Regulation round-up April 2018

Regulation round-up is our monthly email to all regulated firms, updating you on the latest news that affects your sector.

April 2018 Quick Links


Introduction: Keith Jackson, Director of General Insurance and Conduct Specialists in Supervision and Retail Authorisations

Transparency in insurance renewals

On 1 April 2017, the renewal rules came into effect to increase the transparency and engagement at renewal in general insurance. 

The rules require firms to:

  • disclose last year’s premium at each renewals to allow a comparison
  • encourage consumers to check their cover and shop around
  • identify consumers who have renewed 4 or more consecutive times and give them additional prescribed messaging 

We have been closely monitoring the sector to make sure firms made the changes required.  We found that Admiral included inaccurate premium amounts in renewal documents issued to some customers by publishing last year’s quoted premium, before discounts were applied, rather than what the customer actually paid. Admiral agreed to contact customers who may have been given inaccurate renewal information. We have also undertaken a small piece of multi-firm work which set out our findings and expectations

RAC is the latest firm to agree to contact affected customers after we found that their breakdown policy renewal documentation failed to display the prior and current year premiums and shopping around message as key information.

It is unacceptable that  firms continue not complying sufficiently with the renewal rules, a year on after the rules came into force.  Fair treatment of existing customers is an ongoing priority of ours, as set out in our Business Plan 2018/19

We take continued non-compliance seriously. We expect firms and senior management to take immediate action to make sure they are compliant.


Hot topics

Business plan, Fees CP and Sector Views 

On Monday 9 April, we published our 2018/19 Business Plan. We also published our Sector Views, Fees Consultation and Evaluation Framework. 

Our Business Plan 2018/19 sets out our key priorities for the coming year. The priorities in this year’s Business Plan reflect the high level of resource we need to dedicate to EU Withdrawal, given its impact both on our regulation and the firms we regulate. 

Alongside this work, we will focus on 7 cross-sector priority areas, based on assessments of where there is the greatest harm or potential for harm, and where intervention can have the greatest impact. 

The priority areas are: 

  • Firms’ culture and governance which should drive behaviours and produce outcomes likely to benefit consumers and markets.
  • High-cost credit, building on the significant impact already made in the market.
  • Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
  • Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services.
  • Innovation, big data, technology and competition which are driving change in markets.
  • The treatment of existing customers to make sure that they don’t get less attention or receive poorer outcomes than new customers.
  • Long-term savings, pensions and intergenerational differences which reflect the changing UK population and their financial needs. 

Our Sector Views highlight the issues and developments we see within the sectors we regulate which help to inform our prioritisation decisions. 

We are consulting on fees for regulated firms for the 2018/19 financial year. This consultation will run until 1 June 2018. 

The final document we published is our Evaluation Framework Discussion Paper, setting out how we intend to assess the impact of our interventions, which we committed to doing in our Mission as part of the decision-making framework.

FCA publishes its Approach to Supervision and Approach to Enforcement 

We have published our Approach to Supervision and our Approach to Enforcement papers - the next in the series of documents we committed to publishing in our Mission. 

When we launched our Mission, we committed to being more open and transparent about how we regulate and why we make the decisions in the way that we do. We want to make sure that our regulation evolves with financial services rather than holding them back, and we’re keen to understand how and when regulation can provide unnecessary barriers to new firms entering the market. 

We want stakeholders’ views on a number of key issues including whether our guidance and approaches are clearly understood. Both the Approach to Supervision and Approach to Enforcement are open for consultation until 21 June 2018 and the final Approach documents will be published later in the year. 

Read more about our Approach to Supervision and Approach to Enforcement.

FCA warns public of increased threat of loan scams  

We are launching a campaign to raise awareness of loan fee scams - where victims are persuaded to pay an upfront fee for a loan they never receive. Scammers target the most financially vulnerable in society, people on lower incomes and with low credit ratings, who have limited access to mainstream credit. 

The campaign launches at the end of April and includes online advertising on social media, digital display and paid search. The advertising will also be supported by PR and partnerships with consumer groups and credit providers. 

Find out more about loan fee fraud here.

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Banks and Building Societies

Easy read guide on everyday banking

We published an easy read guide on everyday banking aimed at helping autistic consumers better understand financial services. We have developed this guide in partnership with The National Autistic Society (NAS). The guide was published during World Autism Awareness Week, in an effort to raise awareness of the issues some autistic people face when accessing financial services. The guide has been created by the winning team of our Chief Executive Challenge, our graduate corporate responsibility programme.

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Financial Advisers

The Basic Advice Regime after MiFID II and IDD

The impact of our implementation of the Re-Cast Markets in Financial Instruments Directive (MiFID II) and Insurance Distribution Directive (IDD) on the basic advice regime is explained in a new web update.  

