Hazell Carr E-Newsletter Issue 4 – Spring 2013
E-Newsletter News in brief Hazell Carr and the wider Equiniti Group have rebranded The Equiniti Group’s strategy is to develop its ‘business process solutions’ offering under a single Equiniti Group brand. The Group has ambitious plans and intends to become the leading provider of financial and business process outsourcing operating in the UK. As part of this rebrand activity, Hazell Carr has launched its new and improved website, which will be central to Hazell Carr’s communications strategy going forwards. Please visit our site at www.hazellcarr.com
CMC round table
Payday loan companies face regulatory crack down From April 2014, the Government will transfer regulatory responsibility for the payday lending sector to the Financial Conduct Authority (FCA).
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o many this has not come as a surprise, with the Office of Fair Trading (OFT) confirming that they had found ‘widespread, irresponsible lending’ within this sector. The OFT also advised that they had begun a consultation on whether to refer the sector to the Competition Commission after it had found evidence of ‘deep-rooted problems in how lenders compete with each other’.
Britain’s payday loan sector has grown rapidly, with concerns about the lack of affordability measures that payday loan companies apply when assessing new customers. Payday loan companies have also drawn extensive criticism for charging annual interest rates of up to 4,000% a year. Continues on next page
Also in this issue: A new class of temporary resourcing
Code of Conduct on retirement choices
Round table review
Events & word quiz
Following the success of our complaints round table event in February we will be holding our next one on 10 June. It will be focused purely on Claims Management Companies (CMCs) and includes a talk from the Ministry of Justice (MoJ). It will be chaired by Ellie Renshaw from Barclays.
The Financial Conduct Authority (FCA) published its Business Plan and Risk Outlook On 1 April 2013 the way that financial services are regulated went through a significant change and the FSA separated into the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA). The FCA’s Business Plan and Risk Outlook provide a clear statement of intention about how its regulatory powers will be exercised going forwards and have been welcomed by a number of stakeholders across the industry. Anthony Brown, Chief Executive of the British Bankers’ Association (BBA), stated: “the new regulator’s priorities align exactly with those of the banking industry – to restore confidence and trust in financial services, and to ensure customers’ needs are the priority”.
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We have found fundamental problems with the way the payday market works and widespread breaches of the law and regulations, causing misery and hardship for many borrowers1 Clive Maxwell, Chief Executive, OFT
OFT report published At the end of February 2012, the OFT published a report giving the leading fifty payday lenders, accounting for 90% of the payday market, 12 weeks to change their business practices or risk losing their licences. The OFT said it had uncovered widespread irresponsible lending, failures to conduct adequate affordability assessments before lending or rolling over loans and insufficient compliance with the standards required of them. They also expressed concern over aggressive debt collection practices and problems with the way lenders treated borrowers in financial difficulty. The OFT has proven that this report should be taken seriously and has reinforced this review activity by banning a payday lender and revoking its consumer credit licence2. The FCA has already committed itself to tackling the regulation of payday loans and addressing advertising problems immediately. A new framework to protect consumers has been introduced by the FSA in a recent consultation paper, CP13/73, and will come into force when the OFT transfers regulatory powers in April 20144. Implications for the FCA Under the new regulation, the FCA will have more power to make rules and ban harmful products than the OFT currently has. It will be able to apply its full enforcement authority to
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consumer credit firms, including banning firms and individuals and imposing fines. The Government will work closely with the OFT, Advertising Standards Agency, Committees of Advertising Practice and industry to make sure that advertising does not lure consumers into taking out loans that are not right for them. The FCA has also advised that it has been given the specific power to cap the overall costs of loans, restrict how long they can last for and the number of times they can be rolled over. While the Regulator does not currently believe that an interest rate cap is the most effective way to address consumer detriment, it is undertaking further work to decide whether or not to use the power in the future.
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calls to National Debtline about payday loans in 2012 Interest rates of up to
4,000% charged by payday loan companies
It is recognised that the demand for short-term credit will not just disappear and that many borrowers only took out payday loans because they could not raise credit from conventional lenders. There are concerns that without access to credit, consumers may turn to unregulated, illegitimate sources. However, the imminent crackdown means it is essential that firms operating in the payday loan market are fully compliant. The new regulatory framework will be one of the most significant changes to the consumer credit market for a generation affecting approximately ÂŁ260 billion in outstanding debt and around 50,000 firms.
