Archive for June, 2014

Castle Keep Law Website Launch

We are pleased to announce the launch of our Castle Keep Law website, as part of the development of our in house law firm at One Advice.

We were granted an ABS licence in December 2013 by the Solicitors Regulation Authority, and thus Castle Keep Law can advise One Advice customers and the wider public on a wide range of legal matters, including court and bailiff action from creditors, contractual disputes and the reclamation of care home fees.

Castle Keep Law adds great value to the holistic service and opportunities we provide for our customers.

Wonga Enter Agreement to Pay over £2.6million to Misled Customers


Following an investigation by the OFT and FCA, payday lender Wonga has agreed to pay £2.6million in redress to customers to whom they sent debt collection letters by fake law firms. The tactic has been described as ‘unfair’ and ‘misleading’ by the FCA, and has affected 44,556 customers.

Under the names “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”, Wonga demanded repayment on loans taken out, threatened further legal action and even added charges to customers’ accounts to cover the administration fees for sending the letters.

This practice took place between October 2008 and November 2010. Wonga have stated that they will now be identifying all of the customers who have been affected and will be contacting them directly via email and letter. The FCA has estimated that the compensation is likely to be paid from the end of July. Director of supervision at the FCA has commented:

“We are pleased that Wonga has been working with us to put matters right for its customers and to ensure that these historical practices are truly a thing of the past.”
He added:
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”

Wonga have issued an apology on their website, telling customers:

“Wonga was set up to meet the widespread demand for short-term finance and we are committed to serving you in a transparent, fair and responsible way.
However, it is clear that as we grew, we made mistakes along the way. We accept responsibility for our mistakes and we will learn from them.
We aim to deal with this issue as quickly and fairly as possible. We are working hard to do the right thing and earn back our customers’ trust”.

If you are struggling making repayments on payday loans, or are concerned about contact from your creditors, contact our advisers today.

Callcredit Launch New Data-sharing Service: ‘MODA’


With effect from today, the Callcredit Information Group’s data sharing service, ‘MODA’, will go live.

The service was developed in response to concerns that lenders should have the most up-to-date and accurate picture of a potential borrower’s circumstances when they make a loan request. The new system has the capability to eventually allow lenders to share information about consumers’ borrowing habits every 15 minutes.

Peter Mansfield, Managing Director at Callcredit Limited commented,

“The alternative lending market has come under increased scrutiny from its regulator recently and the need to lend responsibly has never been greater. MODA supports responsible lending by providing lenders with an up to date view of significant events on consumers’ credit files on which they can base more accurate and responsible lending decisions.

“MODA provides us with the capability to update our data as quickly as the data providers send it to us. At present this frequency is daily, and we have the capability to increase the regularity of data updates.”

Wonga, Uncle Buck, Pounds to Pocket, QuickQuid, PDL Finance (Mr Lender), Cash on Go (Peachy), MYJAR, My Mate, Northway (Swift Sterling), Sunny, Trusted Cash, Trusted Quid, and MEM (Payday Express) are included in the list of payday lenders that have signed up to the new initiative.

Darren Smith Appointed as Director of Castle Keep Law


We are delighted to announce Darren Smith as Director of Castle Keep Law.

Darren is an accomplished senior consultant with a consistent and successful record of developing and delivering strategic objectives and business results in challenging environments.
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Darren adds broader experience to the senior team at Castle Keep Law. Darren’s background is in financial services and claims management, having built his own consultancy service and following a number of senior and directorial positions within award winning, 300+FTE companies in the North West.

As Director of Castle Keep, Darren brings strong leadership and commercial acumen to the Financial Claims Services team. His multi-faceted experience began in Sales, offering indelible insights gained in customer services for RBS, followed by managerial appointments at Freedom Finance and later Capital One Home Loans, wherein he headed business development and sales, along with underwriting secured and unsecured loans.

