 Sector views
This week, we published our latest Sector Views analysis of the risks and harm that we see across financial services markets. It sets out our comprehensive assessment of the state of financial services markets, the key concerns we are already working on and the problems that we’re planning to address.
Whatever the nature of your business, it’s important that you take a close look at the Sector Views and carefully consider how what we’ve found relates to what you do. We expect firms to carefully consider the risks and harm we’ve identified in the areas that they work in, and how they can address these themselves.
We want industry and firms to be part of the solution to the problems that we’ve found. It’s in everyone’s interest that this happens – firms should benefit from better serving customers and markets, and trust in financial services depends on industry being seen to do the right thing. Where responsible firms act to resolve risks before they become problems, that leaves regulators and policy-makers more time and resource to spend on dealing with those who don’t.
We’ll say more about our plans and priorities when we publish our Business Plan for 2020-21 shortly. In the meantime, reading the Sector Views should give you a clear idea of where we see the need for action – from regulators, from firms and others.
Firms now need to update or confirm their Firm Details annually
Firms that are subject to Sup 16.10 rules, are now required to review and confirm their Firm Details annually, within 60 business days of their Accounting Reference Date (ARD). Even if your firm details have not changed from the previous year, you will still need to log on to Connect and confirm that they are up to date. You can only do this on Connect.
Last year we emailed, called, wrote and sent texts to firms who were not registered on Connect, so they could prepare for the rule change that came into force this month. You may have also seen information in this newsletter, on our website and on social media.
Thousands of firms registered in preparation – but we know that many have not yet. These firms should register now, so they are able to comply with the new rules. When updating/confirming Firm Details, firms need to fill in and submit the firm details form on Connect. If you need support registering and updating your firm details, visit our website, watch our video guide, or call 0300 500 0597.
We will consider using our full regulatory tools - including enforcement - where firms fail to comply. All firms must also meet the principles for businesses, including principle 11 - relations with regulators - which outlines that a firm must deal with its regulators in an open and cooperative way, and disclose firm information.
PS20/01: Mortgage Advice and Selling Standards
The changes in this Policy Statement (PS) are part of a package of remedies from the Mortgages Market Study.
These remedies will work together to support our aim of ensuring consumers have the information and support they need to make informed choices about buying a mortgage.
The Mortgages Market Study (MMS) identified three potential harms in our mortgage advice and selling standards:
- our rules and guidance may be a barrier to developing tools that help consumers choose a mortgage
- consumers looking to buy an execution-only mortgage (ie without advice) are diverted to advice; execution-only sales channels are not always easy to use
- many consumers are overpaying for their mortgages, even when they get advice
To address these harms, we consulted on changes to our mortgage advice and selling standards, in Consultation Paper 19/17.
This PS summarises the feedback we received and sets out our final rules.
The changes in this PS make it easier for firms to present options to consumers without giving regulated advice. They help firms make execution-only sales channels easier to use.
The changes to our rules and guidance will come in to force on 31 January 2020.
To allow firms time to adapt their process to accommodate the changes, some of the rules will have transitional provisions until 30 July 2020.
New requirements to help consumers with pre-existing medical conditions better navigate the travel insurance market
On 5 February 2020, we published a Policy Statement introducing new requirements to help consumers with more serious pre-existing medical conditions (PEMCs) better navigate the travel insurance market.
Our changes will:
- require firms to signpost consumers with PEMCs, in certain circumstances, to a directory of specialist providers
- introduce guidance to ensure that firms selling travel insurance policies that exclude PEMCs tell consumers whether and how these PEMC exclusions can be removed
- introduce guidance reminding firms to assess the risk from medical conditions and calculate the premiums using reliable information that is relevant to assessing this risk
We have been working with the Money and Pensions Service (MaPS) to create a directory that meets our criteria for a directory of specialist providers. MaPS expects to launch its directory in Summer 2020.
Firms offering retail travel insurance must implement the new requirements by 5 November 2020. Firms will also be required to include the details of the directory on their website within 30 days of becoming aware of the directory going live.
Cross border payments between UK and EEA
The UK left the EU on 31 January 2020, entering an implementation period. Currently banks and PSPs do not need to provide information such as the address of the payer when making intra-EEA payments. However, this will be required for payments after the implementation period, including direct debits between the UK and the EEA.
You should use this implementation period to proactively fill information gaps that might affect cross-border payments. This includes contacting relevant originators to get missing information which you will require for direct debits.
Our website gives points for your firm to consider after the implementation period.
Banks and building societies must submit their directory persons data by the 9 March deadline
Dual Regulated firms (banks, building societies, credit unions and insurance companies) have until 9 March 2020 to submit their directory persons data, using the Directory Persons form available on Connect.
For help submitting or amending data, firms should refer to the support materials on the directory persons webpage.
The directory persons data will be published on the Financial Services Register from the end of March 2020.
Tip: We’re advising firms to submit data ahead of the deadline so there’s sufficient time to rectify any problems.
