Financial Conduct Authority
Defined benefit pensions - FCA issues proceedings against Estate-Matters Financial Ltd – 09 February 2021
The FCA has commenced civil proceedings in the High Court against Estate-Matters Financial Ltd (in liquidation) (EMF), alleging that:
- the firm has contravened FSMA 2000 requirements by providing unsuitable defined pension scheme transfer advice, leading to policyholders exiting such schemes when it was not in their best interests to do so;
- Paul Steel, the firm’s director and co-owner was knowingly concerned in those contraventions; and
- Mr Steel breached FCA requirements by undertaking a course of action which resulted in the removal of the firm’s assets, meaning it could not meet its potential liabilities in relation to the alleged unsuitable advice, while enabling him to retain significant profits from that advice and ongoing fees.
The FCA has obtained an interim injunction against Jacqueline Foster, Mr Steel’s partner, up to the value of £7 million pending a further hearing. This has been obtained on the basis that she may be holding or controlling assets owned by Mr Steel. The FCA has also asked the Court to make a restitution order requiring Mr Steel to compensate policyholders who have suffered loss as a result of the alleged contraventions.
A trial date is yet to be set.
FCA press release on proceedings against Estate-Matters Financial Ltd
Competition and Markets Authority
COVID-19 – CMA publishes letter to Clydesdale Bank on a breach of the SME Banking Behavioural Undertakings 2002 – 5 February 2021
The Competition & Markets Authority (CMA) has published a letter addressed to Clydesdale Bank plc (the Bank) regarding the Bank’s breaches of the Small and Medium-sized Enterprise (SME) Banking Behavioural Undertakings 2002 in relation to loans offered under the government’s COVID-19 Bounce Back Loans Scheme (the Scheme). The Scheme was launched by the government on 4 May 2020 to enable smaller businesses to access finance more quickly during COVID-19.
In 2020, the Bank gave undertakings not to require SME customers to open and retain a business current account (BCA) as a condition of receiving, servicing or maintaining a loan – a process referred to as ‘bundling’. The Bank began to provide loans under the Scheme on 4 May 2020 and confirmed shortly afterwards that it believed it was doing so in compliance with its undertakings.
The CMA subsequently investigated the position and found the bank to be in breach of the undertakings in relation to 55 SMEs. Those SMEs had been required to open or maintain a BCA as part of their applications for a Scheme loan. Clydesdale has undertaken voluntary action to address the breach, as set out in the Action Plan published alongside the letter, which includes:
- writing to affected customers to apologise and offering them the option to switch from a BCA to fee free loan servicing account;
- providing a follow-up letter to those customers remaining on a BCA one month before charges apply to remind them of the offer to switch;
- offering a choice of a fee free loan servicing account option to new loan applicants; and
- updating its website with key customer messages suggested by the CMA, with updated website guidance to follow.
The Bank also identified that 112 Yorkshire Bank customers have received the same treatment when applying for Scheme loans. Although Yorkshire Bank is not within scope of the Bank’s undertakings, the Bank has, nonetheless, taken the same voluntary action in relation to these customers to achieve consistency across its bank brands.
Given the comprehensive nature of the voluntary action being taken by the Bank, the CMA has said that it does not consider it appropriate to take formal enforcement action at this time but it will continue to monitor the issue.
CMA letter to Clydesdale – 5 February 2021
Clydesdale Action Plan
Webpage
