News & blogs: Compliance Roundups

Compliance Roundup - 1 March 2023

01 March 2023

In this issue:

FCA publishes Consumer Duty portfolio letter for debt collection and debt purchase firms
CSA responds to FCA proposals to improve credit reporting market
New FCA podcast episode and speech on Consumer Duty
First-Tier Tribunal rules in ICO and Experian data protection case
FOS publishes latest quarterly complaints data
EDPB sets out plans and publishes additional guidelines
Small Business Commissioner issues latest newsletter
FOS relaunches Technical Desk as Business Support Hub
ABI shares guide on customer communications
FCA issues February regulation roundup
PSR seeks views as part of card scheme and processing fees market review
FCA enforcement - final notices and decision notices

FCA publishes Consumer Duty portfolio letter for debt collection and debt purchase firms

As part of its Consumer Duty work, the FCA has published a portfolio letter for debt collection and debt purchase firms outlining the FCA’s expectations for the implementation of Consumer Duty and singling out some key areas of focus for firms.

Annex 1 of the letter sets out how the Consumer Duty applies to firms in this sector, clarifying that the regulated activity is the product. As per previously-issued CSA materials, the FCA letter confirms that the regulated activity of debt collection will always be an open product and the 31 July 2023 implementation deadline is therefore applicable to this activity. The letter also confirms that for debt purchasers, portfolios purchased prior to 31 July 2023 will be considered closed products, whereas portfolios purchased after will be open.

Annex 2 of the letter identifies some key sector-specific issues for firms to consider when implementing the Duty, such as:

The rising cost of living and the need to provide forbearance and tailored support
Whether the firm is equipped to respond to an increase in demand for firms’ services
The approach to statute barred debt including the types of transactions that are considered ‘causes of action’, whether communications inappropriately reference legal action and adequacy of oversight and training in relation to statute barred debt
Ensuring that financial and operational pressures do not lead to harmful approaches to collections activity

The CSA intends to engage further with the FCA to better understand its expectations on the subjects highlighted in the portfolio letter.

The FCA’s portfolio letter for debt collection and debt purchase can be found here. The CSA’s materials on Consumer Duty are available here.

Alongside the portfolio letter for the collections sector, the FCA also released the portfolio letter for the debt advice sector, which is available here and may be of interest to CSA members.

CSA responds to FCA proposals to improve credit reporting market

The FCA recently published its interim report as part of its market study into the credit reporting sector. The interim report set out a number of possible changes for the sector, some to be led by the FCA and some by industry, including the creation of a new governance body for credit reporting, the introduction of mandatory reporting for FCA-authorised firms, and expanding the competition in the market.

With input from members, the CSA responded to the FCA’s interim report on 24 February 2023, highlighting concerns about the administrative and financial impact of some of the FCA’s proposals. The response also noted that the challenges facing the current governance body would not necessarily be fixed without regulatory support or powers to address the sector’s issues.

The CSA response is available here and the FCA’s interim report can be found here.

New FCA podcast episode and speech on Consumer Duty

The FCA has shared a new episode of its Inside FCA podcast which looks at the implications of the Consumer Duty for authorisation.

FCA technical specialist, Alex MacDermott, discusses how the Duty will affect firms seeking authorisation, including what firms will need to demonstrate in their applications and what it will mean if firms do not meet the requirements.

The podcast episode, including a transcript, is available here.

The FCA’s executive director for consumers and competition, Sheldon Mills, also recently delivered a speech discussing the implementation of Consumer Duty and the progress that firms are making in preparation. Mills outlines steps that firms can take between now and the July deadline, including engaging commercial partners and focusing on areas with the biggest impact on customer outcomes.

The full text of the speech can be found here.

First-Tier Tribunal rules in ICO and Experian data protection case

The First-Tier Tribunal (Information Rights) has issued its ruling in Experian’s appeal against the Information Commissioner’s Office’s (ICO) enforcement notice.

