Compliance Roundup - 20 November 2024
20 November 2024
In this issue: CSA report highlights regulatory costs and their strain on debt collectionThe Credit Services Association's "Compliance Conundrum" report highlights the challenges posed by rising regulatory costs in the debt collection and purchase sector. It emphasises that while regulation is necessary, the increasing financial burden could limit credit availability, stifle innovation, and harm consumers. The report calls for a thorough review of these costs and their impact on the market to ensure a balanced approach that supports both regulatory goals and industry sustainability. The compliance conundrum - Credit Services Association Ltd FCA consultation on extended timeframes for motor finance commission complaintsThe Financial Conduct Authority (FCA) is consulting on proposals to extend the timeframes for motor finance firms to handle commission-related complaints. This initiative aims to ensure that consumers receive fair treatment and that firms have adequate time to address complex issues. The consultation seeks to gather feedback on the proposed changes, which could impact how complaints are managed and resolved, potentially leading to more thorough investigations and better outcomes for consumers. FCA to consult on extending the time motor finance firms have to handle commission complaints | FCA FOS set to charge CMCs / professional representatives amid rising complaintsThe Financial Ombudsman Service (FOS) has published its feedback statement regarding the consultation on introducing charges for professional representatives, including Claims Management Companies (CMCs). Based on the responses received, FOS is inclined to proceed with charging CMCs at the proposed fee levels. They acknowledge concerns raised by CMCs regarding the time needed for implementation but remain unconvinced by requests for extended preparation periods. FOS plans to announce a start date for the fee regime, which will depend on parliamentary approval and the completion of the necessary procedures by the Financial Conduct Authority (FCA). They have emphasised that they will communicate their final decision once these processes are completed. FOS has recognised a clear disparity between the responses from industry stakeholders and professional representatives. While the financial services sector largely supports the introduction of a fee, with the view that it would reduce the number of frivolous claims, CMCs have expressed significant opposition, fearing the impact on their business models. FOS notes the recent surge in complaints referred by CMCs, many of which have been withdrawn or found lacking in merit. This increase in referrals has been consistent with the expectations of the financial services industry, and FOS remains concerned about the quality and merit of many cases being escalated by professional representatives. The Ombudsman Service has also highlighted that, historically, complaints referred by professional representatives tend to have a lower success rate compared to those brought directly by consumers. This trend is worsening, and FOS believes it is important to factor this into decisions about the implementation timeline for charging. They stress that complaints brought by CMCs should, in theory, have a higher uphold rate due to the professional status of the representatives, but the current data suggests otherwise. As a result, FOS is taking these concerns into account when determining the scope and timing of the fee regime, aiming to strike a balance between addressing the volume of low-merit complaints and ensuring fair access to the service. Feedback statement - responses to questions on charging professional representatives in Plans and Budget Consultation 2024-25 Call for input: FOS and FCA move to modernise redress system The Financial Ombudsman Service (FOS) and the Financial Conduct Authority (FCA) have launched a joint initiative to modernise the financial redress system. This move aims to address issues that lead to spikes in complaints and create uncertainty for firms and their customers1. The initiative seeks feedback on how to better identify and mitigate financial problems early on, allowing firms to resolve complaints more effectively and reduce the need for external intervention. The call for input is part of a broader effort to ensure consumers receive appropriate redress when things go wrong. It also aims to improve communication with stakeholders and create a more stable environment for firms to invest and innovate1. The FOS and FCA believe that a modernized redress system will enhance consumer protection, market integrity, and competition, ultimately supporting sustainable economic growth. Call for Input Modernising the Redress System Financial Ombudsman Service and FCA move to modernise redress system – Financial Ombudsman serviceModernising the redress system | FCA GovS 014: simplifying debt management for government bodiesThe Government Functional Standard GovS 014: Debt sets a framework for managing debt across government departments and their associated bodies. Its core objectives are to establish a consistent approach, enhance government capabilities, reduce losses to the exchequer, and efficiently use taxpayers' money while reducing undue stress on debtors. This standard governs the planning, delivery, and management of debt within government entities and their arm's length bodies, and can also be used by other public sector organisations for benchmarking and continuous improvement. With both mandatory and advisory components, the standard ensures clarity and consistency in its implementation, promoting value for money for taxpayers and uniformity across central government and public sector organisations. https://www.gov.uk/government/publications/government-functional-standard-govs-014-debt SRA faces major setback in bulk litigation caseAs recently highlighted in the Law Gazette a case by the Solicitors Regulation Authority (SRA) has been criticised for its significant financial waste after it failed to achieve a successful outcome. The director involved in the case highlighted the inefficiencies and the substantial costs incurred, raising concerns about the regulatory body’s decision-making processes. This incident underscores the importance of effective case management and the potential financial repercussions of regulatory actions. This case serves as a reminder of the critical need for efficient and cost-effective handling of regulatory matters. The failed SRA case illustrates the potential risks and financial burdens associated with prolonged and unsuccessful regulatory actions. Member firms must stay vigilant and ensure robust compliance practices to avoid similar pitfalls and maintain operational efficiency in the face of regulatory scrutiny. Managing director of Barings Law blasts ‘egregious waste of money’ after failed SRA case | Law Gazette Chancellor rolls out new measures to boost UK’s financial sectorThe Chancellor has announced a series of measures aimed at invigorating the UK’s financial services sector to drive economic growth. These initiatives include regulatory reforms, incentives for innovation, and support for financial technology advancements. The goal is to enhance the competitiveness of the UK’s financial services on a global scale, fostering a more dynamic and resilient economic environment. https://www.gov.uk/government/news/chancellor-fires-up-financial-services-sector-to-drive-growth Association of British Investigators (ABI) code of conduct passed by the ICOThe ABI Data Protection Code of Conduct has set guidelines designed to help operators in the UK Investigative & Litigation Support Services sector on how they are required to handle Personal Data. The Code covers a range of topics including data collection, processing, retention, security, and rights of individuals, emphasising the importance of data governance, risk management, and ensuring that their members uphold high standards in protecting personal information throughout their operations. ABI Data Protection Code of Conduct 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). Regulation of Buy-Now, Pay-Later: consultation on draft legislation (October 2024) - GOV.UK
Closing date: 29th November2024 Call for Input Modernising the Redress System
Closing date 30th January 2025
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