Call for greater consumer protection initiatives to prevent misconduct in European banking

GLC's Principal Solicitor has called upon the European Banking Authority (EBA) to make greater use of its Article 9 consumer protection mandate to help prevent misconduct in banking across the European Union (EU).

In a presentation to the Board of Supervisors of EBA in London yesterday, Mike Dailly noted that EBA had and was undertaking good measures in relation to inappropriate sales incentives and financial stability, however, business misconduct had now become a systemic, macro-prudential risk.

The cost of misconduct from the world’s top 10 banks was £150bn (2008-12) including fines for mis-selling, LIBOR and EURIBOR manipulation, breach of money laundering rules, and non-regulatory compliance. Mis-selling through inappropriate sales incentives schemes was at the heart of the problem and was an ongoing issue.

For example UK mis-sold payment protection insurance compensation payments were over £28bn and rising; in Spain compensation for mis-sold hybrid securities was at €2.9bn; in the Netherlands compensation for customers of the failed DSB Bank totalled €215m; the cost of the bail out of Banco Espirito Santo  in Portugal was €2.1bn; while Deutsche Bank AG was fined £227m last week by the UK's FCA for LIBOR and EURIBOR manipulation and repeatedly misleading the regulator's investigation.

GLC's Mike Dailly suggested a range of initiatives including greater legal accountability of banking executives; a binding ethical code of practice as part of a drive towards professionalism; more meaningful and targeted disclosure to empower consumers and minimise financial detriment; EU market studies on access, quality and pricing of personal current accounts, and analysis of cross-border barriers to banking; all backed up with appropriate legal guidelines and recommendations under Article 9 of Regulation (EU) No. 1093/2010.

Call for greater consumer protection initiatives to prevent misconduct in European banking

GLC's Mike Dailly appointed to the Board of the UK's Money Advice Service

The Financial Conduct Authority has appointed Govan Law Centre's Mike Dailly as a non-executive director of the Money Advice Service's Board, along with two other new non-executive directors, Caroline Fawcett and Nicola Bruce. All three appointments commence on 1 April.

Andy Briscoe, Chair of the Money Advice Service said: “I am delighted to welcome our new non-executive directors onto the Board. Between them they bring extensive experience of financial services and also considerable knowledge of the debt advice sector. They will bring valuable insight to the Money Advice Service and their joining us strengthens the Board as recommended by the Farnish review.”

"Raising the financial capability of the UK population is at the heart of everything we do at the Money Advice Service. Our 2015/16 business plan reflects our focus on helping consumers to plan ahead for key life events such as buying a home, having a baby or for retirement".

"Debt advice is also a key priority, encouraging more people to seek advice and continuing to raise standards across the sector. Our new board members are well placed to guide and support our talented executive team in taking forward this challenging but vital agenda.”

The Money Advice Service is an independent organisation. Set up by government to help people make the most of their money, it gives free, unbiased money advice across the UK – online, over the phone and face to face. Paid for by a statutory levy on the financial services industry, raised through the Financial Conduct Authority, its statutory objectives are to enhance the understanding & knowledge of members of the public about financial matters (including the UK financial system), and to enhance the ability of the public to manage their own financial affairs.

GLC's Mike Dailly appointed to the Board of the UK's Money Advice Service

Govan Law Centre endorses Living Rent campaign and calls for real rights for Scotland's private rented sector tenants

Govan Law Centre's Board of Trustees have agreed to endorse and support the Living Rent campaign in Scotland.

The campaign seeks proper fair rent controls in Scotland's private rented sector (PRS), as well as security of tenure for tenants in that sector.

Govan Law Centre (GLC) is deeply concerned that the greatest rise in 'severe' and 'extreme poverty' in Scotland is amongst PRS tenants.  While the latest annual figures show that severe poverty in other housing tenures have fallen in Scotland, the number in poverty in the PRS rose by 140,000.

Housing costs now amount on average to 24 per cent of the income of private renters - compared with 20 per cent a decade ago - and in comparison to 18 per cent of social renters’ income and 11 per cent for owner-occupiers with a mortgage.

GLC's Principal Solicitor, Mike Dailly, set out our calls for  progressive law reform and regulatory change in Scotland at the launch of the Glasgow Living Rent campaign at the CCA in Glasgow on Saturday 28 March 2015.  Mike's speech is available (as a PDF) here. 

Private sector tenants need meaningful legal rights. The current landlord registration schemes needs revamped and strengthened. We need to remove the bad landlords and letting agencies from the register. 

We need a national strategy and co-ordination of enforcement. Proactive enforcement with legal teeth. 

GLC believes we need a Scotland-wide PRS inspectorate with full regulatory powers to set a proper standard of good practice, with the power to prosecute landlords and letting agencies across the country. 

We need a robust statutory mechanism to set rents at a fair and reasonable level. A mechanism that is practical and works for tenants. And most importantly, we need genuine security of tenure for PRS tenants.

Govan Law Centre endorses Living Rent campaign and calls for real rights for Scotland's private rented sector tenants

Pension reforms: liberation or freedom to lose your pension pot?!

