Vulnerable Customers Policy

Background:

The Financial Conduct Authority having assumed responsibility for supervision consumer credit looking at greater emphasis for the need to protect consumers. The Office of Fair Trading research paper 15 identified seven categories of vulnerable persons:

Those on low income,

The unemployed,

Those suffering from long term illness or disability,

Those with a low level of education attainment,

Members of ethnic minorities where English is not their mother tongue

Older people,

The  young.

When dealing with any Customer or potential Customer who falls into one of the categories associated with Customer vulnerability additional steps need to be taken by Staff. Staff members must takes appropriate precautions in the way that they sell and deliver services in order to ensure that the Customer is not disadvantaged in any way.

Identifying a vulnerable Customer

A vulnerable Customer is someone who, due to their personal circumstances is especially susceptible to detriment when a firm is not acting with appropriate levels of care.

Vulnerability may come in a variety of ways, it may be permanent, temporary or sporadic in nature,  many of those who are in a vulnerable situation may not define themselves as such.

When meeting a Customer face to face it may be apparent from body language and facial expressions to identify whether the prospective Customer requires additional information and guidance to enable them to make an informed decision.

When speaking with Customers over the telephone it may be more difficult to identify a Vulnerable Consumer because it is not possible to see body language and facial expressions etc.  It is critically important to listen carefully to all customers and to identify people who may be classed as a Vulnerable Consumer.  The tone of the voice may give some clues. Typical telephone characteristics may include:

Having to repeatedly explain a particular aspect of the service – either because the Customer is hard of hearing or simply does not understand what is being said.

Where the Customer provides an answer or comment which is inconsistent with the telephone discussion or which indicate they have not understood the information which has been provided.

Where the Customer admits that they do not understand or that they require the assistance of somebody else in making a decision.

When dealing with a Customer electronically (via email / SMS or other Instant messaging facility) staff neither have the benefit of observing body language etc nor the ability to pick up from the tome of the conversation any potential areas for concern.   Typical characteristics here may include :

            Incomplete or repetitive statements / questions or comments;

Having to repeatedly explain or clarify a particular aspect;

Steps to consider when engaging with a Vulnerable Consumer

It should be noted that where someone is potentially regarded as vulnerable then this does not automatically mean that our products and services are unsuitable for them.   Once we believe that we may be engaging with a Vulnerable Consumer we should immediately make a record of the same and ensure we adhere to this policy.

When engaging with a Vulnerable Consumer we should:

Provide ample opportunities for the customer to ask questions about the information we have provided.

Ask if there is anybody with them who is able to assist them.

Ask them that they have understood the information that has been provided – do this repeatedly as appropriate.

Allow them a period of reflection before completing the transaction – offer to contact on another day if appropriate.

Where a member of staff thinks that the customer does not understand the service which is being offered to them we must not proceed with the transaction.  The Customer should be informed that we will write to them with further information about the product or services they are seeking.

Where a Customer provides information which indicates that (s)he does or may have some form of Vulnerability that may impact on his/her ability to make an informed decision, this should not lead to them being automatically denied access to the service being sought.  The Firm should review its processes to ensure that the Customer is treated fairly and a positive outcome achieved for the Customer.

Intermediaries Based in Scotland

“Travelling is easy from Scotland,” says Vash Naidoo. “While the issues we deal with are mostly the same as our English and Welsh colleagues, like most people, Scottish people want to see you and shake your hand. It gives a better impression if someone meets and sees you so it’s a bonus us being in Scotland.

“A Scottish base offers the potential for a lot of travel. As well as Glasgow and Edinburgh we can get to Aberdeen, Dumfries and even the Highlands. There are businesses all over and while Scotland isn’t as big as England, it can take 4 hours to get to some places.

“Everyone is going through same process with the FCA applications. A lot gets lost in translation if you don’t know how to look for things.”

Thanks to our Scottish compliance consultants, you can benefit from our support north of the border, too.

“The biggest benefit for someone who’s based in Scotland is no added cost of travel,” says Vash. “A lot of English consultants add travel and an overnight stay. With us, we don’t charge for travel as it’s a normal cost, 4 hours away max. I could probably fit it in sooner.

“Another consultant might be available tomorrow but not be available for the travel time. I’ve had a real sense of people wanting a person based in Scotland.”.  

Alison Owen, based in Tomintoul, on the Highlands’ “whisky trail” agrees. She covers compliance needs for firms in Inverness, Elgin, Aberdeen, Perth and beyond.

“Even though everyone in the UK is under the FCA, we can offer a more personalised approach than larger compliance companies. I tailor everything around the firm. No two are the same and we can appeal to smaller firms, too.

“We can save you money as you don’t necessarily need everything. If you phone me for a chat, I’ll want to know what you already do and have and, most importantly, what you need. This is the key and I can focus on supplying that rather than overwhelming you with a great wad of information you don’t need.”

While most things are the same, Scottish law around buying property is different. That’s just one more reason to have someone based north of the border to support your mortgage advisors. 

To get in touch with one of our Scottish team please click here or visit our website for more information at
www.compliance-scotland.co.uk

another day, another snippet.......

The Financial Conduct Authority has confirmed that HM government has decided to initiate a rebate to CCL holders to reflect the ending of the OFT’s oversight on 31 March 2014.

