 First firms to begin move to new data collection platform, RegData
Welcome to this edition of Regulation Round-Up.
As announced on 23 September, the first firms will soon be moving across from Gabriel to our new platform for data collections, RegData.
This work is central to our Data Strategy, which sets out how we plan to harness the power of data and advanced analytics to transform the way we regulate and minimise the burden on firms.
All 52,000 firms that provide regular regulatory submissions in Gabriel will need to use RegData in the future. We’re moving firms and their users to RegData in stages, based on their reporting requirements.
To prepare for the move, we have set out the key steps firms will go through as they move to RegData, as well as a range of online resources to guide them when using the platform. Every Gabriel user will receive 3 direct email reminders from Gabriel advising them of their firm’s moving date - 3 weeks, 5 days and 1 day before their move. Firms should continue to use Gabriel as normal until we move them to RegData.
In September, we invited a group of respondents to our 2019 survey and other firms to our RegData familiarisation activity, based on their reporting requirements. These users had the opportunity to use the new RegData system in a test environment and provide feedback. User experience is important to us and we will continue to engage with firms in future familiarisation activities. While we cannot commit to taking forward all suggestions, we will review all feedback as we continue to improve RegData.
Proposals to tackle concerns about general insurance pricing
In September we published the final report of our market study into the pricing of home and motor insurance.
We have proposed a package of remedies to stop firms systematically increasing prices in home and motor insurance for loyal customers in the future, as well as ensuring that firms in the general insurance market focus on providing fair value to all their customers.
We are proposing that when a customer renews their home or motor insurance policy, the renewal price a firm offers can be no greater than the price that the customer would face if they were new to their provider through the same sales channel. Firms would be free to set the level of new business prices, but they would not be able to systematically discriminate against customers on the basis of how long they have held their policy.
We are also consulting on other new measures to further boost competition and deliver fair value to all insurance customers including:
- product governance rules requiring firms to consider how they offer fair value to all insurance customers over the longer term
- requirements on firms to report certain data sets to the FCA so we can check they are following the rules
- making it simpler to stop automatic renewal across all general insurance products
We are seeking views on our proposals by 25 January 2021.
Brexit
The transition period will end at 11pm 31 December 2020, at which point EU law will no longer apply in the UK and passporting will cease. Firms should make sure they have assessed the impact on them and their customers, and have plans in place to ensure they are ready.
We have worked with the Treasury to put in place temporary measures to minimise the potential for disruption for firms and consumers. This includes the Temporary Permissions Regime (TPR) and the Temporary Transitional Power (TTP).
We also continue to prepare to take on additional functions at the end of the transition period. These include the new systems needed for us to run our own MiFID/R regime, primarily in relation to transparency and transaction reporting, getting ready to supervise Credit Ratings Agencies and Trade Repositories and finalising the system changes needed to ensure we can fulfil our regulatory responsibilities.
While we intend to apply the TTP on a broad basis from the end of the transition period until 31 March 2022, there are some areas where it would not be consistent with our statutory objectives to grant transitional relief, or where it would not otherwise be appropriate to do so. In the key areas listed on our webpage, we expect firms to prepare now and be ready to comply with their changed obligations by 31 December 2020. For any remaining onshoring changes where the TTP does not apply, firms and other regulated persons must take reasonable steps during the TTP period to ensure compliance, at the latest by 31 March 2022.
For more information please see our Brexit pages.
Further guidance on consumer credit products and overdrafts
On 30 September we published additional guidance for firms on consumer credit and overdrafts to ensure continued support for consumers who face payment difficulties due to coronavirus (Covid-19). The measures apply to both consumers who are coming to the end of their support under the current guidance and continue to face financial difficulties and those whose financial situation is affected by coronavirus after the current guidance ends on 31 October 2020.
The further guidance on consumer credit products covers users of credit cards and other revolving credit, personal loans, motor finance, buy-now pay-later, rent-to-own, pawnbroking and high-cost short-term credit products. We expect firms to provide tailored support and employ a full range of short and longer-term options to support their customers. We want firms to work with customers approaching the end their payment deferral to provide support and put in place affordable, sustainable repayment arrangements.
We also published further guidance for firms on overdrafts to provide tailored support for customers in financial difficulty due to coronavirus. This includes reducing or waiving interest, agreeing a programme of staged reductions in the overdraft limit, or supporting customers to reduce their overdraft usage by transferring the debt.