From April 6th anyone aged 55 or over will be able to access all of their pension savings as a cash lump sum if it is in a 'Defined Contribution' scheme (as opposed to 'Defined Benefit' scheme which promises a specific income/salary). 

This lump sum is money you've been saving in your pension pot over many years, if not decades, and it has generally been paid in 'tax free'. In other words, the income tax normally deducted from your salary and employers contributions has been paid into the pot too.

This is because it has been a long standing policy of all UK Governments to encourage and help people make provision for their retirement and later life.

The UK Government has been promoting next month's changes to UK pension law as 'the pensions freedom revolution'.  Yet, empowerment to access all of your pension pot from 6 April 2015 might also be seen as freedom to lose your money or get ripped off.

What has not been publicised with equal vigour and prominence is that if you 'cash-in' your pension fund next month you can only take 25% of it tax free.  The other 75% is taxed at your marginal rate. Let's look at an illustration.

Example at 6 April 2015
So you currently pay 20% tax - and let say you earn £24,000 per annum - and you cash-in a pension pot worth £50,000. You can obtain £12,500 tax free.

The balance of £37,500 is treated as your income during the 2015/16 tax year. So your earnings are now £61,500. In relation to the balance of your pension pot you are liable to pay 20% rate tax on the first £7,785, and 40% tax on £29,715 of that balance. Your extra tax bill is £13,443.

To think of it another way - you had a pension pot worth £50,000, but cashing in all of it at once next month (instead of taking a quarter of it tax free) means you lose almost £15,000 in tax!

So you need to think very cautiously and extremely carefully whether you should 'liberate' all of your life savings. 

People often underestimate how long they live for, and making the wrong decision now could not only be expensive, but could prove detrimental in later life.  You can obtain free online guidance from the UK Government's Pension Wise online service and the Money Advice Service.

Two further issues are worth mentioning. First, whatever you do don't get scammed. If something sounds to good to be true, it usually isn't true. So don't get ripped off. The Financial Conduct Authority (FCA) also has good information on pension scams.  If in doubt take independent financial advice from an advisor regulated by the Financial Conduct Authority.

We also post below a helpful '60 seconds' tips on pension law changes from personal finance broadcaster and writer Fergus Muirhead.

Second, the law remains unsatisfactory and unclear as regards the ability of a trustee in bankruptcy to access a Defined Contributions pension fund. There are conflicting English High Court decisions, for example the cases of Raithatha v Williamson [2012] EWHC 909 (Ch), and Horton v Henry [2014] EWHC 4209 (Ch).

Govan Law Centre believes the position should be place beyond doubt: trustees in bankruptcy should not be able to access an uncrystallised pension fund (in other words a pension which is still locked and not accessed by the debtor).  The law should be clarified by the UK Government and Scottish Government (where bankruptcy is devolved).

Disclaimer: this blog provides information only and does not represent legal or financial advice. You should always obtain your own independent and regulated legal or financial advice from a solicitor or qualified independent financial advisor.

Pension reforms: liberation or freedom to lose your pension pot?!

Recruitment: GLC Education Law Unit - vacancies for parent sub-committee members

• Job type: Project Delivery Sub-Committee Members
• Status: Management Board
• Closing date: 31/03/2015
• Location: Glasgow

Role:

Govan Law Centre’s Education Law Unit aims to uphold, protect and enforce the rights of pupils and parents across Scotland by providing expert legal, and non-legal representation at tribunals and courts; provide advice and information about education law; and work with stakeholders to influence legislation and policy with regard to education and the law.

We seek two parents to be part of our Project Delivery Sub-Committee to provide strategic guidance and manage the performance at the Education Law Unit alongside our current Committee members. The Committee’s functions are as follows:

• Provide guidance and direction, make decisions to steer the progress and delivery of the project;
• Monitor and approve the progress of the project against the aims of the project;
• Approve project documentation provided by the project manager;
• Provides timely and appropriate visibility of project progress and key risks and issues to the Board of Trustees as required; and
• Proactively managed project risks.

The meetings take place on a quarterly basis and there is no payment to attend such meetings, although reasonable travel expenses can be met.

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Organisation profile:

Govan law centre (GLC) is an independent, charitable community controlled law centre operating in Scotland.

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Additional:

Govan Law Centre (GLC) is a registered Scottish charity: SCO30193. All GLC legal services are provided by the independent legal practice of Dailly & Co., Solicitors. The Education Law Unit is partly funded by the Third Sector Early Intervention Fund, a joint initiative of the Scottish Government and the Big Fund in Scotland. Let’s Talk ASN is a joint initiative of Govan Law Centre and Kindred Advocacy (Charity No. SC000264). It is funded by the Scottish Government.

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Application notes:

If you are interested, please contact Anne Taylor by email on admin@edlaw.org.uk or by letter to Govan Law Centre, Orkney Street Enterprise Centre, 18-20 Orkney Street, Unit 4, Glasgow, G51 2BZ. Expressions of interest should be returned no later than 31 March 2015.

Recruitment: GLC Education Law Unit - vacancies for parent sub-committee members