 Making overdrafts simpler, fairer and easier to manage
This month we confirmed that we’re introducing reforms to make overdrafts simpler, fairer, and easier to manage and to protect the millions of consumers that use them. The changes represent the biggest overhaul to the overdraft market for a generation.
They include:
- Stopping banks and building societies from charging higher prices for unarranged overdrafts than for arranged overdrafts.
- Banning fixed fees for borrowing through an overdraft – calling an end to fixed daily or monthly charges, and fees for having an overdraft facility.
- Requiring banks and building societies to price overdrafts by a simple annual interest rate.
- Requiring banks and building societies to advertise arranged overdraft prices with an APR to help customers compare them against other products.
- Issuing new guidance to reiterate that refused payment fees should reasonably correspond to the costs of refusing payments.
- Requiring banks and building societies to do more to identify customers who are showing signs of financial strain or are in financial difficulty, and develop and implement a strategy to reduce repeat overdraft use.
We also introduced changes to the Buy Now Pay Later (BNPL) sector, saving consumers around £40-60 million a year. This means:
- Firms cannot charge backdated interest on amounts of money that have been repaid by the consumer during the BNPL offer period.
- Firms have to provide better information to consumers about BNPL offers, reflecting the risks as well as the benefits of the product.
- Firms must give prompts to consumers, to remind them when the offer period is about to end.
Podcast: Interview with Baroness Sally Greengross on intergenerational issues
Listen to cross-party peer Sally Greengross discuss her ideas on intergenerational issues, focusing specifically on planning for old age and the importance of financial advice. She also discusses the work of the Lords’ Intergenerational Fairness and Provision Select Committee and its latest report. Our Discussion Paper on Intergenerational Differences was published in May and responses are open until August.
Annual public meeting
Registration is now open for our annual public meeting (APM). The event will take place on Wednesday 17 July, from 9.30am until 12pm, at The Brewery, 52 Chiswell Street, London, EC1Y 4SD.
At this year’s APM we will be discussing our 2018/19 Annual Reports and Accounts. There will also be an opportunity to ask the FCA’s Chair, Chief Executive and directors any questions.
We will look at how we have delivered against our strategic objective to make markets work well, and our three operational objectives of securing an appropriate degree of protection for consumers, protecting and enhancing the integrity of the UK financial system, and promoting effective competition in the interests of consumers.
Firms, consumers, trade associations and other interest parties are welcome to attend.
Firms’ commitments around the PPI deadline
We have engaged with larger firms about their deadline preparations, which include:
- Including the deadline date when giving positive responses to checking enquiries.
- Pragmatically treating postal complaints arriving up to 5 working days after the deadline as being in time (to allow for potential delivery delays).
- Ensuring phone lines are open late on 29 August, and accepting voicemail complaints after that or treating calls on 30 August as if in time.
We now ask all other firms who receive PPI complaints to consider doing the same.
For any questions please email: FCASupervision-ProjectsPPI@fca.org.uk
Digital Regulatory Reporting Open Day
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
RDR & FAMR Review Roadshows
Come along to one of our afternoon events in Durham, Bristol or Birmingham to give us your input and feedback on RDR & FAMR – visit our events booking website to register your place.
ScamSmart pension scams campaign
We are re-running our ScamSmart pension scams advertising campaign this summer. This campaign aims to help consumers avoid pension and investment fraud.
The advertising will launch on 1 July and will run on TV, radio and online. Please support the campaign by sharing our messages with your customers. To find out more, like our Facebook page and visit our ScamSmart resources page.
The retail intermediary market in 2018
We have published our latest retail intermediary market update. The publication focuses on analysis of the sector based on the data intermediary firms that provide advice on, or arrange, mortgages, insurance policies or retail investment products for consumers, have submitted to us via the Retail Mediation Activities Return (RMAR). This publication provides an update of trends to 2018.
Our findings show that revenue earned by intermediary firms increased in 2018 compared to 2017, continuing the trend seen in recent years. Revenue earned by mortgage, retail investment and non-investment insurance firms increased by 16%, 12% and 8% respectively in 2018.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
The retail intermediary market in 2018
We have published our latest retail intermediary market update. The publication focuses on analysis of the sector based on the data intermediary firms that provide advice on, or arrange, mortgages, insurance policies or retail investment products for consumers, have submitted to us via the Retail Mediation Activities Return (RMAR). This publication provides an update of trends to 2018.
Our findings show that revenue earned by intermediary firms increased in 2018 compared to 2017, continuing the trend seen in recent years. Revenue earned by mortgage, retail investment and non-investment insurance firms increased by 16%, 12% and 8% respectively in 2018.
