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Link(s):FCA steps up action against misleading financial adverts | FCA
Financial promotions data 2024 | FCA
Financial promotions quarterly data 2024 Q4 | FCA

Context

The FCA has published its Q4 2024 financial promotions data, and analysis and insights in relation to its 2024 financial promotions data, along with a commentary web page.  The FCA has highlighted concerns with cryptoasset, debt solutions, and claims management company (CMC) promotions. 9,197 CMC promotions were withdrawn in 2024.  Many of these promotions were related to housing disrepair and motor finance claims targeted at vulnerable consumers.

Key points to note and next actions

  • A total of 19,766 financial promotions were amended or withdrawn in 2024, a 97.5% increase compared to 2023.
  • The FCA’s action resulted in the withdrawal of promotions from 46 authorised CMC firms, affecting 9,197 promotions.
  • 20 finfluencers were interviewed under caution in 2024 following illegal financial promotions on social media.
  • The FCA has ‘accepted’ voluntary requirement requests from 18 firms, and has used its ‘own initiative’ powers on two firms to restrict their ability to communicate or approve financial promotions.
  • For unauthorised firms and individuals, the FCA issued 2,240 alerts in 2024. Whilst this is a decrease of 2% from 2,286 in 2023, the alerts remain high compared to historic levels.
  • The FCA has used data and technology to increase its capacity to identify and assess around 480,000 new websites that could be providing or promoting financial services or products without permission. This resulted in reviews of just over 3,700 websites and social media platforms and led to over 1,600 alerts to warn UK consumers about these unauthorised firms.
  • The Q4 2024 data sets out examples of FCA interventions and actions, in effect setting out what the firms in the examples had got wrong.
  • Only 6% of financial promotions cases in Q4 2024 related to general insurance and protection.
Link(s):Financial Ombudsman Service to start charging professional representatives to refer cases – Financial Ombudsman service Financial Ombudsman Service – Charging CMCs and other professional representatives – Policy statement

Context

FOS has announced the publication of a Policy Statement (containing final FCA Rules) that will make its funding arrangement fairer by proceeding with a proposal (which has been subject to two separate Consultations) to charge professional representatives £250 to refer a case to FOS from 1 April 2025.  Professional representatives were behind around 103,000 of the 220,000 complaints FOS received between April and December 2024 (some 47%).  The professional representatives will receive £175 back if the case outcome is in favour of the consumer.  It will remain free for consumers to refer a complaint themselves, and for charities, families and friends who may be helping them.

Key points to note and next actions

  • Professional representatives will be able to bring ten cases to FOS for free each financial year. After that, every subsequent case they refer will be chargeable.
  • If a complaint referred by a professional representative is not upheld or is withdrawn, the financial business against whom the complaint was made will pay a reduced case fee of £475, instead of £650.
  • The move aims to make the funding arrangements fairer and to encourage professional representatives to submit better-evidenced complaints, considering their merits more diligently before referring them.
  • Only 26% of cases brought by professional representatives were found in favour of the consumer, compared to 38% of those brought directly by consumers for free.
  • The professional status of these firms should mean that these complaints have a considerably higher success rate, compared to consumers who use the service without professional representation.
  • The fee is part of a wider range of measures being brought in to encourage firms to submit well-evidenced complaints.

In summary, FOS has decided it will charge CMCs where the complaint:

Link(s):Information Commissioner’s updated response to the Data (Use and Access) (DUA) Bill | ICO
Information Commissioner’s updated response to the Data (Use and Access) (DUA) Bill – House of Commons | ICO

Context

The ICO has announced that it has published an updated response to the Data (Use and Access) (DUA) Bill, which was introduced to Parliament on 24 October 2024. The Bill has now completed its passage through the House of Lords, where it has been subject to a number of amendments and significant debate. This response provides the Information Commissioner’s comments on the amendments that have been made in the House of Lords and on some key areas of the debate.

