Regulation round-up September 2021

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financial conduct authority

Regulation round-up 

September regulation round-up

Tackling harm in the consumer investment market

Investors have never had more freedom. Technology has democratised the market, new products have become available and people have more access to their life savings. But that freedom comes with risk.

We want to give consumers greater confidence to invest, and to do so safely, understanding the risks. In turn, this should lead to fewer people being scammed or persuaded to invest in products that are too risky for their needs.

There is no single answer to this so our approach has to be multifaceted.

We have published our Consumer Investments Strategy to help people invest with confidence.

We will achieve this by drawing on all the tools at our disposal - a tougher gateway, stringent supervision and enforcement action, as well as new rules to make changes where harm is developing.  

Our strategy sets out a package of measures to achieve the following outcomes by 2025 and we will publish metrics to be transparent about how we’re meeting them:

  • reduce by 20% the number of consumers who could benefit from investment earnings but are missing out 
  • halve the number of consumers who are investing in higher risk products that are not aligned to their needs 
  • reduce the money consumers lose to investment scams perpetrated by regulated firms 
  • stabilise the compensation bill for the FSCS, and target a year-on-year reduction in the LDII funding class 

We’ll continue to take assertive action against bad actors that cause consumer harm. But we also need industry to work with us to strengthen standards and address poor practice. 

Hot Topics

Update on SMR and CF (AR) applications 

We communicated in December 2020 about the delays in determining SMR (Senior Manager Regime) and SIF (Significant Influence Function) applications, following the large volume of applications received before the extension of the Senior Managers and Certification Regime (SM&CR). 

We increased resourcing to address the delays and made good progress in determining most applications which had breached their statutory deadline and reducing the allocation times for applications. 

However, in Q1 2021 we received significantly higher volumes of applications than we forecast. As capacity was down due to Covid-19, we were not able to bring our case volumes and allocation times back to business-as-usual levels by the end of the financial year as planned. Therefore, we’re sorry that applicants may still face delays while we increase resources.  

Applications to hold a Controlled Function at an Appointed Representative that are both routine and 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. You can help us to process your application as quickly as possible by: 

  • carefully checking the application before submission to ensure that it has been completed in full 
  • remembering that for SMR applications you must complete a Disclosure & Barring Service (DBS) check before submission  
  • making sure you have conducted, and included, all appropriate due diligence checks, including regulatory references, before submitting a candidate 
  • responding promptly and fully if we contact you to seek further information about a submitted application

Joint FCA / TPR Pensions Value for Money DP 

The introduction of auto-enrolment and the shift of savings risk to individual savers from the adoption of Defined Contribution pensions means it is increasingly important that the pension sector maximises long-term value for consumers. 

To help drive industry focus on long-term value, we have published a joint Discussion Paper with The Pensions Regulator (TPR) seeking views on developing a framework to assess value for money in pension schemes.  

Currently it is difficult for Independent Governance Committees (IGCs), trustees and other stakeholders to assess how much value pension schemes deliver, as published data to compare schemes is both incomplete and inconsistent, preventing effective comparison. 

We want schemes to be able to compete effectively on long-term value for money, and believe transparency, through a common framework, is essential to achieving this. Common metrics and benchmarks will allow decision makers, intermediaries and others to compare the value of schemes effectively. This will help drive industry focus on long-term value to maximise retirement income for savers.  

Our paper discusses how to assess 3 key drivers of value for money in pensions; investment performance; customer service and scheme oversight; and costs. It considers establishing standard metrics and benchmarking mechanisms for each of these.  

We would like to hear your views on the ideas in the paper and any others you have. We are seeking views by 10 December and will publish a Feedback Statement in the first half of 2022, setting out your feedback and our next steps. You can send your feedback to 


Changes to the Appointed Representative Notification process

From 16 September 2021, Principal firms submitting Appointed Representative notifications via Connect will be required to submit an accompanying Form A, individual application (CF1 AR) and / or (CF 30 AR) simultaneously.

The amended process will combine Add Appointed Representative notifications with the requirement for firms to submit a Form A application. This will allow us to integrate both assessments simultaneously, those being the suitability of the Appointed Representatives and the fitness and propriety / overall regulatory conduct of the individual.  

Exemptions to the process include Introducer Appointed Representative notifications, Changes to Appointed Representatives and Sole Trader notifications.  

All Sectors

Consultation on new powers to remove unused firm permissions 

We’ve published draft guidance on a new power that will help us to quickly remove regulatory permissions that firms are no longer using. The changes will help to ensure the Register presents a clearer picture of the permissions firms hold and help prevent consumers being misled by incorrect or outdated information. 

