Regulation round-up November 2018

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

November 2018 Quick Links


Introduction: Christopher Woolard, Executive Director of Strategy and Competition

Our supervisory work on general insurance (GI) pricing practices has found that people who stay with their insurance provider for a long time often pay significantly more than new customers. This is even though the costs and risks of providing both groups with insurance may be the same. We are concerned about the potential harm this can cause to long-standing customers, particularly those who are vulnerable.

Following our supervisory work, we have decided that a package of measures is necessary. This includes a market study on GI pricing practices and evaluating the impact of the renewals rules that we introduced in 2017. We are also engaging with firms about governance, control and oversight of pricing practices and have sent a letter to CEOs setting out our expectations. Our goal is to ensure that GI markets deliver competitive and fair prices for consumers.

We are aware that industry is taking steps to address concerns about pricing practices. For example, in May 2018, the ABI and BIBA published Guiding Principles and Action Points for GI Pricing. We expect industry to continue the work underway while we conduct our programme of work.

We welcome any views on the questions posed in our market study terms of reference by 3 December 2018. We have also published a wider discussion paper on fairness of pricing in financial services and welcome any views by 31 January 2019.

You can find more information about this work on the FCA website, including a webinar to help firms navigate their way through a market study.


Hot topics

Cryptoassets Taskforce report

This month, as part of a Treasury led Cryptoasset Taskforce, we published a report on the UK’s policy and regulatory approach to cryptoassets. Cryptoassets have the potential to bring benefits to markets, firms and consumers. However, there remains considerable risks with cryptoassets that the taskforce will take action to mitigate.

These actions include:

  • publishing perimeter guidance by the end of 2018
  • considering whether the regulator perimeter for cryptoassets needs extending
  • consulting on the potential prohibition of the sale to retail consumers of derivatives (including contracts for differences, options, and futures) referencing certain types of cryptoassets

The full report can be found here.

Fairer treatment of regular premium PPI complaints and proposals for new mailing requirements

We issued final guidance that clarifies our expectations about the handling of certain regular premium payment protection insurance (PPI) complaints.

We are also proposing new rules requiring firms to write to around 150,000 consumers who had previously complained unsuccessfully to tell them they can make a new complaint and remind them of the deadline.

In March 2017, we made rules and guidance in relation to the Supreme Court judgment in Plevin. That judgment says that a lender’s failure to disclose at point of sale that a large commission was payable out of the PPI premium can make the lender’s relationship with the consumer unfair under the Consumer Credit Act.  

Our final guidance deals with an uncertainty that emerged since its Plevin framework was put in place. The guidance clarifies that firms should assess commission disclosures not only at the point of sale but on an ongoing basis, and that this should be assessed under our general complaint handling rule.

We are also consulting for 1 month on related new rules that would require firms to write to around 150,000 specific PPI complainants whom they previously rejected, to tell them that they can make a new complaint about non-disclosure of commission, and remind them of our 29 August 2019 deadline for complaining.

The consultation on mailing requirements closes on 7 December 2018, and we will consider the feedback received.

If we decide to proceed, we will aim to issue a policy statement with finalised rules in late January 2019, with the mailings to be completed by 29 April 2019. 

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Banks and Building Societies

Retail and Wholesale Banking: review of firms’ whistleblowing arrangements

We have reviewed how firms have implemented our whistleblowing rules and have published our findings. This includes the areas of good practice we observed and areas for improvement, which should help other firms better understand our expectations on whistleblowing. We encourage you to review our findings and consider the steps needed to improve your whistleblowing arrangements.

As reflected in our Business Plan, firms’ culture and governance remains a key priority for the FCA. Recent regulatory actions show the seriousness with which we and the PRA consider whistleblowing failings.

The senior management and Board of firms are responsible for clearly communicating and fostering a culture that welcomes discussion and challenge, so that wrongdoing is identified early and addressed promptly.

Our review found:

  • The new rules are helping to ensure that firms have implemented whistleblowing arrangements, and manage whistleblowing cases and concerns raised by their employees fairly, consistently and in a way which protects the individual whistleblower.
  • Non-executive directors appointed as whistleblowers’ champions are providing independent oversight and accountability and helping to raise the profile of whistleblowing.
  • There are examples of good practice, such as detailed step by step investigation processes and monitoring arrangements for potential victimisation cases. However, there are areas for improvement, most notably in the provision of whistleblowing training and the annual report to the firm’s governing body.
  • We also found that firms needed to better document their whistleblowing investigation process and how to protect whistleblowers against victimisation in practice.

