 Guidance for firms on the fair treatment of vulnerable customers
We are currently consulting on Guidance to give firms involved in the supply of retail products or services clarity on how they should treat vulnerable customers fairly.
Our Financial Lives survey found that 50% of adults show characteristics of potential vulnerability and thus may be more susceptible to experiencing harm. So this is a significant concern and protecting vulnerable consumers is a key priority for us. We want to see firms embedding the fair treatment of vulnerable customers into their culture.
Our research and engagement has shown that firms are making good progress. Despite this, there is room for improvement. We have also found that some firms are failing to think about vulnerability or to provide a fair service to vulnerable consumers. We want to see all firms focused on ensuring vulnerable consumers have good outcomes, and greater consistency across sectors.
Rather than prescribing a checklist of required actions, the draft Guidance sets out ways in which firms can comply with our Principles for Businesses. Precisely what the Guidance means for individual firms will depend on the specific context of the firm, including, among other things, the firm’s size and its customers’ characteristics.
We are keen to get your feedback. We’re consulting on the Guidance in two stages and are asking for comments on this first stage of the consultation by 4 October 2019. We are holding two consultation events in September – for further information & to register please visit our event website.
Update on our work on pensions
On 30 July, we published a package of pensions publications designed to help consumers get better value from their pension.
We are proposing a ban on contingent charging for pension transfer advice. This will help protect customers from the conflicts of interest when a financial adviser only gets paid if a transfer goes ahead. We are also looking to address the conflicts of interest when a financial adviser advising on a pension transfer stands to receive ongoing fees. We have proposed that advisers will be required to demonstrate why any scheme they recommend is more suitable than the consumer’s workplace pension scheme. Our consultation will run until 30 October 2019.
We also published an update on our work on non-workplace pensions. We found that many consumers are not engaged in pension decisions or aware of charges they are paying. Products and charges are often too complicated to compare – leading to a lack of price competition. We have outlined a package of potential measures to protect consumers, and want feedback on these by 8 October 2019. We are aiming to consult on new rules in early 2020.
We have also published our final rules and guidance on the final tranche of remedies from the Retirement Outcomes Review, including the introduction of investment pathways.
Senior Managers and Certification Regime
On 26 July we published final rules final rules on the extension of the Senior Managers and Certification Regime (SM&CR) to FCA solo-regulated firms, including claims management companies.
The SM&CR is being extended to FCA solo-regulated firms on 9 December 2019 to help set a new standard of personal conduct for people working in financial services.
In January 2019, in CP 19/4 we consulted on changes to optimise the SM&CR. The Policy Statement summarises the feedback we received to Consultation Paper 19/4, our response to the feedback and sets out our final rules. The rules are relevant to all SM&CR firms, including CMCs. We implemented the proposed changes to the SM&CR as consulted on, which included:
- confirming that the Head of Legal function is excluded from the requirement to be approved as a Senior Manager
- clarifying the requirements and scope of the Certification Regime
- extending Senior Manager Conduct Rule 4 (SC4) to non-approved Executive Directors at Limited Scope firms
For more information on how SMCR affects solo-regulated firms, please visit our website.
FCA and Practitioner Panel Survey Results
We and the Practitioner Panel have published the findings from our 2019 joint survey of FCA-regulated firms. It is carried out on our behalf by an independent market research organisation, who sent the survey to a sample of firms. The survey gives views across the financial services sector of our performance as a regulator.
It provides firms’ views on how well we are achieving our operational objectives:
- securing an appropriate degree of protection for consumers
- protecting and enhancing the integrity of the UK’s financial system
- promoting effective competition in the interests of customers
This year, scores against the first two of these objectives have risen slightly. For competition, the confidence of fixed firms increased. But the overall score for all firms showing confidence in our ability to achieve this objective decreased from 72% to 70%.
The survey revealed some specific areas for improvement:
- We need to ensure the costs imposed on firms of providing information are proportionate to the benefits. There was a substantial increase in the proportion of fixed firms who said the number of information requests are greater than seems necessary.
- Flexible firms have overall higher satisfaction scores than fixed firms, but are less likely to agree that our staff have sufficient experience and are appropriately qualified. Since conducting the survey, we have clarified our approach to supervision. We will evaluate the impact of this work and any changes to firm views in the next survey.
We will use the results to better understand issues affecting all firms and aim to help improve how we work.
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
Directory persons submission window opens in September
We will start the data collection phase for the new Directory in September. We held an event on 8 August for trade organisations to provide more information on the data submission process.
Banks, building societies, credit unions and insurance companies must submit their data between 9 September and 9 March next year using Connect. All other firms must submit between 9 December 2019 and 9 December 2020. This is key to developing the Directory following the publication of the Policy Statement. We will publish supporting information about the process on our website from 9 September.
