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Regulatory Update: Feb 2024

A route that could have upended the ban on debt packager referral fees has been refused; on 12 January the Administrative Court refused permission for a judicial review claim to challenge the FCA’s ban. This means that the debt packager ban remains in place. The FCA says it introduced the ban to remove a “strong incentive for debt packagers to offer advice which does not have regard to the best interests of the customer or is not appropriate to the individual circumstances of the customer.” The new rule, set out in CONC 8.3.11R, applied to all debt packager firms and their appointed representatives from 2 October 2023.

Funeral Plan Providers: New FCA Regulations




Motor Finance Complaints

Firms offering motor finance should, by now, be aware of the FCA’s pause in complaint timescales. Concerned with the high number of complaints submitted to the Financial Ombudsman Service, and two findings in favour of the complainant, the FCA is pausing the complaints handling timescales to give the regulator time to conduct a review. The outcome of that review may impact on individual complaint outcomes, particularly if the FCA draws attention to harms that have previously gone unnoticed.

In practice, affected firms won’t have to investigate and issue a final response to complaints within the usual eight-week timeframe. The ‘pause’ will be in place for 37 weeks, but it is a pause and not a removal of the timescales. This will mean that firms should understand how this impacts on individual complaints. For example, a complaint received on 20 December 2023 will need to be responded to by 30th October 2024, outside of the 37 week pause, the eight-week timeframe needs to be adhered to. There are a number of communication of information requirements, affected firms should check the Policy Statement or our earlier article for more information.

GAP Insurance pauses

Following a series of discussions between the regulator and firms, the FCA announced on 9 February that multiple insurance firms – which combined account for 80% of the GAP market - have agreed to pause sales of GAP insurance, following a request from the regulator. The FCA will continue to engage with firms around fair value offered by the product.

Access to cash consultation

The FCA and the Bank of England have published consultations on access to cash. There are concerns that consumers and businesses need to maintain access to physical money and are therefore considering how to ensure that cash access services do not “decline in a disorderly way.” The FCA’s consultation proposes a new regime which would require certain banks and building societies to assess and fill gaps in access to cash. The FCA’s consultation closed on 8 February with finalised rules expected in Q3 2024.

PRA issues £57m fine

The PRA has fined HSBC Bank plc and HSBC UK Bank plc £57,417,500 for historic depositor protection failings between 2015 and 2022. In particular, the bank failed to accurately identify deposits that were eligible for Financial Services Compensation Scheme protection. This is the second highest fine that the PRA has issued in its history.

Highlighted failings include the failure to assign clear ownership for the processes required under the Depositor Protection Rules and failure to ensure that a senior manager, under the Senior Managers and Certification Regime, was allocated responsibility for these processes and the integrity of the information required under the Depositor Protection Rules, a “very serious failing in the Firms’ implementation of SMCR.”

The final notice reflects findings that following the establishment of the ring-fenced bank, process steps for the submission of the attestation were missed and not properly resourced. A number of basic errors were also noted, including failure to provide copies of documents in advance of the appointment to sign the attestation, rushing the process and the individual providing the attestation relying on verbal assurances of the quality of data.

The final notice demonstrates a number of errors of implementation of SMCR, including lines of responsibility and reasonable steps.

Wholesale Insurers and non-financial misconduct

On 6 February, the FCA wrote to wholesale insurers to ask them to provide information relating to incidents of non-financial misconduct in their firm. The letter sets out a range of situations it considers under the term, including harassment, bullying and discrimination inside or outside the workplace, including the office, working from home, working offsite and social situations connected to work. This would include incidents in any work-related capacity, and could include events that have been organised through work including social events, off-site training and conferences, client entertainment or sponsored events but would not include private events organised by members of staff among themselves.

The FCA expects firms to have the systems in place to identify and mitigate risks relating to non-financial misconduct. In-scope firms will need to submit the information by 5 March 2024 via a Qualtrics survey.

ICO issues warning over advertising cookies

In November the ICO wrote to 53 of the UK’s top 100 websites outlining changes they would need to make to advertising cookies to comply with data protection law. In January, the ICO noted that 38 had changed their banners to be compliant, and a further four committed to working towards compliance within the month.

The ICO also said that it expects “all websites using advertising cookies or similar technologies to give people a fair choice over whether they consent to the use of such technologies. Where organisations continue to ignore the law, they can expect to face the consequences. We will not stop with the top 100 websites.”

The ICO are currently developing an AI solution to help identify websites using non-compliant cookie banners.

Data Protection and Digital Information

The Bill, which is set to make amendments to the UK GDPR, is currently at the committee stage in the House of Lords. Final passage of the Bill is due in Spring 2024.

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