Regulation round-up February 2019 | FCA

February 2019 Quick Links


Introduction: Nausicaa Delfas, Executive Director of International

Welcome to this edition of Regulation round-up, which includes an update on Brexit. 

We continue to plan for a range of scenarios for Brexit, including the possibility of the UK leaving the EU on 29 March 2019 without a deal. 

A significant part of our work is to ensure the firms we regulate are ready for this milestone. Your Brexit contingency plans should now be well advanced, including your plans for communicating with your customers. As we have said, you must communicate clearly with customers and in good time.

You can find out more about our approach to Brexit by attending one of our Brexit briefings, taking place on:

  • 11 March: live webcast
  • 14 March: Edinburgh with live webcast

Registrations to attend in London, in person, on 11 March are full. You can still attend the Edinburgh event in person; or join one of the live webcasts. 

At these events, I will update you on our approach to managing the impact of Brexit. You can also discuss your questions with our panel.

I look forward to seeing you at one of our events and hearing your questions.


Hot topics

Banking leaders share their insights on adopting the Senior Managers and Certification Regime (SM&CR)

In a new video, senior leaders from 4 financial services firms talk about their experiences of adopting the Senior Managers and Certification Regime (SM&CR).

The SM&CR aims to increase individual accountability within financial services and is a key step to improve culture and governance in the sector. It was first adopted by the banking sector in 2016 and by insurers in December 2018.

We will be extending the SM&CR to around 47,000 solo-regulated firms in December 2019. The extension of the SM&CR will ensure that all staff in regulated firms and the regulators understand who is responsible for what in a firm. It will also ensure that firms’ governance arrangements are transparent.

In the video, Dame Jayne-Anne Gadhia (former Chief Executive, Virgin Money), Jon Symonds (Deputy Group Chairman, HSBC), Liz Nolan (Chief Executive Officer of EMEA, State Street), and Vis Raghavan (Chief Executive Officer of EMEA, J.P. Morgan) talk about how the SM&CR has helped improve culture and governance in their organisations and give advice to the firms that will be adopting the SM&CR in 2019.

Cryptoassets guidance consultation

We are currently consulting on guidance, which, once finalised, will set out the types of cryptoassets that fall within the FCA’s remit.

The guidance will help firms understand whether their cryptoasset activities come under our regulation. This will provide firms with greater clarity on whether they need to be authorised. The consultation is in response to an industry request for greater clarity, and to the Cryptoasset Taskforce’s recommendation that the FCA provides additional guidance on the existing regulatory perimeter.

We are asking for comments on the consultation by Friday 5 April 2019.

Later this year, the FCA will consult on banning the sale of derivatives linked to certain types of cryptoassets to retail investors. The Government is planning to consult on whether to expand the regulatory perimeter to include further cryptoassets activities. ​​​

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Banks and Building Societies

Are you ready for 14 March?

Under PSD2, providers of payment accounts that are accessible online must, by 14 September 2019, provide access to third party providers (TPPs) in line with these regulatory technical standards. They:

  • Must make available technical specifications and testing facilities for their access interfaces to TPPs no later than 14 March 2019.
  • Can seek exemption from the contingency mechanism requirements. If so, they should contact us as soon as possible to discuss their plans. Email [email protected].
  • Should aim to submit completed exemption requests by 14 June 2019. More details can be found on our website.

For more details see Chapter 17 of the Payment Services and E-money Approach Document.

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Financial Advisers

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 still open for workshops, which are scheduled to conclude in March 2019. Visit our Live & Local webpage for further details.

You may 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

Live & Local 2018/19 events for regulated firms

We are continuing 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 may 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

General Insurance value measures pilot and consultation

We have published the data from our third General Insurance (GI) value measures pilot. The pilots have had a positive impact by improving transparency and creating incentives for firms to improve product value.

We have also published a consultation outlining plans to make the regular reporting and monitoring of GI value measures data a requirement. If approved, GI firms would need to submit their data to us on an annual basis. Our proposals also include requirements for firms to use the data as part of their compliance with FCA product oversight and governance rules.

The consultation will be open until 30 April 2019.

Live & Local 2018/19 events for regulated firms

We are continuing our UK-wide programme of events aimed at 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 may 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

Retirement Outcomes Review – consultation on investment pathways

This month we published a consultation on proposals to introduce investment pathways for non-advised drawdown customers, following on from the final report of our Retirement Outcomes Review in June 2018. We are proposing that firms offer customers who do not take advice a range of investment solutions that broadly meet their objectives. The consultation also includes proposals to ensure that investment in cash is an active choice, and to provide customers on information on charges in pounds and pence.