Portfolio letter for financial advisers & Assessing Suitability Review 2
On 21 January, we published our portfolio letter for financial advisers. The letter outlines the key risks of harm from this sector and our approach to dealing with them. Financial advice firms should review the letter and consider whether they need to take any action.
We also announced further work on the suitability of advice and associated disclosure (known as ‘Assessing Suitability Review 2’). The review will focus on initial and ongoing advice to consumers on taking an income in retirement. Following the pension freedom reforms, we want to assess the outcomes consumers are receiving in this evolving market.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Progress update on RDR/FAMR
On 14 January, we published an update on our review and evaluation of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).
Our last update was in July 2019. Since then, we have collected industry data from firms and commissioned qualitative research on how consumers interact with the market. Together with our Financial Lives survey, this information will inform our view of the state of the market and how it is developing for consumers. We expect to publish our final RDR/FAMR Review report later in the year.
Portfolio letters for asset managers and alternative investment firms
On 20 January, we published two portfolio letters for asset managers and alternative investment firms. The letters outline our view of the key risks of harm that firms in these sectors pose to their customers or the markets in which they operate. It also explains our supervisory strategy and priorities. Firms in these portfolios should review the letters and consider whether they need to take any action.
Live & Local 2019/20 events
Our series of monthly Q&A roundtable discussions for mortgage intermediaries and lenders across the UK concludes in Newport in March.
There is no set agenda for these sessions; attendees at each session decide the topics for discussion. We will be joined by the Financial Ombudsman Service and an industry expert at each session.
Visit our Live & Local webpage for further details and to register.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Dual regulated firms must submit their directory persons data by the 9 March deadline
Dual Regulated firms (banks, building societies, credit unions and insurance companies) have until 9 March 2020 to submit their directory persons data, using the Directory Persons form available on Connect.
For help submitting or amending data, firms should refer to the support materials on the directory persons webpage.
The directory persons data will be published on the Financial Services Register from the end of March 2020.
Tip: We’re advising firms to submit data ahead of the deadline so there’s sufficient time to rectify any problems.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Publishing and disclosing costs and charges to workplace pension scheme members
This month we published our policy statement on Publishing and disclosing costs and charges to workplace pension scheme members and amendments to COBS 19.8. It discharges a duty, created by the Pensions Act 2014, for us to make rules requiring ongoing disclosure and publication of costs and charges information by scheme governance bodies to the members of ‘relevant’ pension schemes. These include the workplace schemes we regulate. It also sets out some amendments to our COBS 19.8 rules, reflecting feedback to our Call for Input on PRIIPs Regulation.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Portfolio letter for benchmark administrators
On 24 January, we published a portfolio letter for benchmark administrators. The letter sets out our view of the potential for harm as well as the underlying drivers that benchmark administrators could pose to their customers and the markets in which they operate. Firms in this portfolio should review the letter and consider whether they need to take any action.
Credit Brokers Portfolio Strategy Letter
We recently published our Credit Brokers Portfolio Strategy Letter which is being sent to credit broking firms.
The letter sets out our view of the key risks credit brokers pose to their customers and the markets in which they operate. We want credit brokers to consider these risks, the degree to which their firm presents such risks and to assess their strategies for managing them. The letter also outlines our supervisory strategy for firms.
If you have any questions about the letter, please contact your normal supervisory contact on 0300 500 0597.
Senior Managers and Certifications Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Dear CEO letter on persistent debt
We have written to credit card firms telling them to review their approach to consumers in persistent credit card debt and outlining our expectations. These include:
- stressing the importance of encouraging customers to discuss potential repayment arrangements, and offering forbearance if they can’t afford these options.
Raising our concerns that firms may cancel or suspend credit cards for everyone in persistent debt, including those willing to engage and come to an agreement. In these circumstances, firms are not allowed to suspend a credit card without having an objectively justifiable reason.
Update on our work on overdrafts
We published research showing that 7 out of 10 overdraft users will be better off or see no change following the implementation of our new rules. We also wrote to the major banks and building societies, asking them to provide evidence of their pricing decisions. We have made it clear that we expect firms to take steps to help customers who may be worse off because of these changes, including asking to see their plans for how they are dealing with the most affected customers. We will be keeping a close eye on the market and will act should we see continued harm.
Credit unions must submit their directory persons data by the 9 March deadline
Dual Regulated firms (banks, building societies, credit unions and insurance companies) have until 9 March 2020 to submit their directory persons data, using the Directory Persons form available on Connect.
For help submitting or amending data, firms should refer to the support materials on the directory persons webpage.
The directory persons data will be published on the Financial Services Register from the end of March 2020.
Tip: We’re advising firms to submit data ahead of the deadline so there’s sufficient time to rectify any problems.
Important changes affecting the Material Risk Taker function on the Directory Persons Form
The Directory persons form does not currently give Credit Unions the option to notify us of employees who are significant risk takers. We propose to rename the ‘[PRA CF] Material Risk Taker’ to ‘[PRA CF] Significant Risk Taker or Material Risk Taker’ on the form and will consult on this.
