Regulation round-up October 2017

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

October 2017 Quick Links


Introduction: David Geale, Director of Policy 

Welcome to the October edition of Regulation round-up. I’d like to take this opportunity to highlight our work to implement the Insurance Distribution Directive (IDD) in the UK.

The IDD was finalised at European level in February 2016 and needs to be implemented in the UK by 23 February 2018, replacing the Insurance Mediation Directive (IMD). It aims to enhance consumer protection when buying insurance - including general insurance, life insurance and insurance-based investment products (IBIPs) – as well as to support competition between insurance distributors by creating a level playing field. Last month we published our third and final dedicated IDD consultation paper, as well as the first of three Policy Statements.

 The IDD is wide-ranging in its scope. The key areas it covers include:

  • professional and organisational requirements which apply to all insurance distributors, as well as prudential requirements which apply only to insurance and reinsurance intermediaries
  • conduct of business, and product oversight and governance requirements for all insurance business
  • additional conduct of business requirements for IBIPs business.

If your business involves insurance distribution it will be affected by the changes brought in by the IDD. You need to ensure you are compliant with the new rules when they come into force on 23 February 2018. This includes the directly-applicable delegated regulations (one covering product oversight and governance, and the other covering conduct of business rules for IBIPs) recently adopted by the European Commission. Your preparations should be well underway by now, with only four months to go.

We encourage you to let us know what you think by responding to CP17/33 by 25 November 2017. Look out for our remaining Policy Statements, planned for December 2017 and January 2018, as you finalise your implementation plans.


Hot topics

Consultation on the Extension of the SM&CR closes soon

We are currently consulting on the extension of the Senior Managers and Certification Regime (SM&CR) to all FSMA authorised firms. This consultation will close on 3 November 2017.

We believe that holding individuals to account is a key component of effective regulation. The SM&CR currently applies to deposit takers and, following the Bank of England and Financial Services Act 2016, is now being extended to insurers and solo-regulated firms.

It replaces the current Approved Persons Regime, changing how individuals working in financial services are regulated. The aim of the new SM&CR is to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.

As part of this, the SM&CR aims to:

  • encourage a culture of staff at all levels taking personal responsibility for their actions
  • make sure firms and staff clearly understand and can demonstrate where responsibility lies

This consultation papers set out our proposed approach to the extension of the SM&CR as well as some minor proposals for the existing banking regime. For information on how to comment on the proposals before the deadline of 3 November 2017, please see our main SM&CR page.

Asset Management Authorisation Hub

We have launched our Asset Management Authorisation Hub. It provides support to new entrants from start-up, through authorisation and into the early stages of supervision. The Hub aims to clarify expectations from the regulator and offer better guidance, easier to access information, as well as create more positive and  personalised contact to  improve the application process.

Starting in October, our Hub will offer pre-application meetings, dedicated case officers and access to the website portal. The FCA’s website gives details on how firms can apply for a pre-application meeting slot under the dedicated webpage for Asset Managers.

Next year, we intend to expand the offer to include support like surgeries and online booking for pre-application meetings. We will also publish more detail on entry criteria and application details.

We want to reduce unnecessary barriers to entry and to encourage competition. However, the authorisation hub is not intended to lower entry standards to the market and we do not intend to allow any reduction in quality. New entrants will still need to meet the same high standards as current firms to receive authorisation.

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News and Publications

ScamSmart PR: Speak out against investment fraud

Next week we’ll be issuing a press release encouraging the public to break their silence and report suspected investment scams to us, as well as talk about scams with friends and family. The release will feature FCA reporting figures and statistics from consumer research, as well as comment from Mark Steward (FCA Director of Enforcement) and campaign ambassador Nick Hewer.

Our ScamSmart campaign increases consumer awareness of investment scams and the common tactics fraudsters use. It stresses the importance of rejecting unsolicited offers, getting impartial advice and checking the FCA Warning List before making an investment. For information visit ScamSmart.

2017/2018 fees and levies

We have now issued our 2017/18 annual fee invoices to fee-payers.