We also announced new rules on the ‘wake up packs’ that must be given to consumers as they approach retirement, and on the disclosure of charges by pension providers.

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Wealth Managers & Private Banks

There are no updates for this sector.

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Investment Managers & Stockbrokers

Publication of second set of rules following our Asset Management Market Study

In February 2019, we published new rules and guidance to improve the quality of the information available to consumers about the funds they invest in.

The asset management industry plays an important role in the UK’s economy. Asset managers seek returns for investors by investing in a variety of assets. Our asset management market study presented evidence of weak price competition in many areas of the asset management industry.

In April 2018, we introduced new rules to ensure fund managers act as agents of investors in their funds. The rules and guidance published in February 2019 complement that work by helping consumers understand more about how their money is being managed, so that they can make better investment decisions.

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Consumer Credit

There are no updates for this sector.

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Credit Unions

Amendments to the FCA handbook – CREDS sourcebook

Work is being done to finalise the on-shoring amendments to CREDS, published as part of Consultation Paper 18/36 on 23 November 2018. There are no substantive changes proposed to the CREDS rules. We intend to give feedback on this CP and publish our near final handbook instruments in early 2019.

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Fintech & Innovative Businesses

Are you ready to connect under PSD2? 

Under PSD2, providers of account information or payment initiation services need to get ready for changes to the way they are allowed to access customer data and payments functionality by:  

  • Making use of testing facilities and technical specifications. Banks and others must make these available by 14 March 2019.
  • Engaging with banks and others making access available via application programming interfaces (APIs), before current access options become unavailable after 14 September 2019.
  • Obtaining qualified certificates required by the eIDAS regulations to identify themselves towards firms when accessing customer account data or payment functionality after 14 September 2019.

For more details see Chapter 17 of the Payment Services and E-money Approach Document.

Cross-border testing pilot for innovative firms open to applications

The Global Financial Innovation Network (GFIN) – a group of 29 international organisations including the FCA – is inviting applications from firms wishing to test innovative ideas across more than one country or jurisdiction. The pilot tests provide a more efficient way for innovative firms to interact with regulators across the world, as they look to scale new ideas.

Firms have until 28 February 2019 to apply to take part in the pilot tests. 

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Payment Service Providers

General standards and communication rules for the payment services and e‑money sectors Policy Statement published

In February, we published our Policy Statement outlining General standards and communication rules for the payment services and e‑money sectors.

This Policy Statement (PS) confirms changes to the FCA’s Handbook following consultation in CP18/21 – General standards and communication rules for the payment services and e‑money sectors.

Our rules and guidance affect both the provision of payment services and e-money by credit institutions and the conduct of PIs, EMIs and RAISPs. In addition to customers using payment services or e-money firms will have to comply with our new rules from 1 August 2019.

More information is available on the FCA website.

Are you ready for 14 March?

Under PSD2, providers of payment accounts that are accessible online must, by 14 September 2019, provide access to third party providers (TPPs) in accordance with these regulatory technical standards. They:

  • Must make available technical specifications and testing facilities for their access interfaces to TPPs no later than 14 March 2019.
  • Can seek exemption from the contingency mechanism requirements. If so, they should contact us as soon as possible to discuss their plans. Email [email protected].
  • Should aim to submit completed exemption requests by 14 June 2019. More details can be found on our website.

For more details see Chapter 17 of the Payment Services and E-money Approach Document.

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Brexit

FCA Brexit Briefings

We are hosting two Brexit briefings for regulated firms, taking place on:

  • 11 March: live webcast
  • 14 March: Edinburgh or live webcast

Registrations to attend in London, in person, on 11 March are full.

Whether you attend in person or watch online, you will be able to submit questions. By the end of the event, you will have a clearer understanding of our approach to managing the impact of Brexit and how it may affect your firm.

The temporary transitional power

The Government intends to give us a temporary transitional power to minimise disruption for firms and other regulated entities in a no-deal scenario. It gives us the ability to delay or phase in changes to regulatory requirements for a maximum of 2 years from exit. We intend to use this power so firms and other regulated entities do not generally need to prepare now to meet new UK regulatory obligations connected to Brexit.

We have set out, on our website, how we will use the power. We have also set out the areas where firms now need to take steps to prepare. 

FCA FIRDS and transaction reporting

We have published a high-level overview of what firms need to do now to comply with the onshored MiFID regime as it applies to transaction reporting.

