06.08.2009

The latest news on the  HMRC phishing scam.  Pension investment rules are now final after being subject to last minute amendments. HSBC fined for information security failings.

HMRC related scam emails
FINANCE ACT 2009 - PENSIONS
US citizens resident in the UK - tax changes 
EMPLOYER CD ROM UPDATE
NEW A-Z EXPENSES GUIDE 
Insurance Sector Regulatory Alert

 

HMRC related scam emails
A number of clients have received emails purporting to be from HMRC, offering tax repayments or requesting information. These are scams, 'phishing' for personal details, bank account information, user IDs and passwords.  HMRC does not use email to advise of tax repayments or to invite completion of online tax reclaim forms.  Reports say the telephone number provided in some scam emails is the correct HMRC contact number lending apparent authority to the email. This is no guarantee the email is legitimate.

Clients should not visit the scam email's website, and should not disclose any personal or payment details. There are many scam emails in operation, so be vigilant. 

The links below provides a list of known scams and an HMRC press release which illustrates how serious the problem is.

HMRC related scam examples: http://www.hmrc.gov.uk/security/examples.htm

News distribution service for Government and the Public sector: http://nds.coi.gov.uk/Content/Detail.aspx?NewsAreaId=2&ReleaseID=405090&SubjectId=2 To view the contents left click the links to go to the article on the website

Finance Act 2009 - Pensions
The changes to the rules on investing in a pension are now final, having been subject to last minute amendments during the passage of the Finance Bill through Parliament. The changes can affect anyone with income in the current or last two tax years in excess of £150,000, and will be relevant whether the individual is investing in his own pension or is a member of an occupational scheme. The main change in the legislation since the Bill was issued is to make some modest provision for those who have not had a regular pattern of saving, or whose employers have not made regular contributions to a scheme on their behalf. Both members and companies who may be affected by this legislation must ensure that they take detailed advice before making a contribution this year.
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US citizens resident in the UK - tax changes
Major changes in the UK tax treatment of non-domiciled individuals may have
significant implications for US citizens resident in the UK. Considerably more
work is likely to be required in both evaluating the options and in preparing
their UK and US tax returns, resulting in potentially higher tax liabilities and
professional fees > more. 

Employer CD ROM Update  
If you use the HMRC Employer CD ROM then make sure that you have updated for the June 2009 release. This includes any changes necessary as a result of the 2009 Budget. It is also necessary to visit the HMRC website for a downloadable file which can be run to update your installation and correct some small errors. This is available from http://www.hmrc.gov.uk/employers/cdrom/download-update.htm , where there is also some useful tips on using the disc.

New A-Z Expenses Guide
The new guidance is intended to help employers decide whether a payment they make to employees or benefits that are provided are subject to tax or National Insurance contributions, and whether they should be included in the payroll or entered on form P11D. The indexing is excellent with “Mobile phones” accessible under M for mobile, P for Phone and T for Telephone. See http://www.hmrc.gov.uk/paye/exb/a-z/a/index.htm 
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Insurance Sector Regulatory Alert

Changes to Financial Services Compensation Scheme (FSCS)
Director banned for inadequate control and business wound up
HSBC fined over £3m for information security failings
New rules for Approved Persons
CEIOPS releases its second set of advice on Solvency II Level 2: implementing measures

 

Changes to Financial Services Compensation Scheme (FSCS)
The FSA has published proposals that will enable people to see how firms handle complaints, including; the number received, services covered and speed of resolution. The proposals would see firms publishing their own complaints data every six months and the FSA would publish results from the whole sector twice a year.

It is proposed that firms will need to provide contextual information such as the number of complaints per 1000 customer accounts and those firms receiving the largest number of complaints will publish information on:
· how many complaints they have opened and closed;
· the percentage closed within eight weeks;
· the percentage of complaints upheld.

Dan Walters, the FSA’s director of retail policy and conduct risk, said ”Publishing complaints data will mean that people can learn more about how firms handle complaints and the frequency with which they arise. We also consider that publishing this information will incentivise firms to deal more effectively with complaints and help to raise industry standards in this important area.”

The proposals are part of a number of steps the FSA is announcing to improve transparency, building on the discussion paper published in May 2008. The FSA is inviting comments on its proposals relating to the publication of firms’ complaints data and the closing date for responses is 30 October 2009.
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Director banned for inadequate control and business wound up 
The FSA has prohibited Graham Darby, Director of insurance broker Ambrose Darby, for failing to control the business of the firm adequately. The order bans Darby performing significant influence functions at any authorised financial firm.

