The FCA held a workshop last week on Customers in Vulnerable Circumstances which focused on its approach to ensuring inclusive and fair treatment of vulnerable consumers in the financial services industry. Much of the focus draws from its Approach to Consumers published in July 2018 (see our previous FISion blog here).
The FCA said?
The FCA’s statistics suggest that 1 in 4 of us will experience a mental health issue at some point in our lives and half the population will suffer a mental health issue in one way of another in our lifetime. Against this backdrop, Nick Stace (Non-Executive Director, FCA) emphasised the need for firms within the industry to demonstrate that guidelines and policies relating to vulnerable consumers are implemented effectively with their impact and the outcomes measured. Christopher Woolard (Executive Director of Strategy and Competition, FCA) stressed that firms which fail to do so could face FCA intervention. There have already been significant challenges determining how to define and treat vulnerability within Financial Services but the FCA are proposing to introduce minimum standards with which firms will need to be aligned.
In Naidoo v Discovery Life Limited & others (202/20170) ZASCA 88 (31 May 2018) the Supreme Court of Appeal was faced with the main task of determining whether a risk-only policy with a beneficiary clause constitutes an asset in the joint-estate as envisaged by section 15(2)(c) of the Matrimonial Property Act,1984 (MPA).
This case deals with two areas of law, insurance and matrimonial law, and illustrates the interplay between the two.
The courts have previously decided on the issue of whether rights that arise by virtue of a life-insurance policy fell within the joint estate upon the death of the insured spouse. This issue was previously decided in Danielz NO V De Wet & another 2009 (6) SA 42 (C).
The Hogan Lovells’ Corporate Insurance Newsletter for August has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Publication by the Government of various Brexit related papers including guidance from HM Treasury on preparation for a ‘no-deal’ Brexit for financial services.
- An update on the Law Commissions’ consultation on insurance interest
The Hogan Lovells’ Corporate Insurance Newsletter for July has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Publication by the FCA and PRA of new policy statements and consultation papers relating to the implementation of the senior managers and certification regime
- Publication by the Government of various Brexit related papers including draft Regulations to deal with the temporary permission regime
- Publication of a series of policy statements from the PRA on changes to reporting formats, internal models, matching adjustment and reporting requirements.
- Developments on ComFrame and the global insurance capital standard
- Launch by EIOPA of thematic reviews on consumer protection issues in travel insurance and on Big Data.
Eurasia v Aguad  EWCA Civ 1742
The Court of Appeal (“CoA“) has held that two of the “general grounds” jurisdictional gateways (as opposed to those gateways which operate only in relation to a specific type of claim) are complementary to each other, such that additional foreign defendants can be brought within English jurisdiction despite the case against those additional defendants having a merely tangential connection to England.
Read full Blog article here …
IVASS published on 5 June Regulation no. 38 concerning provisions on the corporate governance system (the “Regulation“) implementing EIOPA Guidelines pursuant to Solvency II Directive.
The Regulation will be applicable to: (i) insurance and reinsurance undertakings having a registered office in Italy (ii) the Italian branches of insurance and reinsurance undertakings having a registered office in a third State and (iii) the Italian ultimate parent company, only with respect to the provisions concerning the group corporate governance system.
FCA Consultation Paper 18/18
On 4 July 2018, the FCA released a Consultation Paper providing guidance and seeking responses on PPI mis-selling complaints, and the issue of recurring non-disclosure of commissions. The consultation follows the publication in August 2017 of amendments to provisions the FCA Handbook relating to the handling of PPI mis-selling complaints (DISP App 3).
The amendments to DISP App 3 were the culmination of a series of regulatory changes following the Supreme Court decision in Plevin v Paragon Personal Finance Limited, in which the Court held that a lender’s failure to disclose the level of commission taken from a PPI sale gave rise to an unfair relationship between creditor and borrower under the Consumer Credit Act. Previous blog posts from Hogan Lovells have considered these changes in detail.
The Plevin case and subsequent cases which have come before the courts (including the Doran case discussed below) all concerned sales of “single premium” PPI products, purchased through payment of a lump sum at the time the customer took out their loan. Although the rules set out in DISP App 3 relate to complaints regarding both single premium and “regular premium” (where customers paid for PPI on a rolling basis), the FCA has determined that there is uncertainty about some complaints regarding sales of regular premium PPI.
In particular, the FCA considers that there is uncertainty about whether firms should consider recurring non-disclosure(s) (i.e. non-disclosures after the point of sale) of the existence of, or level of, commission and/or profit share (‘RND’) when assessing mis-selling complaints.
On 4 July 2018, the FCA and the PRA released near final rules on the extension of the Senior Managers and Certification Regime (SMCR). While the majority of the rules remain the same, the regulators have made a few changes and have also provided a significant amount of extra guidance to firms who will be subject to regime. Please see a summary below of some of the key points to note for different firm types.
Key Points for Insurers
The FCA and PRA have each released near final rules on the extension of the SMCR to Insurers. In general, there do not seem to be any significant changes made since the draft proposals. The only exception to this is the narrowing of the scope of the certification regime for small non-directive firms, where the certification regime will now encompass only members of the governing body (other than PRA/FCA approved persons or non-executive directors) rather than include all members of the governing body and all employees who report directly to the governing body.
The Hogan Lovells’ Corporate Insurance Newsletter for June has been published. This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants. In this issue, amongst other items, we cover:
- Papers published by HM Treasury, the Bank of England, FCA and EIOPA about preparing for Brexit
- Publication by the PRA of its letter to the House of Commons Treasury Select Committee on its review of the Solvency II risk margin
- Publication by the Law Commissions of a new draft Bill on insurable interest.
On 28 June Consob (the Italian supervisory authority on financial markets) launched a public consultation regarding amendments to its Regulation adopted with Resolution No. 11971 of 14 May 1999 (“Consob Regulation on Issuers”) in order to review the pre-contractual information requirements to be met by insurance undertakings when issuing insurance products with financial content (i.e. life insurance products belonging to insurance class III and V).
This consultation follows the recent publication of Legislative Decree No. 68 of 21 May 2018 implementing in Italy Directive (EU) 2016/97 on insurance distribution (the “IDD”) which amended respectively the Italian Insurance Code and the Consolidated Financial Act, by providing specific provisions regarding insurance based investment products (“IBIPs”) both in terms of pre-contractual disclosure requirements and conduct rules.