It follows our ‘use it or lose it’ exercise in January, where we reminded firms of their obligation to review regulatory permissions and ensure they are up to date or removed if not needed. Firms should read the consultation and respond by 29 October 2021. 

Operational resilience: preparing for the switch from analogue to digital phone lines 

The current analogue phone network (known as the Public Switched Telephone Network or PSTN) is starting to be switched off across the UK. It will be completely decommissioned by the end of 2025 as we transfer over to a digital phone network, delivered through Voice over IP (VoIP).   

This is a major change to the UK’s telecoms networks and will affect anything that currently plugs into existing analogue telephone wall sockets. Firms should be making plans to ensure there is no disruption to the services they provide.   

Find out more about the switch.   

A chance to reflect on your cyber security 

Returning from the summer break is a great time to take stock of your firm's cyber resilience.  

Over the last few years, we’ve published tips and insights about establishing good cyber security from some of our largest regulated firms. They cover key topics like identity and access management, the importance of robust governance, and third party and supply chain risk. It’s worth reading these and seeing where you can tighten the bolts on your cyber resilience. You don’t want to get caught out.  

You’ll find our documents here covering cyber security insights from 2020, 2019 and 2018.

Investment Firm Prudential Regime (IFPR) new publications

The IFPR is our new prudential regime for MiFID investment firms. We have published our third IFPR CP, CP21/26, and second PS, PS21/9Please send your feedback to CP21/26 by 17 September 2021. 

As well as our response to feedback received to CP21/7, PS21/9 contains the near-final rules for the areas consulted on in both CP20/24 and CP21/7, so firms should familiarise themselves with the content. CP21/26 covers remaining aspects of the IFPR including disclosure, applications & notifications, technical standards, and depositaries. 

All our IFPR publications and further information about the regime can be found on our website. 

Redirect links from to will stop working – please review your websites

After 8 years, the redirects are due to be switched off on 1 Oct 2021 as part of decommissioning. Ahead of this, please review any links you have to and update them to the relevant links.

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IOSCO statement on Credit Sensitive Rates 

IOSCO published a Statement on 8 September 2021 highlighting key messages around the difficulty for Credit Sensitive Rates to meet its Principles for Financial Benchmarks. In particular, the Statement draws attention to the inverted pyramid problem (ie the wide use of a benchmark relative to the size of the market it measures). The statement reiterated that compliance with the IOSCO principles is not a one-time exercise, rather administrators and users alike should continually reflect on whether they are compliant. 

Update on Contract Continuity Legislation to Support the Wind-Down of Critical Benchmarks

The Government introduced the Critical Benchmarks (References and Administrators’ Liability’) Bill to Parliament on 8 September 2021. This is intended to address issues identified in the Treasury’s consultation on supporting the wind-down of critical benchmarks. Primarily, the legislation seeks to reduce potential disruption from LIBOR transition from the potential risk of contract uncertainty and disputes for contracts have been unable to transition from LIBOR to another benchmark (tough legacy contracts), where we have exercised our powers in the Financial Services Act.  

General Insurance Intermediaries & Insurers

Product value and coronavirus guidance 

We published the findings of our review into how firms responded to our requirements and expectations of their approach to product governance and value, and our related guidance published in response to Covid-19. 

All firms should consider our findings and any actions they need to take. Many firms still have work to do and this is a final opportunity to identify and address gaps or shortcomings in their approach to meeting the new product governance requirements set out in PS21/5, before their implementation on 1 October 2021. After this date, firms who cannot evidence compliance risk regulatory action. 

Life Insurance & Pension Providers

Periodic review of Guidance on calculating redress for unsuitable DB pension transfers 

We have announced the start of a periodic review of Finalised Guidance 17/9: Guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers. 

We have also set out what we expect of firms while the review is ongoing, including clarifying how firms should be applying or interpreting the guidance in certain areas. 

Read the Statement on our website to find out more. 

Fintech & Innovate Business

Green FinTech Challenge and Digital Sandbox

We’re looking for innovative firms developing solutions that will aid the transition to a net zero economy. Applications are now open for the Green FinTech Challenge 2021 and phase 2 of the Digital Sandbox. Find out more.

Payment Service Providers

Update on inherence for the purpose of Strong Customer Authentication 

We recently consulted in CP21/3 on amending our Approach Document to reflect the European Banking Authority’s (EBA) view of inherence for the purpose of Strong Customer Authentication (SCA). 

After considering consultation responses we have chosen not to reflect the EBA’s view of inherence in our Approach Document. We wanted to clarify this as soon as possible since we are aware firms are currently developing SCA solutions. 

We will publish our rationale and a summary of consultation responses in a full policy statement later this year.  

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