apcc regional forum

APCC Regional Forum

September 2014

Agenda13.00 – 13.30 Registration, tea and coffee13.30 – 13.40 Welcome and introduction

Ray Cohen, APCC Director13.40 – 14.20 FCA Effective Communication with smaller firms

Matthew Thompson, FCA Associate, Thematic Investment and Communication Project14.20 – 15.00 FCA Consumer Credit Authorisation

Keith Cooper, FCA Manager - Debt, Credit & Regulatory Permissions/Credit Authorisations Division/Consumer Credit

15.00 – 15.15 Tea and Coffee Break15.15 – 15.45 FOS – Update on the Ombudsmans’ work with Consumer Credit

FirmsIan Woodman, FOS Outreach Manager

15.45 – 16.15 BIBA and the changing experience to consumer claims in changing regulationAndrew Gibbons, BIBA Board member & Chairman of the BIBA Claims Working Group

16.15 – Close APCC update and open forum

3

FCA Restricted

Effective Communications with Small Firms

APCC Presentation

Matthew Thompson

4

The importance of effective communications

Regulation Compliance

5

Effective Communications Should…

1. Reach the right audience

2. Explain how the information affects that audience

3. Encourage the right action to be taken

6

How are we communicating?

• Email – Direct sector specific information

• Website – Discussion Papers, Guidance

• Video – RDR, Risk Outlook

• Face to Face – Workshops, Speeches

• Trade Press – Consumer credit

• Social Media - Twitter

7

The role of compliance consultants

Regulation Compliance

8

Your views…

[email protected]

Unrestricted

9

Unrestricted

Consumer Credit FCA authorisation

Unrestricted

10

Today…

• Overview of application process• Experience to date• Questions

• No detail on technical matters or specific applications/business models

Unrestricted

11

Our approach

FCA approach

Unrestricted

12

The firm journey

Interim Permission

Full application

New entrant

VoP

Full authorisation

Unrestricted

13

When to apply?

Now • If firms want to start offering consumer credit

Your application

period

• If firms have interim permission

• If firms miss this date, they will need to stop regulated credit activities

Firms can still

prepare now, so they are ready to

apply

Unrestricted

14

How much it costs to apply• Note – income figures must be right

– Brokers - amount paid for credit services– Amount from consumer credit activities – not turnover

• Firms will need to pay an application fee when they apply• The fee will be a calculation based on how complex we

think the application is and the consumer credit income• We have put all firms into different complexity categories

based on what they do:– Limited permission– Straightforward: eg credit broker– Moderately complex: eg, lender– Complex: eg debt management company

Firm’s credit income

Limited permission

Straight-forward

Moderatelycomplex

Complex

Up to £50,000

£100 £600 £800 £1,000

£50-£100,000

£500 £750 £1,000 £1,250

£100-£250,000

£500 £1,000 £1,500 £2,000

£250,000-£1 m

£500 £1,500 £5,000 £7,000

over £1 million

£500 £5,000 £10,000 £15,000

Application fee breakdown

15

Unrestricted

16

• Firm meetings

• Firm visits

The application journey

Application received

• Systems• Databases• Convictions

Decision

• Further information requests

Case officer assessment

Initial vetting

• Risk scoring

• Team allocation

Hybrid cases

Unrestricted

17

Help for firms

• Webinars• ‘Credit Ready’ Packs• Website – FAQs &

guidance• Checklists• Speaking events• Help text in Connect• Case officer support• Contact Centre

• Keep the FCA updated on any firm changes – check and update CCI.

Unrestricted

18

Timescales and progress

• How long – depends on complexity and quality. – Statutory Deadline – 6/12 months

• Have completed a number of more detailed assessments– Visits, firm meetings and conference calls

• AR progress & volumes– Too soon to say – Principal Application Period has only

just closed and these are being assessed– 1st application period soon and this will dramatically

change our current portfolio

Unrestricted

19

Experience so far• Permissions

– Wrong ones– Limited permission– ‘Just in case’

• Criminal convictions – significant events• Failing to disclose all controllers• Lack of documents – secci, adverts, credit agreements

etc• Unclear business models• Lack of competence• Over reliance on 3rd parties

– Brokers– Advisors

Unrestricted

20

Your role?

What can you do to ensure rapid progression?• Complete business models

– Why permissions are required– How the business will work, what will the business do

and why, and how it will make its money– Examples of key docs and advertising– How the firm is set up, who works there and their role,

skills and experience– Who owns or influences the business (controllers)– Compliance strategy– Financial information– The firm’s history and full disclosure of any

‘significant events’

Unrestricted

21

Your role?

• Bespoke applications• Remember we need to hear from the firm – especially

during visits• Honest and transparent with firms

– Cold calling – Need for a consultant– Authorised/approved by FCA

Unrestricted

22

Questions?

