HomeServe Fined £750K For Cold Calling

HomeServe have been fined £750K by Ofcom for cold calling during the period 1 February 2011 and 21 March 2011:

"HomeServe confirms that it has been notified that Ofcom has imposed a fine of £750,000 pursuant to section 130 of the Communications Act 2003 in relation to Ofcom's finding, that between 1 February 2011 and 21 March 2011 ('the Relevant Period') a number of outbound marketing calls made on behalf of HomeServe by one outsourced supplier, did not meet Ofcom's rules regarding silent, abandoned or repeat calls. HomeServe is reviewing the detailed determination.

HomeServe identified the issue and promptly reported it to Ofcom, following an internal audit of all of HomeServe's telemarketing operations. The problem was identified as having resulted from the incorrect use of Answering Machine Detection (AMD) technology via an outsourcer. HomeServe can confirm that it no longer works with outsourcers on its outbound marketing and that AMD is no longer used in any calls made by the company.

HomeServe can also confirm that all of its dialler systems have been fully compliant with Ofcom regulations since 22 March 2011, following the rectification of the errors identified during HomeServe's audit.

HomeServe is providing goodwill gestures of £10 to customers who received a silent, abandoned or repeat call from the referenced outsourcer over the Relevant Period. Anyone who believes they were subject to these over the Relevant Period should contact the company before 31 May 2012 on 0800 389 5280 and the claim will be investigated.

The above details will not have a material impact on HomeServe's financial results and the Company’s financial guidance remains consistent with the pre-close trading update of 29 March."

That's all very well, maybe.

However, why did Ofcom only fine HomeServe for that period and what about the people (such as myself) who were bombarded with cold calls in 2010?

UPDATE

To HomeServe's credit I have just received a call from them, and have been promised £10 for my poor experience of their cold calls.

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FSA Grows Some Balls

In a rare display of balls, the soon to be disbanded FSA fined Ian Hannam, the Chairman of Capital Markets at J P Morgan Cazenove, £450K.

For good measure the FSA also published their decision:

"The Financial Services Authority (FSA) has today published a Decision Notice for Ian Hannam, the Chairman of Capital Markets at J P Morgan Cazenove. The Decision Notice indicates that the FSA has decided to fine Hannam £450,000 for market abuse.

Hannam has referred the matter to the Upper Tribunal (the Tribunal) where he and the FSA will each present their case.  The Tribunal will then determine the appropriate action for the FSA to take. The Tribunal may uphold, vary or cancel the FSA’s decision.  The Tribunal’s decision will be made public on its website.

In the Decision Notice dated 27 February 2012, the FSA set out its decision to fine Hannam for two instances of market abuse (improper disclosure).  In the FSA’s opinion, Hannam disclosed inside information in two emails sent in September and October 2008 to a prospective client.  The emails contained inside information relating to Heritage Oil Plc (Heritage), an existing J P Morgan client for which Hannam was the lead adviser. 

The September email contained information about a potential offer for Heritage and the October email contained information about a new oil find by Heritage.

The Decision Notice states that the FSA accepts that Hannam did not set out to commit market abuse but considers that Hannam’s failings were serious in view of his experience and senior position within J P Morgan. 

The FSA believes that the size of the proposed fine reflects the serious nature of the market abuse and should act as a deterrent to other market participants. 

Tracey McDermott, acting FSA director of enforcement and financial crime, said:

“Inside information is extremely valuable and must be handled with care to ensure that it is properly controlled and that appropriate safeguards are observed.  This applies to all market participants but is particularly important for senior practitioners who will regularly interact with a wide circle of contacts”.

Hannam is disputing the fine. However, he has today resigned from JP Morgan.

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The Telegraph reports that the National Audit Office (NAO) has identified that the UK has paid £0.4BN in fines to the EU, and that there is a further £0.6BN that has been set aside for future fines.

These fines are the cost to the taxpayer of implementing EU schemes in the UK. It seems that when the EU decides that the financial management of a scheme is inadequate it withholds future funds (a form of fine), the shortfall for which the UK government is forced to make up from its own (ie taxpayers') funds.

Whether or not the UK should really be "fined" in this manner is open to question, given that the EU is hardly an example of financial probity, honesty or financial transparency and budgetary control.

Only when the EU receives an unqualified audit report, and implements effective and proactive financial controls that prevent the ongoing and widely documented financial abuse by member states and MEPs, can it be in a position to dictate to the UK what constitutes effective financial control.

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A Slap On The Wrists

The Office of Fair Trading (OFT), having spent four years investigating public sector construction tender rigging, have fined the construction industry a trifling £129.5M.

This fine represents no more that 2% of each business's turnover.

Seemingly the OFT was worried that a larger fine would push the construction industry further into recession.

Maybe so, but what about the millions of pounds of public money that has been wasted because of this tender rigging?

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Barclays Incompetence

Barclays, the bank that once boasted of its record breaking size, has been fined a record breaking (the eighth largest ever) £2.45M by the Financial Services Authority (FSA) for "serious" breaches in its reporting of trades.

Barclays managed to fail to report/incompletely report a staggering 57.5 million transactions.