AML & Financial Crime TechSprint

In Q1 2019, we will be holding a follow-up to our AML & Financial Crime TechSprint in Abu Dhabi to explore the potential for new technologies to enhance information sharing across jurisdictions.

The 2-week TechSprint will be held in conjunction with colleague regulators Abu Dhabi Global Markets (ADGM), Australian Transaction Reports & Analytics Centre (AUSTRAC) and Monetary Authority Singapore (MAS), and in consultation with Europol. We are in the design phase for this event and are keen to work with relevant parties to better understand the specific opportunities that emerging technologies can offer.

We will hold a showcase day on 10 December for interested organisations to demonstrate their technology and discuss how this could contribute to the 2019 TechSprint. To attend, please email [email protected].

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Financial Advisers

Live & Local 2018/19 events

We are continuing the 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 open for workshops taking place across the UK to March 2019. For further details, visit our Live & Local webpage. Additional sessions will be announced in the coming months. Sign up to our Live & Local email updates to be alerted.

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Mortgage Advisers and Lenders

Live & Local 2018/19 events for regulated firms

We are continuing our monthly ‘Ask the regulator’ Q&A roundtable discussions for mortgage advisers and lenders to pose questions and provide feedback directly to a panel of senior FCA representatives and industry experts.

Registration details for events taking place across the UK to March 2019 can be found on our Live & Local webpage. Additional dates and locations in 2019 will be announced in the coming months. Sign up to our Live & Local email updates to be alerted.

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General Insurance Intermediaries and Insurers

Live & Local 2018/19 events for regulated firms

We are continuing our UK-wide programme of events for general insurance firms:

  • 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.

Registration is open for these events taking place across the UK to March 2019. Visit our Live & Local webpage for more information. Additional dates and locations in 2019 will be announced in the coming months. Sign up to our Live & Local email updates to be alerted.

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Life insurance & Pension Providers

Modification by consent to support simpler annual pension statements

During 2018, an industry working group has worked on a simpler annual statement. This is intended to enable defined contribution schemes to produce simpler, easier to compare pension statements. We support efforts to provide information which is easier for consumers to understand and engage with. It has been proposed that the simpler annual statement should include an additional projection not required by legislation, illustrating the potential effect on benefits of increasing contributions to the pension scheme. We have issued a modification by consent which is intended to enable the provision of this additional projection within the statement without it being subject to our projection rules (which require 3 separate projections).

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Wealth Managers & Private Banks

AML & Financial Crime TechSprint

In Q1 2019, we will be holding a follow-up to our AML & Financial Crime TechSprint in Abu Dhabi to explore the potential for new technologies to enhance information sharing across jurisdictions.

The 2-week TechSprint will be held in conjunction with colleague regulators Abu Dhabi Global Markets (ADGM), Australian Transaction Reports & Analytics Centre (AUSTRAC) and Monetary Authority Singapore (MAS), and in consultation with Europol. We are in the design phase for this event and are keen to work with relevant parties to better understand the specific opportunities that emerging technologies can offer.

We will hold a showcase day on 10 December for interested organisations to demonstrate their technology and discuss how this could contribute to the 2019 TechSprint. To attend, please email [email protected].

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Investment Managers & Stockbrokers

There is nothing to report from this area.​​​​​​

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Consumer Credit

Motor Finance Firms – CONC 3 rules

Our Financial Promotions team has intelligence that some motor finance firms are not complying with our rules in CONC 3. This is particularly in relation to posts on social media platforms such as Facebook, Twitter and Instagram. The main issues we have seen include:

  • not displaying a representative example when triggered
  • not making the representative APR prominent
  • not mentioning the legal name of the firm
  • not displaying or a lack of prominence of the credit broker statement
  • displaying monthly costs for a vehicle without indicating whether this is based on a credit or hire agreement

We remind firms of their obligations under CONC 3. We encourage firms to specifically revisit CONC 3.3.1R, CONC 3.5.3R, CONC 3.5.5R, CONC 3.5.7R, CONC 3.7.5R and CONC 3.7.7R, and the guidance related to those rules.

Our social media guidance can be found on our website.

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Credit Unions

There is nothing to report from this area.

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Fintech & Innovative Businesses

Digital regulatory reporting

In Q1 2019, we will be holding a follow-up to our AML & Financial Crime TechSprint in Abu Dhabi to explore the potential for new technologies to enhance information sharing across jurisdictions.