In 2007, Darren became Head of Operations at Loan Options & TCF Debt Solutions, a privately owned loan and mortgage broker, providing DMP and IVA solutions for customers in financial difficulty. He continued into high management as Head of Sales for the Paymex Group, and enjoyed four years providing a full range of financial solutions to the public and corporate market. The Group consisted of high end companies such as Baines & Ernst, Blair Endersby, Baker Evans, Buchanan Roxburgh, Easy Call Finance, Baines & Ernst Corporate, Evolution Banking, Evolution Money and Solve and Save. Darren left the group in 2012 to become the Managing Director at Investor Compensation, a top 5 claims management company that is regulated by the Ministry of Justice that specialises in obtaining client redress for mis-sold financial products.

In 2013, Darren set up his own business, Sycamore Consulting Services, providing consultancy support for corporate and entrepreneurial businesses that operate within the Financial Services & Contact Centre sectors with an overall focus on customer satisfaction and transforming compliance standards. It was through this role that Darren came to work with the Harrington Brooks group.

Darren perpetuates an ethos in common with Harrington Brooks and The One Advice Group, sharing their ambitions, inclusive culture and focus on putting the customers first.

ABS-licensed Castle Keep Law are uniquely designed to offer a comprehensive suite of legal advice and services including claims for mis-sold financial products, promising a professional, specialist, trustworthy service focused on the interests of their customers. Having completed a number of consultancy projects for Harrington Brooks, Darren was delighted to be offered the opportunity to join their subsidiary business, Castle Keep Law, as Director, growing the business, and expanding the product range to suit B2C and B2B customers whilst also improving the quality of service they receive.

“I’m delighted to have joined the savvy team of specialist solicitors and financial claims experts that are incorporated within Castle Keep Law. It’s an exciting, dynamic combination and a perfect example of why the ABS licence was introduced”.

“There is a clear period of change within the financial services sector. This is an exciting and opportunistic time for the Harrington Brooks Group especially as the top 5 high street banks have now made provisions of £20bn for claims redress, Financial Claim Services come under SRA regulations and as of 1 April 2014, the Financial Conduct Authority (FCA) took over the regulation of around 50,000 consumer credit firms from the Office of Fair Trading (OFT) – including Harrington Brooks”.

“My role is to grow and develop the business, expand the range of both legal and financial claim services offered and ensure that the Harrington Brooks customer promise is delivered – putting the customer at the heart of all that we do. Service, delivery and the quality of the customer experience will continue to be a focus.

“I agree with Dominic that the industry must be entirely customer driven so we’ll be working consistently to deliver our brand value which is to provide affordable, quality legal advice and claim management services from a team that genuinely cares”.

Reforms to Pre-pack Administrations Mean a Better Deals from Failing Companies for Businesses and Customers


The Government has published a statement on reforming the regulatory regime for insolvency practitioners. It will be strengthened by the introduction of regulatory objectives for the industry and appropriate powers for the Insolvency Service, as oversight regulator, to deal with poor performance or misconduct.

The statement comes after a review conducted by Theresa Graham, CBE, commissioned by Vince Cable. The review offers a list of recommendations with the aim of increasing transparency for creditors, and clarity for failing businesses.

Teresa Graham CBE said:

“My review of pre-pack administrations over the last nine months shows that they have a unique place in the insolvency market. However there must be major changes in the way they are administered. I believe my proposals, implemented as a complete package, will lead to real improvements in pre-packs. I hope the insolvency industry, as well as all those in business, will embrace these measures as it is in everyone’s interest that they are successful. I believe they will lead to real improvements in transparency and scrutiny.”

Changes and improvements to the marketing of businesses that pre-pack are recommended, as well the insistence that valuations be carried out by a valuer who holds professional indemnity insurance. Other changes include a change in the monitoring of SIP16 statements, through a shift in responsibility from the Insolvency Service to the Recognised Professional Bodies.

The insolvency industry is being given the opportunity to implement any reforms voluntarily; however, there are recommendations within the report for the government to enforce the changes with legislation “as a last resort”. Jenny Willott, parliamentary under secretary of state for employment relations and consumer affairs, agrees with this recommendation, commenting:

“It would be sensible to provide the recommended power to legislate if necessary.”