If you have not received our invoice or online fees email notification, please email the fees helpline at [email protected].

Messages about ring-fencing

We have published some simple messages about ring-fencing on our website for you to use with customers.

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Banks and Building Societies

Senior Managers Regime: Breaches of Conduct Reporting

As part of the Senior Managers and Certification Regime, firms must submit annual data on breaches of our Conduct Rules using REP008 in Gabriel. The FCA notification of Conduct Rule breaches or REP008 reporting window - which opened on 31 August 2017 - will be closing at midnight on 31 October 2017. It covers the timeframe from 1 Sept 2016 to 31 August 2017.

It is mandatory for these firms to submit REP008 via the Gabriel system, including nil returns for all staff members covered by the conduct rules.

Findings from the FCA’s Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpin our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

Messages about ring-fencing

We have published some simple messages about ring-fencing, suitable for use with customers of all banks and building societies.

The UK ring-fencing legislation requires large banks to separate retail banking business from risks in other parts of their business. Banks are making the necessary structural changes during 2017 and 2018 in order to be compliant by 1 January 2019.

Even if your firm is not required to implement ring-fencing, customers who are unsure if they are affected may contact you. Our messages on ring-fencing  can help you respond to these  questions and are consistent with messages provided across the banking industry.

MiFID II: Update

Commodity Derivative Position Limit Exemptions

Non-Financial Entities (NFEs), as defined in RTS 21 Article 2(1), can apply to us for a position limit exemption for one or more contracts. NFEs that have been granted exemptions will still have their positions reported to us but we will take the exemption into account when we apply the position limits.

The position limit exemptions application is now available to complete the FCA’s Connect webpage. Our website has further information.

Approved Reporting Mechanisms

We recently announced that Abide Financial DRSP Limited, Bloomberg Data Reporting Services Ltd, London Stock Exchange plc (UnaVista) and Xtrakter Ltd (Trax) have been authorised as Approved Reporting Mechanisms (ARMs). Firms who are required to submit transaction reports under MiFID II will need to do so through an authorised ARM, unless they decide to join directly via the FCA’s Market Data Processor system. The FCA website has a complete list of authorised Data Reporting Services Providers. 

Pre-trade transparency waivers and commodity derivative position limits

On 28 September 2017, ESMA (European Securities and Markets Authority) issued a public statement on the joint work plan of ESMA and the National Competent Authority for opinions on MiFID II pre-trade transparency waiver and commodity position limits. In light of this, we have clarified how we will deal with decisions on waiver applications and publication of position limits. Read our statement.

Policy Statement 17/3: new obligations on firms concerning PPI complaints in light of Plevin

On 29 August 2017, a new rule came into force setting a deadline of 29 August 2019 for consumers to make new complaints about PPI.

New rules and guidance also came into force on firms’ handling of PPI complaints in light of Plevin (the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited in November 2014)

Firms that handled and rejected PPI mis-selling complaints before 29 August 2017 must write to all such previous complainants where the consumer may now be eligible for redress under Plevin. Firms must send letters to these consumers before 30 November 2017.

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Financial Advisers

Findings from the FCA’s Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpins our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

MiFID II: Update

Commodity Derivative Position Limit Exemptions

Non-Financial Entities (NFEs), as defined in RTS 21 Article 2(1), can apply to us for a position limit exemption for one or more contracts. NFEs that have been granted exemptions will still have their positions reported to us but we will take the exemption into account when we apply the position limits.

The position limit exemptions application is now available to complete the FCA’s Connect webpage. Our website has further information.

Approved Reporting Mechanisms

We recently announced that Abide Financial DRSP Limited, Bloomberg Data Reporting Services Ltd, London Stock Exchange plc (UnaVista) and Xtrakter Ltd (Trax) have been authorised as Approved Reporting Mechanisms (ARMs). Firms who are required to submit transaction reports under MiFID II will need to do so through an authorised ARM, unless they decide to join directly via the FCA’s Market Data Processor system. The FCA website has a complete list of authorised Data Reporting Services Providers. 