© May not be reproduced without permission of Financial Ombudsman Service Ltd 23

workingtogether

Association of Professional Compliance Consultants

September 2014


what does the ombudsman do?

set up by law …

… as an alternative to the courts

to resolve disputes …

… and help both parties move on

share our experience and insight

not a regulator!


and how do we do it?

free

informal impartial

independent


the tools we use

inquisitorial powers

‘fair and reasonable’ outcomes

inquisitorial powers


jurisdiction – which complaints do we cover?

activity covered?

business covered?

eligible complain-

ant?

within UK?

complaint ‘in time’?


when is a business covered?

a business is subject to our jurisdiction where:

it is FCA-authorised to carry on any FCA-regulated activity (= Compulsory Jurisdiction)

this can also include ‘inherited’ jurisdiction

it subscribes to our Voluntary Jurisdiction

Consumer Credit Jurisdiction now fallen away

post April 2014, former OFT licensees should be FCA (interim) authorised firms


process - how we deal with complaints

enquiries and referrals

investigation

resolution by consent

review

final decision


redress - putting things right

interest

financial losses

‘trouble and upset’

costs (rarely)

directions


our workload


consumer credit complaints over time


consumer credit numbers

product type 2013/14 2012/13 2011/12 2010/11 2009/10

point of sale loans 1,418 1,939 2,247 2,765 1,735

hire purchase 1,511 1,621 1,545 1,395 1,430

payday loans 794 542 296 ? ?

catalogue shopping 792 950 695 582 755

credit broking 649 711 627 697 341

debt collection 557 817 576 512 697

store cards 466 650 476 480 574

other 1,443 1,240 1,250 819 1,138

total 7,630 8,470 7,416 7,250 6,329


help from us

online at:

www.financial-ombudsman.org.uk

technical advice desk helpline:

020 7964 [email protected]


any questions?

ANDREW GIBBONS ACII MIoD

Managing Director

Mason Owen Financial Services Ltd

Chair – Industry Claims Initiative

AGENDA

1. Background

2. Formation of the Group

3. Objectives of the Group & Progress

4. FCA Thematic Review of Personal Lines Claims

5. Future Developments in Claims

6. Q&A

BIBA RESEARCH

• Carried out January 2013

• 90% of brokers believe that insurers are stricter on paying claims

• More strict due to the economic climate and fraud

• 66% of brokers were finding it harder to conclude claims

BIBA RESEARCH

• 75% of brokers have overturned a claim rejection by an insurer in the last year

• 70% of brokers had secured an increase in claims payment for a client

• 43% of brokers achieved an average percentage uplift on claims of between 11% and 20%

THE RESULT

• Public spat

• Missed opportunity for reasoned debate

• Confirmation of the Regulator’s interest in this area

MACTAVISH REPORT

• Insurers dispute half of “significant” business claims since 2008

• Insurers take an average of 35 months to settle disputed claims

• Reasons include breaches of conditions or inadequate information disclosure

INSURANCE TIMES - 3RD SEPT 14

INDUSTRY CLAIMS INITIATIVE

• Formed / Launched April 2013

• Made up of industry stakeholders

• Opportunity to explore the issue of claims more thoroughly

MEMBERS

TERMS OF REFERENCE

• To support the FCA thematic reviews on claims

• To improve the customer experience of claims

• To promote positive stories surrounding the industry with particular reference to claims

PROGRESS

• Claims is Point 6 of the BIBA Manifesto

• The group is recognised by government

• The group is recognised by the FCA

POSITIVE STORIES

• Industry Pays £40m in claims every day

• Insurance Times – The Knowledge

• Covered extensively in the Broker Magazine

• Further work being undertaken by Insurance Times in relation to claims and transparency following FCA Conference

FCA CONFERENCE 2014

• Underlined Customer Focus of FCA

• Customer Outcomes are essential to FCA

• Loss Ratio as a Measure of Value

EDUCATION OF THE CUSTOMER

• AXA Insurance – Transparency Project

• The group is accessible to government and the industry on issues such as flood & Storm Surges

• Industry responded to flood claims promptly

REVIEW OF INSURANCE CONTRACT LAW

• Consulted with the Law Commission in relation to their proposals

• Clarifying the position in relation to warranties

• Dealing with issues for remedies to contract

• Insurers can contract out

FCA THEMATIC REVIEW

• FCA attended the May 2014 meeting of the group

• John Parker and John King of FCA attended

• Group had opportunity to question FCA on their findings

• FCA Specifically Requested a Further Audience with the Group Ahead of the Commercial Review in July 2014

FCA THEMATIC REVIEW FINDINGS

• Household and travel insurers were investigated and it did not involve loss adjustors

• Significant scope for improvement was found

• No systematic avoidance of claims payment found

• Travel insurance – 30% of the claims either rejected or withdrawn

• 28% of home claims were rejected or withdrawn


• No indication of how many claims were generated through the broker or direct market

• Main reason for claims failing was that the client was mislead or there was poor communication

• 78% - 83% of customers understood excesses

• 1,500 cases looked at specifically


• 1 in 5 people felt like complaining but only two thirds of those did complain

• Many complaints arose from the supply chain (e.g loss adjustors/contractors not turning up)

• Recording of calls with a view to turning claims down was an issue

• Better ownership within insurers was highlighted by FCA as requiring improvement


• The burden of proof of the insured to find receipts was too onerous

• Emergency response lines for travel insurance were found to be extremely good

• The length of policy documents was found to be too long and complicated

• Travel – Medical Declarations

SUMMARY

• Good in parts

• Not so good in others

• No systematic avoidance of claims

SUMMARY

• No brokers investigated

• Claims Issues may have arisen as a result of poor distribution

• Commercial claims review to follow

ANY OTHER BUSINESS

• The group discuss topical issues such as the supply chain

• Reservation of rights

• Basis clauses

IN SUMMARY

• We can Improve Claims as an Industry

• Just Ticking the Boxes of Compliance Does Not Always Produce the Feeling of a Good Customer Outcome

• Claims is the Shop Window and Should be Resourced and Managed Appropriately

• Concentrate on the Quality!!

QUESTIONS

• APCC Open Forum• Close

apcc regional forum

Documents

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consumer credit incomewe

credit fca authorisation

credit servicesamount

consumer claims

fca associate

fca effective communication

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