Data protection  

FCA says data rules end client ownership rows

FCA says data rules end client ownership rows

The Financial Conduct Authority's Karina McTeague has said data protection rules have put an end to arguments over who owns the client.

Speaking at the UK Finance Personal Finance Conference today (22 May), the regulator's director of retail banking supervision said there could no longer be any debate about an issue that saw Towry take former Raymond James advisers to court back in 2012.

She said: "Data belongs to the customer, not to the firm, so owning the customer is an outdated concept and this means that your firm can only use your customers' data if your firm has the customers' trust and confidence.

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"Financial services (firms) are looking to use big data to understand risk better and understand customer needs better and to inform pricing decisions. But we must all ensure that customers clearly understand their role in the data-driven ecosystem - that customers know they own their data.

"Their decisions need to be informed. Our expectation at the FCA is that firms comply with the spirit as well as the letter of data protection laws. This means making enough information available to customers to make an informed decision."

Her comments come after back in 2012 wealth manager Towry lost a £6m High Court case brought against seven financial advisers whom it alleged had unlawfully solicited clients.

Towry had brought the lawsuit after it acquired, in 2009, smaller rival Edward Jones, where the seven financial advisers were working.

The seven subsequently left to join Raymond James, another independent financial adviser, and a significant number of clients then followed.

In the trial, Towry had alleged that the seven advisers had persuaded many of the clients to transfer their investments to Raymond James.

It claimed their conduct amounted to breaches of restrictive covenants in their employment contracts that prohibited the soliciting of clients for 12 months and misuse of confidential information.

The group also alleged that there had been a conspiracy between the advisers and Raymond James, which was also a defendant in the action.

Towry claimed the total loss it suffered was almost £6m.

The seven financial advisers denied the allegations and argued that they had fully complied with their legal obligations at all times. The clients had transferred the investments "freely and voluntarily" to Raymond James "without any element of persuasion or influence", they said.

Speaking today (22 May) the FCA's Ms McTeague added the City watchdog would take data protection into account when deciding whether a firm was meeting its Treating Customers Fairly obligations.

She appeared at the event on a panel alongside Richard Thompson, principal ombudsman at the Financial Ombudsman Service.

Mr Thompson said financial services firms had to take on board the fact consumer expectations had changed - not just in how they received a service but in how complaints were handled.

He said: "Many firms are now dealing with complaints within 15 days. But if we stop and challenge ourselves for a moment, is 15 days really ambitious enough in a world where I can take out a loan for thousands of pounds in a matter of minutes?"