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
Alternatives to High-Cost Credit
As part of our wider high cost credit review, in July we published a report setting out actions and recommendations to improve the availability and awareness of alternatives to high-cost credit.
The report:
- examines the market for alternatives to high-cost credit by looking at consumer demand and the availability of alternatives
- sets out our actions following the commitments we made in our high-cost credit publications of November and December 2018
- explains our and other organisations’ roles in supporting alternatives to high-cost credit
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
Live & Local 2019/20 events announced
We are starting a new series of monthly Q&A roundtable discussions for mortgage intermediaries and lenders across the UK, with the first stop in Glasgow on 29 October. There is no set agenda for these sessions; topics for discussion are determined by the attendees at each session.
These informal monthly ‘Ask the regulator’ events will conclude in March 2020. Visit our Live & Local webpage for further details and to register.
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
Directory persons submission window opens in September
We will start the data collection phase for the new Directory in September. We held an event on 8 August for trade organisations to provide more information on the data submission process.
Banks, building societies, credit unions and insurance companies must submit their data between 9 September and 9 March next year using Connect. All other firms must submit between 9 December 2019 and 9 December 2020. This is key to developing the Directory following the publication of the Policy Statement. We will publish supporting information about the process on our website from 9 September.
Senior Managers & Certification Regime (SM&CR) transitional period – reminder for insurers
The end of the one-year transitional period for insurers is approaching. By 10 December 2019, firms will need to have:
- completed the first annual fit and proper assessment of their Certification Staff, and issued certificates to staff as appropriate
- trained all their remaining Conduct Rules staff in the Conduct Rules, including how they apply to them in their role
- set up processes to ensure that any new staff from 10 December 2019 are trained in the Conduct Rules
- extended processes to record and report any conduct rule breaches linked to disciplinary action to cover the full Conduct Rules population
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
There is nothing to report in this area.
EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02)
In February 2019 the European Banking Authority (EBA) published its Final Report on outsourcing arrangements.
The Guidelines are for credit institutions and investment firms subject to the EU Capital Requirement Regulations and payment and electronic money institutions. They do not apply to Account Information Service Providers as defined in PSD2.
These Guidelines apply from 30 September 2019 to all outsourcing arrangements entered into, reviewed or amended on or after this date. There are also transitional arrangements extending up to 2021.
The FCA’s FG16/5 remains relevant to all other firms that we authorise.
Fair Pricing in Financial Services
In July we published a feedback statement on our work on fair pricing in financial services.
The judgement of when pricing practices are unfair is not always straightforward. So, in line with our Mission, we developed a fair pricing framework to be transparent about how we think about this issue. This summarises the main themes from the submissions we received and provides further clarification on how we will apply our framework in practice.
We will now begin the work to formally embed this into our regulatory approach and will report further in Q4 2019/20.
Alternatives to High-Cost Credit
As part of our wider high cost credit review, in July we published a report setting out actions and recommendations to improve the availability and awareness of alternatives to high-cost credit.
The report:
- examines the market for alternatives to high-cost credit by looking at consumer demand and the availability of alternatives
- sets out the actions we have taken following the commitments we made in our high-cost credit publications of November and December 2018
- explains our and other organisations’ roles in supporting alternatives to high-cost credit
EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02)
In February 2019 the European Banking Authority (EBA) published its Final Report on outsourcing arrangements.
The Guidelines are for credit institutions and investment firms subject to the EU Capital Requirement Regulations and payment and electronic money institutions. They do not apply to Account Information Service Providers as defined in PSD2.
These Guidelines apply from 30 September 2019 to all outsourcing arrangements entered into, reviewed or amended on or after this date. There are also transitional arrangements extending up to 2021.
The FCA’s FG16/5 remains relevant to all other firms that we authorise.
Directory persons submission window opens in September
We will start the data collection phase for the new Directory in September. We held an event on 8 August for trade organisations to provide more information on the data submission process.
Banks, building societies, credit unions and insurance companies must submit their data between 9 September and 9 March next year using Connect. All other firms must submit between 9 December 2019 and 9 December 2020. This is key to developing the Directory following the publication of the Policy Statement. We will publish supporting information about the process on our website from 9 September.
Alternatives to High-Cost Credit
As part of our wider high cost credit review, in July we published a report setting out actions and recommendations to improve the availability and awareness of alternatives to high-cost credit.
The report:
- examines the market for alternatives to high-cost credit by looking at consumer demand and the availability of alternatives
- sets out the actions we have taken following the commitments we made in our high-cost credit publications of November and December 2018
- explains our and other organisations’ roles in supporting alternatives to high-cost credit
There is nothing to report in this area.
