How the OFT and FSA work together

[Amethyst]

Just interesting how things work...


The OFT and FSA

OFT and Financial Services Authority joint working

The OFT and the Financial Services Authority (FSA) have different, but complementary, powers and statutory objectives. Given our overlapping interests and jointly regulated businesses, it is important we work well together in order to maximise our effectiveness in dealing with consumers and businesses.
We have been working closely with the FSA, and will continue doing so, on specific issues such as PPI and across a broader range of mutual interests. A joint action plan, published in April 2006, sets out in detail how we intend to:

• reduce the administrative burdens on jointly authorised firms by streamlining processes where possible
• join up work to promote consistency in approach, and better investigations / outcomes for markets. This will help improve regulatory certainty for business
• ensure better communication and advice for business and consumers by joining forces to target messages, including relevant signposting on websites and at contact centres
• ensure consumer education initiatives are coordinated and complementary.

An update, summarising progress of each of the work streams, was published in November 2006.
Delivering better regulatory outcomes - May 2008 update (pdf 337 kb)
Delivering better regulatory outcomes (pdf 292 kb)

Delivering better regulatory outcomes - an update (pdf 170 kb)
Unfair Terms OFT / FSA Concordat
Memorandum of Understanding with the Financial Ombudsman Service
Wider Implications Process
Delivering better regulatory outcomes - July 2007 update (pdf 329 kb)
The roles and responsibilities of the Office of Fair Trading and the Financial Services Authority (pdf 109 kb)

Personal Bank Current Account Pricing Market Study & Test Case
The OFT has been carrying out a market study into personal bank current account pricing, the
report is due for publication in the next few weeks, alongside a formal investigation under the
Unfair Terms in Consumer Contracts Regulations 1999 ("UTCCRs") into the fairness of charges
for unarranged overdrafts and returned items. The judgment on the initial stage of the test
case, delivered on 24 April 2008, found that the charges can be assessed for fairness.
The OFT is liaising closely with the FSA and other relevant bodies such as banks, the British
Bankers’ Association, consumer organisations, and the Financial Ombudsman Service (FOS). The
FSA is also party to the litigation agreement the OFT entered into with the banks prior to the
'test case' to facilitate an orderly and timely resolution of the legal issues. So the OFT and the
FSA have put coordination arrangements in place at all levels.
As the OFT’s action is expected to provide greater certainty about the application of the law
to these charges, the Financial Ombudsman Service has decided not to progress complaints
about current account charges until the outcome of the test case is known. The courts decide
independently how to handle claims before them although at the moment they have decided
to stay proceedings.
The FSA is responsible for the complaints handling rules that apply to current account providers
in relation to unauthorised overdraft charges complaints. It considers that it is desirable for there
to be further clarity as to how unauthorised overdraft charges complaints should be handled by
obtaining greater legal certainty, so that complainants can be handled fairly and consistently.
The FSA therefore issued a waiver on 27 July 2007, which means that, until the test case is
resolved or the waiver ceases or is lifted, any bank or building society to whom the waiver
applies will not be required to handle complaints relating to unauthorised overdraft charges
within the usual time limits set out in the FSA rules.

OFT and FSA concordat

Both the OFT and the Financial Services Authority have powers in relation to unfair contract terms under the UTCCRs, and co-ordinate enforcement action and co-operate to ensure the effective and consistent delivery of consumer protection in this area.
The revised framework for this co-ordination is set out in a new concordat which came into effect on 31 July 2006.
Download concordat (pdf file 700 kb).
The OFT and FSA will ensure that:

• any action they take is necessary and propotionate where there is evidence of a potential breach of the UTCCRs and of potentrial consumer harm stemming from the breach, and
• business, in normal circumstances, is given a reasonable opportunity to stop relying on unfair terms, removing or revising them as appropriate, before formal action is taken.

Under the concordat the OFT and and the FSA will consult and liaise to reduce duplication of effort and to promote appropriate action by the body best placed to lead on an issue. The concordat provides that the FSA will consider the fairness under the UTCCRs of standard terms in financial services contracts issued by authorised firms or their appointed representatives for regulated activities. This will include contracts for mortgages and the selling of mortgages; insurance and the selling of insurance; bank, building society and credit union savings accounts; pensions; investments; and long term savings.
The concordat replaces the 2001 concordat between the OFT and the FSA.
In April 2006 the OFT and FSA published a joint action plan setting out how they would work together more closely and effectively on matters of mutual interest.
Download joint action plan (293 kb).

[Amethyst]

Re: How the OFT and FSA work together

and Trading Standards.....


