Regulation round-up January 2019 | FCA

January 2019 Quick Links


Introduction: Christopher Woolard, Executive Director of Strategy and Competition

Welcome to the first 2019 edition of Regulation round-up.

We have started the year by publishing our annual Sector Views. The publication is an analysis of the issues we use to identify where harm, and drivers of harm, are occurring across firms and markets. We publish our Sector Views to show firms how we use information to make decisions, such as identifying the data we want to collect from firms.

In the publication, we have also shared our view of the changes within sectors – and what is driving these changes, including technology, climate change, demographic factors and Brexit. The Sector Views form part of the process that enables us to keep our priorities under review and focus our resources effectively for next year’s business plan.

We are already tackling many of the issues identified in the Sector Views. Our Business Plan (2018/19) gives a more detailed explanation of our priorities for the current year.


Hot topics

Misleading Financial Promotion for Over 50s Life Cover

The financial promotions team have seen promotions for Life Policies for the over-50s where we believe consumers could be misled into thinking they are buying a policy that will cover their funeral costs. Proceeds of these policies can be used for payment of, or towards, the cost of a funeral. However, it is important that, if a firm’s promotion refers to funerals and associated costs, consumers are not misled into believing they are buying a funeral plan that will cover their funeral costs in full.

Over-50s Life policies are widely promoted through various media channels, including television advertisements. They guarantee to provide Life Cover for the over-50s without the need for customers to have a medical examination. If a firm’s promotion includes product features or benefits, these must be presented in a fair, clear, and non-misleading way taking into account the target audience.

In November 2012, the Association of British Insurers published ‘Initial Guidance on Over 50s plans’ which providers of these plans may wish to refer to when designing their promotions.

We expect all promotions to be fair, clear and not misleading in line with COBS 4.2.1R and PRIN 7.

Preparing for Brexit 

This week, the Government lost a vote on the EU Withdrawal Agreement in Parliament. While the position remains uncertain, we continue to prepare for all eventualities in relation to Brexit. This includes a no deal scenario, which would see the UK leave without an implementation period.

The onshoring of our handbook and temporary permissions regime continues to progress. This will help to minimise cliff-edge risks that are within our power to address.

Firms should continue to make their contingency plans and think about how their consumers might be affected by the UK leaving the EU.

For further information, please refer to our website.

In recent weeks, the Government has begun to communicate with consumers and businesses on the need to prepare for a no deal exit. This campaign can be found on the gov.uk website.

Firms should make sure they are able to answer any queries their customers may raise.

FCA and Practitioner Panel Survey

The FCA and Practitioner Panel Survey provides an opportunity for regulated firms to speak directly to the FCA and share their views and concerns. It provides the FCA Board and Executive with important feedback about the FCA’s performance and enables the FCA to adjust their approach to become a better regulator.

12,000 firms are being invited to take part in the 2019 survey, including a random sample of smaller firms. The survey is being conducted by the independent firm Kantar Public. If you are one of the firms selected to take part, please consider taking the time to complete it.

Your views will be valuable in helping to shape the FCA’s approach. The results are presented to the Practitioner Panel and the FCA Board and will be published in the third quarter of 2019.

In line with the Market Research Society Code of Conduct, Kantar Public will treat all survey responses in the strictest confidence and no personally identifiable information will be published or shared with the FCA and Practitioner Panel.

The results from last year’s survey showed that both industry’s satisfaction with its relationship with the FCA and the industry’s rating of the FCA’s effectiveness have increased. It also identified some key areas for improvement including:

 

  • facilitating innovation
  • increasing transparency of regulation
  • more forward-looking regulation

You can find out more about the survey and last year’s results on the FCA website and more about the Practitioner Panel on the Panels’ website.

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Banks and Building Societies

Reform of overdraft pricing

We have published proposals to provide greater protection for millions of overdraft users, particularly the most vulnerable. These include pricing by a single interest rate, inclusion of APR in certain advertising, a ban on fixed fees for overdraft borrowing and an end to the practice of charging higher prices for unarranged overdrafts. We also propose requiring firms to do more to help customers in financial difficulty.  

These proposals go alongside new rules to make it easier for consumers to manage their overdraft use and compare their deal with other providers. 

Responses to the consultation can be submitted until 18 March.

Strategic Review of Retail Banking

We published our final report on 18 December, setting out our findings, key questions for the FCA and industry, and the work we will be doing next.

We found that personal current accounts give the major banks a competitive advantage – they earn higher underlying returns on equity than smaller competitors. This has contributed to issues like high overdraft charges, high transactional charges and pricing models that can work against loyal customers.