Key points to note and next actions

  • The ICO welcomes the Bill as a positive package of reform that maintains high standards of data protection and protects people’s rights and freedoms.
  • Overall, the Bill remains one which the ICO supports as improving the effectiveness of the data protection regime in the UK, upholding people’s rights, providing regulatory certainty and clarity for organisations and improving the way the ICO regulates.
  • Under the heading ‘Data protection reform’, the ICO comments on the definition of scientific research, duties to protect children, the direct marketing ‘soft opt-in’ (as set out in Article 22 of the Privacy in Electronic Communications Regulations – PECR – allowing this to be extended to the charity sector), codes of practice, and automated decision making (ADM).
  • Under the heading ‘Other provisions’, the ICO comments on web crawlers, deepfakes, andGovernment technical amendments (the ICO stating that it agreed with the technical amendments made).
Link(s):Taking a responsible approach to company names – Companies House

Context

A new Companies House article is urging anyone setting up a company to choose an appropriate company name. In 2024, Companies House rejected 560 applications because the proposed name had the potential to offend or, if registered, could commit an offence. This is an increase from 479 company names it rejected in 2023 and 351 rejected names in 2022.

Key points to note and next actions

  • Reasons for rejection include:
    • using a sensitive word or expression (e.g., a word which is on the FCA’s sensitive names list);
    • the name being the same as an existing name; and
    • the name using a restricted term without authority, for example, a term implying a connection to the UK government or a devolved government.
  • The list of restrictions has expanded under Companies House’s new and enhanced powers to reject an application to register a name. These new measures were introduced in March 2024 under the Economic Crime and Corporate Transparency Act. They include restrictions on names set up to facilitate fraud, names that give a false impression the company is connected to a foreign government or international organisation, or names that contain or consist of computer code.
  • The article goes on to consider whether company names have the potential to offend, and whether Companies House is being reasonable in its approach in exercising its new and existing powers.
Link(s):More action needed to protect properties as adverse weather takes record toll on insurance claims in 2024 | ABI

Context

The ABI, supported by its own research data and data gathered by Fathom for Flood Re, has called on the government to commit £1bn of investment every year for flood defences after the industry made record pay-outs for weather-related claims in 2024, compared to when data first started to be collected in 2017. Insurers paid out a record £585m for weather-related damage to people’s homes and possessions in 2024, £127m (28%) higher than the weather-related claims pay-outs for 2023.

Key points to note and next actions

  • The data gathered for Flood Re suggests flood defences can save households alone £1.15bn by mitigating damage each year.
  • Previous research indicates that for every £1 spent on flood defence maintenance, £7 is saved in capital spend.
  • For the final quarter of the year, claims for damage to homes from adverse weather reached £146 million – making it the seventh consecutive quarter that weather-related claims have been above £100m.
  • Insurers also paid out £102m to businesses for weather-related damage and business interruption during the final quarter of the year.
  • EY figures show that in 2023, for every £1 property insurers received in home insurance premium, they paid out £1.18 in claims. This follows on from another loss-making year in 2022, when insurers paid out £1.22 in claims for every £1 received in premiums. EY also expects further losses in 2024 – making it the fifth year in a row that property insurers will pay out more in claims than they receive in premiums.
  • High claims costs have an impact on premiums, as the annual average price of combined building and contents home insurance in 2024 went up by £55 (16%) to £395, compared to 2023
Link(s):The Managing General Agents’ Association and Association of British Insurers Agree Collaboration to Drive Progress in Insurance | ABI

Context

The Managing General Agents’ Association (MGAA) and the Association of British Insurers (ABI) have taken a significant step towards greater industry collaboration and a stronger working relationship by signing a Memorandum of Understanding (MoU). This agreement underscores their joint commitment to fostering mutual understanding, enhancing cooperation, and driving progress in key areas of the insurance sector.

