14th August 2009

Foot Anstey Financial Services Update

Data Security for Smaller Firms

You may have seen in July the latest fine by FSA for data security lapses – a cool £3million against HSBC. Although these large fines against the bigger firms grab the headlines, it should not be forgotten that the same principles apply to any firm handling customer data. The fine may be smaller but FSA have shown that they are not afraid to come down hard on any firm who isn’t up to scratch in this area.

FSA have recently issued an update on data security for smaller firms which can be found here. There is also this link to a factsheet giving more detail of the steps that FSA expect smaller firms to take to ensure the security of the data that they are handling – this is worth a look to ensure that you are up to speed in an area that could easily be overlooked.

FOS and Claims Management Companies

The FOS Annual Report contained some interesting statistics and comments concerning the role of claims management companies in bringing complaints. 26% of all complaints taken to FOS now involve a claims manager, with the number of complaints involving a claims manager increasing by 40% in the last year.

Even FOS now recognises that in a significant number of cases this is of little or no benefit to the consumer and that many claims brought by such companies are speculative at best.

Whilst this is a step in the right direction the fact remains that until the current FSA Rules governing complaints are modified, claims managers will still be able to “play the system” on behalf of their clients, resulting in the firm complained against having to expend significant time and money in dealing with complaints even where they are not justified.

What is worth noting is the letter written by FOS to claims managers earlier this year. Whilst the letter concerned PPI claims only, there are several issues highlighted in that letter which can equally be applied to any complaint brought via a claims manager and which may assist firms in dealing with them. There is no reason why firms should not insist that claims managers provide a similar level of detail to that outlined in the letter in respect of any complaint they bring – rather than just writing a standard letter in order to place the burden on the firm to do all the work – which is what often happens at present.

This may assist in weeding out some of the weaker claims at an early stage. 

FOS and pre-2001 Complaints

A recent Court of Appeal decision in a FOS case has thrown up an interesting point in respect of pre-2001 cases determined by FOS.

In this case the Court of Appeal confirmed that the 15 year long stop does not apply to such complaints, even though pre-2001 the PIA Ombudsman Service did apply the long stop. However the Court of Appeal also said that under the current legislation FOS must be able to demonstrate, when determining pre-2001 complaints, that it has “..taken into account what determination the former ombudsman might have been expected to reach, and what amount (if any) might have been expected to be awarded…”.

This is not the same as saying that FOS is bound to make the same decision as the former scheme would have made, but is a clear warning to FOS that if they don’t take steps to comply with this duty then their decisions will be vulnerable to judicial review.

The significance of this decision may become clearer once FOS is challenged in the Courts on this point in a future case. Only then will it become clearer how far FOS has to go in considering what the former Ombudsman Scheme would have done, to be sure that this duty is satisfied. It does however give firms some hope that FOS’s discretion to decide cases without any reference to what went before may be curbed.

For a longer article on this subject please click here.

Crunch Solutions - free Legal Audit

Foot Anstey is offering leading businesses in the South West a free-of-charge legal audit. The audit, or 'health check', takes the form of a questionnaire that focuses on the key areas of your business that can carry significant legal or governance issues. These include your business' employment provisions, trading terms and conditions, business structure, credit control measures, disputes, intellectual property, pensions and property issues.

One of our senior lawyers will arrange to visit you, free of charge, and go through the questionnaire with you. The meeting usually takes just over an hour. We then produce a report based on your responses in the questionnaire, which highlights any areas which may require attention from a legal perspective. The report is free of charge and there is no obligation to take up its recommendations.

The audit, called Crunch Solutions, has proved very popular and provides a legal 'snap shot' of your business during challenging times. To find out more, click here.

The “visit” can also be conducted over the telephone. If it is more convenient to you or if you are not within easy reach of one of our offices you can also complete the questionnaire remotely and obtain a Crunch report.

For further information or advice on any issues outlined in this publication, please contact:

Alan Hughes, Associate
Tel: 01392 685266
Email:alan.hughes@footanstey.com