 Checking if you’ve registered for RegData ahead of your move
Welcome to this edition of Regulation Round-Up.
Since October we’ve been moving firms across from Gabriel to our new data collection platform, RegData. We’re moving firms and their users to RegData in stages, based on their reporting requirements. So far, 22% of the firm population has successfully moved to RegData and have begun to use the new system for their regulatory reporting.
To prepare for the move, all Gabriel users need to register for RegData before their planned moving date, by logging in to Gabriel and completing a one-time activity to link their Gabriel account to their Connect account. We're simplifying how firms log in to FCA systems so that they can use the same login details for Connect and RegData.
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.
We have also invited a further group of respondents to our 2019 survey and other firms to our RegData familiarisation activity, based on their reporting requirements. These users have 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.
RegData 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 reduce the burden on firms.
SM&CR: Certification Regime and Conduct Rules training
Certification Regime considerations for all firms
Firms must ensure their Senior Managers and Certification Staff are fit and proper (F&P). Staff who aren’t F&P can’t continue to perform certified roles.
The Certification Regime requires firms to certify some key staff as F&P. Firms only need to certify those performing defined Certification Functions. A list of these are in our SM&CR guide.
Certificates must state the firm is satisfied the person is F&P to perform the function to which the certificate relates and set out aspects of the affairs of the firm in which the person will be involved in performing the function.
In a good implementation of F&P:
- The accountable Senior Manager should have adequate oversight over the certification process. This shouldn’t be delegated entirely to another function such as HR or Compliance.
- Firms should ensure they maintain up to date, accurate lists of their certification staff.
- There should be development plans where areas of improvement are identified during assessments.
There are some additional considerations for larger firms:
- When designing F&P assessment processes, first line management should own the process, giving thought to individual requirements for specific roles.
- Managers must be adequately trained so they know what is expected of them.
- Formalising capability frameworks and job descriptions help managers make consistent and thorough F&P assessments.
- The certification requirements should be integrated into existing HR and performance management processes, including what happens if someone fails the assessment.
- Some assessments won’t be clear cut. Panels including senior managers can be used to consider marginal assessments.
Our website provides more information, including examples of positive and negative indicators of the Certification Regime.
You can also watch our new video on things to consider when training relevant staff on how the Conduct Rules apply to their roles.
Update on SMR and CF (AR) applications
In the run up to the extension of the Senior Managers and Certification Regime (SM&CR) to solo regulated firms in December 2019, the FCA managed the automatic conversion of thousands of roles held under the former Approved Persons regime to new Senior Manager functions. The change of regime also brought about a very large volume of applications for new approvals. In the final 4 months of 2019 we received over 6,000 SMR (Senior Manager Regime) and SIF (Significant Influence Function) applications – more than were received in the whole of the previous 8 months. As a result, the average length of time to determine these applications has increased.
To address this, we have increased resourcing which has significantly reduced the volume of SMR/SIF applications in progress. We expect to see the overall volumes reduce over the remainder of financial year 2020/21. But applications may still take longer to determine than we would like over the next few months, while these measures take effect.
Applications to hold a Controlled Function at an Appointed Representative that are non-routine are dealt with by the same teams as handle Senior Manager applications. Because information about such candidates will be examined in detail, these also take longer to determine. Firms submitting candidates who either have been or intend to become involved with the provision of advice on defined benefit pension transfer, for example, should also expect these applications to take longer to be determined.
You can help us to determine your application as quickly as possible by:
- Carefully checking the application before submission to ensure that it has been completed in full.
- For SMR applications, completing a Disclosure & Barring Service (DBS) check before submission.
- Conducting all appropriate due diligence checks, including regulatory references, before submitting a candidate and including details of those checks with your application.
- Responding promptly and fully if we contact you for further information about an application.
We are processing routine applications to be approved to hold a Controlled Function at Appointed Representatives quickly and within the relevant service standards.
Publication of Solo-Regulated firms Directory Persons data on The Financial Services Register
We will start to publish Directory Persons data for solo regulated firms on the Financial Services Register from 14 December. Solo-regulated firms must submit their Directory Persons data via Connect by 31 March 2021. We will incrementally display data from solo-regulated firms as it is submitted. See the FCA website for more details.
FSCS levy update in latest edition of Outlook
The Financial Services Compensation Scheme (FSCS) recently published the latest edition of its industry newsletter, Outlook. It explains the reasons behind the levy increase and calls for action from the entire industry to work together to tackle the underlying causes of the rising levy. Outlook also covers the work FSCS does to try to reduce the levy and how FSCS is prepared for the challenges ahead in 2021 as we start to see the effects of coronavirus on the industry.
Read Outlook here: https://www.fscs.org.uk/news/fscs-news/outlook/
Daily updates
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Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Evaluation of the impact of RDR and FAMR
We have published an evaluation of the impact of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).
Our evaluation has found the advice and guidance market is moving in the right direction, but still has further to go. Further innovation could help even more consumers make better use of their finances.
We will supplement the evidence from this review with feedback to our Call for Input on consumer investments to inform our next steps to tackle some of the regulatory challenges. We expect to carry out this work during the first half of 2021.
