Regulation round-up September 2013

Information for all firms

Positive Compliance - New dates added

We have added further dates to our Positive Compliance seminars. The current programme explores specifically our expectations and common failings in the areas of Pension Switching and Income Drawdown and include interactive case studies.

These sessions are an excellent opportunity to hear directly from the regulator and also provide clarification on our requirements.

Mobile banking and payments thematic review

We have published a report, Mobile banking and payments - supporting an innovative and secure market, it explores some early findings of a review into mobile banking services. It sets out the possible risks to consumers and areas that firms should consider when developing their services. The potential risks we identified and expect firms to consider include:

  • Fraud - Fraudulent access to mobile banking accounts could result in customers being unable to access their money or make payments, resulting in financial loss, inconvenience and stress.
  • Security - Consumers may download malicious software or a virus when downloading a mobile banking application.
  • Technology risk/ interruption to service - a systems failure or an IT problem may prevent consumers from accessing their accounts.
  • Consumer awareness and understanding - that while services are new and consumers are less familiar with using them, it is more likely that payments will be made in error, such as paying the wrong recipient or entering an incorrect amount.
  • Anti-money laundering systems and controls - mobile banking may be used for the facilitation of money laundering activities, particularly where a mobile payment service is not linked to the customers' current account.

Agreement for redress on Card Protection Plan Limited

We announced our agreement with Card Protection Plan Limited and 13 high street banks and credit card issuers that will pave the way for redress to be paid to customers who were mis-sold Card Protection and Identity Protection policies. The banks and credit card issuers sold and/or introduced customers to CPP's products. Seven million customers will shortly receive a letter from CPP providing more information, and the redress bill could ultimately rise to £1.3 billion.  

Four month update on the banks' reviews of sales of interest rate hedging products (IRHPs)

We have published our first update on banks' reviews of sales of IRHPs. In 2012, we identified failings in the way that some banks sold IRHPs. The banks involved had agreed to review their sales of IRHPs made to certain customers since 2001. The banks carried out a pilot exercise to test the review process. We reported key findings of the pilot in January 2013. The banks agreed to conduct their reviews using the approach set out in the report. 

We will provide monthly updates on the progress of banks' reviews. As individual cases reach full and final settlement, our updates will include some information on redress offers.

Further information on IRHPs.  

Financial Advisers

Supervising retail investment advice: inducements and conflicts of interest

Our guidance consultation sets out the findings of our thematic supervision work on the payments made by life insurers to advisory firms under service or distribution agreements. It also contains guidance for consultation on how such agreements can breach Principle 8 and the inducements rules and so undermine the objectives of the RDR. This guidance is relevant to all product providers and advisory firms affected by the RDR.

Professional standards data

By the end of this month we will be sending a reminder to firms asking them 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.  Any submission should reflect the position of all retail investment advisers at the firm as of the date of the submission and not just the end of the subsequent quarter.  

Further information on how to submit professional standards data

AXA fined for unsuitable investment advice

We fined AXA £1.8 million for failing to ensure it gave suitable investment advice to its customers and failing to have effective controls over its incentive schemes. AXA has agreed to contact all customers who may be affected. Any customer who suffered loss as a result will be fully compensated and those sold inappropriate products will be able to switch or withdraw their investment, enabling them to avoid potential future losses.    

Insurance intermediaries

Pacific Blu L.P.

We published a statement explaining that we received confirmation from the relevant New Zealand regulatory bodies that Pacific Blu L.P. a limited partnership registered in New Zealand and providing ‘My Home’ household insurance policy is not licensed as an insurer or as a financial services provider in New Zealand.

The My Home policy has already been sold to consumers in the UK through one authorised general insurance intermediary. It is possible that this policy or others offered by Pacific Blu are also being sold through other general insurance firms in the UK.

Our statement sets out the steps firms need to take if they are selling the My Home policy or any other insurance policy offered by Pacific Blu.

Investment Managers and Stockbrokers (Retail and Wholesale)

Supervising retail investment advice: inducements and conflicts of interest

Our guidance consultation sets out the findings of our thematic supervision work on the payments made by life insurers to advisory firms under service or distribution agreements. It also contains guidance for consultation on how such agreements can breach Principle 8 and the inducements rules and so undermine the objectives of the RDR. This guidance is relevant to all product providers and advisory firms affected by the RDR.

European Banking Authority publish CRDIV Taxonomy consultation

The European Banking Authority (EBA) launched its public consultation on XBRL Taxonomy, which marks another milestone toward CRDIV implementation. This consultation covers; the data items, business concepts, relations and validation rules described by the EBA Data Point Model(s) (DPM) for supervisory reporting in the technical format of an XBRL taxonomy.

We intend to collect financial reports (COREP and FINREP) from firms as set out by the Capital Requirements Directive (CRDIV), using a reporting language called XBRL (eXtensible Business Reporting Language). The report will be submitted through our GABRIEL system. We encourage you to respond to this consultation, which ends on 9 October 2013.

Aberdeen Asset Managers Limited fined for failing to protect client assets

We fined Aberdeen Asset Managers Limited and Aberdeen Fund Management £7,192,500 for failing to identify, and therefore properly protect, client money placed with third party banks. The protection of client assets is a regulatory priority and we will continue to focus on driving up standards through firm supervision and policy work.  Proper handling of client money is essential in ensuring that markets function effectively, and that clients, and ultimately consumers, are protected.