E-Newsletter | Issue 4 – Spring 2013
1. http://www.oft.gov.uk/news-and-updates/ press/2013/20-13#.UWQiixxUMvA 2. www.oft.gov.uk/news-and-updates press/2013/20-13 3. www.fsa.gov.uk/library/policy/cp/2013/13-07.shtml 4. w ww.oft.gov.uk/shared_oft/credit-newsletters/ newsletter0712.pdf
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A new class of temporary resourcing The PPI mis-selling continues to dominate the headlines. We find out more about an innovative solution that helped one bank tackle this issue. Sue Bartlett, Business Development Director at Hazell Carr, knows exactly what her clients need and how she can support them. She took some time to talk about Hazell Carr’s involvement in two of the biggest issues currently affecting the industry: PPI complaints and attracting high quality resource.
needed to be reduced whilst maintaining a high standard of customer service – complaints had to be resolved in both a timely and satisfactory manner, whilst making sure that all regulatory obligations were being met. To help clients such as this, we introduced our Academy Solution.
What does Hazell Carr offer its clients? We work with our clients – who are generally regulated bodies – to support them with customer service, complaint handling and technical solutions. Hazell Carr currently has over 1,500 consultants delivering projects across the UK. Our clients not only consider us as trusted partners, but also rely upon our expertise to deliver on a range of regulatory topics in a time-sensitive manner.
Can you tell us more about the Academy Solution? It provides consultants who are capable and enthusiastic graduates looking to enter the world of work. Highly literate, numerate, conscientious and articulate, our graduate consultants embrace the opportunity that representing Hazell Carr gives them to demonstrate their skills and prove their professional worth.
Have any of Hazell Carr’s clients been affected by the payment protection insurance (PPI) mis-selling scandal? Yes. Since we primarily deal with regulated bodies, a number of our clients are based in financial services. As a result, they have had to increase the size of their complaints handling teams in an effort to address customers’ concerns. This has had a knock-on effect on resourcing, as in some instances clients have had to seek extra support to get them through this busy period. How did Hazell Carr support its clients with PPI? One of our clients, a major bank and credit card provider, turned to us for assistance during this period. The real challenge for our client was that costs
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What process do you follow when recruiting graduates? We know our clients have incredibly high standards and to meet those needs we have a rigorous vetting, screening and training programme in place. In terms of supporting our clients with PPI complaints, all selected consultants are provided with training on relevant regulatory areas and complaint handling processes prior to starting their roles. Did the graduate consultants do a good job working on the PPI project? Yes, and in fact, they exceeded our client’s expectations. This was down to the preparation before our graduates started work – they had a strong understanding of the project, knew what was expected of them and had a strong support structure in
Sue Bartlett, Business Development Director at Hazell Carr
place, which helped them to succeed. We have now put several hundred graduates into positions with them. Our Academy Solution has been very successful, in that it has helped our clients deal with an unprecedented number of complaints, whilst at the same time reducing their interim resourcing costs. From another perspective, our Academy Solution not only allows us to help clients, but it also allows us to support skilled graduates to get that all important first step on the career ladder.
For more information, visit www.hazellcarr.com/ services/academy-solution
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Code of Conduct released to help customers source the best retirement choice In March 2012, the Association of British Insurers (ABI) released its Code of Conduct on Retirement Choices. The Code is intended to reinforce existing regulations relating to the Open Market Option (OMO) and supports the right of policyholders to ‘shop around’ for the best available annuity rates. This legislation came into force on 1 March 2013 and covers all of its members, which include most major pension and annuity providers.
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he code of conduct has three core aims and is designed to support customers in making informed decisions about their pension income by:
annuity application forms must not be included in these communications. It should be clear to customers that better deals may be available through shopping around for their annuity.
roviding clear, timely, jargon-free n p information at least two years before retirement, outlining their choices in a clear and consistent way;
At each stage of the sales process, customers must be asked a series of mandatory questions about their personal circumstances – including health, lifestyle and marital status that may lead to a higher level of retirement income. Pensions and annuity providers should also supply customers with options for how they might be able to take their retirement income, by signposting useful sources of financial advice such as the Money Advice Service and The Pensions Advisory Service.
n explaining the different annuity products available and their suitability for purpose, including enhanced annuities; and n outlining the benefits of not settling for the product offered by their pensions provider but shopping around for the most competitive retirement income product. Implications on the sales process In order for pension and annuity providers to comply with the code of conduct, their dealings with customers will need to change. The sales process will need to be transparent and have built-in protections for the customer. For example, while there is a requirement for providers to supply detailed OMO information at least two years prior to retirement,
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Research results The ABI consulted their membership and from the 36 responses received, it was noted that there was a broad agreement on most of the Code but contrasting views on a number of details. Some respondees felt that the Code did not go far enough and that other measures would be needed to solve the problem, including greater consumer education, further regulation or alignment of regulatory regimes and Government intervention1.