The 2-week TechSprint will be held in conjunction with colleague regulators Abu Dhabi Global Markets (ADGM), Australian Transaction Reports & Analytics Centre (AUSTRAC) and Monetary Authority Singapore (MAS), and in consultation with Europol. We are in the design phase for this event and are keen to work with relevant parties to better understand the specific opportunities that emerging technologies can offer.

We will hold a showcase day on 10 December for interested organisations to demonstrate their technology and discuss how this could contribute to the 2019 TechSprint. To attend, please email [email protected].

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Payment Service Providers

AML & Financial Crime TechSprint

In Q1 2019, we will be holding a follow-up to our AML & Financial Crime TechSprint in Abu Dhabi to explore the potential for new technologies to enhance information sharing across jurisdictions.

The 2-week TechSprint will be held in conjunction with colleague regulators Abu Dhabi Global Markets (ADGM), Australian Transaction Reports & Analytics Centre (AUSTRAC) and Monetary Authority Singapore (MAS), and in consultation with Europol. We are in the design phase for this event and are keen to work with relevant parties to better understand the specific opportunities that emerging technologies can offer.

We will hold a showcase day on 10 December for interested organisations to demonstrate their technology and discuss how this could contribute to the 2019 TechSprint. To attend, please email [email protected].

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Brexit

Consumer update published

We have published general information for consumers about how they may be affected by Brexit.

This update gives general information about how consumers may be affected by the UK’s withdrawal from the EU, and signposts further details. It outlines potential scenarios that may occur depending on whether an implementation period is agreed or not, as well as scam awareness information.

The content is still evolving, and we will update the page as and when we can when the situation changes.

For more information visit the Brexit pages on our website.

Consultation feedback

We welcome your feedback on the 2 consultation papers we published last month. We’re consulting on changes to our Handbook and binding technical standards, and on our proposed Temporary Permissions Regime. We’re particularly interested to hear any significant implementation challenges that you would face because of our proposals. Your feedback will allow us to start working to address these changes now.

We do not expect you to make any changes now.

Both consultations close on 7 December, so you have just over a month to respond.

Preparing for the Temporary Permissions Regime (TPR)

The Temporary Permissions Regime will allow EEA firms and investment funds to continue regulated business in the UK, if the UK leaves the EU in March 2019 without an implementation period in place. To prepare to enter the regime, firms and fund managers are reminded to take these steps now:

Read more about how we are preparing for Brexit.

Draft forms available for trade repositories

When the UK leaves the EU, the FCA will become the regulator of trade repositories. We have now published draft forms for applying to register as a trade repository. Firms intending to apply for full registration and to be included in the temporary registration regime should complete these forms.

Our latest speeches on Brexit

We have given several Brexit-related speeches recently.

On 5 November, Nausicaa Delfas, our Director of International, gave a speech on maintaining market confidence: an update on Brexit at the City and Financial: 3rd UK Financial Services Brexit Summit. Nausicaa provided an update on what we’re doing to prepare for Brexit, our approach to regulation after the UK leaves the EU and what this means for financial services.

On 25 October, Andrew Bailey, our Chief Executive, gave a speech on Brexit and financial services at the City Banquet, Mansion House. In his talk, Andrew highlighted that the FCA is on course to be ready for a hard exit from the EU and has the resources to handle it.

On 2 October, Sarah Rapson, our Director of Authorisations, gave an update on our approach to authorisation and our Brexit preparations, at the APCC Annual Conference. This covered our preparations for all Brexit scenarios, including ‘no deal’, and the temporary permission regime.

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News and Publications

Senior Managers and Certification Regime (SM&CR) – act now!

We’re extending the SM&CR to insurance firms on 10 December 2018. You must submit your documents by midnight on 2 December 2018 - less than a month away. You can check which documents your firm needs to submit by reading our Guide to the SM&CR for Insurers or by checking our website. You will need to log into Connect to submit your documents.

By 10 December you also need to have:

  • identified your Certification Staff
  • trained your Certification Staff and Senior Managers in the relevant Conduct Rules

For further information, check our website.

Live webinar panel discussion: Creating a Speak Up, Listen Up Culture in Financial Services

Please join us as we host our live webinar at 11am on Friday 23 November exploring the theme of psychological safety and creating a speak up and listen up culture.

For this event, we have teamed up with various experts in the field of workplace culture to share views on this topic and hear from you. The webinar will be hosted by Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations, and will include a live panel discussion followed by a Q&A session.

You can register for the event and submit your questions.

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Regulation round-up feedback

As the year comes to an end we would like to know what you like about Regulation round-up and any improvements you’d like to see. You can submit your feedback via [email protected].