SME banking behavioural undertakings of 2002 CMA report on compliance Banks’ audit 2015
1 June 2016
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[email protected].
The Competition and Markets Authority has excluded from this published version of the provisional findings report information which the inquiry group considers should be excluded having regard to the three considerations set out in section 244 of the Enterprise Act 2002 (specified information: considerations relevant to disclosure). The omissions are indicated by [].
Contents Page 1. Introduction ........................................................................................................... 2 2. Summary of audit report findings .......................................................................... 4 3. Best practice for ensuring compliance ................................................................ 13 Appendix 1: Checklist for the 2014 Agreement ........................................................ 18 Appendix 2: CMA’s 2014 Agreement with the eight banks ....................................... 19
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Appendix 1: Checklist for the 2014 Agreement The contents of the annual audit reports should contain the following information: 1.
Procedures, practices and policies in place to promote compliance
2.
Description of internal communications and staff training on compliance
3.
Description of external communications – eg customer guidance
4.
Description of any staff awareness training, frequency of provision and indication of to whom it is provided
5.
Processes and practices to monitor compliance (ie how is monitoring done and when)
6.
List of non-compliance issues in relation to bundling undertakings identified through (a) complaints and (b) banks’ monitoring of compliance
7.
Internal complaints escalation processes
8.
Review of customer complaint or appeal records
9.
Description of the remedial measures taken by banks to address any noncompliance issues
10.
Review of any new products to confirm that they meet the relevant regulatory requirements
18
Appendix 2: CMA’s 2014 Agreement with the eight banks Agreement with respect to the limitation of bundling 1.
That THE BANK1 will, with respect to clauses 17 to 19 of the behavioural undertakings given by the banks to the Secretary of State for Trade and Industry and Chancellor of the Exchequer on 31 October 2002 (‘the Bundling Undertakings’): (a) On an annual basis, conduct a review of [THE BANK’S] compliance with the Bundling Undertakings, specifically including the following issues: (i) The policies, practices and procedures (including those related to training) which THE BANK has in place to secure compliance with the Bundling Undertakings. (ii) The awareness of THE BANK’S staff who are responsible for the marketing and sale of business loans and business deposit accounts (‘the Relevant Staff’) with the obligations created by the Bundling Undertakings. 2 (iii) Other evidence suggesting the presence or absence of actual or suspected non-compliance with the Bundling Undertakings (including customer complaint data or data available from internal escalation processes for internal concerns). Such a review must be conducted, outside the area of the bank which is directly responsible for the provision of banking services to SMEs, by the internal audit function of THE BANK, in accordance with the Code of Professional Conduct3 of the Chartered Institute of Internal Auditors.4 (b) Provide a copy of such a review to the OFT/CMA with an annual statement of THE BANK’S compliance with the Bundling Undertakings which addresses the issues referred to in 1a. The first such statement will be provided by [THE BANK] to the OFT within 4 months of its announcement by the OFT
To add the identity of the relevant bank. In undertaking such a review, an appropriate sample of staff should be assessed. Such a sample should be representative of staff at the various brands within THE BANK’S Group (where applicable), geographical locations and the range of sales/marketing channels available (eg in branch, online, by telephone). 3 See the Chartered Institute of Internal Auditors Code of Professional Conduct. 4 In the event that the internal audit function of THE BANK is unable to conduct that review, the review must be conducted by an external auditor, independent from THE BANK. 1 2
19
2.
That THE BANK, on an annual basis, provides to each of its Relevant Staff, a specific and direct written reminder (which covers no issues, other than the subject matter of the Bundling Undertakings) of: (a) THE BANK’S obligations under the Bundling Undertakings. (b) That THE BANK considers that any breach of those obligations is a serious matter, and that appropriate action will be taken in the event that a member of its staff fails to complies with them. The first such reminder will be provided by [THE BANK] to the Relevant Staff within 1 month of its agreement of this proposal and its announcement by the OFT. A copy of such a reminder will be provided to the OFT/CMA within 10 working days following its provision to the Relevant Staff
Terms used in this document are consistent with the definitions included in the Undertakings.
20
