The results are in... Your views on Claims Management Companies are revealed

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1 Hazell Carr E-Newsletter Issue 5 Autumn 2013 E-Newsletter News in brief The British Bankers Association Hazell Carr and the Equiniti Group are now proud members of the British Bankers Association (BBA) the leading trade association for the UK banking and financial services sector speaking for over 200 member banks from 60 countries on the full range of UK and international banking issues. Becoming members of bodies and associations arms us with intelligence that we can utilise to help our clients, help us raise our profile and provide networking opportunities. Equiniti achieves first position The results are in... Your views on Claims Management Companies are revealed The Hazell Carr Claims Management Company (CMC) Round Table was held in London on Monday 10 June. The intention of the event and accompanying survey was to provide Continues on next page Also in this issue: Exclusive interview with Kevin Rousell Areas of concern for the FCA networking opportunities to key stakeholders from across the industry, improve relationships and enable organisations to share ideas and best practice. Hazell Carr Actuarial Seminar HAZELL CARR TOP FIVE Hazell Carr is proud to announce that parent company, Equiniti, the leading UK share services provider, achieved first place in the Overall Satisfaction category of the annual UK Registrar s Benchmarking Survey. The survey was published by Capital Analytics, an independent consultancy which conducts an annual survey into companies satisfaction with the services provided by their Registrars. Stuart Ellen, Managing Director, Registration Services, Equiniti, said: I am particularly pleased with the Overall Satisfaction category, where an industry-leading 91% of clients gave us a positive endorsement of our service. Hazell Carr attends the Pensions and Benefits Show On 12 June 2013, Hazell Carr attended the Pensions and Benefits Show, an event organised by Incisive Media one of the world s leading B2B information providers, serving the financial and professional services markets globally. The show brought together pension managers, scheme trustees, benefits and rewards managers, finance directors and HR directors to meet, share and discover more about pension and employee benefit issues.

2 The quality of complaint handling in the regulated industry has never come under more scrutiny than today. The aim of the survey and event was to help providers share insights and learnings with a view to increasing efficiencies for all parties and ultimately benefit the end customer. Highlights of the event included the following: n Ministry of Justice (MoJ) consumer-focused policy reforms implemented July 2013 n The MoJ welcomes and encourages insight from organisations to help evidence how the CMCs are causing detriment to consumers n Future market trends include areas such as Interest-Only mortgages and Packaged bank accounts n Providers are employing a number of different methods to promote the message that consumers can come straight to them rather than use CMCs n Some providers have concerns over the reputational risks of engaging with CMCs n There was agreement that there is a potential risk with Requests for Information (RFIs) in that the CMC might receive more than they need to know n Some companies have been facing issues with legal firms trying to take legal action instead of going to the FOS n Many providers have doubts about whether to accept electronic signatures and some refuse to accept them The survey respondents (as per the delegates who attended the event) are representatives from within the financial services market, including banks, building societies, insurance companies, IFAs and claims management companies themselves. All survey responses are anonymous and comments are not attributable to individuals. The survey focused on four areas of complaint handling: n Engagement strategies for working with CMCs n Best practice techniques to improve customer response rates n Identifying business areas which are generating most complaints (with a view to identifying future areas of risk) n Opinions on the limiting of claims through time-barring Provider responses The survey found an almost 50/50 split between providers who are actively engaging with CMCs (52%) and those who were not (48%). However, from the event we can gather that they are all working hard to find the best CMC engagement strategies for their business in order to take control of the relationship and ensure CMCs are managed efficiently. Of those providers who are actively engaging with CMCs, 35% have dedicated inboxes and/or contact strategies for CMCs, 30% have dedicated CMC liaison staff and 15% hold regular meetings with the CMCs they deal with. A small percentage (13%) of providers are even rewarding those CMCs which provide higher quality cases. Whether this proactive engagement strategy is delivering the benefits they seek may be a question for further research. The responses to the question What more stringent rules should the government introduce as mandatory for CMCs? generated a strong response from providers with 92% calling for an end to cold calling, 80% in favour