The guidance came into force on 2 October 2020. We will keep the guidance under review as the pandemic develops and have committed to review it within six months to determine whether it’s relevant, needs to be amended, withdrawn or replaced.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Regulatory Initiatives Grid
The Financial Services Regulatory Initiatives Forum has issued the second edition of the Regulatory Initiatives Grid which aims to give firms a clear idea of upcoming regulatory work. Upcoming work in the latest iteration includes the LIBOR transition and ongoing work to prepare the financial services sector for the end of the EU exit transition period. Also included are Government reviews, including the payments landscape review and the future regulatory framework review. The Forum is comprised of the Bank of England (including the Prudential Regulation Authority), FCA, Payment Systems Regulator and Competition and Markets Authority, with HM Treasury attending as an observer member.
Daily updates
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Dear CEO letters on Adequate Client Assets Arrangements
We have issued letters addressed to CEOs of firms which hold client money and/or custody assets as part of their business to remind them of their obligations under the Client Assets Sourcebook (CASS).
Firms should review their client assets arrangements including the specific areas set out in the letters, considering the current economic environment. Where deficiencies are identified, firms should take appropriate and timely action to rectify them. We also expect firms to notify us of any material concerns identified while reviewing the adequacy of their client assets arrangements.
We have published the letters on our website.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
The FCA and the Bank of England encourage market participants in further switch to SONIA in interest rate swap markets
Following close engagement with market participants, the FCA and Bank of England support and encourage liquidity providers in the sterling swaps market to adopt new quoting conventions for inter-dealer trading based on SONIA instead of LIBOR from 27 October this year. The intention is to facilitate the further shift in market liquidity toward SONIA swaps, bringing benefits for a wide range of end users and other market participants as they move away from use of LIBOR. This supports the Working Group on Sterling Risk-free Reference Rates’ target to cease initiation of new Sterling LIBOR-linked linear derivatives maturing after 2021 by end-Q1.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Dear CEO letter: Adequate Client Money Arrangements
The impact of coronavirus is being felt widely and is affecting all the entities we regulate in ways that may not have been predicted. In these circumstances, it is imperative that your firm continues to maintain adequate arrangements that safeguard the client money it holds for customers.
Our Dear CEO letter highlights those areas that are particularly important to maintaining adequate client money arrangements in the current environment. It also reminds firms of their obligations to continue to oversee those arrangements and notify us if they identify any material concerns.
Update on Business interruption insurance test case appeals process
At the consequentials hearing on 2 October 2020, the FCA was granted a ‘leapfrog’ certificate allowing us to seek leave from the Supreme Court to appeal aspects of the judgment directly to the Supreme Court. The orders made at the consequentials hearing included a series of declarations as to the effect of the judgment.
The FCA will review the declarations and decide on its next steps. Our objective throughout this case has been to achieve clarity for everyone involved as quickly as possible and that remains the case. We will continue discussions with insurers and action groups to find a solution that avoids the need for appeal and enables pay-outs on eligible claims as quickly as possible, whilst pressing on with the application to appeal.
Finalised Guidance: Cancellations and refunds - helping consumers with rights and routes to refunds
There has been an unprecedented number of cancellations of trips, holidays, and other events. In these circumstances, consumers are generally entitled to claim a refund from the travel or service provider or one of the travel guarantee schemes. Consumers might also be able to make a claim with their credit or debit card provider or their travel insurer.
Our guidance is aimed at both credit and debit card providers as well as insurance providers and is designed to ensure that these firms handle enquiries and claims from consumers in a way that minimises inconvenience to the consumer.
Signposting to Travel Insurance – MaPS launches directory for people with serious pre-existing medical conditions
The Money and Pensions Service has launched a travel insurance directory for people with serious pre-existing medical conditions (PEMCs) on its Money Advice Service website. This directory meets our criteria for a Medical Cover Firm Directory.
As set out in PS20/3, from 7 November 2020 (30 calendar days after the directory is live and listed on our website as meeting our criteria for a Medical Cover Firm Directory), all firms offering retail travel insurance must include details of the directory on their websites. From 26 April 2021, firms must signpost certain customers with PEMCs to a directory.
EU Withdrawal: Rules that will apply at the end of the transition period
We have published an updated version of the FCA Handbook to show the rules that will apply at the end of the transition period. It has also set out details on how it intends to use the Temporary Transitional Power (TTP).
