Category: Guidance

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Payment Systems Regulator publishes new Powers and Procedures Guidance

On 20 September 2024, the UK Payment Systems Regulator (the PSR) published an updated version of its guidance entitled ‘Powers and Procedures Guidance’. Section 96 of the Financial Services (Banking Reform) Act 2013 requires the PSR to published guidance.

The guidance updates the PSR’s guidance which was first published in 2015 (and updated in 2020). The PSR’s response paper sets out the changes. These updates include:

– changes to paragraph 5.7 of the guidance: dealing with the process for opening an investigation; and

– changes to paragraph 5.12 of the guidance: dealing with flexibility for staff deployed on monitoring or enforcement to work across functions.

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FCA publishes policy statement and finalised guidance on ways consumer credit and mortgage firms should support customers in financial difficulty

Earlier today, on 10 April 2024, the UK Financial Conduct Authority published a press release and Policy Statement, PS24/2, setting out the new rules and guidance which will apply to consumer credit and mortgage firms to support customers in financial difficulity.

The FCA has also published updated finalised guidance, FG24/2, and a press release.

The changes made to both CONC and MCOB by PS24/2, and FG24/2, will come into force on 4 November 2024.

We’ve set out a summary in a one page infographic (if you click the infographic it should be larger):

If you want a PDF copy, please contact your usual contact at Walker Morris LLP.

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FCA publishes finalised guidance on financial promotions on social media

Earlier today, on 26 March 2024, the UK Financial Conduct Authority published a press release and finalised guidance on financial promotions on social media.

There’s much in the guidance but some headline points for now are:

– The FCA has repeated its guidance that it expects financial promotions to be standalone compliant. While promotions of complex financial products “might require additional supporting information or disclosure“, the “initial promotion needs to remain compliant in and of itself“.

– The requirement for prominence in the FCA’s handbooks is “media-neutral“. Firms should consider the existence guidance on prominence. Firms should ensure information which is required to be displayed prominently “is displayed without needing click-through or any other optional action to view it“.

– Social media may not always be appropriate to promote financial products.

– There are some examples of how an unregulated BNPL financial promotion could be published.

– Firms are reminded of the consumer duty and how it could apply to social media.

– There is a real focus on influencers (or finfluencers).

– There’s guidance for firms on what ‘in the course of a business‘ means. The FCA makes it clear that this includes any level of commerciality. There are also some examples in paragraphs 4.20 to 4.27.

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FCA joins with other regulators to warn firms about debt collection

On 18 March 2024, the UK Financial Conduct Authority published a news story calling on firms to improve debt collection practices. All of the regulators feel that this is particularly important given many consumers continue to feel cost of living pressures.

The news story also includes links to:

– a joint press release; and

– a copy of the joint letter dated 18 March 2024.

This joint letter follows on from a letter published on 28 June 2023 (see the press release and the joint letter dated 28 June 2023).

The latest joint letter makes the following points for financial services firms:

– firms should start from the position that customers in collections are highly likely to have characteristics of vulnerability and should follow FCA’s expectations under the consumer duty (including its finalised guidance) and its vulnerable customer guidance;

– the consumer duty strengthens existing requirements;

– there is foreseeable harm if a debt collection communication sent the customers are perceived to be intimidating or unsupportive (and communications should be tested)

– firms may want to encourage ‘warm’ handovers between frontline and specialist teams; and

– the FCA aims to publish its policy statement before June 2024 on its response to Consultation Paper 23/13.

The FCA reminds financial services firms (and this point should not come as any surprise) that debt collection rules and guidance apply to both debt collectors and to lenders taking steps to recover payments due under credit agreements or consumer hire agreements.

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Land Registry updates Practice Guide on discharges of charges

On 18 September 2023, the Land Registry published an updated Practice Guide 31 on the discharge of charges.

There are two main changes:

– Section 6.7 (headed ‘What Land Registry issue on completion of an electronic discharge’) and Section 7.8 (headed ‘What Land Registry will issue on completion of registration of an e-DS1’) are deleted; and

– Section 7.5 (headed ‘What you should do if you act for a borrower’) has been changed.

These changes have been made because the Land Registry no longer sends redemption letters to borrowers.

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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 policy statement and finalised guidance on its Consumer Duty for retail firms

On 27 July 2022, the UK Financial Conduct Authority published a press release, a webpage, a policy statement and finalised guidance on its consumer duty for retail firms. The FCA is clear that it will “set higher and clearer standards of consumer protection across financial services and require firms to put their customers’ needs first“.

Together with my fellow partners, Noline Matemera and Robin Penfold, we’ve prepared a one page infographic on six key takeaways:

There is no doubt that there is a lot of work for firms to do between now and implementation.

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Financial Conduct Authority warns businesses to stop misleading credit adverts

On 6 May 2022, the UK Financial Conduct Authority published a press release and a ‘Dear CEO’ letter to consumer credit firms telling them to stop using misleading terms in their advertising.

The FCA has written to almost 28,000 consumer credit firms “warning them not to use terms such as ‘no credit check loans’, ‘loan guaranteed’, ‘pre-approved’ or ‘no credit checks’ when marketing loans”. The FCA’s concern is that firms are giving consumers a misleading impression that they will automatically get a loan.

The FCA’s ’Dear CEO’ letter says:

– it expects authorised firms who are issuing and/or approving consumer credit financial promotions to “ensure that all communications of financial promotions are clear, fair and not misleading and otherwise comply with the rules set out at CONC 3. This includes ensuring that those to whom a financial promotion is addressed, or at whom it is directed, understand the nature of the firm’s regulated activities”;

– it has identified a number of financial promotions including phrases like “‘no credit checks loans’, ’loan guaranteed’, ‘pre-approved’ or ’no credit checks’” (some of which could lead consumers to believe that there are no credit checks);

– some firms promoting high-cost short-term credit have failed to include the late payment warning under CONC 3.4.1R;

– whilst the FCA is aware that some advertising media “might appear to pose challenges for firms in meeting” the FCA’s requirements, those rules are “media neutral” and the FCA considers it possible to comply (but it is relaxed on some minor changes to the warning for platforms which do not accept logos);

– some promotions have failed to include a representative APR; and

– certain promotions by credit brokers fail to state they are brokers and not lenders (as required by CONC 3.7.7R).

The FCA also reminds firms of the requirement to comply with the codes published by the Advertising Standards Authority.

Whilst the FCA says the ’Dear CEO’ letter applies to credit brokers and firms providing high-cost lending products, it has clear read-across to other consumer credit products.

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FCA publishes financial promotion case studies

On 9 July 2021, the UK Financial Conduct Authority published financial promotion case studies (which were updated in October 2021). The FCA said it recognised “the need to provide information for firms to understand the financial promotions rules that apply to particular products and services“.

It has therefore published two short video case studies:

– the first is a case study for a hire purchase agreement which includes common mistakes the FCA often sees firms making; and

– the second is a case study for claims management companies offering their services for financial service products which includes common mistakes the FCA often sees firms making.

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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”.