Vince Cable, Secretary of State for Business Innovation and Skills, commissioned the review in order to boost confidence in the insolvency regime. He comments:

“Viable businesses – and the jobs of those they employ – should not be lost to the economy unnecessarily… If there is confidence in how rescue and insolvency operate, this supports lending which in turn supports growth – a central aim for this government.”

‘The Future of Financial Services’ Conference


‘The Future of Financial Services’ conference was hosted in London today by Harrington Brooks’ PR company, Lansons.

The list of speakers included:

Martin Wheatley, CEO of the FCA
Kamal Ahmed, Business Editor, BBC
Stephanie Flanders, Chief Market Strategist, JP Morgan Asset Management
Mick McAteer, Director, Financial Inclusion Centre
Anthony Hilton, Financial Editor, Evening Standard
Tony Langham, Chief Executive, Lansons

Speech by Martin Wheatley

Speech by Martin Wheatley, CEO, the FCA, at Lansons, London. This is the text of the speech as drafted, which may differ from the delivered version:

Thank you. It’s a great pleasure to join everyone this afternoon and my thanks to Lansons for inviting me back.

Last year, I set out some of our key ambitions for the year – particularly around the importance of promoting good conduct in the financial sector, and its link to priority issues like trust and confidence.

The industry has responded positively I think. Most firms have change programmes in place, and we’ve seen welcome steps in areas like incentives and interest-only mortgages.

So, on the former, firms have generally responded well to FCA concerns over the link between sales and poor reward structures for frontline staff.

On the latter, the forward-looking work we did last year to remind interest-only customers to have repayment plans in place, also seems to be having a positive impact. In fact, we saw the CML publish figures this morning suggesting there’s been a 12% drop in interest-only mortgage numbers over the last year.

Front and centre of all this reform of course, has been the importance of markets working well, with consumers clearly a priority. And, with this in mind, I wanted to offer a few reflections on the technological trends that are today sweeping through the City and are, I’m sure, being closely watched by businesses here today.

A key debate I think for all of us, and my topic for this afternoon: what are the challenges and opportunities presented to firms by technology?

the pace and volume of change has raised the stakes for financial service leaders, creating very different visions for the future depending on perspective

The challenge

The UK’s financial sector has, of course, had a long history of promoting innovation.

In fact, many of the most important leaps forward in the industry over the centuries have been incubated on our shores: the first regulated stock exchange; the first exchange for trading derivatives; underwriting; bank cards; cash points; NatWest piggy banks, you name it, all were products of the City’s ingenuity.

But what is different today from yesterday, I’d argue, is the pace, volume and origin of change. It’s of an entirely different order: transformational and global.

High Frequency Traders (HFT) seeking nanosecond advantages; money transfer; payments technology; peer-to-peer finance; big data; portfolio analysis and many others. All being pushed through simultaneously, and often at break-neck speed, alongside the linked rise of other global trends like mobile banking.

So, here we have a technology introduced and popularised in Kenya (where Masai herdsmen have been taking their phones to market, along with their cattle, for years) now expanding out across the financial world at electrifying pace.

In fact by 2022, mobile payments in the UK alone are expected to total some 1.5bn – up from 356m in 2012.

What I think is so interesting here, in the midst of this change, is that all these big financial trends galvanising us today, almost without exception, are technology-led.

And this, in turn, is fuelling increasing concern within the sector over the impact of technology more broadly. Around the world, senior executives now see it as the 4th most serious ‘banana skin’ threatening the future of their firms . Two years ago, it barely registered at 18.

Why this sudden escalation? Because the pace and volume of change has raised the stakes for financial service leaders, creating very different visions for the future depending on perspective.

So, for some all this global technology and innovation opens up a new wave of possibility in financial services. A 21st century answer to all that the industrial revolution accomplished in the UK, or the Edison-inspired electrification of the US achieved at the turn of the 20th.

For others, the skies look darker. The concern here is that financial services become a kind of tech-led Wild West, if you like. Full of cybercrime; data losses; runaway algos; flash crashes and hash-crashes of the type we saw last year, when hackers took over the twitter feed of AP.

