Regulation round-up June 2013

Information for all firms

FCA secures commitment from high street banks to use a ‘retry system’ when processing payments to stop unnecessary penalty charges

We have reached an agreement with seven of the UK’s biggest high street banks that will see them use a same day ‘retry system’ when processing Direct Debits, standing orders and future dated bill payments.  

The new approach has been adopted by Barclays, The Co-operative, HSBC, Nationwide, RBS Group, Santander and National Australia Group (which owns Clydesdale and Yorkshire banks) and will improve the experience of everyday banking for millions of consumers.

Lloyds Banking Group currently operates a same day retry process on many of its transactions, but is updating its systems to ensure it is used for all transactions. Until this occurs customers will be able to claim a refund for related late payment charges.

Press release

Use of our logo and disclosure

In April we announced that regulated firms and other types of organisations are not permitted to use the FCA logo on any of their documentation or promotional material.  Firms should disclose what body they are regulated by, more details on this are set out on our website.

Firms that have used the Financial Services Authority (FSA) logo or reference the FSA in their documentation have until 1 April 2014 to clear their old stock.

Final Annual Public Meeting

The Final Annual Public Meeting of the Financial Services Authority is being held on Thursday 18 July 2013 at The Brewery, Chiswell Street, London.  For further information and to reserve your space online, please click on the following link:

Financial Incentives

We are about to start  further work on whether firms are now managing the risk of mis-selling driven by financial incentive arrangements in place for their staff. The work will focus on firms transacting business with retail customers.

Firms in scope will include Wholesale C1 firms, Retail C2, and C3. A sample of C4 firms and will take the form of an online assessment. Retail C1 firms are being assessed separately.

We plan to make the on-line assessment available from early July and if your firm is selected for this work you will receive an email just before this. Please check your inbox and spam filter around this time, as we expect firms included to complete the assessment within a specified timescale.

Mortgage Brokers

Mortgage Market Review (MMR): Removal of non-advised sales process, applying for ‘Advising on’ activities and qualifications

The new Mortgages and Home Finance: Conduct of Business sourcebook (MCOB) rules, which comes into force on 26 April 2014 (as a result of the MMR), will remove the non-advised sales process.  After 26 April 2014, the rules will allow firms to conduct advised sales and, in limited circumstances, execution-only sales.

This will affect the way firms sell home finance products and may require some firms to vary their Part 4A permission and/or consider whether their employees have appropriate qualifications.  There are a number of firms who currently only hold an arranging mortgage or home finance activity and are not permitted to conduct regulated advice. We have produced a factsheet to assist firms who wish to apply to add the relevant mortgage and/or home finance activities to their permission.

Insurance intermediaries

Notice of Undertakings for Clerical Medical and Equitable Life

On 31 May 2013 we published two Notices of Undertaking received from Clerical Medical and Equitable Life.  They have agreed to either amend or delete the disclaimer terms contained in their pension discharge forms.

In our view, the disclaimer terms were likely to be unfair as they appeared to release the firms from any liability upon payment of the consumer’s funds, even in the event that the firms might have inappropriately invested or incorrectly calculated the consumer’s funds.

Tracing insurers liability insurance (TELI) Policy Statement

Firms with actual or potential liability for UK commercial lines are required to publish an Employment Liability Register (ELR). We have published our final rules (PS13/2) with amendments following a consultation. 

Firms must:

  • Put in place and operate in accordance with a tracing policy.
  • Respond to all ELTO enquiries within one month unless the request is from a qualifying tracing office and no evidence of a historical policy is found.
  • Respond to all non ELTO enquiries within two months.

Motor Legal Expenses Insurance (MLEI) thematic project

This thematic report looked at the MLEI product from a number of perspectives including its value and usefulness, customer understanding, and the sales process. Our findings and consumer research demonstrate firms need to re-evaluate their approach to MLEI. There are three specific areas where firms should review their current practices to ensure they are meeting the needs of their customers. These are:

  • The basis on which MLEI is provided.
  • The quality of explanation of MLEI at all stages of the customer journey, including the claims process, with an emphasis on providing clear, appropriate information.
  • The extent of cover provided.

Motor legal expenses insurance: Consumer market research

TR13/1 - Motor Legal Expenses Insurance (MLEI)