CMA reports on its digital comparison tools market study
The Competition and Markets Authority has published the final report following its market study into the use of price comparison sites and other apps. The year-long examination found that these sites offer a range of benefits, including helping people shop around by making it easier to compare prices and forcing businesses to up their game. But where sites are not working in people’s best interests, the CMA is taking action and laying down clear ground rules. The FCA welcomed the report and expressed concern that some DCTs appear not to be doing all they could, or should, to make their sites user-friendly for some vulnerable people. This is one of a number of areas which the FCA will explore to help DCTs work better for consumers. There is particular concern over certain types of contracts between suppliers and DCTs which limit suppliers’ ability to offer a lower price on one platform than on another.
Insurance Product Information Document (IPID) format approved
As part of the detailed rules for the Insurance Distribution Directive (IDD) insurance providers will be expected to issue consumers with an Insurance Product Information Document (IPID) in a prescribed format summarising their insurance arrangements. This is intended to improve the quality and accessibility of the information given to consumers before they purchase non-life insurance products such as motor and home insurance. The FCA is implementing the Insurance Distribution Directive through new rules, which involve substantial changes to the Insurance Conduct of Business Sourcebook (ICOBS), with effect from 23 February 2018.
The Personal Injury Discount Rate – how it should be set in future
Following the controversial change to the rate used to calculate personal injury compensation payments (the Ogden formula) and subsequent consultation, the Ministry of Justice has announced that the Government now intends to create a fairer and better framework for the setting of the discount rate. Based on evidence and analysis, the assumptions made by the present law on the setting of the discount rate as to how claimants invest are believed to be unrealistic and, as it stands, the rate may produce significantly larger awards than provide 100% compensation. This is thought to be having a significant effect on taxpayers through the additional cost of personal injury settlements paid by the National Health Service and other public sector bodies; and businesses and individual consumers through insurance premiums that are higher because awards of damages may be providing more than 100% compensation. Under the proposed new law the discount rate will reflect the rate of return to be expected on a low risk diversified portfolio.
FCA enforces rules on regulatory returns and fees
The FCA has explained how its Threshold Conditions Team (TCT) takes enforcement action against firms which fail to comply with basic regulatory requirements – such as the requirements to submit FCA returns and to pay FCA fees. Such action often results in the FCA cancelling the statuses of those firms. In the year to 30 June 2017, the TCT cancelled the authorisations of 207 firms for these (and other) failings. Following referral to the TCT, many firms comply late, but are still able to retain their authorisation. Other firms voluntarily give up their FCA authorisation. In the year to 30 June 2017, the TCT accepted 1,387 referrals of firms who had failed to satisfy the minimum standards. 824 of those firms still managed to retain their authorisation by submitting their outstanding returns or paying their overdue fees. 122 firms applied to cancel their FCA authorisation altogether. The FCA warns that where firms are repeatedly referred to Enforcement for failing to comply with basic requirements, their permission are likely to be cancelled even if they comply late.
FCA proposals to extend the Senior Managers and Certification Regime
The FCA has published proposals to extend the Senior Managers and Certification Regime (SM&CR) to all regulated firms, including insurance intermediaries. The new regime will effectively replace the Approved Persons Regime with the intention making individuals more accountable for their conduct and competence.
FCA targets consumer credit complaints handling
The FCA has published a “Dear CEO letter” for the attention of all firms who hold consumer credit permissions following the conclusion of a project on how consumer credit firms deal with complaints. The FCA expects consumer credit firms to review their complaints handling arrangements in light of the letter.