APCC June Southern Forum June 2015

Agenda – 13.40Welcome and introduction Kevin Parkinson, Chairman of the APCC – 14.25Mark Neale, CEO of the FSCS A valuable insight into the day to day challenges that face the FSCS with an overview of how they dove-tail with Regulator and the FOS – 15.15Mel De Noronha, Outreach Officer, Financial Ombudsman Service Following on from the annual conference, Mel will provide further understanding of the work undertaken by the FOS, and look at case studies on how outcomes and decision are made – 15.30Break – 16.15Gordon Findlay, FCA Communications Department An overview of forthcoming FCA communications with firms and what their future focus and vision will be, and an opportunity to ‘ask the regulator’ those burning questions! – 17.00Open Forum A chance for an informal discussion on any hot topics either between consultancy firms, or for further discussion with the FOS, FSCS & FCA Close

Mark Neale - CEO The Financial Services Compensation Scheme

ab FSCS and the Challenges Ahead June 2, 2015 Mark Neale, Chief Executive

ab Our History 5 »The Financial Services and Markets Act 2000 required FSA to set up a Compensation Scheme: »To compensate persons in cases where relevant persons (firms) are unable, or likely to be unable, to satisfy claims against them (the Financial Ombudsman in contrast, deals with cases relating to firms that are still trading) »FSCS was set up in December 2001 »Replaced 8 existing schemes covering investment business, deposits and insurance. Protection extended to cover mortgage and general insurance mediation in 2004/2005 »Set up as an independent, separate company with its own Board, Chairman and Chief Executive »The service is free to consumers »And is funded by the industry through levies

ab Our Governance since 1 April, 2013 – one Scheme, two Masters 6 FSCS Financial Conduct Authority

ab Our Mission and Aims »In delivering this mission FSCS aims to: »Respond quickly, efficiently, and accurately to claims for compensation (Consumers) »Raise awareness of the protection provided by FSCS (The public) »Ensure FSCS operates as efficiently as possible and maximises recoveries from estates of failed providers (Levy payers) »Be ready to respond to defaults in the financial services industry to protect consumers and financial stability (Government and regulators) »Enhance the capability of the FSCS by enabling the people who work for us to develop their skills, knowledge, and professionalism (Our own people) 7 »The FSCS mission is: To provide a responsive, well-understood and efficient compensation service for financial services which raises public confidence in the industry

ab Our Environment: Uncertainty, Volatility and Rising Expectations »Extreme volatility and unpredictability of demand - »Legislative requirements to pay-out the majority of depositors in a failed bank or building society in 7 days and everyone in 20 days »Low public awareness of FSCS protection = risk of unnecessary panic in response to failure »Need to prepare for range of eventualities, including the failure of a life company where continuity of cover would be crucial to public confidence »Ability to develop and participate effectively in resolutions which do not involve pay- outs, including potential “bailing in” of deposit insurer »Increasing complexity and cost of recovering assets from estates of failed providers, including failed banks of 2008 and investment companies like Keydata 8 Claims 2008/09: Over 4 million Claims 2008/09: Over 4 million Compensation payments 2007/08: £82m Compensation payments 2008/09: £20bn Compensation payments 2008/09: £20bn Claims 2002/03: 8,000 Claims 2002/03: 8,000

ab Our Vision and Strategy for the Future »To achieve our aims and meet the challenges of the next five years we have seven imperatives to shape our strategy: ›Modernising our service to consumers; providing a responsive and reliable service at reasonable cost; overcoming complexity ›Diversifying compensation routes so we find new ways of resolving claims and industry failures ›Raising awareness of the protection we provide ›Improving our value for money, transparency and accountability; retain industry confidence and support; can we work together to reduce the cost of regulation? ›Achieving excellence as a creditor ›Deepening contingency planning with key stakeholders to ensure we respond effectively to crises and play a positive part in resolving failures; retain support of Government and the Regulators ›Engaging our people to make FSCS more agile and professional; will require continued change and adaption 9