Payment firms -new regulatory reports
Payment firms will see changes and additions to regulatory reports under PSD2. Two new Connect notifications will be available from 14 September. The reports and notifications are:
- REP018 - Operational Risk reporting (new version available from 1 October)
- REP020 - Quarterly statistics on availability and performance of dedicated interfaces (new)
- NOT004 - Notification that the fraud rate exceeds the reference fraud rate under SCA-RTS article 20 (new)
- NOT005 - Problems with a dedicated interface (SCA-RTS article 33 (3)) (new)
We will notify e-money firms separately when their REP018 and REP020s are available.
EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02)
In February 2019 the European Banking Authority (EBA) published its Final Report on outsourcing arrangements.
The Guidelines are for credit institutions and investment firms subject to the EU Capital Requirement Regulations and payment and electronic money institutions. They do not apply to Account Information Service Providers as defined in PSD2.
These Guidelines apply from 30 September 2019 to all outsourcing arrangements entered into, reviewed or amended on or after this date. There are also transitional arrangements extending up to 2021.
The FCA’s FG16/5 remains relevant to all other firms that we authorise.
Is your firm prepared for Brexit?
Unless a deal is approved or a further extension is agreed the UK will leave the EU without an implementation period on 31 October 2019. We expect all firms to continue to plan for all scenarios, including a no-deal Brexit at the end of October 2019.
You should consider the impact of Brexit on your business. You should have plans in place to address any risks for your firm and any impact it could have for your customers.
Check our website for more information, which includes information on specific financial service sectors.
There is nothing to report in this area.
New platform to improve the way we collect data from firms
Thank you to everyone who has completed our online survey so far – there is still time to share your experience with our data collection system, Gabriel. We recently announced plans to move to a new platform for our data collection systems, which includes replacing Gabriel. We would like to hear your thoughts on the way we collect data from firms and how we can improve it. Initial changes to our platform will be technology focused, so to begin with there will be no change to the way you currently provide data to us.
Send us your feedback on our proposals by 15 September 2019.
Senior Managers & Certification Regime: keep up to date with the latest information
From 9 December 2019, we are extending the Senior Managers and Certification Regime (SM&CR) to solo-regulated firms. You can find out more about SM&CR and how to prepare on our recently updated webpages. You can also read our practical Guidance on preparing Statements of Responsibilities and Responsibilities Maps.
We’ve published the findings of our review into the embedding of SM&CR in the banking sector.
We’ve also published Final Rules (see our Hot Topic) and an SM&CR and culture podcast.
Inside FCA podcast: Culture and the Senior Managers & Certification Regime (SM&CR)
Listen to our podcast with FCA Executive Director Jonathan Davidson and guest Dame Jayne-Anne Gadhia on the impact of SM&CR and its role in creating a healthy financial services culture.
Former Chief Executive of Virgin Money, Jayne-Anne draws on her own experiences of firm cultures over the years, and talks about her views on how to create a healthy culture. She and Jonathan discuss how the SM&CR, including Conduct Rules and Certification, relates to culture and behaviours and how it can benefit firms.
Advisory Group on Open Finance Launched
The Advisory Group on Open Finance met for the first time in July to look at extending Open Banking-like data sharing to a range of financial products.
The Advisory Group comprises industry experts, consumer and business representatives, academics and government. The Group will be considering how Open Finance will develop, as well as the barriers and ethical and practical issues around data sharing.
The Advisory Group’s work will inform the FCA’s Call for Input, which will shape the FCA’s strategy towards Open Finance, to be published later this year.
EBA Guidelines on outsourcing arrangements (EBA/GL/2019/02)
In February 2019 the European Banking Authority (EBA) published its Final Report on outsourcing arrangements.
The Guidelines are for credit institutions and investment firms subject to the EU Capital Requirement Regulations and payment and electronic money institutions. They do not apply to Account Information Service Providers as defined in PSD2.
These Guidelines apply from 30 September 2019 to all outsourcing arrangements entered into, reviewed or amended on or after this date. There are also transitional arrangements extending up to 2021.
The FCA’s FG16/5 remains relevant to all other firms that we authorise.
Credit Information Market Study launched
We have launched a market study to examine how the credit information market operates and its impact on consumers. It will focus on the following themes:
- the purpose, quality and accessibility of credit information
- market structure, business models and competition
- consumers’ engagement and understanding of credit information and how it affects their behaviour
The study will assess how the sector is working now and how it may develop in the future.
We will report on our preliminary conclusions in Spring 2020 including, if necessary, a discussion of potential remedies.
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