Mortgage lending statistics Q1 2019
We, alongside the Bank of England, have published the latest Mortgage Lenders and Administrators Statistics covering the period up to the end of Q1 2019. The publication highlights the latest trends in the UK's mortgage market.
Interesting changes in Q1 2019 are:
- The outstanding value of all residential mortgage loans was £1,451 billion in 2019 Q1, 3.4% higher than a year earlier.
- The share of mortgage loans with loan to value (LTV) ratios exceeding 90% increased to 4.5% in 2019 Q1, compared to 3.3% a year earlier. This is its highest since 2017 Q2.
Proposals to promote shareholder engagement: Feedback and final rules
We have introduced new requirements to improve shareholder engagement and increase transparency around stewardship.
From 10 June 2019, asset managers and life insurers will need to disclose and make publicly available:
- Their policies on how they engage with each other and the companies they invest in.
- How their strategies create long-term value.
Issuers will also need to make new disclosures on their related party transactions (RPTs).
These rules, which we consulted on in January, implement the provisions of the amended Shareholder Rights Directive (SRD II).
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
RDR & FAMR Review Roadshows
Come along to one of our afternoon events in Durham, Bristol or Birmingham to give us your input and feedback on RDR & FAMR – visit our events booking website to register your place.
The retail intermediary market in 2018
We have published our latest retail intermediary market update. The publication focuses on analysis of the sector based on the data intermediary firms that provide advice on, or arrange, mortgages, insurance policies or retail investment products for consumers, have submitted to us via the Retail Mediation Activities Return (RMAR). This publication provides an update of trends to 2018.
Our findings show that revenue earned by intermediary firms increased in 2018 compared to 2017, continuing the trend seen in recent years. Revenue earned by mortgage, retail investment and non-investment insurance firms increased by 16%, 12% and 8% respectively in 2018.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
RDR & FAMR Review Roadshows
Come along to one of our afternoon events in Durham, Bristol or Birmingham to give us your input and feedback on RDR & FAMR – visit our events booking website to register your place.
ScamSmart pension scams campaign
We are re-running our ScamSmart pension scams advertising campaign this summer. Our campaign aims to help consumers avoid pension and investment fraud.
The advertising will launch on 1 July and will run on TV, radio and online. Please support the campaign by sharing our messages with your customers. To find out more, like our Facebook page and visit our ScamSmart resources page.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
5 Conduct Questions
The 5 Conduct Questions help firms to improve their conduct risk management and ultimately drive cultural change. They are incorporated in our assessment methodology for firms we supervise. We began directly engaging with wholesale banks as a formal programme in 2015 and this is rolling out further, including to wholesale agency brokers and asset managers.
We published our third annual report summarising the progress made by firms. Key findings include:
- Good conduct and culture is a competitive advantage.
- Framing conduct as part of broader corporate goals generates traction.
- Non-financial misconduct needs more attention from staff at all levels.
ScamSmart pension scams campaign
We are re-running our ScamSmart pension scams advertising campaign this summer. Our campaign aims to help consumers avoid pension and investment fraud.
The advertising will launch on 1 July and will run on TV, radio and online. Please support the campaign by sharing our messages with your customers. To find out more, like our Facebook page and visit our ScamSmart resources page.
Review of principal firms in the investment management sector
In May we published findings from our supervisory work looking at how principal firms in the investment management sector understood and complied with their regulatory responsibilities in respect of their appointed representatives (ARs).
Our review identified shortcomings in principal firms’ understanding of their regulatory responsibilities for their ARs.
The findings are relevant for principals and ARs with the following business models: asset management; promotion and management of alternative investment funds (AIFs), wealth management activity, contracts for difference providers, fund advisory and arranging activities and ARs working in all other sectors.
The letter to firms is available on the FCA website.
Proposals to promote shareholder engagement: Feedback and final rules
We have introduced new requirements to improve shareholder engagement and increase transparency around stewardship.
From 10 June 2019, asset managers and life insurers will need to disclose and make publicly available:
- Their policies on how they engage with each other and the companies they invest in.
- How their strategies create long-term value.
Issuers will also need to make new disclosures regarding their related party transactions (RPTs).
These rules, which we consulted on in January, implement the provisions of the amended Shareholder Rights Directive (SRD II).
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
ScamSmart pension scams campaign
We are re-running our ScamSmart pension scams advertising campaign this summer. Our campaign aims to help consumers avoid pension and investment fraud.
