The FCA has published a “Dear CEO” letter sent by Jonathan Davidson, FCA Director of Supervision (Retail and Authorisations), to debt management firms setting out the FCA’s expectations when customers or customer information is transferred.
Among other things, the FCA’s expectations include the following:
- transfers must be lawful and compliant with FCA rules and principles. In particular firms are reminded that any data transfers must be in accordance with the Data Protection Act 1998 and the expectations of the Information Commissioner’s Office. Additionally, under the Consumer Credit sourcebook (CONC), firms should ensure that: (i) all advice given and actions taken have regard to the customers’ best interests; (ii) are based on reasonable and reliable assessments of the customers’ financial position and circumstances; and (iii) advice is also provided in a durable medium;
- firms must notify the FCA of a proposed sale or purchase of customer lists or customer contracts. The FCA expects firms to inform it at an early stage, including providing it with at least 10 working days’ notice of any such proposed sale or purchase;
- firms must ensure their customers have a very clear view of the costs and benefits of the service provided and have a very clear view of the other options available to them, including free advice via the Money Advice Service. Therefore, the FCA expect that any affected customers should be provided with a statement prior to the completion of the sale and before any transfer takes place;
- firms are reminded that they hold client money as trustee and are responsible for the protection of that money, including during a transfer, and firms must ensure that they are meeting their fiduciary duties in relation to client money; and
- purchasing firms are expected to have adequate financial resources, including the ability to comply with prudential requirements as set out at CONC 10 (Prudential rules for debt management firms).
The FCA notes that the Dear CEO letter is not intended to be an exhaustive list of considerations relating to a transfer of customer contracts or contact details, as these will differ depending on the nature and circumstances of the transfer.