Debt Management to be covered by FSCS from April 2018

[Amethyst]

Need a hand finding what the actual changes are.

Update is https://fca.org.uk/publicat…/handbook/handbook-notice-48.pdf ??


But I can't find the actual amendment bits - Financial Services Compensation Scheme (Funding and Scope) Instrument 2017 (FCA 2017/58)

Financial Services Compensation Scheme (Funding and Scope) Instrument 2017 (FCA 2017/58)

Following consultation in CP16/42, the FCA Board has made changes to the FCA Handbook sections listed below:
Glossary
FEES 6 and TPs
SUP 13A and 16
COMP 1 to 7, 10 to 12, 14 to 16, TP 1, Schedules 2 and 5
CONC 3 and 8

In summary this instrument extends FSCS coverage for some aspects of fund management and introduces it for certain debt management activities and structured deposit intermediation. We are also amending the scope of the FSCS in other areas. The changes we are making include:

then
Part 1 of Annex B comes into force on 30 October 2017, Part 1 of Annex A and Part 2 of Annex B on 3 January 2018 and the remainder of this instrument on 1 April 2018
. Feedback will be published in a separate Policy Statement



It comes off the back of a consultation a while back to bring some DMP stuff under FSCS (16/42 - see paras 9.2-9.14 of https://www.fca.org.uk/publication/consultation/cp16-42.pdf )

[charitynjw]

Re: Latest FCA handbook update FSCS / DMP's

Instruments – the definitive version of the rules
1.3 Section 138G of FSMA requires the FCA to make rules made by the FCA Board publicly available,in writing, by a ‘rule-making instrument’. Most other legislative provisions made by the FCA(such as general guidance and codes) are also made by instrument.
1.4 We publish our instruments online to fulfil this statutory requirement. The definitive version ofthe rules is the legal instrument and it is this text that should be used if there is any discrepancybetween the instrument and the website page text.
https://www.fca.org.uk/publication/h...ders-guide.pdf


https://www.handbook.fca.org.uk/document/instrument?page=1
I can't see it in the above.

[Amethyst]

Re: Latest FCA handbook update FSCS / DMP's

We are proceeding with the proposal to introduce a new debt management claims class for claims about the loss of client money in relation to the activities
debt counselling and debt adjusting carried out as part of an individual entering a debt solution to discharge their debts. This does not cover IVAs arranged by insolvency practitioners, which are not
regulated by the FCA.

This class will be funded by debt management firms and consumer credit firms with specific lending permissions. We acknowledge that there could be several factors that result in a consumer being in a debt
management plan, but we also recognise the link that exists between lenders and consumer debts, and the need for the class to be funded in a sustainable way. We will not require NFP debt management firms to contribute to the class and are extending the exclusion from contributing to the class to all firms with limited consumer credit permissions. This is in line with the approach of the regulatory regime for NFP firms and firms with limited consumer credit permissions more generally.

We considered using annual arrears as the tariff measure for contributions from lenders, but concluded that it would not be a more appropriate metric than annual lending as it could inappropriately favour
some types of firms, such as those that provide overdrafts and credit cards, and exclude significant debts that are not initially classified as arrears. We plan to use the tariff measure of annual lending for lenders, and debts under management for debt managers.

Recognising concerns about the class threshold being disproportionately higher than the risks associated with the class, and the impact that this could have on contributors to the class if the retail
pool is triggered, we have decided to reduce the class threshold from £45m to £20m. It is difficult to anticipate how appropriate a threshold would be in the absence of claims history, but we think that £20m would be more appropriate and prevent firms having excessive exposure to the retail pool.

The class threshold and compensation limit for the new debt management claims class may be reviewed at a later stage in light of actual claims.


https://www.fca.org.uk/publication/c...on/cp17-36.pdf



HANDBOOK REG CHANGES

Protected debt management business
12.4.21AR
The FSCS may pay compensation for any claim made in connection with protected debt management business only to the extent that the
FSCS considers that the payment of compensation is essential to provide the claimant with fair compensation
.

Protected debt management business
12.3.9R
For a claimmade in connection with protected debt management business, the FSCS must determine a specific date as the quantification date
, and this date may be either on, before or after the date of determination of default.

COMP 5.8
Protected debt management business
5.8.1R
Protected debt management business is debt management activity carried out by a CASS debt management firm from an establishment maintained by it in the United Kingdom
, but only in so far as the claim relates to a shortfall in client money

(2B)(in CASS 11 and,CONC 3.9, CONC 8.3, CONC 10,COMP 5 and COMP 12) money which a CASS debt management firm receives or holds on behalf of a
client in the course of or in connection with debt management activity

[Amethyst]

Re: Latest FCA handbook update FSCS / DMP's

Finally - heres 58 - Comes into force on 1 April 2018 - https://www.handbook.fca.org.uk/inst...CA_2017_58.pdf so very basically from April 2018 there will be FSCS compensation for victims of debt management companies that go under taking client money with them.

a firm which:

(a) carries on the activities of debt counselling or debt adjusting, alone or together, with a view to an individual entering into a particular debt solution; or
(b) carries on the activity of debt counselling where an associate carries on debt adjusting with the aim in (a) in view; or
(c) carries on debt adjusting where an associate carries on debt counselling with the aim in (a) in view; or
(d) is a not-for-profit debt advice body.

COMP 5.8.1R01/04/2018

Protected debt management business is debt management activity carried out by a CASS debt management firm from an establishment maintained by it in the United Kingdom, but only in so far as the claim relates to a shortfall in client money.