The advertising will launch on 1 July and will run on TV, radio and online. Please support the campaign by sharing our messages with your customers. To find out more, like our Facebook page and visit our ScamSmart resources page.
First undertaking received from consumer credit firm under Consumer Rights Act 2015 (CRA) and Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)
We have published an undertaking from Capital Financial Management Limited about the consumer cancellation terms in its debt management contract. We were concerned that two terms gave the firm sole discretion in respect of the costs it could charge if consumers cancelled the contract. Another term was not clear what notice period consumers had to give to cancel. The firm was fully cooperative in resolving our concerns. We remind all firms to ensure their contracts comply with requirements for fairness and transparency under the UTCCRs and the CRA. Read further information about our powers and other publications.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
Cross-sector Sandbox – call for input
We have published a call for input on the need for a cross-sector sandbox - a single-point-of-entry sandbox for firms to test innovative propositions with multiple UK regulators. We welcome views by 30 August.
This follows a six-month study into how this kind of sandbox could be established, funded by the Regulator Pioneer Fund (a fund launched by the Department for Business, Energy and Industrial Strategy and administered by Innovate UK).
Initiatives that could benefit from cross-sectoral testing include the emergence of the Internet of Things, Big Data, smart contracts, Artificial Intelligence, and firms moving into adjacent sectors.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
REP018 Operational and Security Risk assessment
We ask firms wishing to advise us that they intend to use the SCA-RTS Article 17 exemption (Corporate Payment Exemption) from 14 September 2019 to add this information to your REP018 assessment for the January to March period. This will ensure you meet the 3 months’ notice requirement as the April to June return submission window will be outside of that period. If you have already submitted your return for this period, please re-submit it. Please refer to the website for more information on reporting requirements.
Digital Regulatory Reporting
We will be hosting an industry open day on 5 July to present the next phase of work on Digital Regulatory Reporting, with presentations beginning at 1pm. To register your interest, please email regtech@fca.org.uk using the subject ‘DRR Open Day’ or visit our website for more information.
Brexit update
As we have flagged on our website, the Government has confirmed that if there’s no deal with the EU, the UK is due to leave on 31 October 2019. Firms should continue to prepare for a range of scenarios, including one in which the UK leaves without a deal on 31 October 2019. We will provide updates as necessary on our website and through other channels. Refer to our Brexit pages for more information.
Second phase of CMC authorisation is underway
We’re now in the second slot for claims management companies (CMCs) to apply for full authorisation. The deadline for applications is 31 July 2019 so CMCs should not delay in applying.
This landing slot is for:
- CMCs that do financial services and product claims work and also do lead generation for non-financial services/products claims.
- CMCs that only do lead generation (regardless of sector)
- CMCs operating in all other sectors.
- To apply, CMCs should log into the Connect system on our website.
Firms that miss the deadline have 30 days to wind down their business and stop regulated claims management activity.
Annual reporting requirements for claims management companies
We have published new information about our reporting requirements for claims management companies (CMCs). The requirements apply to all firms with permissions to carry on regulated claims management activities, including firms in temporary permission.
The new information covers reporting dates, the information CMCs need to provide and how to submit returns to us. You can find the information on our website.
Securitisation: Handbook changes
On 6 June, we published rules to enable us to regulate securitisation repositories (SRs), who we will be responsible for regulating when the UK leaves the EU. The Policy Statement includes near final rules applying our existing supervisory and enforcement processes to SRs. They will come into force once the UK leaves the EU.
It also has final rules on additional enforcement powers given to us over persons subject to the EU Securitisation Regulation. These rules have immediate effect.
You can read the Policy Statement on our website. The rules are largely unchanged from those we proposed in March.
Senior Managers & Certification Regime (SM&CR): more information
We have updated the content on our webpages for solo-regulated firms with more information about how to prepare for SM&CR.
You can also watch on-demand a 60-minute webinar that took place on 3 June where we provided more detail and clarification in a Q&A session with our panel of speakers.
Solo-regulated firms which are authorised under FSMA should be preparing for the SM&CR, using the information available on our website. The regime comes into effect on 9 December 2019 and will replace the Approved Persons Regime.
First undertaking received from consumer credit firm under Consumer Rights Act 2015 (CRA) and Unfair Terms in Consumer Contracts Regulations 1999 (UTCCRs)
We have published an undertaking from Capital Financial Management Limited about the consumer cancellation terms in its debt management contract. We were concerned that two terms gave the firm sole discretion in respect of the costs it could charge if consumers cancelled the contract. Another term was not clear what notice period consumers had to give to cancel. The firm was fully cooperative in resolving our concerns.