Our report sets out how innovative business models and competition could deliver better value and enhanced customer service, and examines future issues around Access to Financial Services, Use of Data, and Systems Resilience and Financial Crime.

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Financial Advisers

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results. We would greatly appreciate your participation.

Live & Local 2018/19 events

We are continuing our series of UK-wide interactive workshops for representatives of regulated firms who are qualified to give Defined Benefit pension transfer advice. The workshops will:

  • highlight the key points that firms should consider when operating in this market
  • reiterate our expectations when transacting this type of business
  • highlight our updated rules and guidance
  • include an interactive case study to put into practice our expectations

Registration is open for this series of workshops taking place until March 2019. Visit our Live & Local webpage for further details.

You can also sign up to our Live & Local email updates to be alerted to upcoming Live & Local events.

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Mortgage Advisers and Lenders

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

Live & Local 2018/19 events for regulated firms

We have added sessions in April, May and June to our series of monthly ‘Ask the regulator’ Q&A roundtable discussions for mortgage advisers and lenders across the UK to pose questions and provide feedback directly to a panel of senior FCA representatives and industry experts.

Registration details for events taking place to June 2019 can be found on our Live & Local webpage.

You can also sign up to our Live & Local email updates to be alerted to upcoming Live & Local events.

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General Insurance Intermediaries and Insurers

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

Live & Local 2018/19 events for regulated firms

We have added sessions in April, May and June to our UK-wide programme of events for general insurance firms. Registration is open for the below events:

  • Interactive workshop on the extension of the Senior Managers and Certification Regime (SM&CR) and the Insurance Distribution Directive (IDD).
  • ‘Ask the regulator’ Q&A roundtable discussions where general insurance firms pose questions and provide feedback directly to a panel of FCA and industry representatives in an open, informal setting.

Visit our Live & Local webpage for dates, locations and registration link for the above events taking place to June 2019.

You can also sign up to our Live & Local email updates to be alerted to upcoming Live & Local events.

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Life insurance & Pension Providers

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Wealth Managers & Private Banks

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Investment Managers & Stockbrokers

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Consumer Credit

Extended protections for high-cost credit products

As part of our High-Cost Credit Review, as well as publishing our consultations on overdrafts and on rent-to-own pricing, we have made new rules strengthening the protections for consumers using home-collected credit (doorstep lending), catalogue credit and store cards. We are also consulting on further measures on buy now pay later offers. Responses to the consultation can be submitted until 18 March. 

As part of our work to help consumers get essential household goods and less expensive forms of credit, we have also published finalised guidance for registered social landlords

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Credit Unions

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Fintech & Innovative Businesses

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Payment Service Providers

Revised Payment Services Directive 2 Policy Statement

In December, we published our approach and guidance to implementing the revised Payment Services Directive and associated EBA technical standards supporting the security of electronic payments (SCA-RTS).

This follows our September consultation on the rules and guidance for firms on the SCA-RTS and associated European Banking Authority Guidelines.

Key issues include how we will assess banks’ ’Open Banking’ or application programming interfaces. This is technology that allows third parties to communicate with different financial platforms.

To coincide, we have also published a consultation to show how we propose to make the technical standards in case of a no-deal Brexit.

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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Brexit

Notification window for the temporary permissions regime now open

The notification window for the temporary permissions regime opened on 7 January 2019 and closes on 28 March 2019.

The regime will allow EEA-based firms currently passporting into the UK to continue new and existing regulated business within the scope of their current permissions in the UK for a limited period, while they seek full FCA authorisation, if the UK leaves the EU on exit day without an implementation period in place. It will also allow EEA-domiciled investment funds that market in the UK under a passport to continue temporarily marketing in the UK.

Financial services contracts regime

We have set out proposals to implement the financial services contracts regime (FSCR) so that EEA firms can fulfil their existing contractual obligations in the UK.

The FSCR allows for the continuity of existing contracts after exit day for EEA firms which either:

The FSCR does not allow EEA firms to take on new business after 29 March 2019. Similarly, EEA-based managers, depositaries and trustees of UK authorised funds cannot continue to manage or provide services to these funds after exit day under FSCR.

Advance applications for credit rating agencies and trade repositories now open

When the UK leaves the EU, we will become the UK regulator of credit rating agencies and trade repositories.

Credit rating agencies and trade repositories can now submit their advance applications.

Notification window for data reporting services providers now open

The window is now open for EEA data reporting services providers (DRSPs) authorised under MIFID to let us know that they wish to provide data reporting services in the UK after exit day.

EEA DRSPs should notify us by 15 February 2019.

