Since our last publication, the FCA has confirmed the scope of its retail business banking model review and published its second consultation on its review of FSCS funding, and HM Treasury has issued a call for evidence on problem debt.
FCA sets out purpose and scope of retail banking business model review
The FCA has published a paper setting out the purpose and scope of its strategic review of retail banking business models. The paper has been published by the FCA ahead of engaging with firms to gather information. It covers:
- The context for the strategic review
- How the FCA uses business model analysis in conduct and competition regulation
- The changing face of retail banking and its potential effects on retail banking business models.
In particular, the review seeks to:
- Understand how free-if-in-credit banking is paid for, in particular whether it leads to concerns about the distribution of profits from different types of consumers or different products; and
- understand the impact of changes such as increased use of digital services and reduced use of branches on banks’ business models and the potential consequences for our consumer protection and competition objectives.
The first phase of the review will focus on gathering information. The second phase will consider areas of specific focus that the FCA has identified. The FCA intends to publish an update on its work in the second quarter of 2018.
FCA, 25 October 2017
HM Treasury call for evidence on problem debt
HM Treasury has published a call for evidence relating to relieving the burden of problem debt for individuals. Problem debt is described in the call for evidence as being where debt and arrears absorb an excessive proportion of income. HM Treasury is considering developing a way to provide individuals in debt with up to six weeks free from further interest, charges and enforcement action. At present there is a statutory scheme in place which provides for this, but only in Scotland and not England and Wales. The idea is that this period, referred to as "breathing space", would give those affected time to take action by seeking financial advice about how to manage and relieve their debt burden. By issuing the call for evidence, HM Treasury is seeking to gain further insight from the debt advice sector and creditors about the scale of the issue, and about how best to design, implement, administer and monitor a six week breathing space scheme debt repayment plan. Comments can be made until 16 January 2018.
HM Treasury, 24 October 2017
Second FCA consultation on review of FSCS funding
The FCA has published its second consultation paper on reviewing the funding of the Financial Services Compensation Scheme (FSCS) (CP17/36). The FCA:
- Seeks views on proposals for consultation concerning funding classes and provider contributions and to FSCS compensation limits, which includes increasing the compensation limit for home finance intermediation and debt management claims to £85,000; and
- Sets out policy decisions and final rules, which extend FSCS protection to cover certain debt management activities and structured deposit intermediation.
FCA, 30 October 2017
New FCA webpage on reporting consumer credit income
The FCA has published information with regard to what firms need to report on in relation to consumer credit income and to ensure they are correctly charged.
FCA, 26 October 2017
FCA complaints data for first half of 2017
The FCA has published complaints data relating to the period from January 2017 to June 2017. The press release links to FCA webpages on:
- Aggregate complaints data. This page contains information on the complaints that firms reported to the FCA, including the most-complained about products, the main reasons for complaints and outcomes for consumers.
- Firm-level complaints data. This webpage contains data from firms that report 500 or more complaints within the period from January 2017 to June 2017, or 1,000 or more for an annual reporting period.
In total, 3.32 million complaints were recorded by firms in the first half of 2017. This compares to 3.04 million in the second half of 2016. Since June 2016, firms have been required to report data to the FCA in a new way, which has increased the number of complaints reported. This is the first half year in which all firms are reporting under the new rules. Payment protection insurance (PPI) continues to be the most complained about product, making up a third of all complaints in the first half of 2017. The total redress paid to consumers was £1.99 billion in the first half of 2017, with 82% of the total redress payments for PPI complaints.
FCA, 23 October 2017
FOS ombudsman news issue 142
The Financial Ombudsman Service (FOS) has published issue 142 of ombudsman news. Among other matters, the issue includes:
- An update on the FCA's PPI awareness campaign;
- FAQs and case studies on PPI and
- Complaints statistics for the second quarter of 2017/2018 financial year.
FOS, 24 October 2017
EPC consultation on revised mobile contactless card payments guidelines
The European Payments Council (EPC) has published a consultation on a revised version of its mobile contactless Single Euro Payments Area (SEPA) card payments interoperability implementation guidelines.
EPC, 26 October 2017
European Commission inception impact assessment on legislative proposal for EU framework on crowdfunding
The EU Commission has published an inception impact assessment for a legislative proposal for an EU framework on crown and peer-to-peer finance. The aim of the initiative is to create a framework that will encourage cross-border activity in relation to crowdfunding platforms and to provide platforms with a proportionate and effective risk management framework. The Commission is concerned about the perceived lack of reliability of crowdfunding and peer-to-peer platforms, with the biggest perceived risks being loan defaults, business failures, fraudulent activities and the collapse of platforms because of malpractice. The deadline for comments is 27 November 2017.
European Commission, 30 October 2017
Partner, Financial Regulation and Co-head of Financial Services Sector