Category: BCOBS

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ICO and FCA publishes joint letter on data protection provisions and effective communications to savings customers

On 18 July 2023, the Information Commissioner’s Office and the Financial Conduct Authority published a joint letter sent to UK Finance and the Building Societies Association setting out whether data protection regulations stop firms from telling savings customers about better deals. The joint letter’s answer is that this “is not the case“.

There are a number of useful points from the joint letter including:

– Data protection law gives data subjects the right to object from direct marketing.

– But this does not stop firms from providing communications when requested, or required, by a statutory regulatory (for example, the FCA under the consumer duty). This is true even if the customer has ‘opted out’ of direct marketing.

– PRIN 2A.5.3R and PRIN 2A.5.5R (both of which implement the consumer duty) both require firms to communicate with their customers so that they can make informed decisions.

– The ICO’s guidance on direct marketing and regulatory communications explains how to draft such regulatory communications, and includes illustrative examples. Firms should use a neutral tone and avoid active promotion or encouragement.

– Firms can therefore send regulatory communications to all their savings customers that provide neutral, factual information about the interest rate and terms of the savings product they hold, the interest rate and terms of other available savings products, and what their options are for moving to another product.

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FCA publishes final report on strategic review of retail banking business models 

On 20 January 2022, the UK Financial Conduct Authority published its final report following its strategic review of retail banking business models, together with a webpage and press release.

This report follows the FCA’s progress report from June 2018.

The key points from the final report are:

– large banks have a strong position but are facing challenge from others;

– low levels of consumer engagement have historically contributed to high barriers to entry and expansion;

– digital challenges have rapidly gained a share of the personal current account and business current account markets

– competition in the mortgage market has increased (causing yields to come down)

– yields for consumer credit firms have fallen too (particularly on unarranged overdrafts);

– large banks did proportionately more micro-business lending under the government schemes than most other banks; and

– increased competition and innovation have improved outcomes for many consumers and some small businesses.

The FCA says it will be “discussing the points raised in our 2022 Final Report with firms and consumer organisations but are keen to hear from other stakeholders”. The FCA has invited written submissions by 31 March 2022.

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Butterworths Financial Regulation Service – updated commentary on CONC and BCOBS, and new commentary on BCOBS 4 and 5, published

Issue 115 of Butterworths Financial Regulation Service has now been published. I’ve written new chapters on BCOBS 4 and BCOBS 5. I’ve also reviewed and revised the existing chapters in BCOBS and in CONC. The commentary is up to date to December 2020.

The changes include:

– revising the commentary in CONC to reflect latest COVID-19 guidance from the FCA;

– updating the commentary in CONC to consider the changes to commission disclosure, including analysing the meaning of the ‘nature’ of commission; and

– considering the changes to both CONC and BCOBS as a result of Brexit.

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Butterworths Financial Regulation Service – updated commentary on CONC and MCOB, and new commentary on BCOBS, published

Issue 113 of Butterworths Financial Regulation Service has now been published. I’ve written a new chapter on CONC 8, and reviewed and revised the existing chapters on CONC (including adding the latest COVID-19 guidance published by the Financial Conduct Authority).

I’ve also written new chapters on MCOB 2A, 3B, 4A and 6A, and reviewed and revised the existing chapters on MCOB.

I’m also delighted to have published brand new commentary on BCOBS. There will be additional new chapters over coming issues but this issue has:

– an introductory chapter on BCOBS; and

– commentary on BCOBS 1, 2, 2A and 3.

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FCA publishes letter sent to firms about overdraft pricing

On 28 February 2020, the UK Financial Conduct Authority published a letter sent to firms asking for more information about its overdraft pricing in light of the forthcoming rules which will apply from 6 April 2020. The deadline for a response is 10 February 2020.

The FCA has also published a webpage. This says the FCA will be “keeping a close eye on the market” and “will act should we see continued harm”.

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CMA publishes final decision to vary Part 6 of the Retail Banking Market Investigation Order 2017

On 4 December 2019, the UK Competition and Markets Authority (the CMA) published:

– its final decision to vary the Retail Banking Market Investigation Order 2017 (the Order) and remove Part 6 of the Order;

– a notice of variation to the Order; and

– the Retail Banking Market Investigation Order 2017 Variation Order 2019 (the Variation Order) and an explanatory note to the Variation Order.

The broad effect of the Variation Order is to remove the requirement (set out in the Order) for alerts to be sent to overdraft customers. The reason the CMA has made the Order is because of the introduction of similar rules in Chapter 8 to the Banking: Conduct of Business Sourcebook (BCOBS) and, in particular, the provisions in BCOBS 8.4.