This update includes important information for firms selling stakeholder products using basic advice. These firms should read this update to make sure they understand the impact of MiFID II and IDD, and comply with our standards. 

It also directs firms to previously published information on providing streamlined advice to consumers.  

New rules and consultation on advising on pensions transfers

We published new rules and guidance on pension transfer advice and are seeking views on additional changes, including adviser charging structures, in particular whether we should ban contingent fees for pension transfer advice. The new rules and areas for discussion aim to improve the quality of pension transfer advice to help consumers make informed decisions for their individual circumstances. We have kept the position that an adviser should start from the assumption that a DB pension transfer will be unsuitable.

Thematic review of non-advised drawdown

We published a thematic review on non-advised drawdown. It assesses whether firms are providing necessary information at the right time and in a way that helps customers make informed decisions when accessing retirement benefits – as well as when reviewing whether their drawdown pension still meets their needs. We found firms are broadly meeting their obligations to communicate clearly with customers but that there is a risk of harm from customers not fully engaging with the information. The findings are closely aligned to the interim findings of our Retirement Outcomes Review and will inform the final report.

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Mortgage Advisers and Lenders

​​​​FCA Live & Local regional programme continues

We are continuing our series of interactive Q&A roundtable discussions with FCA and industry experts. 

Upcoming sessions include:

  • 10 May in Newcastle with the Association of Mortgage Intermediaries
  • 6 June in Belfast with the Financial Ombudsman Service 

Dates, locations and registration details are on the Live & Local webpage

To be notified of future Live & Local regional events, sign up to email alerts using our Live & Local updates web form.

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General Insurance Intermediaries and Insurers

FCA Live & Local regional programme continues

Following the sessions in January, we have added another date in London on 10 July for the well-received interactive workshop on how firms can identify and prevent harm. Upcoming workshops in Bournemouth (26 April), Gloucestershire (23 May) and Norwich (21 June) are still accepting registrations.

Our next interactive Q&A roundtable discussion is taking place in Glasgow on 3 May where we will be joined by the Association of Professional Compliance Consultants (APCC) on the panel. 

We are also holding a presentation for retail insurers and intermediaries on 14 May at our London office. Topics include Culture and Governance; Resilience; and Treatment of Existing Customers. 

Dates, locations and registration details for these upcoming events are on the Live & Local webpage

To be notified of future Live & Local regional events, sign up to email alerts using our Live & Local updates web form.

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Life insurance & Pension Providers

There are no updates for this sector this month.

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Wealth Managers & Private Banks

FCA publishes final rules and further consultation on asset management

In April, we published final rules, focused on the duties of fund managers as the agents of investors in their funds. We also published a consultation on proposed rules and guidance, focused on improving the information which investors get about funds. These followed on from the final report of our asset management market study in June 2017. 

We published a consultation on proposed remedies for funds to provide better information about what they offer. This includes proposals on:

  • how fund objectives can be expressed more clearly and be more useful to investors
  • making it clearer when funds are benchmark-constrained, or limited in how far their holdings can differ from the weightings of a benchmark index
  • making sure that if a fund uses one or more benchmarks, this is disclosed consistently and explained to investors 

We also published an Occasional Paper which looked at how different ways of presenting information about charges affected investors’ decision-making and their understanding and awareness of charges.

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Investment Managers & Stockbrokers

FCA publishes final rules and further consultation on asset management

In April, we published final rules, focused on the duties of fund managers as the agents of investors in their funds. We also published a consultation on proposed rules and guidance, focused on improving the information which investors get about funds. These followed on from the final report of our asset management market study in June 2017. 

We published a consultation on proposed remedies for funds to provide better information about what they offer. This includes proposals on:

  • how fund objectives can be expressed more clearly and be more useful to investors
  • making it clearer when funds are benchmark-constrained, or limited in how far their holdings can differ from the weightings of a benchmark index
  • making sure that if a fund uses one or more benchmarks, this is disclosed consistently and explained to investors 

We also published an Occasional Paper which looked at how different ways of presenting information about charges affected investors’ decision-making and their understanding and awareness of charges.

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Consumer Credit

Four years of FCA regulation

We marked 4 years of FCA regulation of consumer credit at the end of March.  We published a video drawing together some of the key changes that we’ve made in this time, and the work we have still to do, with stories from consumers and Andrew Bailey talking about our commitment to a credit market that meets the needs of society.

FCA publishes rules and guidance on staff incentives and performance management

We have published rules requiring consumer credit firms to identify and monitor risks arising from their pay and performance management practices. We have also published final guidance which will support consumer credit firms’ compliance with the new rules. 

The guidance gives examples of good and poor practice found during our thematic review and outlines high risk elements of incentive schemes. We believe the guidance will be of interest to any firm with sales and collections teams. 