Pre-trade transparency waivers and commodity derivative position limits

On 28 September 2017, ESMA (European Securities and Markets Authority) issued a public statement on the joint work plan of ESMA and the National Competent Authority for opinions on MiFID II pre-trade transparency waiver and commodity position limits. In light of this, we have clarified how we will deal with decisions on waiver applications and publication of position limits. Read our statement.

Policy Statement 17/3: new obligations on firms concerning PPI complaints in light of Plevin

On 29 August 2017, a new rule came into force setting a deadline of 29 August 2019 for consumers to make new complaints about PPI.

New rules and guidance also came into force on firms’ handling of PPI complaints in light of Plevin (the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited in November 2014)

Firms that handled and rejected PPI mis-selling complaints before 29 August 2017 must write to all such previous complainants where the consumer may now be eligible for redress under Plevin. Firms must send letters to these consumers before 30 November 2017.

FCA Live and Local regional programme continues

Our series of regional events for retail investment firms continues in November, December and into January, with workshops on assessing suitability, Q&A roundtables with FCA and industry panel, and one-to-one surgery sessions. Dates and locations can be found on the Live and Local webpage.

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Mortgage Advisers and Lenders

Findings from the FCA’s Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpins our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

FCA: Live and Local regional programme returns

Before launching a full programme of events in 2018, we are holding our first Live and Local event for mortgage firms at our office in London on 21 November. It will be a Q&A roundtable where attendees can pose questions and provide feedback directly to our senior management plus an industry expert. Details are available on the Live and local webpage. To ensure you are notified of future Live and Local regional events in 2018, sign up to email alerts using our Live and Local updates web form.

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General Insurance Intermediaries and Insurers

Findings from the FCA's Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpins our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

Policy Statement 17/3: new obligations on firms concerning PPI complaints in light of Plevin

On 29 August 2017, a new rule came into force setting a deadline of 29 August 2019 for consumers to make new complaints about PPI.

New rules and guidance also came into force concerning firms’ handling of PPI complaints in light of Plevin (the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited in November 2014)

Firms that have, before 29 August 2017, handled and rejected PPI mis-selling complaints must write to all such previous complainants  where the consumer may now be eligible for redress under Plevin. Firms must send these letters to these consumers before 30 November 2017.

FCA: Live and Local regional programme continues

Our series of regional events for retail investment firms continues in November, December and into January, with workshops on assessing suitability, Q&A roundtables with FCA and industry panel, and one-to-one surgery sessions. Dates and locations can be found on the Live and Local webpage.

Implementation of the transparency in insurance renewals rule 

In April 2017 rules came into effect requiring firms to make changes to any renewal notice being sent to a consumer.

We have monitored how firms have been implementing these rules, and have now published our findings. We have seen some good practice that has helped consumers engage and make informed decisions. However, we have also seen a number of instances where firms have failed to fully comply with the rules and consumers have lost out as a result.

Firms should use our findings to review their current processes and documentation (both direct to consumer and on-line) to ensure it is compliant.

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Life Insurance and Pension Providers

Findings from the FCA's Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpins our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

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Wealth Managers and Private Banks

MiFID II: Update

Commodity Derivative Position Limit Exemptions

Non-Financial Entities (NFEs), as defined in RTS 21 Article 2(1), can apply to us for a position limit exemption for one or more contracts. NFEs that have been granted exemptions will still have their positions reported to us but we will take the exemption into account when we apply the position limits.

The position limit exemptions application is now available to complete the FCA’s Connect webpage. Our website has further information.

Approved Reporting Mechanisms

We recently announced that Abide Financial DRSP Limited, Bloomberg Data Reporting Services Ltd, London Stock Exchange plc (UnaVista) and Xtrakter Ltd (Trax) have been authorised as Approved Reporting Mechanisms (ARMs). Firms who are required to submit transaction reports under MiFID II will need to do so through an authorised ARM, unless they decide to join directly via the FCA’s Market Data Processor system. The FCA website has a complete list of authorised Data Reporting Services Providers. 

