Key Regulatory Developments in October
Please see this month's roundup of developments affecting the retail services sector
Liberty Mutual Insurance Fine
This enforcement action is a reminder to firms that outsourced services should be treated as though they were being undertaken by the firm. The FCA highlight the need for several underlying principles to appropriately monitor third party outsourcing risks to ensure that the activity is effectively managed with adequate controls in place. It also emphasises that complaints remains at the top of the regulatory agenda. This is further accentuated by the following publications:
- Dear CEO" letters to High Cost Short Term Credit firms (15/10/18) emphasised the importance of complaints handling
- Dear CEO letter to all firms with consumer credit permissions regarding their complaints handling (13/09/17)
- Expansion of access to FOS to a greater number small and medium enterprises
- Proposal to increase the maximum award the FOS can award to £160,000 for acts and omission before the 1/4/19 and £350,000 for acts and omission after 1/4/19
- FCA have recently published complaints statistics within financial services firms which showed that over 4m complaints were submitted to firms in the first half of 2018, the highest figure to date, and a 10% increase on H2 of 2017. The FCA said " Firms need to be doing all that they can to reduce complaints. It is clear that firms need to look at the cause of the rise in complaints and address these issues to prevent further increases. 'It should be a priority for firms to ensure good consumer outcomes are achieved and they should be making sure that they are taking the right steps to treat customers fairly".
FCA Complaints figures for H1
The complaints figures have continue to increase for the fourth consecutive half year, reaching a new record level of 4.13m. This is a 10% increase when compared with the previous 6 month period.
PPI continues to be at the top of the complaints categories, accounting for 42% of all complaints, followed by:
- Current Accounts (15%)
- Credit Cards (8%)
- Motor and Transport Insurance (6%)
Regardless of the exclusion of PPI from the figures, complaints rose by 9% on the previous 6 month period. The high-profile disruption cases within the retail banking sector have resulted in certain firms having an increase in the number of complaints that they have recorded.
However, despite the record levels of complaints being recorded there has also been an increase in the number of complaints being resolved, with 58% being resolved within H1.
The FCA does still highlight the need for more to be done to reduce the number of complaints within the industry. Along with better root cause analysis to enable the firm to identify the underlying issues that generate complaints and take preventative action to address these and take mitigating action to address.