of removing up front fees and 52% wishing to see providers being granted the power to not deal with unregistered CMCs. 52% of providers said they wished to be granted the power to not deal with unregistered CMCs Providers actively engaging with CMCs Yes No The areas of increased complaints include: PPI (58%), but investments (35%) and Interest-Only mortgages (23%) also showed significant increases. Providers are also finding that mortgages in general are an area of increasing complaint volume. This looks like a trend that is set to continue and increase in the future. CMC responses Of the CMC respondents, 100% indicated that they charged a simple percentage of total compensation awarded to the claimant (with 33% stating that they place a cap on their charges) when asked to confirm the nature of their fee charging structure. When questioned as to what the minimum net expected redress amount (after deduction of all fees and charges) before they would pursue a claim was, the CMCs advised that they didn t have a minimum threshold with cases pursued on merit irrespective of value. Areas of increased complaints PPI Investments Interest-Only mortgages These answers seem to support the view held by many providers, that CMCs will pursue even very small value claims as loss leaders for longer term strategic gains. Whether this is in the interest of the consumer is an ongoing question for debate between CMCs and providers. Hazell Carr would like to thank Kevin Rousell, of the MoJ and Ellie Renshaw, of Barclays for chairing at the event. Please get in touch with us if you would like to attend a future event contact@hazellcarr.com 1 E-Newsletter Issue 5 Autumn E-Newsletter Issue 5 Autumn

3 Hazell Carr talks exclusively to Kevin Rousell Claims Management Regulation (CMR) has been established for six years now. Kevin Rousell, Head of Claims Management Regulation at the Ministry of Justice, spoke exclusively to Hazell Carr about the CMR primary objectives, previous action taken and the plans for the future. What are the primary objectives of Claims Management Regulation and has this changed since its inception in 2007? When Claims Management Regulation (CMR) was established, its role was to tackle a landscape where some rogue accident claims companies infiltrated the claims market, tarnishing the industry s reputation with poor business practice and dubious marketing. CMR was established to help bring claims management companies into line and to provide better safeguards and protection to consumers. These remain our primary objectives. Into our sixth year of regulation, our operational costs are met by fees levied on CMCs, not by the taxpayer, and we continually refine and refresh our approach as the industry has changed, and continues to change, substantially. Payment protection insurance (PPI) mis-selling is an example of a claims market that has brought examples of further poor practice and complaints. Regulating the claims industry involves a lot of horizon-scanning for new claims markets that may be gathering momentum, with our focus firmly on both the financial and personal injury claims sectors. What action has the CMR taken? We ve been addressing these issues steadily since regulation began, building up a robust and nimble regulatory regime, and this year has been no different. In April we brought an end to CMCs offering inducements to make claims, and began to police a ban on referral fees in personal injury cases. In June we introduced an online tool to show the names of CMCs we have under investigation or are subject to formal enforcement action. In July we brought in the requirement for contracts to be signed before a CMC can take any fees and CMCs now need to inform their clients if they are suspended, or have other enforcement action taken against them. We also stopped CMCs from referring to the Ministry of Justice as their regulator; I d heard too many reports of CMCs using their regulatory statement to infer that they had MoJ endorsement, or that they were somehow acting on behalf of the MoJ. What has been the strategy to tackle the issues around PPI? We work closely with consumer groups, trade associations and the claims management industry, and this year will see us step up our on-going work with the Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) to tackle our shared issues around PPI. We re improving our information sharing arrangements with lenders and other financial stakeholders, as well as publishing enforcement data and strengthening our stakeholder engagement. Our PPI strategy also includes reinforcing the capacity of our dedicated PPI team; who are busy taking forward an increased programme of auditing. The CMR unit won t be stopping there. Our recent activity has focused mainly on alleviating consumer detriment; the right approach, I think, given that consumer protection is our statutory and prime objective. I ve been listening carefully to lenders from car dealers to major banks, telling me about the impact that the badly prepared claims have on them. I ve also listened to similar concerns from the FOS, FCA and industry representatives. Lenders and other organisations struggle in the face of poor quality submissions. Some CMCs take a speculative approach by submitting large