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Claims Management Companies

CMC Policy Statement and temporary permission

We published the new rules and fees in December that will apply to all claims management companies (CMCs) set up or serving customers in England, Scotland and Wales from April 2019 when we start regulating the sector. CMCs must register for temporary permission by 31 March. This will allow them to continue operating until they are fully FCA-authorised during one of two waves between April and the end of July. The new rules will ensure firms are transparent about their estimated fees and notify customers of alternative options. You can find more information on our website

Impact of FCA regulation on small firms

We are carrying out a survey of smaller firms on how FCA regulation specifically impacts them. This will help ensure FCA cost benefit analyses and judgements of proportionality take account of smaller firms’ circumstances.

The independent consultancy Kantar Public will be working on our behalf, conducting in-depth interviews with a small representative sample of firms over the next month. These interviews will inform the design of an online questionnaire which will be sent to a larger sample of firms in April and May.

As with the wider FCA and Practitioner Panel Survey Kantar will fully anonymise all results.

If you are contacted by Kantar, we would greatly appreciate your participation.

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News & Publications

Securitisation Policy Statement 

On 1 January 2019, the EU Securitisation Regulation and related amendment to the Capital Requirements Regulation (CRR Amendment) came into effect. Policy Statement PS18/25 – published on 19 December 2018 – outlines changes to our Handbook following Consultation Papers CP18/22 and CP18/30. These changes address fees for Third Party Verifiers (TPVs), amendments to the IFPRU, COLL and FUND sourcebooks and updates to the Decision Procedure and Penalties manual (DEPP) and Enforcement Guide (EG) sections. For further information please refer to our Securitisation web page.

Measuring our impact after we intervene

We have published our Ex Post Impact Evaluation Framework and completed 3 impact evaluations. The paper sets out how we approach measuring the impact of our past interventions. It explains why we do ex post impact evaluation, how we choose specific interventions to study, and how we ensure that our evaluations are robust.

The publication updates the Discussion Paper we published last April, in light of the feedback we have received. You can see a summary of the comments, and our response to them, in our Feedback Statement. You can read both documents here.

SME access to the FOS – final rules

In October, we published the SME access to the Financial Ombudsman Service– near final rules, and, on 20 December, we published our final rules. Our final rules, which are unchanged from our near-final rules, extend access to the Financial Ombudsman Service to more small and medium-sized enterprises, as well as larger charities and trusts, and a new category of personal guarantors. Our final rules set out the eligibility criteria that these complainants must meet to be able to refer complaints against financial services firms to the Financial Ombudsman Service.

Authorised push payment fraud – extending the jurisdiction of the Financial Ombudsman Service

We have published a Policy Statement following feedback to our Consultation Paper 18/16: Authorised push payment fraud – extending the jurisdiction of the Financial Ombudsman Service. The policy changes intend to provide victims of alleged authorised push payment (APP) fraud (where they are eligible complainants, see DISP 2.7 in our handbook) with prompt and fair complaints resolution, and access to dispute resolution through the Financial Ombudsman Service for complaints against payment service providers (PSPs) who receive payments relating to the alleged fraud. These final rules will take effect on 31 January 2019.

European Securities and Markets Authority (ESMA) guidelines on MiFID II suitability requirements

We have confirmed to the European Securities and Markets Authority (ESMA) that we are compliant with their guidelines on MiFID II suitability requirements.

The guidelines were originally published in 2012, then updated in May 2018 to reflect the changes introduced by MiFID II. They are intended to establish consistent, efficient and effective supervisory practices as well as the common and uniform application of EU law. 

Firms in scope should have considered what steps they need to take to be compliant. ESMA’s guidelines can be viewed here.

Permitted Links Rules consultation

On 12 December, we published a Consultation Paper proposing changes to the permitted links rules. Our proposals would enable retail investors to invest in a broader range of long-term assets – also known as patient capital – in unit-linked funds.

These changes aim to promote competition in the industry, while continuing to protect consumers.

Responses can be submitted until 28 February 2019.

The publication of this paper and the Patient Capital and Authorised Funds Discussion Paper meets a commitment made in the Chancellor’s Budget 2018 to publish a consultation and discussion paper relating to patient capital.

Patient Capital and Authorised Funds Discussion Paper

On 12 December, we published a Discussion Paper exploring how UK authorised funds can be used to invest in patient capital. By opening this discussion, we would like to determine whether future rule changes in this area are appropriate.

Responses can be submitted until 28 February 2019.

The publication of this paper and the Permitted Links Rules consultation meets a commitment made in the Chancellor’s Budget 2018 to publish a consultation and discussion paper relating to patient capital.

Weekly News and Publications alerts

Subscribe to receive our weekly round-ups of news and publications published on the FCA website. Sent every Friday, the email covers our news items, including press releases and speeches, and publications, research and data, and notices from the week.

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