Pre-trade transparency waivers and commodity derivative position limits

On 28 September 2017, ESMA (European Securities and Markets Authority) issued a public statement on the joint work plan of ESMA and the National Competent Authority for opinions on MiFID II pre-trade transparency waiver and commodity position limits. In light of this, we have clarified how we will deal with decisions on waiver applications and publication of position limits. Read our statement.

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Investment Managers and Stockbrokers

MiFID II: Update

Commodity Derivative Position Limit Exemptions

Non-Financial Entities (NFEs), as defined in RTS 21 Article 2(1), can apply to us for a position limit exemption for one or more contracts. NFEs that have been granted exemptions will still have their positions reported to us but we will take the exemption into account when we apply the position limits.

The position limit exemptions application is now available to complete the FCA’s Connect webpage. Our website has further information.

Approved Reporting Mechanisms

We recently announced that Abide Financial DRSP Limited, Bloomberg Data Reporting Services Ltd, London Stock Exchange plc (UnaVista) and Xtrakter Ltd (Trax) have been authorised as Approved Reporting Mechanisms (ARMs). Firms who are required to submit transaction reports under MiFID II will need to do so through an authorised ARM, unless they decide to join directly via the FCA’s Market Data Processor system. The FCA website has a complete list of authorised Data Reporting Services Providers. 

Pre-trade transparency waivers and commodity derivative position limits

On 28 September 2017, ESMA (European Securities and Markets Authority) issued a public statement on the joint work plan of ESMA and the National Competent Authority for opinions on MiFID II pre-trade transparency waiver and commodity position limits. In light of this, we have clarified how we will deal with decisions on waiver applications and publication of position limits. Read our statement.

Institutional Disclosure Working

We want to see more consistent and standardised disclosure of asset management costs and charges to institutional investors.

We have appointed an independent person to chair an institutional working group of stakeholders, with a view to agreeing a template for the disclosure of costs and charges. The first and second meetings of the group have now taken place, and good progress is being made.

We are keen to hear views from stakeholders on this work.

This working group is part of overall package of remedies to make competition work better following the findings of the asset management market study.

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Consumer Credit

Debt Management - Thematic Review

We are undertaking a thematic review of the debt management sector, in line with the commitment in our 2017/18 Business Plan. We want to understand how providers across this sector are meeting the needs of their customers, following our  interventions in the market and other changes since our last thematic review.

Our review will be based on a sample of both fee-charging and free-to-customer debt management providers. We will look at the outcomes for customers from the service they are given as well as the initial advice process. We want to understand where there is good practice that is helping consumers to achieve positive results in dealing with their debts, as well as identify areas for improvement.

Findings from the FCA's Financial Lives Survey 2017

We’ve published the findings of our Financial Lives 2017 survey. Drawing on responses from just under 13,000 adults in the UK, Financial Lives is the FCA’s largest tracking survey on consumers and finance. It reveals a wealth of information about different types of consumer and their experiences of financial products and services.

Financial Lives is one of the key sources of information that underpins our consumer protection work. It also provides valuable insights for any organisation focusing on consumers and finance. To provide greater access to the findings, alongside the report we have also published a set of weighted data tables showing the results from the full survey and a guide on how to use them.

Policy Statement 17/3: new obligations on firms concerning PPI complaints in light of Plevin

On 29 August 2017, a new rule came into force setting a deadline of 29 August 2019 for consumers to make new complaints about PPI.

New rules and guidance also came into force concerning firms’ handling of PPI complaints in light of Plevin (the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited in November 2014)

Firms that have, before 29 August 2017, handled and rejected PPI mis-selling complaints must write to all such previous complainants where the consumer may now be eligible for redress under Plevin. Firms must send these letters to consumers before 30 November 2017.

