Since our last publication, the FCA has published its second consultation paper on persistent debt, its final rules on information about current account services and near final rules on implementation of the Insurance Distribution Directive.
Second FCA consultation paper on persistent debt and earlier intervention
The FCA has published its second consultation paper on persistent debt and earlier intervention remedies (CP17/43). It follows the FCA's April 2017 consultation paper (CP17/10), which set out proposals for new rules and guidance. In the light of responses received, the FCA has made some changes to its proposals on persistent debt, to more clearly reflect the policy intention set out in CP17/10, which include the following:
- The FCA has clarified guidance on the content of communications to customers at 18, 27 and 36 months to make it clear that the rules do not specify the form of words firms must use.
- The requirement for firms to warn customers in their communications that card suspension may be reported to credit rating agencies (CRAs) has been replaced with a provision that firms make customers aware of the potential implications of continuing with low repayments.
- The introduction of additional guidance that, while the FCA expects three to four years to be a reasonable timeframe to repay for customers reaching the 36 month intervention point, a slightly longer period may be reasonable. However, this is only in exceptional circumstances where this results in no additional cost to the customer.
- The FCA plans to give firms a six-month implementation period, so they can amend their contracts to reflect the new persistent debt interventions, and provide any necessary advance notices to customers, an additional three months over what was previously proposed.
The proposed changes to the Consumer Credit sourcebook (CONC) is set out in Appendix 1 to CP17/43.
FCA, 14 December 2017
FCA policy statement and final rules on information about current account services
The FCA has published a policy statement (PS17/26) on information about current account services, setting out feedback on the FCA's consultation paper (CP12/24) on rules to require providers of personal current accounts (PCA) and business current accounts (BCA) to make information about current account services available to customers, and the final rules. The main changes to the rules consulted on are:
- Firms will not need to publish service metrics related to powers of attorney. Instead, UK Finance and the Building Societies Association (BSA) will develop an industry agreement to publish comparable information about the current account services firms offer to certain categories of vulnerable customer.
- Firms will not need to publish metrics related to account opening or debit card replacement until February 2019, to enable them to implement the required systems. The requirement to publish other information in August 2018 remains unchanged.
- Firms will need to present information about current account services in a series of standardised tables in a set order. The FCA considers this will make it easier for consumers to compare the information published by various current account providers.
The final rules will come into effect on 15 August 2018.
FCA, 12 December 2017
Insurance Distribution Directive implementation – FCA Feedback to CP17/23 and near-final rules
The FCA has published a second policy statement on implementing the Insurance Distribution Directive (IDD). This includes the response to the feedback they received to Consultation Paper 17/23 and covers the implementation of most IDD Level 1 directive matters, including the remaining conduct requirements for life policies and information disclosure in relation to non-investment insurance contracts that were not previously covered in an earlier consultation.
Additional near-final rules are also published.
FCA, 15 December 2017
MAS strategic approach to debt advice commissioning
The Money Advice Service (MAS) has published its strategic approach to commissioning free client debt advice services between 2018 and 2023. The strategy is built around six principles, which include enhancing the quality of debt advice provision across MAS funded services and developing services that make the best possible use of existing and emerging technologies. The MAS expects that the single financial guidance body, which will replace the MAS, will be established during the period of the strategy (late 2018), at which point it may be subject to review.
MAS, 18 December 2017
FOS consults on plans and budget for 2018/19
The Financial Ombudsman Services (FOS) has published a consultation on its proposed plans and budget for 2018/19. Points of interest include:
- The FOS is likely to receive and resolve 7,000 more complaints that it had originally anticipated, with the exception of packaged bank account complaints, which have fallen more quickly than anticipated;
- The implementation of the revised Payment Services Directive (PSD2) from 13 January 2018, will mean businesses have to resolve certain types of complaints within 15 days, rather than the current eight weeks;
- Since the FCA's Plevin rules and guidance came into effect in August 2017 and its payment protection insurance (PPI) awareness campaign was launched, the FOS has seen an increase in consumers getting in touch regarding PPI. The FOS is on track to receive the 180,000 new PPI complaints it had budgeted for in the current financial year and forecasts that it will resolve 280,000 PPI complaints by the end of March 2018.
- The FOS has received 4,500 more complaints concerning short-term lending (that is, payday loans and instalment loans) than previously forecast.
Regarding the proposed plans for the 2018/9 financial year, FOS proposes to freeze the case fee at £550 for the sixth consecutive year, with 25 “free” cases. It also proposes to impose an industry levy of £24.5 million and to maintain the current group funding arrangements for larger businesses, with no amendments.
FOS, 13 December 2017
FCA consults on approach to transitioning firms and individuals to SM&CR
The FCA has published three consultation papers containing a package of proposals on transitioning firms and individuals from the approved persons regime (APR) to the senior managers and certification regime (SM&CR), including proposals relating to guidance on the extension of the duty of responsibility. On 13 December 2017, the FCA published the following consultation papers setting out a package of proposals on how firms and individuals will transition from the approved persons regime (APR) to the senior managers and certification regime (SM&CR):
- Consultation paper on individual accountability: transitioning FCA firms and individuals to the SM&CR (CP17/40).
- Consultation paper on individual accountability: transitioning insurers and individuals to the SM&CR (CP17/41).
- Consultation paper on the duty of responsibility for insurers and FCA solo-regulated firms(CP17/42).
Comments can be made on the proposals in CP17/40, CP17/41 and CP17/42 until 21 February 2018.
FCA, 13 December 2017
Partner, Financial Regulation and Co-head of Financial Services Sector