Transcript Document
APCC Regional Forum
September 2014
13.00 – 13.30
13.30 – 13.40
13.40 – 14.20
14.20 – 15.00
15.00 – 15.15
15.15 – 15.45
15.45 – 16.15
16.15 – Close
Agenda
Registration, tea and coffee Welcome and introduction
Ray Cohen, APCC Director
FCA Effective Communication with smaller firms
Matthew Thompson, FCA Associate, Thematic Investment and Communication Project
FCA Consumer Credit Authorisation
Keith Cooper, FCA Manager - Debt, Credit & Regulatory Permissions/Credit Authorisations Division/Consumer Credit Tea and Coffee Break
FOS – Update on the Ombudsmans’ work with Consumer Credit Firms
Ian Woodman, FOS Outreach Manager
BIBA and the changing experience to consumer claims in changing regulation
Andrew Gibbons, BIBA Board member & Chairman of the BIBA Claims Working Group APCC update and open forum
FCA Restricted
Effective Communications with Small Firms APCC Presentation
Matthew Thompson
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The importance of effective communications
Regulation Compliance
4
Effective Communications Should… 1. Reach the right audience 2. Explain how the information affects that audience 3. Encourage the right action to be taken
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How are we communicating?
• • • • • •
– Direct sector specific information
Website
– Discussion Papers, Guidance
Video
– RDR, Risk Outlook
Face to Face
– Workshops, Speeches
Trade Press
– Consumer credit
Social Media
- Twitter 6
The role of compliance consultants
Regulation Compliance
7
Your views…
[email protected]
8
9
Consumer Credit FCA authorisation
Unrestricted
Today…
• • • Overview of application process Experience to date Questions • No detail on technical matters or specific applications/business models 10
Unrestricted
Our approach
Gateway is key Flexible for different size firms
FCA approach
High minimum standards Getting to know firms 11
Unrestricted
The firm journey
Interim Permission New entrant Full application VoP 12 Full authorisation
Unrestricted
When to apply?
Now Your application period • If firms want to start offering consumer credit • 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 13
Unrestricted
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 14
Application fee breakdown
Firm’s credit income
Up to £50,000 £50 £100,000 £100 £250,000 £250,000 £1 m over £1 million
Limited permission Straight forward Moderately complex Complex
£100 £500 £500 £600 £750 £1,000 £800 £1,000 £1,500 £1,000 £1,250 £2,000 £500 £500 £1,500 £5,000 £5,000 £10,000 £7,000 £15,000 15
Unrestricted
The application journey
Application received Hybrid cases Initial vetting Case officer assessment • • • Systems Databases Convictions • • Risk scoring Team allocation • • • Further information requests Firm meetings Firm visits Decision 16
Unrestricted
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.
17
Unrestricted
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 1 st application period soon and this will dramatically change our current portfolio 18
Unrestricted
• • • • • • •
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 3 rd parties – – Brokers Advisors 19
Unrestricted
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’ 20
Unrestricted
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 21
Unrestricted
Questions?
22
workingtogether Association of Professional Compliance Consultants September 2014
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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!
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and how do we do it?
free independent informal
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impartial
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the tools we use inquisitorial powers inquisitorial powers ‘fair and reasonable’ outcomes
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jurisdiction – which complaints do we cover?
business covered?
complaint ‘in time’?
activity covered?
eligible complain ant?
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within UK?
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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
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process - how we deal with complaints enquiries and referrals investigation resolution by consent review final decision
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redress - putting things right financial losses directions interest ‘trouble and upset’
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costs (rarely)
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our workload
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consumer credit complaints over time
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consumer credit numbers product type
point of sale loans hire purchase payday loans catalogue shopping credit broking debt collection store cards other
total
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2013/14
1,418 1,511 794 792 649 557 466 1,443
7,630 2012/13
1,939 1,621 542 950 711 817 650 1,240
8,470 2011/12
2,247 1,545 296 695 627 576 476 1,250
7,416 2010/11 2009/10
2,765 1,395 ?
582 697 512 480 819
7,250
1,735 1,430 ?
755 341 697 574 1,138
6,329
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help from us
online at:
www.financial-ombudsman.org.uk
technical advice desk helpline:
020 7964 1400 [email protected]
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any questions?
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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 - 3
RD
SEPT 14
INSURANCE TIMES - 3
RD
SEPT 14
INDUSTRY CLAIMS INITIATIVE
• Formed / Launched April 2013 • Made up of industry stakeholders • Opportunity to explore the issue of claims more thoroughly
MEMBERS
MEMBERS
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
FCA THEMATIC REVIEW FINDINGS
• 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
FCA THEMATIC REVIEW FINDINGS
• 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
FCA THEMATIC REVIEW FINDINGS
• 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!!