amounts of standardised information with little regard to substantiating the specifics of individual claims. The impact of poor quality submissions is I d heard too many reports of CMCs using their regulatory statement to infer that they had MoJ endorsement. felt by the wide industry. Poor claims can be time consuming and costly for providers to process. FOS can be affected by the same issue further downstream. Most importantly though, the consumers behind each complaint suffer; whether they are genuine claimants whose payments have been delayed by system congestion, or people who ve had their hopes of a payout unfairly raised by misleading marketing. What additional steps are you taking going forward to tackle CMCs? We ve decided to take another look at our Rules but this time, more from the perspective of financial service providers and third party organisations such as FOS. We want to more plainly set the standards we expect CMCs to apply to their relationships with third-party organisations. We aim to do this by writing our expectations into our Conduct of Authorised Persons Rules. In particular, we ll be outlining the importance of CMCs taking reasonable steps to investigate the merits of potential claims before presenting them to a third party. We ll also push for CMCs to substantiate and evidence the basis of their complaints and make a clear rule compelling CMCs to comply with FOS requirements where they make referrals. The FOS, FCA and the British Bankers Association have all fed ideas into the formation of the proposed rules. How will you enforce this? CMCs are already required to conduct their business responsibly. We will achieve nothing by generating huge numbers of new and complicated rules. This is why we re determined to hone the strong, basic principles that we have. We re looking to draw out the scope of the rules to increase the transparency of regulation, sharpen our focus, eliminate any room for manoeuvre on the part of a CMC, and make a clear statement about the standards that CMCs are expected to meet. We want CMCs to present, as far as possible, only genuine fact-based complaints where it s reasonably believed that mis-selling took place. Our proposals to amend our Conduct Rules should be out for public consultation this autumn, with implementation planned for the first quarter of 2014, subject to government approval. What is the future for CMCs? Despite how things may seem, only a relatively small minority of CMCs engage in poor behaviour. The number of FOS referrals from CMCs is also falling, as more and more consumers choose to bring PPI complaints themselves. It can t be presumed that all CMC customers were encouraged into making claims with cold calls; we know that many consumers prefer to use CMCs for reasons such as not having the time to pursue a claim, or simply because they just don t want to deal with it themselves. In the end, CMCs are here to stay, and though PPI claims may be a temporary industry which is now showing early signs of contraction, we can expect it to be a dominant issue for some time yet. So any lenders fending off invalid claims should remember that our operation is intelligence led and targeted, and let us know about it. In the meantime, we re committed to constantly improving regulation making it clearer, faster and stronger. Exclusive interview with Kevin Rousell, Head of Claims Management Regulation at the Ministry of Justice. We want to more plainly set the standards we expect CMCs to apply to their relationships with third-party organisations. 3 E-Newsletter Issue 5 Autumn E-Newsletter Issue 5 Autumn

4 Areas of concern for the FCA Join the debate via Twitter or LinkedIn or us at The Financial Conduct Authority (FCA) has been looking at three areas for concern where consumer rights have been breached - Continuous Payment Authorities (CPA), Mobile Phone Insurance (MPI) and Card Protection Plan (CPP) insurance. The recent FCA reviews in these areas have all identified potential areas of concern that may lead to customer detriment. The recent media coverage around CPA, MPI and CPP can be seen as an opportunity to improve customer service as well as review your organisation s processes and procedures therefore improving your company brand and reputation. Continuous Payments Authorities (CPAs) CPAs are automatic payment arrangements whereby customers allow regular payments to be taken from their debit or credit card. They are relatively easy to set up, but can be difficult to cancel. Following the FCA review of how the largest high street banks process requests to cancel CPAs, the FCA has reinforced the regulations which state that when a customer asks for a recurring payment to end that is sufficient to cancel the arrangement. During its investigation, the FCA found that some banks were not cancelling CPAs following customer requests, despite the fact that they are obliged to do so. These findings are supported by the results of a Which? Money investigation carried out this year. Which? made 60 calls to banks and credit card providers to test their staff s knowledge of the rules relating to CPAs. In two-thirds of cases, they found debit and credit cards were failing to abide by the Payments Services Regulations of 2009, which require card providers