:

– some CMCs having presented a claim to a HCC lender where the customer had never taken out a loan with them;

– some HCC lenders suspending lending whilst the complaint is being investigated;

– some CMCs using ‘catch all’ letters of authority; and

– some HCC lenders being unwilling to share information efficiently.

The FCA has reminded CMCs that:

– they must not make or pursue a claim if they have reasonable grounds to suspect the claim does not have a good arguable base or is fraudulent, frivolous or vexatious;

– they should take “all reasonable steps to investigate the existence and merits of each element of a potential claim” before making or pursuing a claim; and

– their investigations should enable them to make representations when presenting a claim which: (i) substantiate the basis of the claim; (ii) relate to the nature of the claim and are specific to the claim; and (iii) are not false, misleading or an exaggeration.

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Money and Pensions Service reveals plans for a single consumer destination driving financial wellbeing

On 18 March 2021, the Money and Pensions Service (MaPS) published a press release revealing plans to launch a single offering for consumers this summer called MoneyHelper. This will replace the legacy brands of the Money Advice Service, The Pensions Advisory Service and Pension Wise.

MaPS says that MoneyHelper will be a “single destination providing money and pensions guidance over the phone, online and face to face”.

MaPS also says MoneyHelper was developed following extensive user testing amongst MaPS audiences of people who are “struggling, squeezed and cushioned”.