Regulation round-up August 2018

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

August 2018 Quick Links


Introduction: Mark Steward, Executive Director of Enforcement and Market Oversight

We have launched a new Scamsmart campaign with The Pensions Regulator (TPR) to raise awareness of pension scams and urging the public to be cautious when approached about their pension. Pension savers can be targeted by highly sophisticated scammers who steal on average, £91,000 per scam. Victims can lose their life savings and be left with limited income when nearing retirement.  

The group most at risk is pension holders aged 45-65. New research shows that a third do not know how to check whether they are speaking with a legitimate pensions provider or adviser. Research has also revealed that 1 in 8 pension holders aged 45-65 are likely to trust an offer of a ‘free pension review’ – a tactic frequently used by scammers to lure pension savers into a scam.  

The FCA reviews and assesses all reports received about unauthorised pension activities which are very often linked to these types of pension scams. This year the Unauthorised Business Department commenced proceedings against 2 unregulated pension introducers involved in the transfer of at least £86 million in pension assets from over 2000 consumers. The FCA is seeking injunctions, declarations and restitution orders to prevent further breaches in schemes which were unlawfully promoted to the public using false, misleading and deceptive statements.  

The new campaign urges consumers to be ScamSmart and to check they are dealing with an authorised firm if they are considering changing their pension arrangements. 

The campaign launched on 14 August 2018 with TV, radio and online advertising. The advertising will be supported by PR, and partnership activity with a wide range of organisations. If you would like to support the campaign, you can download resources on the ScamSmart site.

Find out more about the campaign here.


Hot topics

Accessible communications for consumers

Our recently published Approach to Consumers sets out our vision for well-functioning markets. Key to this is that the needs of all consumers, including vulnerable consumers are considered. Our Approach to Consumers sets out the key drivers of potential vulnerability – health, life events, financial resilience and capability. 

One way firms can help potentially vulnerable consumers is to ensure that their services are accessible and easy to use. For example, the Royal National Institute of Blind People (RNIB) explain that every day 250 people start to lose their sight. As financial services are increasingly online, it is important to make sure people with visual impairments are not disadvantaged.

As a regulator it is important that we make our work and campaigns accessible for vulnerable consumers. That is why, for example, as part of our PPI campaign we have produced leaflets in a range of formats, including braille, large font and audio, as well as animation videos with information available in different languages, including British Sign Language. We worked directly with the RNIB and Visionary to share our message and carry out user testing with a range of users, including visually impaired consumers, to make our website easier to access and compatible with screen readers.

Accessibility benefits everyone, not just the vulnerable. We expect firms to ensure their communications are accessible to consumers by providing choice in how they communicate and ensuring that communications are designed in an inclusive way.

To make our expectations clear and ensure good outcomes for consumers, we will be consulting on guidance for firms on the identification and treatment of vulnerable consumers. As part of this, we are hosting an event to explore how to make financial services work well for consumers in vulnerable circumstances on 18 September 2018. For further information, please email [email protected] 

Preparing your firm for Brexit

 

As the UK prepares to leave the EU, FCA solo regulated firms should consider if or how they will be affected and what action they may need to take. Firms need to make sure they understand the implications of Brexit and plan accordingly.

Passporting currently allows firms authorised in an EEA state to conduct business within other EEA states based on their ‘home’ member state authorisation. After Brexit, and any implementation period, passporting in its current form will end for the financial firms currently using it in the UK. This may change depending on any future agreement with the EU.

This will affect:

  • firms and funds based in the UK that conduct business in the EEA
  • firms and funds based in the EEA that carry out certain types of business in the UK

There are questions on our website that may help you decide if you conduct business in the EEA or if Brexit might affect your business. If you think that you are affected by Brexit you should:

  • Work out what changes you might have to make to your business or which additional regulatory permissions you may need to continue to carry it out.
  • Think about any information you will need to give to customers who might be affected by your plans and how you can provide it in a way which is clear, fair and not misleading. For example, explaining clearly to customers where a change in contractual terms might affect them.
  • Consider the implications of a range of possible scenarios including an implementation period.

You may also want to discuss the implications with the relevant EEA regulator in the countries in which you do business, your trade association or get independent legal advice for further clarification.

Track your Connect application – live soon 

As you may be aware from our Approach to Authorisation, we want to ensure that our regulation evolves with financial services and that we continue to develop our systems and processes to meet the requirements of the firms we regulate.  

