Financial Ombudsman Service compensation limit increases to £350,000 on 1 April 2019

The Financial Conduct Authority (“FCA”) has published a policy statement detailing that the Financial Ombudsman Service (“FOS”) compensation limit of £150,000 will increase to £350,000 from 1 April 2019. This follows a Consultation on the topic of the FOS award limit, which was open between October and December 2018.  

The new limit of £350,000 applies to complaints about actions or omissions of firms, which took place after 1 April 2019. For complaints about actions/omissions occurring prior to 1 April, but referred to the FOS after that date, there is a smaller increase in the limit to £160,000. The policy statement further confirms that the financial awards limit will now automatically adjust annually in line with inflation.

Finally, the FCA has also announced that recourse to the FOS will now be available to larger small and medium-sized enterprises (“SMEs”) as well as individual consumers. To qualify, the SME must have an annual turnover of under £6.5 million, an annual balance sheet total of under £5 million, or fewer than 50 employees. This extension has been introduced by the FCA in recognition of the cost and time difficulties faced by consumers and SMEs when considering taking firms to Court. In particular, Andrew Bailey, Chief Executive of the FCA, stated that “…it is essential [that consumers and SMEs] can receive fair compensation from the Financial Ombudsman Service when things go wrong”.

These changes could significantly increase the value and number of financial awards made as a result of complaints to the FOS. Firms should also note that the implementation period for these new rules is relatively short.

 

 

English Court refuses permission for collateral disclosure of evidence to the FBI

In ACL Netherlands BV and others v Lynch and another [2019] EWHC 249 (Ch) (“ACL“), the High Court said that an applicant is unlikely to be granted permission for collateral use of evidence  disclosed in English civil proceedings, unless there are special circumstances amounting to ‘cogent and persuasive reasons’.

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FCA Releases Final Brexit Guidance to Financial Sector

Overview

The Financial Conduct Authority published a policy statement on 28 February 2019 setting out near-final rules and guidance that will apply to financial services firms in the event of a no-deal Brexit. Most notable is the introduction of a 15-month ‘grace period’ for firms to comply with rule changes in the event of a no-deal Brexit on 29 March 2019.

 The FCA has been in the process of converting EU rules into domestic rules but the changes made will have a knock-on effect on firms’ reporting systems. These rules (which will require Treasury approval before coming into effect) seek to combat that knock-on effect by giving financial firms the grace period in order to comply.Banks, asset managers, insurers and brokers would be covered by these updated rules and could face penalties if they do not comply in time.

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Breach of Competition Law by Asset Managers leads to FCA Fines – First Formal Decision from the FCA under its Competition Enforcement Powers

FCA

The conclusion of a three-year investigation into price collusion in an initial public offering (‘IPO’) saw the FCA issue a decision, on 21 February 2019, which finds three investment firms (the ‘Firms’) to have breached competition law with fines of £414,900 have been imposed as a result. This is the FCA’s first formal decision under its competition enforcement powers.

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English High Court dismisses US $45 million fraud claim where proceedings already up and runnning in a Court in another jurisdiction

Where a claimant has already issued related Court proceedings in another jurisdiction, the English Court is unlikely to be the appropriate forum for the trial of a claim, according to the recent High Court decision in Punjab National Bank (International) Ltd v Srinivasan and others [2019] UKHC 89 (Ch).

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Can English law insurance policies cover ICO fines imposed on financial institutions under GDPR?

 

When the General Data Protection Regulation (“GDPR“) passed into English law on 25 May 2018, one of the headlines that heralded the new legislation was the Information Commissioner Office’s (“ICO“) new power to impose fines of up to €20million, or 4% of global turnover (whichever is the higher) on organisations that breach the GDPR.

And, given the dramatic increase of the ICO’s power to impose fines, one of the big questions asked by insureds, brokers and insurers was whether the fines could be covered by insurance?

The question was repeated earlier this month following on from the announcement of the fine of €50million imposed on Google by the French data regulator for breach of GDPR.

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