ab Our Opportunities, Risks and Challenges 10 Within FSCS »Implementation of Connect- our new internal process and operating system; will deliver a more efficient, effective and customer-focused claims handling process to benefit industry and consumers Deposits »Preparing for the changes brought in by DGSD (Deposit Guarantee Scheme Directive) on July 3rd- includes work on SCV (Single Customer View) and data verification Investments »Increasing number of SIPPs claims- investors being negligently advised to switch from conventional pensions. Quantifying investment and pension losses. »Claims relating to advice to invest into Unregulated Collective Investment Scheme (UCIS) investments, with complicated valuation and causation considerations. Insurance »Changes to policyholder protection limits on July 3 rd - increased cover for consumers »Increasing numbers and rise in cost of deafness and asbestos-related claims

ab Thank You ANY QUESTIONS? FSCS protects deposits, insurance and investments as well as mortgage advice. Since 2001, it has protected more than 4.5m people and paid out £26bn in compensation when firms went bust. FSCS is independent and does not charge consumers to use its services. It is funded by financial services firms. FSCS, 10th Floor Beaufort House, 15 St Botolph Street, London, EC3A 7QU

Mel De Noronha The Financial Ombudsman Service Fair and Reasonable

what is fair and reasonable? Mel De Noronha outreach officer APCC Regional Forum

Financial Ombudsman meettheomb what I’ll be covering what we’re seeing about ‘fair and reasonable’… … and how it works in practice the support available to you and your clients

Financial Ombudsman meettheomb our annual review

Financial Ombudsman meettheomb – the headlines… work coming in – around 1.8 million initial enquiries around 1 in 5 became ‘cases’ almost 200,000 about the sale of PPI work coming in – around 1.8 million initial enquiries around 1 in 5 became ‘cases’ almost 200,000 about the sale of PPI cases closed – nearly 450,000 resolved 63% about PPI sales around 43,000 needed an ombudsman’s final decision cases closed – nearly 450,000 resolved 63% about PPI sales around 43,000 needed an ombudsman’s final decision

Financial Ombudsman meettheomb fair and reasonable

Financial Ombudsman meettheomb fair & reasonable case law regulations codes of practice rules contract law good industry practice both sides of the story not black & white based on facts terms & conditions best practice balance of probabilities how we look at things

Financial Ombudsman meettheomb fair & reasonable in practice…

Financial Ombudsman meettheomb need a hand? (9am - 5pm, Mon to Fri) ! online technical resource publication of final decisions complaint data about individual named businesses ombudsman news

Financial Ombudsman meettheomb meet the ombudsman roadshow Birmingham, 9 June Durham, 23 June York, 24 June Blackpool, 7 July Bradford, 8 July Crewe, 28 July …and more to come

Financial Ombudsman meettheomb time limits ‘frivolous & vexatious’ claims companies staff training consistency case fees your questions 8% interest what’s next what matters to you? compensation

Financial Ombudsman #meettheomb

Gordon Findlay The Financial Conduct Authority

Communication & Education programme Gordon Findlay

Tracey McDermott: For smaller firms specifically, one of our key aims is to ensure that we increase our focus on engagement and education, building on the success of work such as our Positive Compliance workshops. We will also be looking to improve our website to make it easier to find the information you need, and we will also look to make more creative use of technology, such as webinars, to assist us in reaching large numbers of firms. 26

Background Working with supervision Regional focus Two way communication Different engagement opportunities Making best use of resources and technology Adapting to new preferences of our audience Remaining Braw workshops/reviews? FCA website 27

Proposed pilot – North West Expanded Positive Compliance sessions Positive Compliance mortgage sessions One to one surgery opportunities Smaller discussion sessions - Breakfast meetings - Lunches - Panel discussions Other sector engagement opportunities 28

Questions? Burning or otherwise…….. 29

Open Forum

For details on how to join or for any general communications please contact; Mrs Beverley Robertson The Association of Professional Compliance Consultants Kemp House City Road London EC1V 2NX Tel;