Your feedback helps shape this, and helps us understand what is important to you.  

In September, we are launching new functionality in the Connect system. It will give greater visibility of your application, and allow you to track its progress. When you log in, you’ll be able to see helpful information depending on the type of application you have submitted.  

We are also launching a new look and feel to Connect which will make the system more intuitive to use. This will be a beta version which will allow you to switch back to the current view if you prefer.

We will be providing more information about this exciting, new change in the upcoming weeks.

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Banks and Building Societies

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

Service metrics

Following action by the FCA and the Competition and Markets Authority, consumers and small businesses will have better information about the services offered by current account providers. From 15 August, the FCA is requiring these firms to provide standard information on:

  • how often they have had to report major operational and security incidents
  • levels of complaints against them
  • how and when their services are available
  • how customers can contact them for help

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Financial Advisers

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Mortgage Advisers and Lenders

Digital Regulatory Reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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General Insurance Intermediaries and Insurers

An evaluation of our add-on guaranteed asset protection insurance intervention

We have published the first of a new series of evaluations of our past interventions. We committed to these in our Mission. We have evaluated our September 2015 add-on Guaranteed Asset Protection (GAP) insurance intervention. This intervention looked to reduce consumer harm that we identified in our General insurance add-ons market study.

Our evaluation found that the intervention has had a positive impact. After our intervention, consumers engage more with the decision-making process when buying GAP Insurance, with shopping around more than doubling. 

You can read the report on our website.

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Life insurance & Pension Providers

Regulatory reporting – retirement income data

We made handbook rules in July 2017 (PS17/16) requiring 2 new regulatory returns to be completed by all pension and annuities providers:

  1. REP015 (retirement income flow data): first submission within 45 business days of 30 September 2018, covering 1 April 2018 to 30 September 2018. Then 6 monthly.
  2. REP016 (retirement income stock data and withdrawals flow data): first submission within 45 business days of 31 March 2019, covering 1 April 2018 to 31 March 2019. Then annually.

The returns will be scheduled in Gabriel. If they are not in your schedule but you are expecting them, please contact us.

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Wealth Managers & Private Banks

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Investment Managers & Stockbrokers

Call for Input: PRIIPs Regulation – initial experiences with the new requirements

Last month we published our Packaged Retail and Insurance-based Investment Products (PRIIPs) Call for Input. We are inviting firms and consumers to provide input on their initial experiences of the requirements introduced by the Regulation. 

The PRIIPs Regulation requires certain firms to prepare and provide investors with standardised key information documents (KIDs). It aims to improve consumer understanding and outcomes by standardising the disclosures retail investors receive, giving them the ability to compare competing products.  

We would like to hear from those who are producing, advising on, or distributing PRIIPs (and preparing and providing KIDs), and from consumers now using KIDs to decide whether to invest in these investment products.  

This Call for Input covers questions around the scope of the PRIIPs Regulation, and around the content of KIDs. We invite firms and consumers to tell us about their experiences of the required disclosures. We also invite input on any other practical experiences with the PRIIPs Regulation.

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Consumer Credit

There are no specific updates this month for this sector.

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Credit Unions

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Fintech & Innovative Businesses

Global Financial Innovation Network

In collaboration with 11 financial regulators and related organisations, we have announced the creation of the Global Financial Innovation Network (GFIN). This builds on the FCA’s proposal earlier this year to create a ‘global sandbox’.

The network will seek to provide a more efficient way for innovative firms to interact with regulators, helping them navigate between countries as they look to scale new ideas. It will also create a new framework for co-operation between financial services regulators on innovation related topics, sharing different experiences and approaches.

The group has launched a consultation on the role the GFIN should play in delivering its objectives and we are inviting feedback by 14 October 2018.

We are keen to hear from all interested parties on the mission statement, how this network will work in practice, what it should prioritise and how regulators and other stakeholders can work together to take it forward.

We encourage innovative financial services firms, financial services regulators, technology companies, technology providers, trade bodies, accelerators, academia, consumer groups and other stakeholders keen on being part of the development of the GFIN to respond to the questions in the Global Financial Innovation Network paper.

