Regulation round-up October 2021

View in browser

financial conduct authority

Regulation round-up 

Sarah Pritchard, Executive Director, Markets

Introducing the FCA’s InvestSmart campaign – helping consumers to make better-informed investment decisions

On 20 October we launched InvestSmart, our new campaign to help investors make better-informed investment decisions that suit their individual financial circumstances and risk appetite. Drawing attention to potential investment harms from higher-risk products that are unsuitable for many people, and providing impartial, relatable information on basic investment principles, InvestSmart encourages a longer-term, more diversified approach to investing.

Research conducted by Britain Thinks on our behalf shows that newer investors are tempted into complex, riskier products that are very unlikely to suit their needs. Our Financial Lives survey suggests that during the pandemic, over 1m adults increased their holdings or bought their first high-risk investment.  Investment apps and social media hype have increased the pressure for new investors to participate, many of whom tell us that any significant loss would have a fundamental impact on their lifestyle.

Targeting a young, new investor audience, InvestSmart takes an inclusive approach to empower, rather than inhibit, investment choices. InvestSmart addresses this audience on their own terms, in language they relate to, using multiple advertising channels, including online video platforms (YouTube, TikTok etc), digital display advertising, social media and search engine ads. We also published an FCA press release that featured Olympic Freestyle BMX Champion Charlotte Worthington, highlighting the pitfalls of high-risk activities, the need for proper preparation before investing, and the sense of competitiveness driving investors.

To support InvestSmart’s aim of helping consumers make better-informed investment decisions, please download our partner toolkit and social media pack here. To receive more information and regular updates about the InvestSmart campaign, sign up here.

Hot Topics

Launch of the Joint Transformation Programme

Following the publication of a joint Dear CEO Letter and a plan for Transforming Data Collection from the UK Financial Sector in February 2021, the Bank of England and the FCA have launched  a Joint Transformation Programme. Together with firms who have come forward to participate, we are designing and testing solutions to address the issues we and industry face with today’s data collection process. To help industry participants with their internal budgeting and business planning, we have updated our expected resource and budget needs for collectively transforming data collections from April 2022 to April 2023. You can read the announcement on the TDC Webpage.

We held a webinar with the Bank on Wednesday 13 October to reiterate the key messages from the announcement and provide industry an opportunity to find out more. You can access a recording of the event and the presentation slides on the TDC Webpage.

There are still plenty of opportunities to get involved with the joint work programme. If you would like to be involved with the strategy-setting or delivery of the programme or if you would like to find out more, please contact

Soon we will engage with FCA solo-regulated firms directly to invite them onto this journey and will seek input from the full range and diversity of the population, and associated trade bodies, compliance consultants and software vendors.

LIBOR publications on key decisions

On 29 September, we released a package of publications on  arrangements for the orderly wind-down of LIBOR at end-2021.

The publications confirm that we have made formal decisions to:

  • designate 6 key LIBOR settings (1-, 3, and 6-month sterling and Japanese yen) as permanently unrepresentative
  • compel IBA to continue publication of these 6 key settings after the relevant LIBOR panels cease at the end of 2021, using a ‘synthetic’ methodology

We also published a consultation on our proposed decisions on:

  • which legacy contracts can use these ‘synthetic’ LIBOR rates
  • prohibiting most new use of the 5 continuing US dollar LIBOR settings after end-2021, in line with US guidance and existing FCA and PRA supervisory expectations

Edwin Schooling Latter, Director of Markets and Wholesale Policy at the FCA, said:

'Market participants have made huge progress in moving away from LIBOR. The publication of a 'synthetic' rate for some sterling and Japanese yen LIBOR settings for a limited period will give market participants a bit more time to complete transition of legacy contracts. We encourage firms to use that time well.'

On 15 October, we published questions and answers for firms related to the use of our powers under the UK Benchmarks Regulation (BMR), and publications on 29 September, to help manage an orderly wind-down of LIBOR.

All Sectors

Listen to the latest episode of the Inside FCA Podcast on consumer investments

In this Inside FCA Podcast interview, Debbie Gupta, Director of the FCA’s Investment, Wholesale and Specialists Supervision Division, talks about our recently published consumer investments strategy. She discusses some of the complex challenges of the consumer investment market today and our ambitions for the future, including helping consumers invest safely and with confidence, reducing the number of people making unsuitable investments, and working to tackle investment scams. Listen to the interview.

Climate Change Adaptation Report

We published our Climate Change Adaptation Report, which sets out how the financial sectors we regulate are affected by climate change and the action we are taking in response. Read the report.

Listen to the Inside FCA Podcast on sustainable finance

In the run-up to COP26, Sacha Sadan, the FCA's Director of Environmental, Social and Governance, talks about the climate change agenda, sustainable finance and the role of the regulator in helping to achieve a net zero economy in our latest Inside FCA Podcast episode.

A new authorised fund regime for investing in long term assets

On 25 October we finalised our rules for a new category of fund, a Long-Term Asset Fund (LTAF), a new FCA-regulated fund that is designed specifically to help investment in assets including venture capital, private equity, private debt, real estate and infrastructure.

