This month we take a high-level look at the regulators’ plans for 2025.
The Consumer Duty, complaints and vulnerable customers
For the FCA the Consumer Duty continues to be its flagship policy. The FCA continues to embed The Consumer Duty in raising standards across the financial services industry. As part of this this it will continue to look at how firms handle and learn from complaints, how vulnerable customers are treated and the price and value outcome.
The motor industry has already experienced the latter with the FCA’s work on GAP Insurance in 2024, although this product is now back on the market.
The Financial Ombudsman Service (“FOS”) is looking to charge Professional Representatives (Claims Management Companies and law firms) £250 to bring a case to FOS which they would lose if the case is not upheld. It is hoped that this will deter spurious cases.
FCA and FOS have also jointly launched a “call for input” about modernising the redress system. Unfortunately for the motor industry this is somewhat “closing the stable door after the horse has bolted” given the furore over commission on motor finance.
Discretionary commission
January 2024 finally saw the FOS rule in favour of the customers on two discretionary commission motor finance agreements, which caused the FCA to undertake a lot more work in this space and extending the time on complaints handling whilst they worked out what to do. This was further compounded later in the year by the Court of Appeal decision in the Johnson, Wrench and Hopcraft case which went wider than discretionary commission agreements and even wider than FCA rules on the subject. Barclays Bank also failed in their judicial review of the FOS’s decision.
In 2025 we all wait for the Supreme Court to rule on the above to give the motor industry some clarity and hence a way forward from the current uncertainty, but in the meantime the industry has moved to a world of commission disclosure on motor finance agreements to ensure compliance with the latest and existing decisions and law.
Update from the FSCS
Finally, some good news from the Financial Services Compensation Scheme (“FSCS”) in that it is not proposing to set a levy for 2025/26 in the General Insurance Distribution class, because it is not expecting any new firm failures. Note, Consumer Credit business is not covered by the FSCS.
Be confident with ITC
If ITC is your principal firm, we will continue to monitor the above and keep you abreast of any new regulatory developments in 2025. We work with our member firms to advise them so that they can do business in a compliant manner, and ensure that customers are always getting good outcomes.