Digital regulatory reporting

We are continuing our work with the Bank of England (BoE) on a 6 month pilot to build upon the Proof of Concept developed at our November TechSprint on digital regulatory reporting. The pilots are evaluating the feasibility of scaling the work from the TechSprint considering 2 use cases. One is focusing on retail reporting and the other on wholesale reporting.  

We will be holding 2 open demonstration and Q&A sessions to give attendees an opportunity to understand the technological, governance and legal decisions made throughout and allow an opportunity to critique and review the work. The open days will be held on 22 August and 28 September. Please email [email protected] if you would like to attend either session.

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Payment Service Providers

FCA consults on rules and guidance to improve conduct and communications in payment services and e-money firms

This month we are consulting on rules and guidance to improve conduct standards and communications in the payment services and e-money sectors.  

Consultation paper 18/21 proposes to extend the application of the FCA Principles for Businesses and certain specific rules about promotions and communications to cover wider categories of businesses that we regulate (including businesses authorised or registered under the Payment Services Regulations or the Electronic Money Regulations). 

We are also proposing new guidance to help ensure that firms do not mislead consumers when they are advertising payment services or e-money that involve a currency conversion. This delivers on a commitment we made last year, to act on concerns about firms’ use of currency converter tools in relation to their currency transfer services.  

We are seeking comments on the proposals by 1 November 2018.

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EU Withdrawal

FCA’s role in preparing for EU withdrawal

Earlier in the summer we published an update on how we are preparing for the UK leaving the European Union. This includes setting out how we will amend EU binding technical standards (detailed EU rules) and our Handbook to ensure they can function effectively when the UK leaves the EU.

Temporary permissions regime

The Treasury published the statutory instrument on TPR on 24 July. We have provided more details on the TPR on our website for firms and funds currently passporting into the UK.

Statutory instruments

The Treasury set out its approach to amending financial services legislation under the EU (Withdrawal) Act on 27 June. It will use statutory instruments (SIs) to do this, and laid the first of these in July. The Treasury has since published further SIs, with more expected shortly. Firms do not need to prepare to implement this legislation now. Please see the Treasury website for more information.

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News and Publications

Live & Local 2018/19 events programme announced

Continuing our successful Live & Local events programme that began in April 2016, we have launched our 2018/19 programme. From September 2018, we will be travelling across the UK with a new series of events for regulated firms. 

The first set of events will take place from September to December 2018. This year, we have added events for non-bank payment services firms as well as events for general insurance and mortgage firms. 

Visit our Live & Local webpages for dates, locations and registration links.

Complaints handling case study and multi-firm review

We have published a hypothetical case study on complaints handling including root cause analysis. This is a tool to help respondent firms when reviewing and amending their complaint handling policies and procedures, particularly with understanding what good root cause analysis can look like. 

The hypothetical case study follows multi-firm work into complaints handling where we found that some firms did not conduct adequate complaints root cause analysis.

Annual public meeting 2018, Tuesday 11 September 2018, London

At the annual public meeting, we will discuss our 2017/18 Annual Report.

For further information and to book a place please visit our events booking website.

Senior Managers and Certification Regime – events for insurers

We are holding events on the Senior Managers and Certification Regime to help dual-regulated insurers prepare for commencement.

On 4 July, we published rules for how we will extend the Senior Managers and Certification Regime. The regime will begin for insurers on 10 December 2018.

For further information about the events and the new regime, please visit our events booking website.

Discussion Paper on duty of care

Alongside the Approach to Consumers, in July we published a Discussion Paper on a duty of care and the potential alternative approaches. Feedback to our Future Approach to Consumers consultation paper showed differing views and concerns, so it is important that we have an open discussion and debate about the potential merits of a duty of care.

In this Discussion Paper, we consider and seek views on alternative approaches that might address stakeholders’ concerns. To encourage views on this topic, we are hosting an event for firms on 26 September 2018 to discuss the questions in the paper.

For further information on the event, please email [email protected]. This Discussion Paper is open for consultation until 2 November 2018. You can also submit your views by email at the address above. 

New Securitisation Legislation for 1 January 2019

The Securitisation Regulation and related amendment to the Capital Requirements Regulation (CRR) came into force on 18 January 2018. Most of their provisions will come into effect on 1 January 2019. 

We are consulting on a number of changes to ensure that our Handbook is consistent with the directly applicable EU Securitisation Regulation and CRR amendment. For more information, please read CP18/22.

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