The OFT and TSS

Local Authority Trading Standards Services

Local Authority Trading Standards Services (TSS) are our key partners in implementing the consumer law regime, which lies at the heart of UK economic policy. We share enforcement powers and work closely with them to provide an efficient and effective service for both consumers and businesses.
TSS are funded by and accountable to local authorities, and are required to work to national priorities set by government departments and agencies, as well as local priorities set by elected councillors which focus on the particular needs of the local community. They also enforce a far broader range of legislation than the OFT and often have responsibility for animal health, food safety and underage sales of tobacco, alcohol, knives and fireworks.
With the introduction of the Enterprise Act, the OFT was given responsibility for coordinating enforcement activity across a wide range of legislation enforced by both the OFT and TSS. This has led to far greater collaborative working and we have established a better understanding of our respective priorities and ways of working.
We are working with TSS to establish a UK-wide network of Regional Intelligence Officers, whose responsibility will be to pull together information and intelligence on issues affecting consumers across the country. This will enable us to build a comprehensive picture that will inform the priorities of both TSS and the OFT.
OFT and TSS programme of joint action

Since December 2005, the OFT has also had responsibility for championing and providing regulatory leadership to TSS. In order to establish precisely what these roles should entail, the OFT consulted widely with all TSS Heads of Service in early 2006. This led to the creation of the OFT and TSS programme of joint action (PJA), which seeks to shape joint action between the OFT and TSS in addressing some of the most important issues impacting TSS' ability to deliver services across the UK.
Some of the issues addressed include access to funding, raising the profile of TSS and the best way to provide advice to consumers and businesses.
The PJA outlines our joint vision for TSS. We are working towards a TSS that is collaborative, that delivers first rate services and promotes the well-being of local communities.
As the national voice for TSS within government, the OFT has committed to champion TSS in all aspects of their work and to ensure that the voice of TSS is heard on key issues.
We will also give regulatory leadership and assistance to TSS. We will facilitate the effective use of intelligence to ensure that our collective resources can be targeted where they can make most impact nationally and locally. We will provide expert advice, guidance and training, and we will undertake work that has significant benefits for consumers and the economy.
Detailed information of how the OFT and TSS will be working together to benefit consumers and businesses is published in 'Programme of joint action'.
OFT and Trading Standards Services - programme of joint action (pdf 149 kb)
Workstream and programme board members (pdf 56 kb)

[Amethyst]

Re: How the OFT and FSA work together

Amiable Irishman gets tough as OFT takes aim at unfair practices - Times Online

Interesting Article - I have pasted a link elsewhere

John Fingleton has a confession to make. The scourge of British business, the man who, as chief executive of the Office of Fair Trading (OFT), issued £237 million of fines last year, has raided supermarket head offices and gone toe-to-toe with the banks on overdraft fees is, well, a bit of a softie.
On a recent trip to a restaurant, the cartel breaker and self-styled consumer champion fell apart. “They hadn't got the tables quite right. There were ten of us but they'd sat us at two tables of five,” he says.
“I was quite timid, I was trying to be nice and was wondering whether I just hadn't made it clear when I made the booking.
“The American I was with just said to the waiter: ‘Look, we are not going anywhere else, we have booked here, we are putting the tables together'.”

Mr Fingleton's critics in the City will have a hard time believing it. They give the distinct impression they would not want to be in the same room as the Irishman, let alone discussing which bottle of claret to share.

Mr Fingleton admits this anecdote may be misleading - he is far from timid in the workplace and is known for putting in long hours. Since taking over as chief executive at the OFT three years ago, Mr Fingleton has embraced the new powers granted by the Government's Enterprise Act of 2003 - which include the threat of criminal sanctions - and focused the OFT's resources in a way that has put more than a few businessmen's noses out of joint.
British Airways has been hit with a £121 million fine for colluding with Virgin, the rival airline, over fuel surcharges. Drugs companies have been accused of ripping off the NHS by up to £500 million a year. More than 100 construction companies have been accused of price-rigging public sector contracts.
Executives claim Mr Fingleton is pursuing a populist agenda and chasing headlines. Sir Terry Leahy, Tesco's chief executive, last year railed against the manner in which the OFT released the provisional findings of its inquiry into price-fixing of milk by supermarkets and dairies, noting that a verdict normally comes once all the evidence has been considered.

His argument carried some weight. The OFT was forced to pay £100,000 to Wm Morrison and apologise for forgetting to put the word “alleged” before claims in the press release about the supermarket chain's involvement in any of the illegal activity.

The day after the apology, the chastened OFT took a leaf out of the Kremlin's book, and marched into each supermarket head office to collect reams of pricing data on more than 100 consumer goods.