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Credit Unions

Senior Managers Regime: Breaches of Conduct Reporting

As part of the Senior Managers and Certification Regime, firms must submit annual data on breaches of our Conduct Rules using ‘Form H’. Please note Credit Unions should only submit a return if disciplinary action has been undertaken relating to a conduct rule breach by staff members covered by the conduct rules.

Firms are reminded that the reporting window to notify the FCA of Conduct Rule breaches which opened on 31 August 2017, will be closing at midnight on 31 October 2017. It covers the timeframe from 1 Sept 2016 to 31 August 2017. If there have been no breaches of the Conduct Rules within this timeframe, credit unions do not need to submit Form H.

Credit Unions are required to send this by post, or via scanned email copy to [email protected]. You can view the form via the FCA Handbook.

Policy Statement 17/3: new obligations on firms concerning PPI complaints in light of Plevin

On 29 August 2017, a new rule came into force setting a deadline of 29 August 2019 for consumers to make new complaints about PPI.

New rules and guidance also came into force concerning firms’ handling of PPI complaints in light of Plevin (the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited in November 2014)

Firms that have, before 29 August 2017, handled and rejected PPI mis-selling complaints must write to all such previous complainants where the consumer may now be eligible for redress under Plevin. Firms must send these letters to consumers before 30 November 2017.

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Fintech and Innovative Businesses

Payment service providers can now apply under the revised Payment Services Directive (PSD2)

We are now open for applications under PSD2 (the PSRs 2017)

You can now apply to be authorised or registered under the Payment Services Regulations (PSRs) 2017, or the Electronic Money Regulations (EMRs) as amended by the PSRs 2017.

Find out more on how to prepare for PSD2 if you want to become, or you are already, a payment institution or an e-money institution.

Get ready for 13 January 2018

PSD2 introduces a number of new requirements around how firms must treat their customers, handle complaints and the data they report to us. The majority of the new regime will apply from 13 January 2018. You can read in full about our approach to regulating firms under PSD2 in our PSD2 Approach Document and Policy Statement.

To help you identify the key changes that are relevant to you resulting from PSD2 we have launched the PSD2 Navigator. The online decision tool directs you to relevant information and explains what you need to do to be PSD2 compliant.

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Payment Services

PPRO undertaking received

We have received a second undertaking under the Consumer Rights Act 2015, this one given by PPRO Financial Limited. It concerns the fairness of a number of terms in PPRO’s VIABUY Prepaid MasterCard terms and conditions, including various fees and charges terms, and renewing and terminating the prepaid card agreement. The firm fully cooperated with us in resolving our concerns. 

We want to remind firms that:

  • They must ensure that the terms in their consumer contracts comply with the Consumer Rights Act 2015. This requires terms to be fair and transparent - consistent with our objective of reducing harm to consumers.
  • An unfair term of a consumer contract is not binding on the consumer (Section 62(1) of the Consumer Rights Act 2015).
  • If a term could have different meanings, the meaning that is most favourable to the consumer is to prevail (section 69(1) of the Consumer Rights Act 2015).
  • We expect firms to consider the undertakings we publish as part of their risk management process (UNFCOG 1.5).

Payment service providers can now apply under the revised Payment Services Directive (PSD2)

We are now open for applications under PSD2 (the PSRs 2017)

You can now apply to be authorised or registered under the Payment Services Regulations (PSRs) 2017, or the Electronic Money Regulations (EMRs) as amended by the PSRs 2017.

Find out more on how to prepare for PSD2 if you want to become, or you are already, a payment institution or an e-money institution.

Get ready for 13 January 2018

PSD2 introduces a number of new requirements around how firms must treat their customers, handle complaints and the data they report to us. The majority of the new regime will apply from 13 January 2018. You can read in full about our approach to regulating firms under PSD2 in our PSD2 Approach Document and Policy Statement.

To help you identify the key changes that are relevant to you resulting from PSD2 we have launched the PSD2 Navigator. The online decision tool directs you to relevant information and explains what you need to do to be PSD2 compliant. 

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PSD2 Navigator explainer video

Please watch the following short video to find out how you can benefit from using the PSD2 Navigator.