We ask Credit Unions to submit data using the existing ‘(PRA) Material Risk Taker’ CF on Connect. We will automatically update these records, presenting this as ‘[PRA CF] Significant Risk Taker or Material Risk Taker’ on the FS Register. This will also be applied to previously submitted data.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Are you ready for the end of the SCA online banking adjustment period on 14 March 2020?
The Strong Customer Authentication (SCA) online banking adjustment period is ending on 14 March 2020.
From 14 March 2020:
- all account service payment service providers (ASPSPs) must have in place either a dedicated interface (API) with a contingency mechanism, unless exempted, or a modified customer interface (MCI)
- ASPSPs must ensure that their interfaces enable TPPs to identify themselves using eIDAS certificates
- all third-party providers (TPPs) must have eIDAS certificates
We will take appropriate supervisory and enforcement action against firms that fail to comply with the requirements for SCA and identification.
Please see our website for more information.
Senior Managers and Certification Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
Brexit
The UK left the EU on 31 January 2020 and has entered a transition period, which is due to end on 31 December 2020. During the transition period, EU law will continue to apply in the UK, and existing financial services passporting rights will remain valid. Find out what this means for firms and consumers on our Brexit pages.
Temporary Permissions Regime
The TPR will now take effect at the end of the transition period. Firms and funds which have not notified us, but which want to use the regime after the end of the transition period will need to submit a notification later this year when the notification window reopens. Firms and fund managers that have already submitted a notification need take no further action at this stage. We will confirm our plans for reopening the notification window later this year. More information is available on our website.
FCA refuses to authorise claims management company (CMC) for failing to meet required standards
We have refused the application of FS Claims Ltd to conduct claims management activities. Its application was incomplete, and it has since failed to respond to our requests for information.
Authorised firms, and those seeking authorisation, must engage with the FCA in an open and cooperative way. Firms must comply with the requirements and standards under the regulatory system which apply to the firm. For more information see Authorisation: what’s involved.
This is the first refusal of a CMC’s authorisation application since we took over the regulation of CMCs on 1 April 2019. Full details in the Final Notice.
Acting in the best interest of FSCS claimants and in compliance with data protection
We have published a joint statement with the Information Commissioner’s Office and Financial Services Compensation Scheme (FSCS), about claims management companies’ (CMCs) use of personal client data and claims that can be made to the FSCS for free.
We are aware that some FCA-authorised firms and insolvency practitioners have attempted to sell clients’ personal data to CMCs unlawfully.
CMCs that intend to buy and use such personal data must be able to demonstrate how they have considered the fair treatment of customers and how their actions comply with data protection and direct marketing laws.
Senior Managers and Certifications Regime (SM&CR)
The SM&CR is a catalyst for driving cultural transformation and sets a new standard of personal conduct in financial services.
By 9 December 2020 solo-regulated firms will need to ensure:
- all relevant staff are trained on the 5 Conduct Rules and understand how these rules apply to their roles
- all staff in certified roles are fit and proper to perform that role and are issued with a certificate
- you submit data to us for directory persons working in financial services
This will take time so you should start preparing now.
Read our SM&CR guide for solo-regulated firms for more information.
2020/2021 fees and levies
Firms that intend to cancel their permission and do not want to be liable for next year’s annual fee (1 April 2020 to 31 March 2021) need to apply to cancel online, through Connect by 31 March 2020. If they do not they will be liable for the full annual fee.
Inside FCA Podcast interview with Andrew Bailey
In an in-depth interview, Andrew Bailey looks back at the past year and his time as Chief Executive as he discusses challenges and achievements, and calls on tech giants to collaborate with the FCA to help protect consumers. Listen to the full interview on our website or the FCA SoundCloud page.
Acting in the best interest of FSCS claimants and in compliance with data protection
We have published a joint statement with the Information Commissioner’s Office and Financial Services Compensation Scheme (FSCS), about claims management companies’ (CMCs) use of personal client data and claims that can be made to the FSCS for free.
We are aware that some FCA-authorised firms and insolvency practitioners have attempted to sell clients’ personal data to CMCs unlawfully.
CMCs that intend to buy and use such personal data must be able to demonstrate how they have considered the fair treatment of customers and how their actions comply with data protection and direct marketing laws.
Portfolio letter for benchmark administrators
On 24 January, we published a portfolio letter for benchmark administrators. The letter sets out our view of the potential for harm as well as the underlying drivers that benchmark administrators could pose to their customers and the markets in which they operate. Firms in this portfolio should review the letter and consider whether they need to take any action.
Operational Resilience Consultation Paper Webinar
We’re running a joint webinar with the Bank of England and PRA on our operational resilience consultation. We’ll be discussing the key concepts in our consultation papers and you’ll have the opportunity to ask questions.
The webinar will be hosted by Megan Butler, Executive Director of the FCA’s Supervision – Investment, Wholesale and Specialist Division, and Lyndon Nelson, Deputy CEO of the PRA.
The webinar is free and open to everyone. It runs from 9:30am to 10:30am on Friday 13 March 2020. Register by following this link.
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