Compliance Roundup - 5 June 2024
05 June 2024
In this issue: Updated CSA Code of Practice comes into forceEarlier this year, the CSA announced updates to its Code of Practice relating to contact with customers. The updated Code of Practice containing new provisions 2q(i), 2q(ii) and 2q(iii) came into force on 1 June 2024. The revised version of the Code of Practice is available on the CSA website here. FOS launches consultation on charging professional representatives; publishes latest newsletterThe Financial Ombudsman Service (FOS) has launched its consultation into charging a fee to claims management companies and professional representatives for using its service. The FOS is consulting on introducing a fee of up to £250 for professional representatives. The fee charged to a professional representative will vary depending on the outcome of the complaint, with the professional representative fee reduced to £75 where the complaint is found in their / the consumer’s favour, but rising to the full £250 if the FOS finds against them / the consumer. In a positive move, the FOS proposes that where a professional representative is subject to the £250 charge, £175 of this will be used to reduce the firm that is subject to the complaint. Thus, under the new proposals, a firm subject to a FOS complaint raised by a professional representative may end up paying only a £475 case fee if the FOS finds in their favour. If any members are interested in contributing to an industry response, please contact the CSA head of policy, Daniel Spenceley (daniel.spenceley@csa-uk.com), as soon as possible. As part of the launch of the consultation, the CSA attended a trade body meeting with the FOS. During that meeting, the FOS confirmed that the upcoming general election would not impact its ability to consult on this change, but it would require a sitting Parliament post-consultation in order to effect the change. The consultation paper can be found here and closes for responses on 4 July 2024. The FOS has also published its latest newsletter, which includes updates on the consultation and the FOS’ half-yearly complaints statistics. Ombudsman News No. 191 is available here. Prime Minister sets date for general electionPrime Minister, Rishi Sunak, confirmed that a general election would take place on 4 July 2024. In the interim, there will be limited regulatory and statutory progress. It has been confirmed that certain Bills were not progressed prior to the dissolution of Parliament, including the Data Protection and Digital Information Bill, while some were pushed through, such as the Digital Markets, Competition and Consumer Act. There will also be no further progress on Consumer Credit Reform or Insolvency Reform, unless picked up by a new government post-election. The announcement of Royal Assent for the Digital Markets, Competition and Consumer Act can be found here. FCA fines HSBC over historic collection practicesThe FCA has confirmed that it has fined HSBC £6.2 million for failures in its treatment of customers who were in arrears or experiencing financial difficulty. The failures relate to the period June 2017 to October 2018, where HSBC failed to properly consider the circumstances of people who had missed payments. It did not always do the right affordability assessments when entering arrangements with people to reduce or clear their arrears, and sometimes it took disproportionate action when people fell behind. The FCA attributed many of the failing to deficiencies in HSBC’s policies and procedures, and the training of its staff. The final notice may be of interest to CSA members in understanding some of the FCA’s concerns and expectations about collection practices. The FCA announcement, including a link to the final notice, can be found here. Yvonne MacDermid OBE launches consultation seeking views on debt solutions in ScotlandScotland’s Minister for Community Wealth and Public Finance, Tom Arthur, recently appointed Yvonne MacDermid OBE to lead a review of debt solutions in Scotland. Ms MacDermid, who also sits on the CSA board of directors as an independent director, has now launched a consultation seeking views on debt solutions in Scotland. The consultation represents Stage Three of the review of debt solutions in Scotland and aims to develop recommendations for improving the framework in Scotland. Ideas under consideration include splitting any increase in income between the creditor and the customer, and developing a single gateway to insolvency. Any members interested in contributing to an industry response should share their feedback with the CSA’s head of policy, Daniel Spenceley (daniel.spenceley@csa-uk.com), as soon as possible. The consultation closes for feedback on 18 July 2024 and is available here.
New rules requiring mediation in small claims come into forceThe government confirmed that, from 22 May 2024, parties in money claims up to the value of £10,000 must take part in a free one-hour mediation appointment. The mediation appointment would be provided by HM Court and Tribunals Services’ (HMCTS) Small Claims Mediation Service. HMCTS advises that it has doubled the number of mediators and recruited additional administrative staff. The government announcement states: “If a party does not attend the required mediation appointment without good reason, the judge may apply a sanction at the final hearing. This could include a fine, covering the cost of the wasted mediation appointment, or in extreme circumstances having their claim or defence dismissed.” Integrated mediation is being rolled out initially to new claims made on paper and made through HMCTS’ legacy systems, which represent more than 70% of these types of claims. The government announcement can be found here. FCA issues latest Regulation RoundupThe FCA has issued its latest Regulation Roundup, which pulls together recent regulatory news and developments. The May 2024 Regulation Roundup includes commentary from the FCA’s executive director of authorisations, Sheree Howard, on the authorisations process, an update on the implications of the general election and a reminder of the impending closed products deadline for Consumer Duty. On the general election, the FCA notes that its essential business will continue and will be publicised as normal. However, the FCA is not planning to publish any major consultation or significant final rules during the election period and while Parliament is dissolved. It has also postponed the next edition of its Regulatory Initiatives Grid. The FCA’s Regulation Roundup is available here. SRA consults on 2024/25 business plan and budgetThe Solicitors Regulation Authority has published a consultation on its business plan and budget for 2024/25. The business plan sets out the SRA’s proposed priorities for the coming year and the work it will carry out to deliver on its objectives. The SRA draft business plan and budget 2024/25 is available here. FSCS publishes May 2024 Outlook statementThe Financial Services Compensation Scheme (FSCS) has published its latest Outlook statement, which provides an update on compensation figures and the 2024/25 levy. The FSCS Outlook confirms that the FSCS has refined its forecast for the year ahead and has reduced the compensation it expects to pay in 2024/25. It also anticipates a decreased levy from its early forecast in November 2023. The FSCS confirms that it is transitioning to a new operating model this year and costs have been factored into the 2024/25 forecasts. The FSCS Outlook for May 2024 is available here. ConsultationsThe following are consultation papers that are currently open for responses and may be of relevance to some or all CSA members. Also listed are papers that have recently closed to which the CSA has responded. If an industry response is warranted and you want to contribute, please contact CSA head of policy, Daniel Spenceley (daniel.spenceley@csa-uk.com). HMT: Improving the effectiveness of the Money Laundering Regulations
Closing date: 9 June 2024 FCA: Financial Crime Guide updates
Closing date: 27 June 2024 NEW: FOS: Charging claims management companies and other professional representatives
Closing date: 4 July 2024 NEW: Review of Scotland’s debt solutions
Closing date: 18 July 2024
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