to cancel CPAs. Legally, card issuers must refund these payments and any related charges immediately. In a market worth 7.5 billion, this could equate to the repayment of a considerable number of charges and/or a rise in complaints to the Financial Ombudsman Service (FOS) for consumers who are unhappy with the response. Mobile Phone Insurance (MPI) According to Ofcom, 92% of adults use or own a mobile phone with the mobile phone insurance market equating to 10 million policies in operation today. The FCA decided to review MPI in response to concerns raised by the FOS, consumer groups and the media. In its review of the nine biggest providers of MPI in the UK, the FCA found that product governance wasn t always effective with a high number of claims being rejected, product design did not always meet consumers needs, terms and conditions were not always clear or fair, poor sales practices were identified, claims handling was often slow and rules were not adhered to. The FCA has presented the findings to the firms that took part in the review and as a result these firms are already making changes that include; making terms clearer so that consumers know when and where they are covered, removing the two-stage claims process, handling claims more promptly and increasing the amount of time customers have to register a claim. Card Protection Plan (CPP) The Financial Conduct Authority (FCA) has reached an agreement with Card Protection Plan Limited (CPP) and 13 high street banks and credit card issuers that will allow up to 1.3bn of redress to be paid to seven million customers who were mis-sold CPP s Card Protection and Identity Protection policies. The scheme will reimburse customers mis-sold the products by insurer CPP after 14 January All customers who bought or renewed the products via CPP, or one of the 13 banks and card issuers who are participating in the Scheme, may be entitled to redress. A proactive contact exercise is underway to notify customers within scope of this review, which will lead to a peak of cases that require processing. Take affirmative action To stop any complaints from escalating, the time to address the problem is now. Firstly, identify if your complaints process is robust and fair are your staff fully trained on the implications of the regulations related to CPAs, MPIs and CPPs in order to protect both your customers and your reputation? What is your policy on these types of complaints do you have any precedents to follow and/or do you need to create some? If you need help, Hazell Carr can work with you to ensure compliance for these services. With careful planning you can minimise the business and financial risks of any complainants and future proof your organisation. These are just three potential areas of concern but no doubt, there will be more. We d be interested to know what you think will be the next area of regulation and focus within your industry. Actuarial Seminar Hazell Carr will be hosting an actuarial seminar on Thursday 17 October in central London on the topics of pensions in the UK and Europe, as well as an update about Long Term Care. The event will be held at the Lancaster Hotel by Hyde Park from 2.30pm 5.30pm, with a drinks reception afterwards. Topics include: Long Term Care Is Private Insurance Possible? Laurence Kleerekoper (formerly an actuary at Government Actuary s Department) will discuss the main drivers of the need for funding of social care, including residential care, in older life. This will cover both the costs that the individual faces and the costs that the UK economy faces, and touch on some of the difficulties of measuring and projecting these costs. Laurence will also look at how these funding problems are dealt with in other countries, particularly France and Germany. The session will include a brief look at the UK s current efforts to implement the Dilnot recommendations. Pensions in the UK and Europe Con Keating (of Brighton Rock Group) will put the efficiency of DB in context and indicate where everything fits in terms of the defined ambition and individual DC - i.e. the relative efficiencies of different approaches to pension provision. Delegates will have the opportunity to meet with their peers, develop new industry contacts, share knowledge and discuss common actuarial issues. We will be keeping a log of attendees so any attendance can also be recorded for CPD purposes. Both actuaries and students are welcome. If you are interested in attending please confirm your space by contacting Natalie on: natalie. george@hazellcarr.com. Or alternatively complete our online event form. Click here to register for this event 5 E-Newsletter Issue 5 Autumn E-Newsletter Issue 5 Autumn

