Financial Conduct Authority
Home insurance renewals - FCA fines insurers and insurance intermediaries for failures in communications - 8 July 2021
The FCA has published a final notice it has issued to Lloyds Bank General Insurance Limited, St Andrew’s Insurance Plc, Lloyds Bank Insurance Services Limited and Halifax General Insurance Services Limited (LBGI) for failing to ensure that language contained within millions of home insurance renewal communications was clear, fair and not misleading. A financial penalty of £90,688,400 has been imposed.
Between January 2009 and November 2017, LBGI sent nearly 9 million renewal communications to home insurance customers which included language to the effect that they were receiving a ‘competitive price’ at renewal, but LBGI did not substantiate the ‘competitive price’ language. Separately, LBGI informed approximately half a million customers that they would receive a discount based on either their ‘loyalty’ or the fact they were a ‘valued customer’. This described discount was not applied and was never intended to apply, affecting approximately 1.2 million renewals. As a result, the FCA found that LBGI breached Principle 3 and Principle 7 of the FCA’s Principles for Businesses between 1 January 2009 and 19 November 2017.
LBGI has voluntarily made payments of approximately £13.5 million to customers who received communications that erroneously referred to the application of a discount when none was applied, and this has been taken into account in the assessment of the financial penalty. LBGI is contacting customers proactively, meaning customers do not have to take any steps to receive payment. The FCA continues to engage with LBGI on the voluntary payments process.
Final notice
Press release: FCA fines LBGI £90 million for failures in communications for home insurance renewals between 2009 and 2017
Recent Cases
Financial Conduct Authority v 24hr Trading Academy Ltd and another [2021] EWHC 648
The Court of Appeal has updated its civil appeals case tracker to reflect that an application for permission to appeal the decision of the High Court in Financial Conduct Authority v 24hr Trading Academy Ltd and another was refused on 30 June 2021.
As previously reported in this bulletin, Richards J. gave summary judgment for the FCA, deciding that 24hr Academy Ltd - an unauthorised company - had breached the general prohibition in section 19 of FSMA by carrying on certain regulated activities specified in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) without authorisation. Richards J also decided that 24hr Academy had breached the financial promotion prohibition in section 21 of FSMA, and that a senior individual at 24hr Academy was knowingly concerned in the FSMA contravention, although he did not find that the individual had themselves breached FSMA.
Updated Case Tracker for Civil Appeals: The Financial Conduct Authority v 24 Hr Trading Academy Limited and another (A3/2021/0904)
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Stuart Malcolm Forsyth v The Financial Conduct Authority and The Prudential Regulation Authority, [2021] UKUT 0162 (TCC), 6 July 2021
This decision concerned two references by Mr Stuart Forsyth (Mr Forsyth) in respect of a decision notice of the FCA dated 30 September 2019 and a decision notice of the PRA also dated 30 September 2019. Both decision notices (the Decision Notices) concerned the same matters.
Pursuant to the Decision Notices, the regulators decided to: (i) make an order, under section 56 of FSMA, prohibiting Mr Forsyth from performing any function in relation to any regulated activity; and (ii) impose, pursuant to section 66 of FSMA, financial penalties of £78,318 and £76,180 on Mr Forsyth.
The regulators contended that during the period 19 February 2010 to 8 July 2016, Mr Forsyth’s conduct – which concerned remuneration paid to Mr Forsyth’s wife - demonstrated a serious lack of integrity, in breach of a number of its rules, including: Statement of Principle 1 (Integrity) of the Regulators’ Statements of Principle for Approved Persons; Rule 1 (Integrity) of the FCA’s Individual Conduct Rules; and Individual Conduct Standard 1 (Integrity) of the PRA’s Insurance Conduct Standards.
The tribunal found that the regulators had not made out their case that Mr Forsyth failed to act with integrity in relation to the subject matter of the references. Accordingly, the tribunal held that the regulators should not impose a financial penalty on Mr Forsyth, and remitted the question of whether a prohibition order should be imposed to the regulators for them to reconsider their decision in that regard. The tribunal also made a number of recommendations to the FCA and the PRA pursuant to section 133A(5) of FSMA.
Judgement
Webpage
Press release