We have built an FCA FIRDS system to replace ESMA’s system in the UK as a contingency for a no deal exit. Our website gives more detail about FCA FIRDS, including:

  • how it will work
  • the switch-over from ESMA FIRDS
  • transaction reporting
  • what firms need to do now

Memorandums of Understanding (MoUs) with ESMA and EU regulators

We have signed MoUs to support continued close cooperation and information sharing between regulatory authorities. The MoUs will help minimise the potential for disruption. For example, in the investment management sector, where agreements allow fund managers to still delegate portfolio management services to the UK.

The MoUs are:

  • a multilateral MoU with EU and EEA National Competent Authorities (NCAs) covering supervisory cooperation, enforcement and information exchange
  • an MoU with the European Securities and Markets Authority (ESMA) covering supervision of Credit Rating Agencies and Trade Repositories

Find out more on our website.

Green cards and travel insurance

The ABI has issued guidance on travelling to the EU in the event of no deal. It includes information about green cards, which UK motorists will need if the UK ceases to be part of the European free circulation zone. 

Motor insurers should take appropriate action. You should inform customers of the need for green cards, being clear about the process necessary to get one. You need to tell customers in enough time for them to be able to request and receive one before exit day.  

Preparing your firm for Brexit

Look out for updates to our website on preparing your firm for Brexit.

We will shortly update this page with further details, including the latest information specific to:

  • General Insurance
  • Retail Banks and Payments
  • Retail Investments
  • Pensions and Retirements Income, and
  • the Wholesale sector

We will announce updates through LinkedIn and Twitter, as well as including them in our weekly News & publications alert.

Primary Market Bulletin

We will shortly publish a Brexit edition of the Primary Market Bulletin. The bulletin provides updates from the FCA to Primary Market Participants on the Market Abuse Regulation and the Short Selling Regulation.

Once published, you will be able to access it on our website, alongside all previous editions of the Primary Market Bulletin. You can also sign up to receive the Primary Market Bulletin by email.

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Claims Management Companies

Watch our webinar

Last month we hosted a webinar which included information about the rules CMCs will need to follow, and the process for registering for temporary permission and applying for full authorisation. If you were unable to attend – or would like to revisit the discussion – a recording of the webinar is now available on our website.  

Register for temporary permission

We’re pleased to report that 300 CMCs have already registered for temporary permission to ensure they can continue operating after 1 April 2019. You have until 31 March 2019 to submit a completed application via our Connect portal. If you fail to meet the deadline, you will not be able to carry out regulated activity after this date. We’d encourage you to join the other CMCs in registering early to avoid potential delays.

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News & Publications

FCA and Practitioner Panel Survey

How well do you think the FCA is doing in delivering on its regulatory responsibilities?

The FCA and Practitioner Panel joint survey is sent annually to a sample of the firms that we regulate. It gives firms the opportunity to provide feedback on how we regulate the industry.

The survey is carried out on our behalf by Kantar Public, an independent social research organisation.

The results are presented to the Practitioner Panel and our Board and will be published in the summer.

The survey is still open. If you have received an invitation to participate then please fill in the survey now.

CP19/04: Optimising the Senior Managers & Certification Regime and feedback to DP16/4 – Overall responsibility and the legal function

On 23 January, we published a consultation paper (CP) on proposals to clarify the rules on how the Senior Managers & Certification Regime (SM&CR) applies to administrative and legal staff. This CP is relevant to all firms currently covered by the SM&CR and those firms who will be covered from December 2019. We are asking for comments by 23 April 2019.

You can use the form on our website.

For more information on the SM&CR, check our website.

Consultation on proposals to improve shareholder engagement

We have published a consultation paper (CP), which sets out how parts of the Revised Shareholder Rights Directive (SRD II) will be implemented in the UK. SRD II aims to promote effective stewardship and long-term investment decision-making by enhancing transparency of engagement policies and investment strategies across the institutional investment community. We have published a discussion paper (DP) alongside the CP, which has been co-authored by the FCA and FRC. This DP calls for input on how best to encourage the institutional investment community to engage more actively in stewardship of the assets in which they invest

Memorandum of Understanding (MoU) with the Information Commissioner’s Office (ICO) updated 

The updated MoU reinforces how the authorities coordinate across areas of mutual interest, including engagement in the development of policy and guidance. The agreement also outlines the framework for information and intelligence sharing to support supervisory and enforcement functions.  

While the ICO regulates firms’ compliance with the General Data Protection Regulation (GDPR), firms are reminded that complying with the GDPR requirements is also something the FCA will consider under our rules. As part of their obligations under the Senior Management Arrangements, Systems and Controls (SYSC) module, firms should establish, maintain and improve appropriate technology and cyber resilience systems and controls. 

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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