From the regulatory perspective, the challenge here is clear.

Effectively, you want oversight that’s able to reduce the risk of the latter, dystopian scenario without damaging the possibilities presented by the first. A delicate balance that will no doubt hinge on a multiplicity of complex questions and assessments in the years to come.

So, for example, where are the technologies that are benefitting consumers and markets – and how do you then support them?

On the other hand, at what point does the risk of disruption or damage simply become too high?

Or, more tricky still, if reward comes with risk, how then do you balance the one against the other?

This afternoon, I want to offer a few reflections on all three points on this spectrum the good, bad and mixed, and give a sense of how the FCA is looking to help technology flourish safely.

A key objective, as many will already know, is to make sure positive developments by which I mean the ones that genuinely promise to improve the lives of consumers or clients – are supported by the regulatory environment.

Benefits for consumers

On the first point, so the question of how to supportive positive tech developments it’s fair to say governments and agencies have been slow in the past to react to technological change.

But it’s too easy, I think, to claim that regulation is always to blame when creativity or innovation slows in financial services.

It’s no secret that regulators are sometimes used as a shield for firms who simply don’t want to take the risk, so prefer to say that we’d probably stop them anyway. Or, alternatively, you’ll find those who try to innovate, find problems and then have the regulators taking action against them.

So, not a one-sided story here; but regulation clearly should be fleet-footed enough to support progress, which is why the FCA last week launched Project Innovate.

A key objective, as many will already know, is to make sure positive developments by which I mean the ones that genuinely promise to improve the lives of consumers or clients – are supported by the regulatory environment.

So, priority areas here might include the likes of mobile banking; P2P (now a £500m business); online investment; money transfer; wearable tech; big data; and next gen data processing – in many of which London is already a leader.

In fact, the UK and Ireland are today the fastest growing fin-tech incubators in the world, developing at an annualized rate of some 74% since 2008 – as against 23% in Silicon Valley.

Key potential opportunities to explore here, as I see it, include: more direct interaction for consumers with products and services; customised offerings; greater efficiency; better information; and of course the possibility of increased convenience.

The most immediate priority here for us – and the most pressing I think – is to ensure these tech-led improvements to customer experience can be safely fast tracked into the UK.

And to help this happen, the FCA is working closer than ever before with financial service firms who are developing innovative approaches to service that aren’t explicitly covered by regulatory rules – or where the guidance looks ambivalent.

As I said last week, this engagement has already begun through initial conversations with a number of start-ups and organisations like Tech City UK and Level 39.

Following on from this, we’ll be pulling together a scoping document exploring how innovation can be supported more broadly. That paper will focus on FCA expectations of firms, as well as specifics around advice and support for bringing new models of financial service to market.

In the meantime, we’re opening up a hub that will provide more bespoke FCA support to innovators in a few key ways:

First, by providing compliance expertise to firms developing new models or products so they can navigate regulation.

Second, launching an incubator to support innovative, small financial businesses to get ready for authorisation.

And third, by looking for areas where the system itself needs to adapt to new technology or broader change – rather than the other way round.

One area I’d include here as a priority, automated advice, where we’ve seen some significant leaps forward in related technology over the decades.

So, just thirty years ago, science journals were full of articles about the ‘AI Winter’, the fear that post-war hopes for Artificial Intelligence had stalled.

Ten years on, and those warnings were being reassessed as technology become more powerful and capable. Gary Kasparov’s famous defeat by IBM’s Deep Blue computer, in particular, was a defining moment. A machine that was, at the time, capable of calculating some 200m individual chess moves per second.

And today, once again, we’re having our expectations raised.

In fact, we may yet look back on June 2014 as a defining moment in financial service history, with The Royal Society yesterday revealing a computer had passed its iconic ‘Turing Test’ for the first time. In other words, a machine has become indistinguishable from a human.

An important question: what, if anything, does all this mean for dispensing investment advice in the years to come?

And can it be automated to deliver returns and security for consumers with straightforward needs? Tackling the so-called ‘advice gap’ between those with large investments pots, who are willing to pay for financial support, and those with smaller investments, who might be more reluctant to put a value on advice.