We remind all firms to ensure their contracts comply with requirements for fairness and transparency under the UTCCRs and the CRA. Read further information about our powers and other publications.
Webinar: The Role of Leaders in Transforming Culture
As part of our Transforming Culture Series, we hosted a live panel discussion exploring Leadership and Management capabilities.
Our panel discuss the skills and capabilities financial services leaders need, and how to build them. In the live Q&A the audience asked about topics such as shared parental leave and discussed personal difficulties with leadership.
Jonathan Davidson, our Executive Director of Retail Supervision, was joined by leaders from the fields of neuroscience, intersectionality and industry who each contributed a unique perspective to the conversation.
Watch the discussion here, and watch out for our next transforming culture webinar later this year.
Creating an innovation culture
This month, Nick Cook, Director of Innovation, delivered a speech at the 6th Central Bank Executive Summit in Frankfurt. Nick discussed the impact technology is having on the markets that we regulate and how we will need to adapt and respond to this change. A key facet of this response will be to actively stimulate certain innovation within the market that we believe will deliver public value.
5 Conduct Questions
The 5 Conduct Questions help firms to improve their conduct risk management and ultimately drive cultural change. They are incorporated in our assessment methodology for firms we supervise. We began directly engaging with wholesale banks as a formal programme in 2015 and this is rolling out further, including to wholesale agency brokers and asset managers.
We published our third annual report summarising the progress made by firms. Key findings include:
- Good conduct and culture is a competitive advantage.
- Framing conduct as part of broader corporate goals generates traction.
- non-financial misconduct needs more attention from staff at all levels.
Anti-competitive conduct in the asset management sector: FCA Decisions under the Competition Act 1998
On 21 February 2019, the FCA decided that three asset management firms infringed competition law, by disclosing and/or accepting strategic information, on a bilateral basis, during two book-building processes shortly before the share prices were set. The otherwise confidential information comprised the price they were bidding and sometimes the volume they wanted. This allowed one firm to know another's plans during the book-building processes - when they should have been competing.
The FCA fined Hargreave Hale £306,300 and River and Mercantile Asset Management (RAMAM) £108,600. Newton benefitted from leniency and so was not fined. The decision is here and a summary here.
Understanding the money laundering risks in the capital markets
We have published the findings of our thematic review looking at the money-laundering risks and vulnerabilities in the capital markets. Our aim was to enhance our view of these risks and, where possible, to develop case studies to inform the industry.
We found that some we visited needed to be more aware of the money-laundering risks they face, and we expect firms to consider their approaches to identifying and assessing money-laundering risk in light of our report.
The Annex to our report contains a non-exhaustive set of typologies which may help inform risk assessments, transaction monitoring and training.
Our framework: assessing adequate financial resources consultation
We have published the Our framework: assessing adequate financial resources consultation outlining our plans to help solo-regulated firms improve the way they operate, so they can prevent harm from occurring and put things right when they go wrong.
Our proposals clearly outline the meaning of ‘adequate financial resources’ on Threshold Conditions and Principles for Businesses (PRIN).
We have also set out:
- Why it’s important for firms to have adequate financial resources.
- Why and how we assess the adequacy of a firm’s financial resources.
- What we expect from firms.
- What we focus on during our supervisory reviews.
The consultation will close on 13 September 2019.
The retail intermediary market in 2018
We have published our latest retail intermediary market update. The publication focuses on analysis of the sector based on the data intermediary firms that provide advice on, or arrange, mortgages, insurance policies or retail investment products for consumers, have submitted to us via the Retail Mediation Activities Return (RMAR). This publication provides an update of trends to 2018.
Our findings show that revenue earned by intermediary firms increased in 2018 compared to 2017, continuing the trend seen in recent years. Revenue earned by mortgage, retail investment and non-investment insurance firms increased by 16%, 12% and 8% respectively in 2018.
Mortgage lending statistics Q1 2019
We, alongside the Bank of England, have published the latest Mortgage Lenders and Administrators Statistics covering the period up to the end of Q1 2019. The publication highlights the latest trends in the UK's mortgage market.
Interesting changes in Q1 2019 are:
- The outstanding value of all residential mortgage loans was £1,451 billion in 2019 Q1, 3.4% higher than a year earlier.
- The share of mortgage loans with loan to value (LTV) ratios exceeding 90% increased to 4.5% in 2019 Q1, compared to 3.3% a year earlier. This is its highest since 2017 Q2.
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