E-Newsletter | Issue 4 – Spring 2013
With an ageing population, more people are reaching retirement every year; it is estimated that 400,000 individuals will buy annuities in 20132. With annuity prices at a historic high, shopping around could help pensioners attain a better quality of life. A report by the National Association of Pension Funds and the Pensions Institute last year estimated that the total cost of individuals not exercising their right to OMO is leading to £1bn3 being lost from future pensions income. The report goes on to speculate that, as millions more people are auto-enrolled, this figure could increase to more than £3bn over the decade4.
It is estimated that 400,000 will buy annuities in 20132 and auto-enrolment is likely to see this number rise over the long-term
Insurers who offer both pension products and annuities will be affected the most as they will be obliged to state clearly that they may not be able to provide the best annuity offer for their customer’s circumstances.
get it right, the market opportunity is substantial. However, compliance alone will not eliminate customer inertia, with easy access to guidance and advice remaining key to ensuring positive outcomes are achieved in the annuity market.
It is also estimated that financial advisers will see significantly more business as clients seek best advice, and specialist enhanced annuity providers will see a rise in enquiries and business. For providers who
1. www.abi.org.uk/publications/61444.pdf 2. http://www.retirementspecialist.co.uk/2013/02/26/ annuity-changes-1st-march-2013/ 3. http://www.pensions-institute.org/media/2012/12%20 Recent%20Media%20Comments%202012.pdf 4. http://www.pensions-institute.org/media/2012/12%20
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For more information on the Open Market Option read our fact sheet on: www.hazellcarr.com/ media-centre/news
Recent%20Media%20Comments%202012.pdf
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Round table review Our latest Round table event was held at the Landmark Hotel in London, on 12 February and focused on complaints handling. Chaired by Hazell Carr, the event was well attended by industry professionals, keen to share strategies, opinions and best practice, whilst working together to improve industry collaboration. A number of in-depth discussions took place on the day, however, as space is limited here, this article will focus on the key findings within four of these topics, the first being Claims Management Companies (CMCs). CMCs During this discussion, opinions were forwarded on how to manage CMCs and respond to the challenges they present. Amongst the group, there was complete consensus that the CMCs present a significant challenge, with the way providers respond to CMCs differing across the industry. All providers are engaging with the Ministry of Justice (MoJ) and escalating issues with CMCs via this channel – although it’s felt that the MoJ does not possess the resource and capability to strictly regulate the CMC market. The issue for many providers, especially in the Payment Protection Insurance (PPI) space, is how to manage the CMC relationship. Most providers are searching for ways to encourage CMCs to undertake more detailed due diligence before submitting complaints. Some providers are establishing CMC strategy and engagement teams; finding ways of rewarding CMCs that provide higher quality cases and penalising weak and more speculative firms. An example of innovation was to establish ‘CMC metrics’, recording CMC performance against a number of criteria and establishing benchmark figures. Some providers are
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rewarding better performing CMCs by allowing them to engage on a short-form basis. Mailboxes and specialist contact centre numbers can also be dedicated to specific CMCs, with the aim of almost ‘adopting a CMC’ or forming a panel of providers that CMCs actually want to belong to. Building better relationships with ‘consumer champions’ was felt as key to generating an understanding with all industry stakeholders.
The issue for many providers, especially in the Payment Protection Insurance (PPI) space, is how to manage the CMC relationship
FOS escalations Discussions on this subject centred around examples of recent issues
E-Newsletter | Issue 4 – Spring 2013
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acceptance form and was issuing payment electronically. This speedy resolution ensured that escalations were kept to a minimum.
helped enormously, as it provided an opportunity to separate mailings into logical peer groups, tranches and cohorts.
The key message appears to be the importance of actively engaging with FOS. This enables providers to raise issues where appropriate and build a constructive dialogue.
Few providers were using third parties to assist with data cleansing and tracing, with most agreeing that it was difficult to validate data provided by a third party if the customer does not respond.
