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Retail Finance round-up - 1 July 2016

Retail Finance round-up - 1 July 2016

  • United Kingdom
  • Financial institutions - Retail finance


The referendum result has dominated the news this week, with a majority of the UK electorate voting to leave the European Union. We issued a briefing last Friday morning, summarising the impact which that decision will have on UK financial institutions. All our Brexit briefings, including ‘What will it mean to leave the EU?’ are available on our website. 

Last Friday the Financial Conduct Authority issued a statement on Brexit, which said:

Much financial regulation currently applicable in the UK derives from EU legislation. This regulation will remain applicable until any changes are made, which will be a matter for Government and Parliament. Firms must continue to abide by their obligations under UK law, including those derived from EU law and continue with implementation plans for legislation that is still to come into effect.

The short term legal effect which the FCA statement highlights can be summarised as follows:

Current EU laws  No immediate impact – UK law giving effect to EU Directives such as the Consumer Credit Directive, the Mortgage Credit Directive and Payment Accounts Directive continues to apply. EU Regulations such as the Regulation on Interchange Fees for Card-Based Payment Transactions and the Market Abuse Regulation (applicable from 3 July 2016) continue to apply.
Powers of EU authorities  Immediate impact unlikely – powers of European Supervisory Authorities (such as the EBA) to take action against FCA or PRA for non-compliance with EU law continue. The extent to which ESAs would be willing to take action is less clear.
Passporting No immediate impact – rights of UK authorised firms to provide cross-border services into, operate branches in, or market products in other EEA Member States, and the same rights for EEA Member State firms passporting into the UK continue.
Forthcoming EU laws Immediate impact unlikely – The UK is obliged to implement EU Directives and enforce EU Regulations – the extent of the UK’s influence until Brexit on negotiating the content of such laws is less clear.

The Information Commissioner announced last Friday that “The Data Protection Act remains the law of the land irrespective of the referendum result. If the UK is not part of the EU, then upcoming EU reforms to data protection law would not directly apply to the UK. But if the UK wants to trade with the Single Market on equal terms we would have to prove 'adequacy' – in other words UK data protection standards would have to be equivalent to the EU's General Data Protection Regulation framework starting in 2018.”

The Financial Services Compensation Scheme (FSCS) has also announced that the FSCS scope and coverage remains unchanged following the referendum result. 

The House of Commons has published a briefing paper on 'Brexit: what happens next?' This paper considers questions about UK withdrawal from the EU and what is likely to happen in the coming weeks and months.

In other news this week, the new complaint handling rules took effect yesterday. Chris Busby has summarised the changes and key developments in complaints in an article now available on our website.

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Spotlight on... Complaint handling - major changes took effect 30 June 2016

On 30 June 2016, key complaint handling changes came into effect following the publication in July 2015 by the Financial Conduct Authority (FCA) of Policy Statement 15/19 on Improving Complaint Handling. The changes follow-on from the FCA’s thematic review into Complaint Handling in 2014.

Complaint handling remains high on the FCA’s agenda because ensuring that firms treat customers fairly is at the heart of its consumer protection agenda and complaint handling is a key barometer of the culture of a firm. The FCA hopes that the new rules will benefit consumers who wish to complain by ensuring complaints are handled more quickly, easily and transparently than at present.

Chris Busby sets out the key changes and what they mean for you in this detailed briefing.

FCA publishes Handbook Notice 34

Between 16 June 2016 and 23 June 2016, the FCA Board made some changes to the FCA Handbook. The update was published on 24 June 2016 in Handbook Notice 34.  The most significant changes are as follows:

  • The Periodic Fees (2016/17) and Other Fees Instrument 2016 (2016/41), which makes amendments to fee levels and levies. This comes into force on 1 July 2016.  The FCA consulted on these changes in April 2016 in CP16/9.
  • The Fees (Payment Systems Regulator) (No 2) Instrument 2016 (2016/42), which makes changes in order to implement policy proposals regarding the Payment Systems Regulator (PSR) regulatory fees for 2016/17.  This instrument comes into force on 8 July 2016.
  • The Disclosure Rules and Transparency Rules Sourcebook (Statutory Audit Amending Directive) Instrument 2016 (2016/40), which amends elements of the Disclosure and Transparency Rules (DTR) to implement the requirements for audit committees set out in the Statutory Audit Amending Directive (2014/56/EU). This instrument came into force on 17 June 2016.  The FCA consulted on these changes in its September 2015 quarterly consultation (CP15/28).
  • The Supervision Manual (Reporting No 2) Instrument 2016 (2016/45), which amends chapters 15 and 16 of the Supervision Manual. The objective of 2016/45 is to enhance the clarity of the guidance notes and remove superfluous text.  The FCA consulted on these changes in its March 2016 quarterly consultation (CP16/8).
  • The Enforcement Guide (Warning Notices Publicity) Instrument 2016 (2016/46). This instrument is targeted at reducing speculation in regard to specific cases as they progress via Warning Notice statements. This instrument came into force on 24 June 2016.  The FCA consulted on these changes in its March 2016 quarterly consultation (CP16/8).

If you would like to discuss any issues raised by this development, please contact Jo Owens.

FOS publishes ombudsman news issue 133

The Financial Ombudsman Service (FOS) has published issue 133 of its ombudsman news.  Items of interest in this issue include:

  • complaints involving everyday problems that the FOS sees, including complaints relating to section 75 of the Consumer Credit Act 1974.
  • Q&A relating to complaints handling rules.  In particular, the requirement for firms to provide details of the FOS’ website in their final response letter to customers following a complaint, and the ability of the ombudsman to look into a complaint within its first eight weeks, provided that the firm and the customer both agree to their involvement.  
  • ombudsman's perspective on pension freedoms.

If you would like to discuss any issues raised by this development, please contact Chris Busby.

For more information contact

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