Financial Ombudsman Service compensation limit increased again – by more than 10%


The Financial Conduct Authority confirmed last month that the limit for compensation that can be awarded by the Financial Ombudsman Service (“FOS”) will be raised from £375,000 to £415,000, for complaints made after 1 April 2023 relating to acts or omissions on or after 1 April 2019 – an increase of over 10%.

A lower limit of £190,000 applies to any complaints made from 1 April 2023 relating to events that occurred prior to 1 April 2019 – again an increase of over 10%, from £170,000 in 2022.

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Ready or not, here comes the Consumer Duty

Since July 2022 when the FCA published its rules and guidance to implement the Consumer Duty, much ink has been spilled on what it will mean for affected firms. Now, with the clock ticking down to implementation on 31 July 2023, the FCA has published the findings of its review of a number of larger firms’ plans for complying with the Duty.

“Could do better” is the overall mark on the industry’s homework so far.

What will the Consumer Duty involve?

To recap, the reforms will involve:

  1. An overarching Consumer Principle requiring firms to act to deliver good outcomes for retail customers when selling products and services.
  2. Cross-cutting rules providing clarity on FCA expectations, which will require firms to act in good faith, avoid causing foreseeable harm, and enable and support retail customers to pursue their financial objectives.
  3. Rules relating to the four outcomes the FCA wants to see, around: appropriateness of products and services; transparent pricing and fair value; consumer understanding; and consumer support.

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FCA tightens appointed representative regime

In August 2022, the FCA released a policy statement introducing improvements to the appointed representative (“AR“) regime. In its policy statement, the FCA provides feedback on its earlier consultation, and sets out new rules to make authorised financial firms more responsible for their ARs.

In its press release, the FCA says that whilst some principal firms do effectively ensure their ARs comply with rules, “many do not adequately oversee the activities of their ARs“. It says its new rules will “prevent consumers being mis-sold or mis-led by ARs and will prevent misconduct by ARs undermining markets operating fairly and safely“.

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Is the FCA catching on to its AFrO and AFO powers?

My colleague Ben Ticehurst, a Director in our UK Government Investigations and White Collar team, recently shared a timely insight on increased use by the Financial Conduct Authority of Account Freezing Orders (“AFrOs”) and Account Forfeiture Orders (“AFOs”) on our Anticorruption Blog.  He reports on the recent decision for the FCA to secure its first AFO, a tool used for asset recovery under Part 5 of Proceeds of Crime Act 2002, for £2 million against QPay Europe Limited.  Until recently , AFO and AFrO powers, granted by the Criminal Finances Act 2017, have mainly been used by the National Crime Agency, regional police forces, and His Majesty’s Revenue and Customs (“HMRC”). However, given the FCA’s stated intent in their recently published three year strategy to use their “enforcement and intervention powers more actively”, these measures should now be firmly on the radar of compliance teams and MLROs of FCA-regulated entities. 
Given the relevance to readers of this blog, we wanted to call this to your attention – check out Ben’s full post here:  Account Freezing and Forfeiture Orders: is the FCA waking up to its investigative powers?    | The Anticorruption Blog

You’ve been served…well, virtually.

In what is widely touted as the first of its kind in the UK, a recent order made in D’Aloia v Persons Unknown & Others by the High Court marks an expansion of the potential methods for service of claims permitted for English proceedings, by allowing proceedings to be served via airdrop of Non-Fungible Token (NFT). The decision marks a useful step forward for victims of fraud in the crypto-asset space.

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FCA future gazing

On 14 July FCA CEO Nikhil Rathi gave a speech at the Peterson Institute for International Economics, setting out a helpful overview of the FCA’s intended future approach to its aspects of its regulatory responsibilities. In addition to emphasising cross-border co-operation, Mr Rathi elaborated the following focus areas:

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Use it or lose it: FCA accelerates crack down on unused regulatory permissions

The Financial Conduct Authority’s new powers to more swiftly cancel or change firms’ regulatory permissions have now come into effect. These powers are particularly aimed at firms that have permissions they are not using. Firms can be required to prove they are carrying out the regulated activities they have permissions for, or risk losing their permissions. It can be expected that the FCA will be increasingly active in the coming months in looking to strip firms of unused permissions via this new streamlined process. Firms should continue to think carefully about whether they have permissions they are not using and should voluntarily relinquish to avoid incurring the regulator’s ire.

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Banks’ Quincecare duty in APP fraud Cases potentially extended

In March the Court of Appeal overturned an earlier High Court judgment and held that the application of Quincecare duty does not depend on the fact that the bank is instructed by an agent of the customer of the bank. In principle, the Quincecare duty could now arise where a non-corporate customer falls victim to an “authorised push payment” (APP) fraud. Continue Reading

Cryptoasset firms and sanctions

The FCA has stressed recently that it expects the cryptoasset sector to play its part in ensuring that Russian sanctions are complied with, and highlighted that the financial sanctions regulations do not differentiate between cryptoassets and other forms of assets.

The use of cryptoassets to breach or circumvent economic sanctions is a criminal offence under the Money Laundering Regulations 2017 and regulations made under the Sanctions and Anti-Money Laundering Act 2018; most notably the Russia (Sanctions) (EU Exit) Regulations 2019, as amended.

In addition to steps taken to identify customers and monitor transactions under the Money Laundering Regulations 2017, the financial sector, including the cryptoasset sector, will also need to implement additional sanctions specific controls as appropriate.

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