28 Jun 2016
The FCA intends to consult on changes to rules set out in MCOB Chapter 12 – regarding firms dealing with customers experiencing a payment shortfall
The FCA is proposing to amend the wording of the rule in MCOB 12.4.1BR on the allocation of payments received from customers with a payment shortfall and to amend the Glossary definition of “payment shortfall”
Allocation of payments – the FCA proposes to clarify that, when a customer is suffering a payment shortfall, the firm must ensure that no part of any payment received from the customer is allocated towards paying un-capitalised interest or charges incurred because of a payment shortfall before the balance of the payment shortfall is cleared.
Glossary definition – the FCA proposes to amend the definition to make it clear that interest (on missed payments), fees and charges, and ancillary items (such as unpaid service charges settled on behalf of a consumer) do not form part of a payment shortfall.
The aim of the proposed new rules is to ensure payments are allocated in a way that minimises the time taken to pay off the arrears and thus reduces the amount paid in related fees and charges.
The FCA believes the amendments will clarify the FCA’s expectation and help to ensure an appropriate level of consumer protection by providing related Guidance
Responses are required by 10th August 2016 by using the online response form which can be found here.
The FCA have published a note on their key findings from their 2015 thematic review on benefits provided and received by firms conducting MiFID business.
The FCA notes that they consider that hospitality provided or received did not always appear to be designed to enhance the quality of service to the client. Individuals from firms had participated in or spectated at sporting or social events, eg golf, tennis, concerts. These benefits did not appear capable of enhancing the quality of service to clients as they were either not conducive to business discussions or the discussions could better take place without these activities.
It was further noted that hospitality logs did not always record relevant detail or were not well maintained. For example, logs did not always capture how the benefit was designed to enhance the quality of service to the client.
They advised that when providing or receiving a non-monetary benefit the FCA expect firms to consider and assess whether all aspects of the benefit are designed to enhance the quality of the service to the client including the location and nature of the venue, and those activities which are not conducive or required for business discussions, eg sporting and social events and activities.
Find out more: Theamtic Review
Two recent reports still call for further input by the FCA into improving competition in the mortgage sector.
The Responsible Lending Review found that although new rules designed to protect older and self-employed borrowers have not prevented responsible lending to these groups; some firms are applying the rules too rigidly.
The FCA calls for more firms to be more proactive in being flexible and applying exemptions to the responsible lending requirements for existing customers.
Christopher Woolard, director of strategy and competition at the FCA said, “Competition can play a key role in ensuring that the sector works well, delivering lower prices, better products and choices, and more innovation.”
A forward-looking market study is scheduled for later this year to look into what concerns the impact of panel and other commercial arrangements between lenders, brokers and other parties may have on competition in the mortgage supply chain.
Find out more: Mortgage Finance Gazette