Embracing complaints During debates on this topic, the general consensus was that Tony Boorman’s (FOS, principal ombudsman) comments in the Hazell Carr newsletter were broadly consistent with statements he has been making – that increasing complaints is not necessarily a bad thing.
with the FOS and perceived inconsistencies, contesting FOS decisions, good practice and reducing FOS referrals. The group felt that the key to reducing these referrals was providing rapid responses to customer complaints and clear communication. Circumstantial evidence indicated that rapid responses to complaints, meant it was less likely that cases will go to the FOS. One provider managed to issue proactive mailings, process responses and issue redress within 13 working days. In this instance the provider was not waiting for a signed
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One provider suggested an innovative approach to customer complaints. It was suggested that providers with branch networks could appoint a specific individual within a branch to function as the key local point of contact for complaints. The individual in the branch then provides a face-to-face service, which can reduce the risk of trivial service issues transforming into complaints. In some instances this personal level of service has helped to transform 4% of complaints into new product sales. Proactive mailing ‘Best practice’ was a key discussion point for this topic. The importance of data validation was highlighted and all providers indicated that they were undertaking some sort of data cleansing. The group felt that knowing the demographics of their customers
The majority of the group believed that phased contact was the most controlled approach to proactive mailing as it allowed them to test the mailing approach and resolve any specific issues. Segregated mailing and ‘A-B’ testing exercises were also highlighted as methods used to develop a better understanding of factors that may influence response rates. This is just a snapshot of some of the findings from the review. We find these events hugely beneficial, as they enable us to share opinion and knowledge and gain genuine stakeholder insight into issues affecting our industry.
Please get in touch with us if you would like to attend a future event 0118 951 3971 contact@hazellcarr.com
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Please get in touch with us if you would like to attend a future event. We look forward to seeing you there
Events Hazell Carr will be attending the following events and we look forward to meeting you there.
0118 951 3971 contact@hazellcarr.com
BBA FATCA Update Seminar – 29 May 2013 – Tower Hill, London
Hazell Carr will be attending this seminar, which provides the latest update on the proposed FACTA (Foreign Account Tax Compliance Act) regulations. Attendees will be able to engage with those who have influenced the development of the regulations and the team responsible for the intergovernmental approach. They will also have the opportunity to obtain their insights on future developments.
Round table – 10 June 2013, 11am-3pm
Following the success of our complaints round table in February, we will be holding our next event on10 June. This will be focused entirely on CMCs which proved to be a popular topic in February. The event will be chaired by Ellie Renshaw of Barclays and will include a speaker from the Ministry of Justice. Confirmed attendees include individuals from across the banking, insurance and advisory markets. The round table is invitation only, however, if you are interested in attending then please get in touch. We hope this will be another useful industry insight and successful networking opportunity.
Recent events Hazell Carr has attended Water Industry Customer Conference – 23-24 January 2013
Hazell Carr exhibited at the Water Industry Customer Conference with our colleagues from Equiniti ICS. We were there to promote our outsourced complaint handling services, and our Perito complaints management software. The integrated work flow offered by this software automates the entire end-to-end complaints process. This provides staff with a step-by-step guide to completing all their tasks and can be easily adapted to reflect operational or legislative changes.
Infoline Complaints Management in Financial Services – 26-28 February 2013
Hazell Carr exhibited at the Infoline Complaints Management in Financial Services with our colleagues from Equiniti ICS. The event provided attendees with an industry and regulatory update on financial services complaints management – with industry experts tackling all of the most important challenges in handling financial services complaints.
Future of Consumer Credit Regulation – 9 April 2013
Hazell Carr attended this event as delegates. The conference provided lenders with an in-depth analysis of the Government’s proposals and their likely impact on the consumer credit industry.
CML Mortgage Complaints Seminar – 30 April 2013 – London
Hazell Carr attended this event as delegates. The event provided a compelling seminar to explore how lenders can find solutions to reduce complaints volumes and, where complaints do arise, handle them fairly and efficiently.
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E-Newsletter | Issue 4 – Spring 2013
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Word quiz Answer the most questions correctly and you could win a £25 John Lewis voucher. Just send an electronic copy of your answers to contact@hazellcarr.com or print this page and post to: Business Development Team, 27 Kings Road, Reading, Berkshire, RG1 3AR. In the event of a tie, a winner will be selected at random. All entries must be received by 31 May 2013.
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Entrants must be aged 18 or over. Competition winners will be selected at random from all correct entries. The editor’s choice is final and no correspondence will be entered into. There are no restrictions on the number of entries. No cash alternative to the stated prize is available. Prize winners will be notified by e-mail within 30 days of the prize draw. Prizes will be delivered to prize winners within 30 days of notification. Details of winners and results are available on request. Hazell Carr competitions are not open to Equiniti employees and their families. No purchase necessary. Competition closes 31 May 2013.
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