Financial Services News Articles

ICO issues ‘stop now’ order to CMC that has already been fined by MOJ

Firms need to comply with the requirements of both their main industry regulator, and those of the data protection watchdog, the Information Commissioner’s Office (ICO).

In August 2015, the Claims Management Regulator at the Ministry of Justice (MoJ) fined Aurangzeb Iqbal £220,000 for making large numbers of unsolicited marketing calls regarding hearing loss claims. Many of those he contacted were registered with the Telephone Preference Service (TPS), or claimed that they had previously informed the firm they did not wish to receive further marketing calls.

The ICO has now taken its own action. It has issued Mr Iqbal with a ‘Stop Now’ order, instructing him to stop making unsolicited calls. If a Stop Now order is breached, it could lead to criminal prosecution.

Mr Iqbal, who trades as The Hearing Clinic and whose premises are in Derby, is appealing against the MoJ fine. It is unclear at present whether he will appeal against the ICO’s sanction.

The data protection regulator says that Mr Iqbal’s firm made false statements to consumers telling them that they had worked in noisy environments, made concerning statements to the effect that they could be at risk of hearing loss, sometimes made multiple calls to the same household, and engaged in aggressive sales tactics.

The ICO conducted a three month monitoring exercise on Mr Iqbal and offered him advice on how to comply with the legal requirements, but the watchdog still received some 278 complaints about his marketing practices.

Andy Curry, the ICO’s Group Enforcement manager said:

Aurangzeb Iqbal had every chance to improve his practices in line with the law. Our team provided advice and guidance and yet the complaints kept coming in.

The Claims Management Regulation Unit has already fined Aurangzeb Iqbal but our enforcement notice should stop him from making any more nuisance calls.

We believe complaints about this type of hearing claims call are on the rise and we do have more enforcement action in the pipeline. This should send a clear message to these companies that they must operate in line with the regulations or face the consequences.”

It is a breach of the European Union’s Privacy and Electronic Communications Regulations to make marketing calls to consumers who have registered with the TPS, or who have informed a firm that they wish to opt out of communications of this nature.

In recent weeks the ICO has taken a number of actions in its fight against nuisance calls and texts. It fined two suppliers of call blocking software – Nuisance Call Blocker Ltd and Telecom Protection Service Ltd – £90,000 and £80,000 respectively, for making marketing phone calls to individuals registered with the TPS; and fined claims manager UK Money Solutions £80,000 for sending unsolicited marketing texts. It also wrote to more than 1,000 list brokers asking them to provide details of their arrangements for ensuring consumers give consent to their data being processed, and of the arrangements they have in place for ensuring TPS registered customers are not contacted.

The ICO closely assists the MoJ in regulating the claims management industry.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

Confusion between UK and EU over mortgage prisoners

Confusion reigns as the European Union (EU) and the Financial Conduct Authority (FCA) appear to be blaming each other over the mortgage prisoners issue.

Mortgage prisoners are those trapped on an unfavourable mortgage deal, and who would be unable to re-mortgage to a cheaper deal because they would fail the stricter affordability checks imposed by the FCA’s Mortgage Market Review (MMR) in April 2014. This could have created an undesirable situation where customers were told ‘you can’t afford a new mortgage; so you need to stay on your existing, more expensive mortgage deal, that was granted to you when affordability checks were less strict. Even though the new deal is cheaper we can’t allow you to take it out’.

Hence, the FCA allowed lenders to grant re-mortgages where no additional borrowing was being considered, and where the repayments were lower, regardless of whether the client would have passed the new affordability checks. Not all lenders are allowing customers to make use of this, but that is a separate issue – at present the FCA’s rules definitely allow this exemption to be used.

Under MMR, in normal circumstances lenders are required to assess mortgage applications on whether the borrower would still be able to afford the repayments if base rates rose to 6%.

It has been widely reported in the financial press that the EU’s Mortgage Credit Directive would end this exemption. The Directive’s provisions will come into force on March 21 2016, and according to numerous reports, will stop lenders granting new deals to mortgage prisoners, thus forcing them to remain on the more expensive arrangement. The Directive theoretically still allows mortgage prisoners to re-mortgage with the same lender, but in practice this is unlikely to occur, as lenders will not have an incentive to make an offer of this kind.

However, a statement from the European Commission has cast doubt on these press reports. The statement reads:

“Reports that British homeowners are being prevented from getting a cheaper deal when they re-mortgage are clearly a cause for concern.

“This has been linked to the introduction of the Mortgage Credit Directive, but there is nothing in that directive which should prevent consumers changing their existing mortgage to a cheaper one.

“It seems that the problem may lie with how the UK’s new affordability tests are being applied. These stricter tests come from the UK’s Mortgage Market Review, not EU legislation. We suggest that those concerned about what’s happening take up the issue with mortgage providers or the relevant British authorities.”

This EU statement effectively says it is the FCA that is creating the problem, but the UK regulator responded by saying:

The implementation of the Mortgage Credit Directive (MCD) means that, from 21 March 2016, an affordability assessment will be required if a lender takes on an existing borrower from another lender.

“While an unfortunate consequence of the MCD, it is likely to affect a very small number of borrowers.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.

FCA fines network’s CEO and director of risk, with a ban for the CEO

Charles Palmer, the majority shareholder and chief executive of Standard Financial Group; and director and de facto CEO of its main subsidiary Financial Ltd, has vowed to fight the fine and ban imposed on him by the Financial Conduct Authority (FCA) by appealing to the Upper Tribunal.

In their Decision Notice, the FCA gives details of its intention to fine Mr Palmer £86,691, and ban him from holding any significant influence function in the future, over issues regarding the suitability of advice given by the group’s appointed representatives (ARs). Standard Financial Group had two network subsidiaries – Financial Ltd and Investments Ltd.

40,000 clients are said to have been exposed to “significant risk” as a result of the group’s failure to ensure the ARs were adequately supervised, and that the suitability of their advice was adequately monitored. Many clients were advised to invest into high risk Unregulated Collective Investment Schemes (UCIS).

The group is conducting its own review of its past UCIS business, and as of July 16 2015, 94% of cases reviewed had been found to involve potentially unsuitable advice.

Mr Palmer commented:

After all the time and money spent on this FCA investigation of Financial Ltd there was just one single allegation of substance against me.”

Whatever the outcome of the appeal, this case highlights the need for principals to ensure they adequately monitor their ARs, and also highlights how the FCA can take action against individuals as well as their firms.

Principals can always expect to be held accountable for the actions of their ARs, and need to impose strict rules on how they can conduct business. Yet in this case, the FCA says the group’s ARs were allowed “a high level of flexibility and freedom as to how they could operate.” They were allowed to use their own fact finds, customer risk profilers and research systems, and the ARs were not required to seek the approval of the group’s compliance function before using documents of their own design.

According to research by law firm RPC, 51% of the FCA’s fines in 2015 were levied against individuals.

Back in 2010, Mr Palmer accepted a £49,000 fine from the FCA’s predecessor, the Financial Services Authority, for failing to ensure that Financial Ltd’s advisers gave suitable advice on pension switch transactions. However, the latest fine relates to the period between February 2010 and December 2012.

In 2014, the FCA punished Financial Ltd and Investments Ltd by prohibiting them from taking on new ARs for a period of 126 days. The FCA found numerous issues with the group’s recruitment, training, supervision and file checking of its ARs. These failings also led to the compliance director Stephen Bell being banned and fined £33,800.

The FCA has now also fined the group’s former risk director, Paivi Grigg, the sum of £14,807 for risk management failings. However. Ms Grigg does not intend to appeal.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.