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Credit Unions

There are no updates for this sector this month.

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Fintech & Innovative Businesses

Speech: Regulating innovation: a global enterprise

Christopher Woolard, Executive Director of Strategy and Competition, delivered a speech at Innovate Finance Global Summit on regulating innovation. He noted that we’re increasingly hearing a demand from firms to operate internationally, so we’re working with partners from around the world to consider options for a global sandbox.

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EU Withdrawal

FCA preparation for EU withdrawal

The UK’s decision to leave the EU has, and will continue to have, a substantial impact on the way we work. This year we are increasing the level of resource dedicated to managing our work on EU withdrawal. We will continue to provide technical advice to the Government and to engage with international bodies, as well as working with regulated firms.  This is laid out in our Business Plan 2018/19.

Implementation period for withdrawal

We welcomed the agreement on the terms of a implementation period to operate from 29 March 2019 until the end of 2020, during which time firms and funds would continue to benefit from passporting. The implementation period forms part of the withdrawal agreement, which is subject to further negotiations between the UK and EU before it is finalised.

Passporting into the UK

Firms and funds currently benefiting from an EU passport need not apply for authorisation at this stage. This is in light of the agreement on the terms of an implementation period and HM Government’s commitment to providing for a Temporary Permission Regime as a backstop.

However, firms should complete our survey for EEA inbound passported firms by 11 May.

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News and Publications

Asset Management Conference

On Tuesday, 12 June 2018 we will host our Asset Management Conference , where our CEO Andrew Bailey will outline our priorities for the sector and business leaders and other stakeholders will discuss key trends, challenges and developments facing the industry. 

Asset managers have a crucial role to play in providing for the future financial well-being of millions of savers. Our vision is for a dynamic, competitive and innovative sector where firms compete on the value they deliver for investors 

Please visit the event website for more information and to register your place

The fee to attend is £435+VAT (£522).

Speech: Transforming culture in financial services

Andrew Bailey delivered a speech on transforming culture in financial services.

Speech: Regulating innovation: a global enterprise

Christopher Woolard, Executive Director of Strategy and Competition, delivered a speech at Innovate Finance Global Summit on regulating innovation. He noted that we’re increasingly hearing a demand from firms to operate internationally, so we’re working with partners from around the world to consider options for a global sandbox.

European Securities and Markets Authority guidelines on MiFID II product governance requirements

We have confirmed that we are compliant with the European Securities and Markets Authority (ESMA)’s guidelines on MiFID II product governance requirements.

We implemented the MiFID II product governance requirements in the PROD section of our Handbook as rules for MiFID firms and as guidance for non-MiFID firms. The requirements apply to manufacturers and distributors of MiFID financial instruments and structured deposits.

PROD and ESMA’s guidelines took effect from 3 January 2018. Firms in scope should have considered what steps they need to take to be compliant. ESMA’s guidelines can be viewed here.

FCA Financial Crime Guide: insider dealing and market manipulation

FCA Financial Crime Guide: insider dealing and market manipulation. 

We are consulting on changes to the Financial Crime Guide for firms (the Guide). We propose to add a chapter on insider dealing and market manipulation and make changes as a result of recent regulatory changes to make sure the guide remains up to date. The Guide, as currently drafted is available on the FCA website

Financial crime covers a broad range of criminal offences, including insider dealing and market manipulation. The Guide doesn’t currently provide guidance for countering the risk of insider dealing or market manipulation. We want to help firms by adding a new chapter to address these offences. 

We want feedback on our proposals. Details of our Guidance Consultation (including the new draft chapter), and how to respond can be found here.

Changing your firm’s details: Standing Data is now Firm Details

To make it clear for firms updating their firm’s information and contact details, we have changed the term ‘Standing Data to ‘Firm Details’. 

To change your firm’s details, access Connect and select the ‘Firm Details Application Form’. 

The term ‘Standing Data’ changed to ‘Firm details’, on 26 March 2018. 

All submitted and historic Standing Data applications have changed to Firm Details on Connect. All Handbook and web pages have also been changed. 

We encourage you to log onto Connect and check your Firm details to make sure everything is correct and up to date. 

Any questions, please call the Contact Centre on 0300 500 0597 - open Monday to Friday, 9am to 5pm, and Thursday 9:45am to 5pm

Video of our London pensions strategy seminar

We have completed our series of pension strategy seminar events in London, Edinburgh and Manchester. These were an opportunity for firms and consumer groups to feed into the joint pensions strategy we are developing with The Pensions Regulator. If you weren’t able to make the sessions, you can now see the highlights of our London session online. This includes the key notes from David Geale, Director of Policy at the FCA, and Lesley Titcomb, Chief Executive of The Pensions Regulator, as well as an introduction to our work on remits and areas of focus. We welcome written responses to the call for input until 19 June.

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