Regulation Hub Update - March 2021
24 Mar 2021
The ICO is still on a roll of PECR-based enforcement actions and fines of rogue marketers and has taken action against another 4 firms. Recent cases have predominantly been about contact centres live calling TPS-registered numbers, but the published in the past month are based around the sending of illegal marketing text and email messages.
Just Hype (an ecommerce fashion site) sent hundreds of thousands of promotional SMS messages marketing face masks. Unfortunately, they used either email addresses of previous customers who hadn’t given consent for future contact or 3rd party-supplied addresses of people who had no awareness of Just Hype at all. The ICO fined Just Hype £60,000.
Similarly, lead gen firm Valca Vehicle and Life Cover Agency - which traded most recently as DebtQuity - has been fined £80,000 for breaking the PECR rules infringements. DebtQuity sent thousands of SMS messages about debt management services without valid consent – and omitting to include an opt-out route on many of them.
Muscle Foods sent over 135 million emails and 6 million texts to consumers advertising its foods and food supplements. In its ruling announcing a £50,000 fine of Muscle Foods, the ICO highlighted that its online checkout journey did not make it clear that customers would receive subsequent marketing communications, made worse by Muscle Foods not stopping its marketing efforts while the ICO carried out its investigation.
Lead generator Leads Work generated a record volume of consumer complaints to the SMS text 7726 complaints service. The 3 million texts were sent using the Avon brand, but weren’t directly authorised by Avon as they were to help field sales agent recruit sub-agents to work on their behalf. However, Leads Work had no clear consent to do so and as the ICO identified “no mitigating factors” in the case, it fined Leads Work £250,000.
Full details on all these cases are contained on the ICO’s website.
FCA Publishes Finalised Vulnerable Customers Guidance
The FCA have issued their guidance for firms, stating clearly that they expect firms to provide vulnerable customers with a level of care that is appropriate to the characteristics of the customers themselves and for vulnerable customers particular care must be taken to ensure they are treated fairly. The expectation of firms is to embed the treatment of vulnerable customers should be embedded as part of a healthy culture and goes beyond front line staff to areas such as product development. The agenda should be driven from the top of the firm and policies and processes should be designed/reviewed in such a way that a firm can meet demands and needs of vulnerable customers.
The full guidance can be found here.
The paper explains, alongside some clear actions required by firms, that to achieve good outcomes for vulnerable customers a firm should:
- Understand the needs of its target market/customer base
- Ensure staff have the right skills and capability to recognise and respond to the needs of vulnerable customers
- Respond to customer needs throughout product design, flexible customer service provisions and communications
- Monitor and assess whether they are meeting and responding to the needs of customers with characteristics of vulnerability and make improvements when this is not happening
FCA launches consultation of pre-paid funeral plans
The consultation, which closes on 13 April has been launched by the FCA to outline how they plan to improve standards in this sector. Whilst the consultation is focused on a very specific sector, it is worthy of note based on some of the recommendations it contains. The press release can be found here.
The proposal states that the FCA want to ensure that:
- Products meet the demands of customers which will include a ban on products that do not pay out for almost all circumstances around a customer's death
- Plans are sold fairly, including a ban on all cold-calling activity
- Pricing of plans will deliver value, preventing fees being used for profit and stopping commission payments to intermediaries.
Once the regulator has received feedback on its consultation, they will issue further publications to outline any change in requirements for those firms in the sector.
FCA study finds a quarter of UK adults have been left with low financial resilience as a result of the COVID 19 pandemic
The FCA concluded its Financial Lives Survey (FLS) research in February and ran an extra survey in October in order to understand the impact of the Covid-19 pandemic on the financial situation of consumers. The FLS seeks to provide insight into the financial lives of consumers.
According to the October survey, there are now 27.7 million adults in the UK with characteristics of vulnerability such as poor health, low financial resilience or recent negative life events. Having one of these characteristics means that these consumers are at greater risk of harm. This figure is up 15% since the FCA completed its FLS in February, when 24.0 million displayed characteristics of vulnerability.
The FCA found that the number of consumers with low financial resilience – meaning over-indebtedness or with low levels of savings or low or erratic earnings – has grown. Over the course of 2020, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million.
Highlighting the threat to people’s incomes from the pandemic, in October one in three (30% or 15.9m) adults said they expect their household income to fall during the next six months, while 25% (13.2m) expected to struggle to make ends meet. To cope with the hardships they expected to face, many adults reported that they were likely to cut back on essentials (33% or 17.5m) or to use a food bank (11% or 5.6m); 8.1 million (16%) expected to take on more debt. However, 48% of adults have not been affected financially by Covid-19, and 14% have actually seen an improvement in their financial situation.
Content accurate as of 14th March 2021