Key points to note and next actions

The new MoU establishes a framework for collaboration in three strategic areas:

  1. Information exchange – the MGAA and the ABI will work together to promote mutual understanding by exchanging insights on key industry issues, including retail and commercial insurance, regulation, operational resilience, and technological advancements.
  2. Coordination of views – The two organisations will, where possible and within relevant and significant areas, coordinate views and approaches on key issues driven by governmental and regulatory bodies.
  3. Joint Events, Learning, and Research – The agreement paves the way for collaborative learning opportunities, networking events, and potential joint research initiatives that will benefit stakeholders across the industry
Link(s):IUA publishes cyber business interruption report
Cyber

Context

The IUA has published a new report (which is available to download from this page) in which it states that cyber business interruption risks should receive the same level of attention as that given to information technology security controls and ransomware threats. Research conducted by the IUA in association with Baker Tilly analyses claims experiences from the last few years.  The report is titled “Cyber Business Interruption: What has changed since 2018?”.

Key points to note and next actions

  • Whilst understanding of cyber business interruption has come a long way, there is still work to be done to improve the claims experience for both insurers and policyholders.
  • The cyber insurance market has handled a significant increase in business interruption claims in recent years, both in terms of volume and value.
  • In 2024 alone the industry has seen the Change Healthcare, CDK and CrowdStrike events, highlighting the importance of cover for such risks and the threat of systemic risks. The report seeks to identify the challenges that arise when calculating cyber business interruption losses and how they can be addressed in future.
  • Business interruption cover is a critical part of a cyber insurance policy and can be a significant part of any claim settlement.
  • The report considers it critical to the cyber insurance market’s continued success to share these experiences, so that cyber interruption and the resulting financial exposures are better understood.
  • The report considers current cyber BI policy wordings, the treatment of stock in BI losses, indemnity periods, payroll and system/data restoration costs, and enforced software upgrades.
Link(s):Lords report concludes that naming and shaming is not the way to regulate – UK Parliament
Naming and shaming: how not to regulate

Context

The House of Lords Financial Services Regulation Committee, which was reappointed by the House of Lords on Monday 29 July 2024, following the State Opening of Parliament on Wednesday 17 July, has published its report on the FCA’s plans to publish details of enforcement investigations early (see the FCA’s Consultation Papers CP24/2 and CP24/2 Part 2).   The report is titled “Naming and shaming: how not to regulate”.

The details of the Committee’s inquiry and links to relevant transcripts and submissions can be found here.  UKGI Learning Solutions Insights team has also published a summary of the report.  The title indicates the nature of the findings of the inquiry, and perhaps adds to the less than favourable recent Parliamentary scrutiny of the FCA.

Key points to note and next actions

  • The report’s summary of conclusions and recommendations is set out over 24 separate paragraphs, commentary split between the enforcement proposals themselves and proposed next steps.
  • The pressure on the FCA in this regard has increased following recent Government pressure on the FCA to ensure ‘international competitiveness and growth’, with the report stating that “We remain unconvinced that the FCA has adequately demonstrated how the proposals contained in CP24/2 Part 2 align with its secondary international competitiveness and growth objective.”
  • Whilst the FCA already has the power to name firms under investigation in ‘exceptional circumstances’, in February last year, the regulator announced plans (in CP24/2) to shift to a ‘public interest test’ which would allow it greater discretion when choosing to publicly name firms.
  • The FCA’s consultation prompted an immediate and widespread backlash from across the financial services sector and from legal firms, and even drew criticism from the previous Chancellor of the Exchequer. The Committee was concerned at how surprised the FCA was to the reaction its consultation generated and how it perhaps demonstrated a disconnect between the FCA’s senior leadership and the sector it regulated.
  • Witnesses were worried that the UK was at risk of becoming an international outlier, as no other jurisdiction routinely publicises investigations in the way the FCA is proposing.
  • Despite being asked to carry out and publish a cost benefit analysis (CBA), the FCA has thus far refused to do so on the basis that it only does CBAs for rules and guidance on rules. The Committee recommends that the FCA changes this policy and practice.