The ICO issued an enforcement notice in relation to Experian’s use of personal data for marketing purposes and the company’s legitimate interests assessments. The ICO reports that the Tribunal rejected the regulator’s view that Experian’s privacy notice was not transparent, that the use of credit reference data for direct marketing purposes was unfair and that Experian had not properly assessed its lawful basis. However, the Tribunal did find in the ICO’s favour that Experian had failed to notify over 5 million individuals about its processing.

The ICO news item on the finding is available here and the Tribunal decision notice can be found here.

FOS publishes latest quarterly complaints data

The Financial Ombudsman Service (FOS) has published its latest quarterly complaints data, covering the period October-December 2022.

The latest update sets out the number of enquiries and new cases received in relation to different financial products and services, as well as the proportion of complaints upheld. The latest figures show 31% of complaints about debt collection were upheld during the quarter, with 167 new cases taken on by the FOS.

Further information, including the published statistics, can be found here.

EDPB sets out plans and publishes additional guidelines

The European Data Protection Board (EDPB) has announced the adoption of its new work programme, confirming its areas of focus for the immediate future.

The EDPB intends to develop further guidelines to support data protection authorities, including guidance on the use of social media by public bodies and on the interplay between legislation on artificial intelligence and the General Data Protection Regulation.

The EDPB has also recently adopted additional guidelines on international transfers and certification.

The EDPB update on its new work programme can be found here and further details of its new guidelines are available here.

Small Business Commissioner issues latest newsletter

The Small Business Commissioner has issued its February 2023 newsletter.

The newsletter includes an invitation to provide views and feedback on the role of the Office of the Small Business Commissioner, with the survey closing to responses on 28 April 2023. The newsletter also highlights the Commissioner’s new interest calculator for unpaid invoices.

The February 2023 newsletter is available here.

FOS relaunches Technical Desk as Business Support Hub

In a recent blog, the Financial Ombudsman Service’s (FOS) chief operating officer, Karl Khan, has announced the relaunch of the Technical Desk as the Business Support Hub.

The blog outlines the reason behind the rebrand and the help that firms can get from the Business Support Hub.

The blog can be found here and includes links to the Business Support Hub.

ABI shares guide on customer communications

The Association of British Insurers (ABI) has collaborated with Fairer Finance to produce a guide on clear customer communications.

Although written for the insurance market, the Fairer Finance and ABI guide may be of interest to CSA members in relation to their own communications.

The guide is available here.

FCA issues February regulation roundup

The FCA has issued its regulation roundup for February 2023.

The roundup includes commentary from the FCA’s executive director for consumers and competition, Sheldon Mills, on the implementation of Consumer Duty, as well as an update on changes to accessing the FCA’s systems and details of the FCA’s survey of regulated firms.

The February roundup can be found here.

PSR seeks views as part of card scheme and processing fees market review

The Payment Systems Regulator (PSR) has published two papers seeking stakeholder views as part of its card scheme and processing fees market review.

One paper sets out the regulator’s proposed approach to analysing the profitability of Visa and Mastercard’s UK businesses, while the other paper is seeking stakeholder feedback on how competition is working in the market and how it affects the fees that businesses have to pay to accept card payments.

Further details of each paper, including how to respond, can be found in the PSR’s press release here.

FCA enforcement - final notices and decision notices

The FCA often publishes final notices and decision notices following investigations into alleged regulatory breaches or the refusal of applications for authorisation. These notices can often provide useful insight into what the FCA considers to be poor practice and the potential consequences of those practices. The FCA will also occasionally publish press releases detailing the outcome of cases pursued through the courts.

In the last week, the FCA has issued the notices listed below. You can read more about the FCA’s investigation and findings by clicking on the relevant link.

Stratton Leasing Ltd – final notice
Tyne Point Car Sales Limited – final notice
Abbey Lane Financial Associates Limited – first supervisory notice
Estate Capital Financial Management Limited – first supervisory notice