There is a logic to its pursuit of high-profile names - he argues that by focusing on the bigger fish such as the supermarkets, drug companies or airlines, the OFT is simply using its limited resources in the best way possible. This way, it can protect consumers and send out a signal to other businesses. When questioned about the knock-on benefits to his own career from the resulting press coverage, the amiable Irishman shrugs his shoulders, smiles and remarks that he is hardly that well known - he still gets asked at functions in the City if the OFT is a body that safeguards fairly traded coffee.

“It was the same when I was in Ireland at the Competition Authority,” he says. “We had schools writing in asking what competitions we were organising. I'm frankly uninterested in my own profile. This is much more about me getting the OFT firing on all cylinders, making sure we are using our powers in the right way and running efficiently.”

He adds: “We have to make a judgment call, like the police. We have limited resources and have to decide where might it have the greatest effect, where it might send a message to industry about the integrity of doing the right thing.”

The fact that one of the OFT's most significant cases to date was in the unglamorous world of marine hoses tends to support his point that the competition authority is not just chasing headlines. Three British executives who worked for Dunlop Oil and Marine were last month jailed for a total of eight-and-a-half years for running a cartel that defrauded the Ministry of Defence and the United States Government out of up to £75million a year.

Mr Fingleton says: “A lot of the stuff we do is very pro-business, while most of the headlines are not terribly representative of what we do.
“The guidance we issue that business really likes on things such as unfair commercial practice is pretty unsexy for the media, I'm sure you'll agree.”
Three years into his job at the OFT and Mr Fingleton says his biggest achievement is the prioritisation programme.

This has enabled the OFT to achieve far greater results and speed up the delivery of price-fixing investigations such as those into milk and cigarettes, which have been on its to-do list for years.

Of the OFT's annual budget of £70million, half goes on a helpline for consumers and training trading standards officers, leaving the rest to cover administrative costs, merger approvals and enforcement work.

Under Mr Fingleton, the regulator has become far more brutal in deciding which cases to follow and which ones to drop - which cases represent the best use of limited resources.

Two cases brought by competitors against the London Metals Exchange and Walkers Crisps were shelved last year - the OFT judged that the cost of pursuing them was too high given the likely scant benefits to consumers.

Mr Fingleton points out that the OFT also initially turned down the call for an investigation into Britain's grocery sector. The Association of Convenience Stores appealed against this decision. The OFT then referred it to the Competition Commission, whose subsequent inquiry was then criticised for wasting taxpayers' money.
“Five years ago too much of our work was being determined by people who had more interest in stopping competition than supporting it,” he says. “Very often it was competitors bringing complaints about their more efficient rivals.
“We now look at prioritisation across all the work we do.
“We did a market study on online shopping, which is an important issue. People have rights to return an item within seven days, and the right to an electronic contact with the company.
“We found that not all businesses had complied with this so we used an education programme to tell companies what was expected. We thought ‘what's the most effective tool here?' A big high-profile court case against an online retailer probably wasn't the thing.”
Mr Fingleton first rose to prominence more than a decade ago at Trinity College, Dublin, in his native Ireland. Far beyond his mismatched eyes (one blue, one brown) and first class degree, he is remembered most for a book about taxis.
In a sign of what was to come, he wrote a tome about how consumers were being let down by the regulation of the taxi market, which restricted the number of cabs in circulation.
“I used to watch or stand in a queue, and see all these people waiting for up to an hour for a taxi so I wrote a book about it and proposed a solution to the Government,” he says.
He eventually pushed through his proposals as chairman of the Irish Competition Authority, a role he was awarded in 2000, three years after his book was published.
Fortunately, he is now more able to switch off in his spare time, insisting that he does not even raise an eyebrow at the price of a pint of milk in his local grocery store.
“When I book rental cars back in Dublin they have this airport pick-up charge, and you only get told about it at the end of the booking process.
“I get thinking like everybody else ‘you know, someone should do something about this' but no, when I'm not working, I have this amazing ability to switch off.”
Mr Fingleton's hope is that the OFT's success will ultimately persuade consumers to be far more demanding in terms of the customer service they receive.
Once more quoting the example of America, he remarks how the high service standards expected on the other side of the Atlantic forces companies to up their game.
“It's a cultural difference. In the US when something goes wrong people blame businesses. Here we're more likely to blame the Government. What we are trying to do is build consumer confidence in the market process.
“If one individual complains it isn't going to make a huge difference.
“People sometimes think ‘oh things are better than they were', but what they don't have is a vision of how good things can be.”