The Financial Conduct Authority will be issuing further guidance on this in the Autumn.

The FCA will charge Sole Traders £150 and most other Firms will have to pay £350.  Those Firms that Register before the 30^th November will be entitled to a 30% discount for the interim license.

Firms therefore are advised to review their current license requirements and make preparations for to apply for an interim license that will run until October 2014.

http://www.compliantsolutions.co.uk/fca-consumer-credit.php

More about Consumer Credit and the move to the FCA

Some 80,000 licence holders would have received a joint communication from the FCA / OFT. 

From September 2013 Forms will be able to apply for Interim permission as part of the new Consumer Credit regulation regime.

Despite Firms having already paid for an "indefinate licence" most licence holders will be required to pay an additional fee to the FCA.

The FCA are advising all OFT Licence holders to review / update their existing licences in order to facilitate a smoother migration. 

So what happens next? 

From the beginning of September Firms should be able to register for "interim permission" - the FCA will be contacting all existing licence holders to let them know how they can register and the steps to be taken.

By the end of September the FCA will have published a further Consultation Paper setting out more detailed rules and proposals. 

Between October and next March the FCA will be hosting a program of free workshops around the country to go through and explain the new changes.

By March next year "Final" rules should be published - giving Firms a month to prepare prior to the FCA officially taking over responsibility. 

After 1st April 2014 all Firms will need to complete a more detailed application process for FCA Authorisation and the FCA have confirmed that this will be a phased approach over a 2 year timescale.

Existing FCA Authorised Firms will have to apply to undertake a VoP to extend their existing permissions to cover consumer credit. 

Should you want to discuss your application or need assistance contact us :

tel - 01376 514166

e   - info@compliantsolutions.co.uk

and follow us on twitter - @compliant and @FCAcompliance

FOS Limit increased and changes to Complaints Handling arrangements

The FSA are inviting comments on the "Final Rules" by 31st August 2011 on CP11/10 : Consumer Complaints: The Ombudsman Award Limit and changes to the complaint handling rules.

From 1st September 2011 Firms will be required to identify a senior individual within the Firm responsible for complaints handling. Firms are also expected to take into consideration the findings of FOS and undertake root cause analysis. Further guidance is to be published by the FSA.

FOS have published some useful guidance notes for Firms and these may be found at

 http://www.financial-ombudsman.org.uk/faq/index.htm

From 1st January 2012 the maximum FOS award limit will increase from £100,000 to £150,000. This higher figure will then apply to any eligible complaint case referred to FOS after this date regardless of when the cause for the complaint took place.

From 1st July 2012 the two stage approach to dealing with complaints will be abolished.  The FSA expects Firms to deal with complaints more promptly and accepts that there may be a 5 - 30% increase in the numbers of complainants that take the matter to FOS.  Firms will still be expected to issue a "final response" letter within 8 weeks.

The FSA will also be issuing a joint communication with the Claims Management Regulator, FOS and FSCS concerning Claims Management Companies aka Ambulance Chasers.  The communication will make it clear to Consumers that Claims Management Companies are permitted to charge a fee for handling the referral of a complaint to the Ombudsman service and the issues a consumer should consider when choosing to use a CMC.

The Paper also makes references to changes to the definition of "eligible complainant" and in particular the scenario where an individual has been subject to identity theft and is being pursued by debt recovery teams on behalf of Regulated businesses.

Client Money - more changes expected

The FSA were planning on introducing changes to client money controls and requiring Firms to appoint a CF10a (Controlled Function responsible for Client Money). These planned changes are pressing ahead for Large and Medium Size Firms.  Such Firms will also be required to report on a monthly basis & will already have been contacted directly by the FSA.

All other Firms that are authorised to hold / control client money will be contacted at the beginning of July - and will be required to provide details to the FSA of the highest balance held on the Client Money Account during the period Jan - June 2011. 

Ultimately, the FSA wants all other Firms to provide the data on a half yearly basis - those not currently on the radar but who held significant client funds during the period will be added to the Large / Medium Firms list. 

Further details may be found at http://www.fsa.gov.uk/pubs/cp/cp11_04.pdf   - Chapter 3.  Annex B gives details of the additional data to be collected.  This requirement only applies to Monies held under the CASS requirements and as a result those Firms which hold client monies and also have risk transfer arrangements in place will need to be able to clearly segregate the two.

This is still at the consultative stage and we can expect final confirmation from the FSA in April /. May. 

Retail Distribution Review Timetable

Further Consultation papers are expected from the Financial Services Authority concerning :

Retail Distribution Review (RDR) - changes to the GABRIEL Reporting requirements inc Complaints; Product Disclosure charges following the introduction of Customer Agreed Remuneration; Capital Requirements and how to apply a consistent approach to expenditure based requirements (EBR).

By the end of 2011 - all IFA's (the FSA prefer to call them Personal Investment Firms or PIF's) must have arrangements in place to monitor and evidence that they hold the greater of £15,000 or one months EBR.

By the end of 2012 - Learning statements need to be in place and ALL advisers should have acquired the necessary level four qualifications plus gap filling where required.  All advisers need to be operating on a Customer Agreed remuneration / Consultancy Charging model . All advisers should describe their services as restricted or independent.

By the end of 2013 -  all PIF's will need to hold a minimum of 3 months EBR or £20,000.