Landlord Insurance
Recent cases at Birmingham and York County Courts found that letting agents’ policies of rejecting tenancy applications because the applicant receives housing benefit are unlawfully discriminatory, i.e. contrary to the Equality Act 2010.
Considering this, firms should ensure their landlord insurance business (including terms and distribution arrangements) complies with our rules, including Principles 2 (skill, care and diligence) and 6 (treating customers fairly), ICOBS 5.2 (demands and needs) and PROD 4 (product governance).
Products that could encourage landlords to discriminate against someone with protected characteristics, or make it more likely that they will, are likely to breach our rules.
ESMA guidelines on liquidity stress testing
ESMA guidelines on liquidity stress testing (LST) in UCITS and AIFs have applied since 30 September 2020. The guidelines aim to increase the standard and consistency of LST by providing guidance on the design of models, governance and policies, and frequency of LST. We expect fund managers and depositaries to have regard to the guidelines, according to the nature, scale and complexity of the fund, when conducting LST as required by the UCITS and AIFMD Directives. Managers of money market funds (MMFs) should abide by the ESMA guidelines on stress testing in MMFs that have applied since May 2020.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Inside FCA Podcast
Listen to the latest podcast interview with Kate Tuckley, Head of the FCA’s new Retail 4 function, who explains the work of this multidisciplinary team, and what this approach to enforcement means for both firms and consumers.
Digital Sandbox Pilot
We have launched, with the City of London Corporation, a digital sandbox pilot to support innovative firms develop solutions in three areas affected by Covid-19 - preventing fraud and scams, supporting the financial resilience of vulnerable consumers, and improving access to finance for small and medium sized enterprises. The application window is open from 5 October to 30 October. Successful applicants will get access to features such as synthetic data assets, a development environment and collaboration tools. Firms which don’t have a proposition to test but who want to observe progress can register an account to stay up to date.
Digital Sandbox pilot – Call for relevant APIs
A feature of the digital sandbox pilot, that we have launched to support innovative firms address Covid-19 challenges, will be an Application programming interface (API) marketplace, where digital service providers can list their APIs for use by participants of the pilot. We are interested in hearing from firms who have relevant APIs that they would like to make available to the initiative. Please contact digital.sandbox@fca.org.uk to express your interest.
Brexit
The transition period for EU withdrawal is due to end on 31 December 2020. It is important that firms are taking the steps they need to be ready. Our Brexit pages have more information on what firms should be doing to prepare.
Preparing for the end of the transition period
We have published information about preparing for all scenarios at the end of the transition period for firms and consumers. Find out more:
Dear CEO letter – final preparations
Jointly with the Bank of England, we have written a letter to CEOs of UK and international banks on the importance of being prepared for the end of the transition period, in order to minimise disruption and ensure market stability.
We published web updates for firms that deposit client money and/or custody assets in any institution in the EEA, or have a safeguarding institution in the EEA, following the publication of CEO letters on Client Assets Sourcebook (CASS).
Temporary Permissions Regime (TPR)
The Temporary Permissions Regime (TPR) notification window re-opened on 30 September. More information can be found here.
Our approach to international firms
We are consulting on our approach to the authorisation of international firms. The consultation paper sets out our general expectations for international firms providing financial services that require authorisation in the UK. The consultation is open until 27 November.
Temporary Transitional Power (TTP)
To help firms prepare for the end of the transition period and to provide clarity, we published more information on the Temporary Transitional Power (TTP) and the key requirements that firms should prioritise for the end of the transition period.
FCA Handbook
An updated version of the FCA Handbook is now available which allows users to ‘time travel’ to a date beyond the end of the transition period (31 December 2020) to see what rules will apply to their firms.
The Handbook incorporates amendments made by all of the FCA’s Brexit-related instruments to the end of September. It also has two new sections containing Technical Standards and Level 3 Materials as well as a guide to help users navigate their way around the new areas and functionality of the site.
MiFID trade reporting and commodity limits
We published a statement reiterating that we will not require UK investment firms that transact on trading venues outside the UK, in the EU or elsewhere, to publish details of those transactions through a UK Approved Publication Arrangement (APA) after the end of the transition period. More information can be found here.
Industry testing - FCA FITRS
Industry testing for the FCA FITRS (Financial Instruments Transparency System) opened on 5 October 2020.
Firms who wish to operate as a UK SR after the end of the transition period may apply now by completing the draft SR application form and emailing it to SRapplications@fca.org.uk.
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