Industry guidance criteria and process

Read about how we grant confirmation and the criteria you have to meet. 

How we grant confirmation

Our confirmation process ensures a consistent and efficient approach when dealing with requests for confirmation.

Process no.

Notes

1.

We will generally discuss with the guidance provider which area the guidance is intended to cover, the benefits of doing so, timescales and involvement required from us.

2.

We will consider the proposal, check if there have been other requests of a similar nature (as this could be an indication that we need to provide the guidance ourselves) and check resource availability. This will not be a lengthy process.

3.

We will send a letter to the guidance provider stating we think the proposal will add value and we are committed to reviewing the guidance with a view to granting confirmation once the content is finalised.

4.

The guidance provider drafts the guidance. The provider needs to bear in mind that the industry guidance must meet the confirmation criteria when drafting the guidance.

5 & 6.

We (and our Consumer Panel where necessary) will review the draft text and provide any comments to the guidance provider. On some occasions, as the FSCP recognises, the guidance provider may wish to present / discuss the draft directly with the Panel. The process for doing this can be discussed on a case-by-case basis.

7 & 8.

When the provider has made the final changes, it should send us a final draft for review and sign off.

9.

If we are satisfied that the final version meets the confirmation criteria and minimum regulatory requirements, we will grant confirmation and will notify the guidance provider. If the guidance provider wants to renew confirmation, it must contact us around three months before the end date. Confirmation is valid for 3 years provided that during this period there is no change to the content of the industry guidance or to the underlying FCA requirements.

10.

The guidance producer will need to provide details of where the confirmed industry guidance is stored so we can link to it from its industry guidance web page.

 

Confirmation criteria

Industry guidance should:

  • explain how it relates to a relevant FCA rule and/or principle.

It is important that any industry guidance we confirm is very clear about which requirements (either FCA rules and/or principles, in whole or in part) it relates to. Otherwise, it will not succeed in the objective that industry guidance should help firms meet their regulatory requirements. In some cases, it may need to bear in mind wider legal implications (for example, the Unfair Terms in Consumer Contracts regulations).

It is also necessary for there to be a direct link to FCA requirements to ensure that industry guidance does not result in regulation creeping into areas where there is no market failure, or where we have no current remit.

Industry guidance should highlight any suggested practices that go beyond the minimum necessary to meet FCA requirements. This will enable those making use of industry guidance to decide whether to go beyond the minimum.

If there is a conflict between a piece of industry guidance and FCA requirements, the Handbook will prevail.

  • consider consumer interests and views, if it will directly affect consumers.

It is vital that the interests of consumers (including how our rules protect them) are not undermined. We will look for evidence that the provider of the guidance has considered carefully the impact that the guidance would have on consumers and has accounted for consumer interests. This may require discussions between the guidance provider and consumer groups or the Financial Services Consumer Panel. For those cases with a significant impact on consumers, it may be more appropriate for us to look to make a rule or issue FCA guidance.

We will assess the appropriate and proportionate level of involvement by consumer groups on a case-by-case basis.

Also, FCA confirmed industry guidance must not be used as a marketing tool to customers or as a means of discouraging customers from complaining.

  • not claim to limit or affect the rights of third parties. 

The Handbook Reader's Guide highlights that FCA guidance cannot affect the rights of third parties and does not bind the courts. Similarly, granting ‘FCA confirmation’ cannot affect the rights of third parties and so will not bind the courts or the Financial Ombudsman Service.

We will not confirm industry guidance that claims to affect the rights of third parties.

Industry guidance must be optional and be one way, not the only way, to comply.

It is important that the use of industry guidance is voluntary. It should be looking to help firms meet their regulatory obligations, not telling them what they must do.

Industry guidance must not claim to be an exhaustive or definitive statement of what FCA rules or guidance are or require.

Industry guidance can provide examples of how firms could comply, or key points for firms to consider, but cannot claim that it is an exhaustive or definitive way to meet our requirements. That would go against our aim to encourage judgement and flexibility within firms.

Often most value added guidance will come from practical examples rather than discursive legal commentary.

The content of industry guidance also has a bearing on its legal status. Anything that claims to be exhaustive or definitive moves closer to becoming a safe harbour rather than the sturdy breakwater we are seeking to achieve.

  • be publicly available.

Industry guidance must be publicly available and free. We are aware that this is likely to be a controversial point as some trade bodies indicated they would prefer to limit the availability of industry guidance they produce to their members only.

We do understand that this may be seen as diminishing the benefits of membership of a trade or professional body. But we consider members will still have the benefit of determining where industry guidance is developed and can help to contribute to its development. Trade or professional bodies can be expected to tailor industry guidance so it is most relevant for their members.

We have been asked if we will consider providing financial assistance to those willing to develop industry guidance. We are unlikely to provide financial help for several reasons. We are not intending to require anybody to produce industry guidance and we do not consider this to be outsourcing our responsibilities. Developing industry guidance is a decision for the body concerned and something any individual body can choose to do or not.

However, we are content for guidance producers to charge a reasonable sum for the production of hard-copy pieces of Guidance. Guidance should be available free of charge electronically and must be available for those who wish to access the guidance via our confirmed industry guidance webpage.

  • detail who its intended audience is.

Industry guidance must clearly state who the intended audience is eg, type of firms/sectors/size of firms. This is to help firms decide whether a piece of industry guidance is relevant for them.

  • not be anti-competitive.

In confirming industry guidance, we will consider the need to minimise adverse effects on competition.

Those developing industry guidance should consider competition issues (and this may result in them needing to obtain legal advice).

Additional considerations

Before giving ‘FCA confirmation’, developers of guidance will need to satisfy us that they have considered any impact on other sectors or areas of the market. If necessary, we may ask them to seek the views of other parties before we grant ‘FCA confirmation’.

If somebody disagrees with a piece of industry guidance following publication, we would, in the first instance, expect them to raise the issue with the guidance provider.

One of the aims of a principles-based approach to regulation is to give firms greater flexibility in how they meet their regulatory obligations. So, it is possible there will be different pieces of industry guidance on the same topic saying different things.

This may be due to different intended audiences or just different opinions on how to meet regulatory requirements. As long as different pieces of guidance do not contradict each other, we do not consider it an issue if they have different approaches.

This will not prevent us confirming more than one piece of guidance in the same area.