Since our last publication, the FCA has published a "Dear CEO" letter on consumer credit firms' handling of complaints. In other news, the Treasury Committee has published a letter to the Chancellor of the Exchequer on the impact of Brexit on cross-border insurance contracts.

UK

FCA "Dear CEO" letter on consumer credit firms' handling of complaints

The FCA has published a Dear CEO letter addressed to firms engaging in consumer credit activities, setting out its concerns about firms' handling of complaints. The FCA states that it recently undertook a review of how consumer credit firms approach and deal with customer complaints. In the letter, the FCA highlights its concerns relating to:

• The failure of firms to provide appropriate information about their internal complaints-handling procedures and to refer complainants to the availability of it.
• The poor quality of final responses from firms about complaints. The FCA found that firms failed to provide clear explanations of factors such as the assessment of the complaint, the decision itself and the reasons why a complaint was rejected.
• The failure of firms to undertake root cause analyses to identify and remedy any recurring or systemic problems, as required by DISP 1.3.3R.
• Firms failing to record and report accurate complaints data.

The FCA expects firms to review how they identify, record and deal with complaints as well as how this is communicated to customers, particularly taking into consideration the issues highlighted in the letter. Firms do not need to notify the FCA about the review or its outcome. However, the FCA may request evidence of compliance with complaints-handling requirements, including details of any reviews undertaken in response to this letter.

FCA, 13 September 2017

Treasury Committee letter to Chancellor on impact of Brexit on insurance contracts

On 14 September 2017, the UK Parliament published a letter from Nicky Morgan, Chair of the House of Commons Treasury Committee, to Philip Hammond, Chancellor of the Exchequer, on the impact of Brexit on cross-border insurance contracts.

The letter focuses on insurance contracts sold under passporting arrangements with duration extending past 29 March 2019. If insurers were to lose their legal right to service these contracts they would have to terminate the contracts or be in breach of the law. They could establish a subsidiary elsewhere in the EEA and transfer the contracts to the new entity, but this would be a costly and time-consuming process.

Ms Morgan asks the following questions by 21 September 2017:

• Does the Treasury consider that this problem poses risks to a smooth and orderly exit from the EU, and does it therefore consider it to be a matter for the first phase of the Article 50 negotiations?
• What proposals are being considered to preserve stability and certainty in respect of insurance contracts that straddle "Brexit day"? In particular, does the Treasury wish to see arrangements that allow contracts written before "Brexit day" to retain the same regulatory treatment for their duration?
• Does the government intend to publish a position paper on this issue?

FCA, 14 September 2017

FCA Handbook Notice 47

FCA has published Handbook Notice 47, which sets out the changes made to the FCA Handbook under instruments made by the FCA Board on 12 September 2017:

• Handbook Administration (No 47) Instrument 2017. This instrument makes minor changes to various modules of the FCA Handbook, the Perimeter Guidance manual (PERG) and the Reader's Guide.
• Training and Competence Sourcebook (Qualifications Amendments) Instrument 2017. This instrument makes changes to the Glossary and Appendix 4.1 to the Training and Competence sourcebook (TC) to keep it up to date.
• Conduct of Business (Disclosure Amendment) Instrument 2017. This instrument makes changes to COBS 4, COBS 14 and chapter 7 of the Mortgages and Home Finance Conduct of Business sourcebook (MCOB).
• Pension Schemes (Disclosure of Transaction Costs and Administration Charges) Instrument 2017 (FCA 2017/53). This instrument makes changes to the Glossary and COBS 19 to enable governance bodies of relevant pension schemes to protect the interests of pension scheme members by enabling them to obtain information to assess transaction costs and judge whether these represent value for money.
• Listing Rules (Corporate Governance Code) Instrument 2017. This instrument makes changes to the Glossary, and Appendix 1.1 and transitional provisions (TR) 13 of the Listing Rules sourcebook (LR).
• Fees (Payment Services) Instrument 2017 (FCA 2017/56). This instrument introduces application charges to enable firms to submit applications in advance of the revised Payment Services Directive ((EU) 2015/2366) (PSD2). It comes into force on 13 October 2017 and 13 January 2018. The FCA published a policy statement outlining its final rules in this area in July 2017.

FCA, 13 September 2017

BoE and PSR announce formation of NPSO

The Payment Systems Regulator (PSR) and the Bank of England (BoE) have announced that the Payment System Operator Delivery Group (PSODG) has completed the necessary steps to deliver against the mandate that the regulators tasked it with. Following the appointment of Melanie Johnson as its first chair, work will continue at pace to deliver the New Payment Systems Operator (NPSO) by the end of 2017. With the NPSO now taking the lead, the PSR and the BoE have confirmed the closure of the PSODG. 

PSR, 13 September 2017

PRA updates supervisory statement on depositor and dormant account protection (September 2017)

On 19 September 2017, the PRA issued a revised version of its supervisory statement on depositor and dormant account protection (SS18/15). SS18/15 sets out the PRA's expectations of deposit-takers with regards to the depositor protection rules.

The only changes to the previous version which was published in January 2017 are to section 3.16. The changes clarify the use of the Financial Services Compensation Scheme (FSCS) badge on the information sheet contained in Annex 1 of the Depositor Protection Part of the PRA Rulebook. Explanation of the updates can be found on the PRA's dedicated webpage. 

PRA, 19 September 2017

EU

European Commission speech on financial services initiatives for 2017 and early 2018

The European Commission has published a speech given by Vice President Valdis Dombrovskis, European Commissioner for Financial Stability, Financial Services and Capital Markets Union (CMU) on technological innovation and global regulatory co-ordination.

European Commission, 15 September 2017

European Commission summary of contributions to its consultation on FinTech

The European Commission published a summary of the contributions to its consultation on its policy approach to FinTech, which was published in March 2017. The Commission received 226 responses to the consultation (40 from the UK), the majority of which came from the industry. Many respondents underlined that FinTech, and technological innovation in general, were drivers of financial sector development and that there were huge opportunities in terms of access to finance, operational efficiency, cost-saving and competition. On the risk side, the predominant themes raised by respondents related to cybersecurity, the use and control of data and money laundering.

European Commission, 12 September 2017