Regulation round-up July 2013

Information for all firms

100 days of the Financial Conduct Authority (FCA)

On 9th July, the FCA had been in operation for 100 days.  In his ABI speech, Martin Wheatley said that we are taking steps in the right direction and sited our recent pre-emptive work on interest only mortgages.

Review of automatic renewal of fixed term bonds

We have completed one aspect of our work on automatic renewal, which looked into firms’ contract terms and practices regarding automatic renewal of fixed term bonds. Our short paper highlights the concerns we identified. 

Firms involved in the review have taken positive steps and changed their contract terms and/or practices. We are undertaking further work, focussing on home and motor insurance policies, and expect to publish our full findings on automatic renewal in 2014.

Regulatory references

Before submitting an application for approval, authorised firms should conduct appropriate due diligence on candidates, including acquiring references from the candidate’s previous employer(s). Of particular relevance are references from other authorised firms known as ‘regulatory references’.

Authorised firms have a responsibility to provide regulatory references for former employees.  Further details on the type of information that should be provided.

Submission of a reference which does not satisfy our rules may mean we request the firm to liaise with the candidate’s previous employer, to request a compliant reference. This may lead to delays in the outcome of the application.

Trade finance thematic review

We have published our report which looked at how banks control money laundering, terrorist financing and sanctions risks in trade finance business. We found that they had generally developed effective controls to ensure they were not dealing with sanctioned individuals and entities, but most had failed to adequately consider money laundering and terrorist financing risk in trade finance.

Financial crime newsletter coming soon

Later this month, we will publish our first financial crime newsletter.  

Follow us on Twitter

We are increasingly using our Twitter account to promote our latest communications to firms as well as consumers. It will help you keep up to date on the latest news from us.

Follow us at @theFCA  

UK Strategy for Financial Capability

On 16th May the Money Advice Service (MAS) launched a call for evidence for the UK Strategy for Financial Capability. Following this, MAS will start analysing the information and identifying key strategic themes and discussing these with a wide range of stakeholders who will be instrumental in successfully delivering the strategy. The draft strategy will be published for consultation in December 2013 with the final strategy being published in Spring 2014.

You can read their brief consultation paper and submit your responses through their survey by Wednesday 26 July.

Reporting a misleading promotion

We continually monitor financial promotions for compliance but we also like to utilise the knowledge within firms to bring misleading adverts to our attention. If you see an advert (of any media) that you feel is unfair, unclear or misleading, please complete a reporting form and we can investigate further.

Where possible we request copies of the promotions you believe to be non-compliant. Details of how to send these are available once the form has been submitted.

Cancelling Continuous Payment Authorities (CPAs)

We have reminded the industry of their obligation when cancelling CPAs and the associated redress.

Following our review, the largest high street banks and mutuals have changed their processes to ensure that when a customer asks for a CPA to end, that will be sufficient to cancel the arrangement. The banks have committed to review past complaints on this issue back to 2009 (when the FSA took on regulation of banking conduct) and pay redress where appropriate.

Financial Advisers

Retail Distribution Review (RDR) – Professional Standards Data

In June we sent a reminder asking firms to let us know of any changes to their professional standards data. Firms are reminded that their first professional standards data submission is mandatory.  After the first submission, we require firms to submit their returns within 20 business days of the end of each subsequent quarter, unless there have been no changes to the information previously submitted. 

Further information on how to submit professional standards data.

Insurers/Insurance intermediaries

What does the future of insurance broking look like? Speech by Simon Green

Simon Green, Head of General Insurance and Protection, delivered a speech on issues relating specifically to the future of insurance broking which included:

  • restoring trust and confidence in the insurance sector
  • re-evaluating how you do business in the context of the new regulatory landscape and an ever-challenging operating environment, and
  • resolving to work with you to deliver a market that works well in the interests of customers.

He also announced our thematic review into how UK insurance brokers manage conflicts of interest.

Martin Wheatley speaks at the ABI Biennial Conference

Martin Wheatley, Chief Executive, explained how the FCA is a very different animal to the Financial Services Authority. He also provided an update on our first market study underway looking at general insurance add-ons. It will look at GAP insurance, home emergency, gadget, travel and personal accident and accident cash plans as representative of the market. We have called for evidence and approached a number of firms in the market for information.

Investment Managers and Stockbrokers (Retail and Wholesale)

Statement on CRDIV

On 27 June CRDIV was published in the Official Journal of the European Union. The bulk of the legislation will apply from 1 January 2014.

We will consult later this summer on:

  • the changes to our rules to remove the current provision to implement the Directive; and
  • relevant discretions provided in the Regulation and specific issues related to the procedure for transitioning.

Full statement

Review of the client assets regime for investment business

In June we published our consultation paper (CP13/5) proposing changes to the rules relating to client money, custody assets and mandates, and consulting on two alternative proposals for the distribution of client money in insolvency.

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07/02/2022: Link changed Fixed broken link.