We’ll be publishing a consultation paper looking at some of these key questions next month.

Risk and benefit equation

On the second area I wanted to look at today, so the more conflicted tech-related issues, two key priorities to mention. First, high frequency trading, second, peer-to-peer.

On the former, the Flash Boys’ issue if you like, we’re effectively talking here about major wholesale issues like market fairness; efficiency and safety.

Now, in one sense there’s nothing much new here. As far back as the 18th century, pioneer arbitrageurs were racing horse drawn carriages between New York and Philadelphia to speculate on shorts and futures.

Today, those horses have been replaced by fibre-optics, yes, but the broad challenge for regulators is much the same. We’re simply seeing old problems resurfacing through new mediums.

But for me, despite all the fierce debate and challenging headlines over HFT, this is a classic technological risk/reward equation.

So, actually, there are undoubted benefits to HFT. Most notably, the link between competition and market efficiency, as well as liquidity from reductions in bid/offer spreads and reduced transaction costs.

On the other hand, there are, of course, clear risks to mitigate in areas like market fairness, market cleanliness and market resilience.

The first point to make here is that the UK risks are different from those described by Michael Lewis in the US.

The fact is that the American equity market is generally more geographically dispersed than it is in the UK and EU. Investor best execution requirements are also handled differently.

And, finally, dark trading in the UK is comparatively low as a percentage of trading compared to the volumes we see on Wall Street.

Nonetheless, there’s no doubt the technology here is a risk to be managed. And the implementation of MIFID – which is bringing in a long and complex list of technical rules from Europe – will mitigate many of the risks associated with HFT.

It should not, however, disrupt the potential benefits.

Now, on the second priority, peer-to-peer lending and investment-based crowdfunding, the technology challenge while retail, is nonetheless analogous. So, the key question is the effectively same:

How do we achieve equilibrium between supporting the benefits, without creating unacceptable risk, particularly for so-called ma and pa investors?

At the moment, the numbers are still relatively small. But the sector is clearly growing significantly. Something like £1bn was raised through all types of crowd funding in 2013, with around £480m of that raised through peer-to-peer lending alone.

In this context, it is important to offer some level of protection for smaller investors.

The balance the FCA has struck seems sensible to me. So, for example, we require lending platforms to assess the creditworthiness of borrowers and meet minimum capital requirements. And for investment-based crowdfunding platforms, we require firms to ensure ordinary retail clients are not invited to commit more than 10% of their assets, unless they receive advice.

It’s also worth noting it’s been broadly welcomed by industry.

FCA now employs gifted quantitative analysts and technologists, with expertise in areas like maths and statistics, to spot unusual trading patterns


Finally, a word on some of the tech-risks we’re facing that seem to bring little or no upside: so, physical loss of systems or data for example; jurisdictional issues for regulators; fraud; possible misuse of personal data; and of course – probably the most pressing issue – cyber-crime.

Already, something like half the world’s securities exchanges have fought off cyber attacks. Nine in ten firms have suffered security breaches in the last year. And 70%of chief executives now list it as a key risk to growth.

Adding to the difficulty – a range of motivations for attack. Potentially from those seeking profit, yes, but also from those disenchanted with, or disenfranchised by, global structures.

So, we’re talking here about ‘hactivists’ and the like, as well as new forms of criminal operations across Europe. Gangs coalescing across multiple criminal networks, in multiple jurisdictions, with 60 or more nationalities among their memberships.

So, a challenging picture. And arguably a particular risk in the UK, where we have the added vulnerability of legacy systems in many firms. Vernon Hill famously described IT in the UK as being ‘one step up from the quill’.

Two points here to end with. First, I think it was a very important move in June for the Financial Policy Committee, with support from the FCA and PRA, to give a recommendation to the sector to improve and test resilience to a cyber-attack.

Second, it’s worth reminding ourselves that technological sophistication is not simply a weapon. It is one of our most important defences.