It was found that Darby, who was diagnosed in July 2008 with a severe medical condition, did not have a full understanding of the firm’s responsibilities about handling clients money and did not conduct client money reconciliations as required. Part of the findings were:
· there were no systems and controls in operation at the firm to manage the receipt of monies from customers or, to effect, the payment of premiums to insurance providers;
· it appeared at one time that Ambrose Darby owed insurance providers £83,814.71 and was owed £61,961 from customers (some of which had been outstanding for more than 90 days);
· due to Darby’s medical condition and the absence of structured systems and controls, the firm lacked adequate resources from both a financial and personnel point of view. Following the diagnosis of his illness, he did not seek assistance to deal with his business affairs.

Margaret Cole, the FSAs Director of Enforcement said, “The FSA is sympathetic with regard to Darby’s medical condition, but the consequence nonetheless was that it was unclear both to customers and providers who was responsible for the day-to-day operation of the firm while he was absent. This was unacceptable.”

Ambrose Darby is currently in liquidation and is no longer authorised to conduct regulated business.
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HSBC fined over £3m for information security failings
Three HSBC firms were fined over £3 million by the FSA, for not having adequate systems and controls in place to protect their customers’ confidential details from being lost or stolen. These failings contributed to customer data being lost in the post on two occasions.

HSBC Life UK Limited (HSBC Life) was fined £1,610,000, HSBC Actuaries and Consultants Limited (HSBC Actuaries) was fined £875,000 and HSBC Insurance Brokers Limited (HSBC Insurance Brokers) was fined £700,000.

During its investigations, the FSA found large amounts of unencrypted customer details were sent via the post or couriered to third parties and confidential information about customers was left on open shelves or in unlocked cabinets. The FSA also found that staff were not provided with sufficient financial crime training, such as how to identify and manage risks like identity theft.

Margaret Cole, director of enforcement at the FSA said, “These breaches are very disappointing. All three firms failed their customers by being careless with personal details which could have ended up in the hands of criminals. It is also worrying that increasing awareness around the importance of keeping personal information safe and the dangers of fraud did not prompt the firms to do more to protect their customers’ details”. She went on to comment that identity theft is a major concern and “firms must ensure that their data security systems and controls are constantly reviewed and updated to tackle this growing threat.”
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New rules for Approved Persons  
The FSA has confirmed an extension of the Approved Persons regime for those that perform a ‘significant influence’ function at firms.

In its Supervisory Enhancement Programme (SEP), the FSA stated that it would place greater emphasis on the role of senior management, including Non-Executive Directors (NEDs).

In the FSA’s policy statement, it sets out changes to the Approved Persons regime which improves the FSA’s approach to ‘significant influence’ functions by ensuring that those likely to exert a significant influence on a firm fall within the scope of the Approved Person regime. In particular, the FSA has:
· extended the scope and application of CF1 (director function) and CF2 (non-executive director) to include those persons employed by an unregulated parent undertaking or holding company, whose decisions or actions are regularly taken into account by the governing body of a regulated firm;
· extended the definition of the significant management controlled function (CF29) to include all proprietary traders who are not senior managers but who are likely to exert significant influence on a firm;
· amended the application of the Approved Persons regime to UK branches of overseas firms based outside the EEA.

The original proposal included clarifying the role of NEDs to make clear that the FSA will look at NEDs more closely where it believes they should have intervened more actively within a firm’s management.

The Director of Permissions, Decisions and Reporting Division, Graeme Ashley-Fenn, said “It is important that directors and senior managers at firms understand their regulatory obligations and have the relevant competencies and experience to carry out their roles with integrity.”

Before making a final decision on this issue, the FSA wishes to consider the relevant recommendations of the Walker Review and the Financial Reporting Council’s review of the Combined Code. These results will be published in a further consultation paper on governance which the FSA expects to publish in Q4 2009.

These changes will come into effect on 6 August 2009 with a transitional period of six months. Firms should now begin assessing which individuals require approval and submit timely applications to comply with the end of the transitional period.
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CEIOPS releases its second set of advice on Solvency II Level 2: implementing measures
The European Commission has requested CEIOPS provide final, fully consulted advice on the vast majority of Solvency II Level 2 implementing measures for October 2010 and begin developing Level 3 guidance on certain areas.

On 2 July CEIOPS released for consultation its second set of advice developed on the basis of Solvency II Level 1 text adopted by the European Parliament on 22 April 2009. The consultation papers provide advice on key aspects for the future implementation of the Solvency II framework. Although they are presented in separate papers, the issues are interlinked.

A first set of advice on Level 2 measures has already been consulted on and comments are currently being processed. The third set is expected to be released at the beginning of November 2009 and stakeholders will be invited to comment on both the consultation papers and annexes. Subsequently CEIOPS will finalise the papers for submission to the European Commission, taking into account the comments received and the lessons learned from the crisis.
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