5 Events Hazell Carr will be attending the following events and we look forward to meeting you there. Actuarial Seminar 17 October 2013 BBA Complaints Seminar 22 October 2013 Recent events Hazell Carr has attended CML Interest Only Mortgages Conference 22 May 2013 Claims Management Company Round Table 10 June 2013 Pensions and Benefits Show 12 June 2013 The Actuarial Seminar, hosted by Hazell Carr, will be held in central London at the Lancaster Hotel by Hyde Park from 2.30pm 5.30pm, with a drinks reception afterwards. The seminar will cover the topics of pensions in the UK and Europe, as well as an update about Long Term Care. Hazell Carr will be attending this Seminar hosted by the British Bankers Association (BBA) in order to gain an insight into Ombudsman decisions and the future of complaints handling processes. The seminar will look at the FOS publications, CMC conduct rules, and the Freedom of Information Act. It will also facilitate discussion and networking with industry peers and support the sharing of best practice experiences. Hazell Carr attended the CML s new, dedicated Interest Only (IO) Mortgages Conference which was held at The King s Fund, London. The conference was chaired by the CML Deputy Chairman Stephen Noakes, Home and Lifestyle Director for Lloyds Banking. The event addressed the key issues for lenders to ensure their IO strategies are streamlined and effective, both for their back books and in relation to new interest-only lending. Hazell Carr hosted the CMC Round Table in London on Monday 10 June. The purpose of the event was to provide networking opportunities to key stakeholders from across the industry, improve relationships and enable organisations to share ideas and best practice. The Pensions and Benefits Show brought together pension managers, scheme trustees, benefits and rewards managers, finance directors and HR directors to meet, share and discover more about pension and employee benefit issues. These included changes in legislation, challenges businesses are currently facing and the different approaches employers are taking to deal with them. What are your thoughts on the topics covered in this issue? Are there subjects you would like to see featured in forthcoming newsletters? We want to hear your views please get in touch. Top Five ways to motivate your team Welcome to the first in our series of Top Five articles, to help you and your business think outside the box. Every manager wants a team that s efficient, focused, driven, and fully committed to achieving the best possible results for your business. However we all know that this isn t always the case. The Office for National Statistics (ONS) published figures for the first quarter of 2013 Labour Productivity in the UK highlighting that the average output per worker in the financial services is 92.7 GDP, considerably less than the UK average of While every manager has their own individual style to motivate their team to perform at maximum productivity levels, it can sometimes be helpful to try something new or different. We have put together the five top ways to motivate your team in order to get the best possible results for your business: 1. Set clear objectives Make it clear to the team what needs to be achieved and by when. When the team understand their role and their importance in completing the task, they will be more focused on the job in hand. Regular meetings to discuss progress can be a good way to ensure that your team is able to focus on what needs to be achieved. 2. Give credit when it is due Praising your team when they have done a good job is very important, however you need to find the right balance. If everyone in a race receives a medal then where is the incentive to finish first? On the other hand, not giving any praise or rewards at all will result in a very demotivated team who do not see the benefit of striving to do their best. Peer-led rewarding is also important: if colleagues can recognise the positives in their peers performance it encourages them to reach the same standards themselves. Introducing an award for a team member who goes the extra mile which they vote for themselves will encourage them to look for and admire the positive attributes in others and reward exceptional performance. 3. Suggestions box Introduce a suggestions box where employees can provide suggestions on how the department could be run better, more efficiently or generate the business a cost saving. Where practical, try to implement the best suggestion and recognise the employee who made it. 4. Training Offer training to your team. Whether it s technical or more generic team building skills, it shows the workforce that you are willing to invest in them. Preparing them for the next step HAZELL CARR TOP FIVE on their career path will make your employees feel valued and recognised and shows you have faith in their abilities. 5. Additional responsibility Allocating extra tasks to employees who want more of a challenge is a good way of keeping them motivated. If they are meeting their targets and express an interest in additional responsibility, allocating them extra work will be seen as a reward. This method of rewarding will cost you nothing and by delegating extra tasks could even lighten your own workload. We hope you found our top five tips useful. Why not try out some, or all, of the above to motivate your team this autumn. Doing something differently could be the difference between innovation and stagnation E-Newsletter Issue 5 Autumn E-Newsletter Issue 5 Autumn

6 Get in touch Hazell Carr is a trading name for Paymaster (1836) Limited. Registered Office: Sutherland House, Russell Way, Crawley, West Sussex RH10 1UH. Registered in England and Wales No Paymaster (1836) Limited is authorised and regulated by the Financial Conduct Authority. Part of the Equiniti Group.