The FCA offices in Canary Wharf may seem a country mile from the tech-led businesses mushrooming-up in areas like Kings Cross, but the reality is that data and computers are playing an ever-increasing role in our own authorisation, policy, supervision and enforcement work.

We are currently working, as an example, on individual projects using computer networks with hundreds of gigabytes of RAM – and hundreds of computing cores, capable, in turn, of crunching many millions of data entries per second. Enabling us to run through significant amounts of sophisticated econometric modelling in previously impossible ways.

Likewise, in the wholesale space, the FCA now employs gifted quantitative analysts and technologists, with expertise in areas like maths and statistics, to spot unusual trading patterns in the mountains of so-called ‘blue-sheet’ data we collect every day.

Some 2.7bn detailed transaction reports are processed through our analytics servers every year, as well as our surveillance software from Nasdaq OMX.

A useful stat to include here I think to demonstrate impact: pre-2008, the FSA had never criminally prosecuted insider dealing. We have since secured 28 convictions.


So, to finish then, a very sophisticated equation here in the debate between risk and benefits.

And this complexity is, undoubtedly, amplified by the great unknown of our technological future. The world has been notoriously poor at predicting future trends over the years, with expert analysis ranging from the science fiction all the way through to gross underestimations of progress.

In 1899, the director of the U.S. Patent Office, Charles H. Duell, famously asserted that “everything that can be invented has already been invented.”

In 2014, the debate is a question of degree. Just how far and fast will the financial world move? The years ahead may not turn out to be as space-age as some imagine. Nor as similar to today as others might hope.

But it now seems inevitable that the future of financial services will not be exclusively shaped by business or economics graduates. But those studying science, maths and computing. Digital experts in Shoreditch, software developers in Silicone Valley, computer programmers in Budapest and so on and so forth.

It is a regulatory responsibility to make sure this is handled the best it can possibly be. To confront the challenges, to take hold of the advantages and ultimately, to create a better future for our financial services and their customers.

New Bill Calls for Broadcast Ban on Payday Loan Adverts Before Watershed


A new bill was proposed in the House of Lords today, calling for the broadcasting of payday loan adverts to be banned between 5.30am and 9pm.

The Private Member’s Bill was introduced by Lord Mitchell before Parliament as part of the Labour Party’s campaign against the unfair practice of payday loan companies. The bill hopes to protect children from being exposed to the advertisements. Mitchell commented:

“Daytime television is deluged with advertisements for payday loans, many of them including fluffy puppets, catchy jingles and smiley people.
“Children see these advertisements and, not surprisingly, when family money is tight, they pester their parents to take out these loans.”

Baroness Benjamin, a Liberal Democrat, said:

“Payday loans is a form of grooming, so to protect our children should there not be a clause in the Advertising Standards Authority’s code which refers to the scheduling of adverts that encourage potentially harmful lifestyle choice, such as payday loans?”

Spokesperson for Labour on consumer affairs, MP Stella Creasy, who has successfully campaigned for a cap on the cost of payday loans, stated:

“We want to tackle the aggressive marketing practices of such companies.

“With 2.5 million people already in a debt management plan, our proposals are an opportunity to reform this industry before millions more end up caught in their crosshairs.”

FCA Consumer Credit Research Report Released

FCA logo

The FCA have released the results of research they conducted into the consumer experience for those who have experienced payday loans, logbook loans and debt management services.

The research included the interviews of over 60 consumers who had taken out credit products between November and December 2013, both fee charging and non fee charging.

Of the three consumer credit services, payday loans were the most widely used and well-known. Reputation and brand were of particular focus when finding a lender, whilst APR was given little attention, with repayment weighed up in terms of fees and charges.

Logbook loans appeared less widely known, with many interviewees taking out a loan with the first company they came across (often also the first time they came across the concept of logbook loans). Incidentally, many consumers were unaware of key aspects of a logbook loan agreement, including additional charges or fees and the state of ownership of the car.

Debt management plans were similarly chosen with little shopping around and product comparison. Most respondents felt a huge relief after signing up for a debt management plan, with the process of actually applying for and setting up the DMP or IVA simple and quick.