Lloyd’s and London Market Insurers portfolio letter
We recently published our Lloyd's and London Market Insurers portfolio letter. This was sent to insurers who predominantly operate within the Lloyd’s and London insurance market as well as P&I Clubs and Run-off firms.
It sets out our view of the key risks of harm to customers posed by these firms. We want firms to consider these risks, the degree to which their firm presents such risks, and to assess their strategies for mitigating them. It also outlines our supervisory strategy for firms.
Please contact us on 0300 500 0597 if you have any questions about this.
Business interruption (BI): Supreme Court appeal
The Supreme Court appeal hearing has now ended. Lord Reed recognised the importance of an early judgment for the businesses affected. He said that the Justices would do what they could to provide judgment as quickly as possible, but could not comment on whether that would be before Christmas or in January. The Court intends to keep the parties informed, and we will update our BI webpage to that effect as soon as we can. Copies of the transcripts for each of the days can be found on our BI web page.
The MaPS Drawdown Comparator Tool
In July 2019, we published final rules on investment pathways to be offered to consumers at the point of retirement (PS19/21). These rules include requirements for firms to signpost consumers to the Money and Pensions Service (MaPS) drawdown comparator tool at various points in the retirement journey.
MaPS have developed the drawdown comparator tool, which will be available for consumers to use from 1 February 2021. This is the link firms can use to signpost consumers directly to the tool:
https://www.moneyadviceservice.org.uk/en/tools/drawdown-investment-pathways
The link will not work until 1 February 2021.
Portfolio letter for SIPP operators
On 3 December 2020, we published a portfolio letter for self-invested personal pension (SIPP) operators. The letter sets out our view of how consumers using SIPPs may be harmed, and how we expect SIPP operators to improve outcomes for consumers and the markets in which they operate. Firms in this portfolio should review the letter and consider whether they need to take any action.
Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Update on CP20/15: Liquidity mismatch in authorised open-ended property funds
CP20/15 proposed introducing notice periods to deal with the liquidity mismatch in authorised open-ended property funds. We have received numerous responses.
As we consider the case for change, we are focused on the long-term interests of investors. We will explore with market participants how to address the operational challenges which would need to be resolved before a change could come into effect. If we do decide to proceed with notice periods, we would take into account the time needed to ensure the change could be implemented smoothly, when setting the date on which any new rule comes into force.
Rent-to-Own price cap – evaluation
We have published an evaluation of the impact of the price cap on rent-to-own (RTO) products that we introduced in April 2019.
The evaluation shows that the price cap has been effective. It led to an estimated average fall in prices of 19% for the 2 largest firms that were in the market when we intervened, and the highest prices charged by RTO firms have been significantly reduced. We found no evidence that RTO firms raised their other prices or charges to make up for the revenue lost to the price cap.
Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Digital Sandbox Pilot
The Digital Sandbox Pilot has opened to participants. Thirty organisations will take part in the pilot to develop solutions to tackle challenges relating to, or exacerbated by, coronavirus; scams and fraud, consumer vulnerability and SME access to finance. A key feature of the pilot is the building of a community of interested stakeholders to interact with the teams and solutions as they are being developed in the testing environment, sharing knowledge, experience and expertise. Any organisations or individuals who want to observe or potentially be involved with a team by being a mentor can register here.
Brexit and UK firms’ EEA customers
From 11pm on 31 December 2020, EU law will no longer apply in the UK and the current ‘passporting’ system will end.
If you have any customers in the EEA, you need to have decided on your approach to servicing your existing contracts with them. You should service customers in line with local law and local regulators’ expectations, and be guided by achieving appropriate outcomes for customers.
This applies to firms in all sectors. If you decide to stop servicing customers in the EEA after the transition period, we expect you to treat your customers fairly.
See our website for information on Brexit and the retail investment sector.
Brexit and making and receiving payments for EEA customers
Some UK banks are notifying EEA-based customers that they will be closing their bank accounts after the transition period because of Brexit.
EEA residents receiving or making a payment into a pension, annuity, income drawdown, insurance, investment or savings product may be affected. If you have customers in the EU who rely UK bank accounts that may be closed, you will need to review your capability to make and receive payments to and from an overseas account.
You need to identify impacted customers and work to implement alternative arrangements so that they can continue to benefit from their product.
Details are available on the website.
Brexit videos available to view
Last month we held a Brexit webinar to advise on what the end of the transition period on the 31 December means for firms and consumers.
Nausicaa Delfas (Executive Director of International), Zertasha Malik (Head of International) and Greg Sachrajda (Head of International Delivery) highlighted key information to help firms prepare and answered questions.
Watch our short videos on what firms and consumers need to consider before the end of the transition period now available on our website.
Brexit: information for UK retail banking firms
The Dutch National Bank (DNB) has published a statement confirming that UK credit institutions cannot provide current or savings accounts to retail customers in the Netherlands following the end of the transition period. There are specific issues that firms might need to consider when deciding how to implement the DNB’s overall approach set out in its statement. Please visit our webpage for more information.
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