From 1 November 2007 to 31 October 2008, 100% of Barclays' reportable transactions from every 'core asset class', except cash equities, were either reported inaccurately or not reported at all (84% of cash equity transactions were affected).

A staggering display of incompetence by Barclays.

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FSA To Increase Fines

The Financial Services Authority (FSA), in an attempt to cast off its sleepy old watchdog image, is attempting to look tough by upping the level of its fines.

In a consultation paper it proposes a new tariff system, for rule breaches committed after February 2010. The new tariffs will fine insider dealers a minimum of £100K, and companies could be hit with penalties of up to £50M.

Margaret Cole, the head of enforcement for the FSA, is quoted in The Times:

"By hitting companies and individuals in the pocket where it hurts, the fines will be a stark warning to others on what they can expect to pay for flouting our rules."

All very well, but the FSA will still need to be able to prove misconduct before it can levy these fines.

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Banks' Behaviour Unacceptable

The Information Commissioner has publicly accused banks, that have left customer details in the street, of an 'unacceptable' breach of the Data Protection Act.

It seems that the ever popular banks, who provide their customers with such "value for money", have been leaving customer account details in waste bins, skips and bin bags outside 11 branches across the country.

Needless to say this exposes the hapless customer to identity theft and fraud.

Deputy Information Commissioner David Smith said:

"It is unacceptable for banks and other organisations to carelessly discard their customers.

It is vital that banks and other organisations take security seriously. If they do not, they not only risk further action from the Information Commissioner but also risk losing the trust of their customers.

Individuals must feel confident that banks and other organisations are safeguarding their personal information."

The 11 financial institutions that have been named and shamed are:

-Halifax-Bank of Scotland
-Barclays
-Alliance & Leicester
-Royal Bank of Scotland
-NatWest
-Nationwide Building Society
-Co-operative Bank
-HFC Bank
-Clydesdale Bank
-Scarborough Building Society
-United National Bank

Also on the list were the Post Office and the Immigration Advisory Service.

The information publicly discarded by the banks included; names, addresses and bank account numbers.

Nigel Evans MP, chairman of the All Party Parliamentary Group on Identity Fraud, demanded heavy fines for the organisations involved.

Quote:

"It is absolutely unforgivable that these financial institutions have acted so irresponsibly.

They seem to have ignored warnings about the need to keep customer details secure. Quite frankly, I am amazed that this is still going on. It is well known that criminals actively target bins in search of this sort of detail. This behaviour shows a cavalier disregard towards the protection of customers."

The Information Commissioner's Office has asked the banks and other organisations to sign a formal undertaking to abide by the Data Protection Act in future. If they fail to do so, they would face action leading to prosecution and fines.

The British Bankers' Association said:

"Banks take their responsibilities for protecting customers' personal information very seriously and each bank has secure arrangements for disposing of confidential customer information.

The banks concerned have fully investigated the circumstances and taken appropriate steps to ensure that any weak links in their security practices have been addressed."

The statement by the Bankers' Association is of course contradictory, what is the point of having secure arrangements if they are not followed?

Pretty pathetic really, it hardly leads one to conclude that the high fees that banks charge for their "services" are justified.

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FSA Fines Banks

In the coming weeks, ten banks and lenders will be fined by the Financial Services Authority (FSA) for mis-selling payment protection insurance (PPI).

It is expected that these, yet to be named, bodies will each receive fines of about £1M.

It is also expected that the news of the fines will prompt customers to launch their own compensation claims, for the mis-selling of these insurance policies. Some cynics dub the selling of these policies as a "protection racket".

In 2006 the OFT conducted a 5 month investigation into PPI, describing it as a type of insurance that failed consumers because too often it gave them a poor deal and offered less protection than they thought.

To date Regency, Loans.co.uk, and Redcats have been fined £781K between them for mis-selling the policies.

It seems to be an unfortunate fact of life that Britain's financial services industry seems to regard the Biriahs public as sheep ready for "financial slaughter". It is time that the public fought back.

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Caveat Emptor

As if Britain's financial services industry did not have a bad enough reputation already, another nail has just been driven into it by the Financial Services Authority (FSA).

It seems that, according to the FSA, over 66% of mortgage advisors are failing to provide suitable advice in relation to mortgages, and some do not carry out the appropriate background checks required on prospective customers.

The FSA conducted a survey of 252 mortgage advice companies using; mystery shoppers, FSA visits and questionnaires.

Less than 33% of those surveyed had processes which ensured advice given was suitable.

The FSA said:

"We found significant failings in the advice-giving processes in a number of mortgage firms. Poor processes increase the risk of unsuitable advice being given.

It is essential that firms have robust processes in place, so that they treat their customers fairly and provide suitable advice. It is crucial that customer needs are assessed properly. Customers should consider what they can afford both now and in the future, taking into account any likely changes to their circumstances."

Some companies have been "referred to enforcement", and face the risk of hefty fines.

These findings further damage the poor reputation of some mortgage advice firms. Less than 3 months ago one mortgage broker firm was fined £17K by the FSA for cold calling and mis-selling payment protection insurance.

Some mortgage brokers were also found to be misleading borrowers who had a poor credit history.

The old adage "caveat emptor", buyer beware, is as applicable today as it's always been.

You have been warned!

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