The LTAF is aimed at defined contribution (DC) pension schemes which may be interested in investing, in line with their investment horizons and risk appetite. It also offers long-term investment opportunities to experienced retail investors and some high-net-worth individuals.

Remote or hybrid working expectations for firms

Due to the coronavirus (Covid-19) pandemic, firms are already familiar with working in a remote environment and adapting their systems and controls. We understand that it is likely many firms will continue these new ways of working.

On 11 October we set out our expectations for remote or hybrid working so firms can plan and continue to meet their regulatory responsibilities.

Vacancy: Chair of the Smaller Business Practitioner Panel

The FCA Board is looking to appoint a new Chair of the FCA Smaller Business Practitioner Panel (SBBP), an independent statutory body representing the views of small and medium-sized regulated firms.

The deadline for applications is Sunday 5 December.

This is an opportunity to help shape the FCA’s strategy and policy direction at a time of significant change in UK financial services regulation. 

More information on the application process is here and further information about SBPP is here.

The FCA is taking action to be a leading diverse and inclusive organisation. Further details are here.

The Temporary Transitional Period (TPP) is ending

To prepare for the end of the Brexit Transition Period, we onshored, and where necessary adapted, EU legislation to ensure it was workable in a UK-only context. Some requirements on firms and other regulated persons changed at the end of the Transition Period. To avoid disruption we used our Temporary Transitional Power (TTP) to give firms time to adapt to the new regime. We expect firms to fully comply with onshored regulatory obligations by 31 March 2022. Firms should use the duration of the TTP to prepare for full compliance with changes to UK regulatory obligations.

Cross-border payments and the end of the TTP

After 31 March 2022, if you provide cross-border payment services, you must provide the name of the payer and payee, and address of the payer, when making payments between the UK and the EEA. All Payment Services Providers (PSPs) are to have effective risk-based procedures that apply where they are acting as the recipient PSP for a payment that lacks the information needed. These requirements arise from the Funds Transfer Regulation. 

If payments are disrupted we expect you to communicate promptly with any affected customers, to make them aware of the disruption and give them the opportunity to make the payment in another way.

Annual report on the regulatory perimeter 2020/21

On 21 October we published our annual regulatory perimeter report.

Our perimeter report helps explain what we do and don’t regulate. It discusses where we see the potential for harm linked to our perimeter and what we’re doing in response. It also highlights where we see gaps in the legislation and where we think our perimeter needs to change.

Later this year we will discuss the content of the report and steps we can take with the Economic Secretary to the Treasury. The results of the discussion will be published to ensure transparency around the actions we are taking on the perimeter.

sign-up for news and publications, banner


Active Transition

The Working Group on Sterling Risk-Free Reference Rates’ recommended end-Q3 2021 milestone to complete active conversion of all legacy sterling LIBOR contracts expiring after end-2021 where viable (or otherwise adopt robust fallbacks), has now passed.

Even where this has not been viable, users of LIBOR should still focus on active transition rather than rely on synthetic sterling LIBOR, which will not be published indefinitely. The FCA and PRA will continue to monitor firms’ efforts to remove any remaining dependencies on LIBOR across all asset classes, both leading up to and after end-2021.

General Insurance Intermediaries & Insurers

Lloyd’s & London Market Insurers Portfolio Letter

We recently published our portfolio letter for the Lloyd’s & London Market (LLM) Insurers, setting out our view of the key risks of harm LLM insurers pose to their consumers and the markets in which they operate. The letter also outlines our expectations of firms and provides an overview of our supervisory strategy to ensure that LLM firms are meeting our expectations, and harms are being appropriately remedied. We want the wholesale market to support itself to do the right thing, firms to embrace the spirit of regulation and put the end-customer at the heart of their business model.

General Insurance Pricing Practices

We have made 2 further updates to the Q&As on the published rules to answer questions from firms on incentives and insurance distribution activities.

Life Insurance & Pension Providers

Driving Value for Money in Pensions

On 4 October we issued final rules (PS 21/12) on how Independent Governance Committees (IGCs) and Governance Advisory Arrangements compare the value of pension products and services, and promote best value for pension scheme members. Firms and IGCs have until the end of September 2022 to publish their next report. 

We have also published a joint discussion paper with The Pension Regulator seeking input on prescribing standardised metrics or benchmarks for 3 elements of value for money across the pensions market to make it easier to compare products. We also want to encourage discussion on transparency and availability of comparison data. Send us your views by 10 December 2021.

Fintech & Innovate Business

FCA Sustainability TechSprint Demonstration Day

From the 18-21 October, the FCA hosted our ninth TechSprint, aimed at developing new solutions and proofs of concept to some of the challenges faced by regulators in the area of environmental, social, and governance (ESG) data and disclosure. Over 100 individuals took part across 9 teams, developing some excellent prototype solutions that addressed issues ranging from verification of companies’ carbon offsetting programs, to helping develop sustainable investment labels using impact scores. An on-demand recording of the final demonstration day, including keynote speakers is available here.

Consumer Credit

Regulating for Better Outcomes speech

FCA Director of Consumer and Retail Policy Nisha Arora set out our priorities and next steps in consumer credit in a speech to Westminster Business Forum on 8 October. Consumer credit remains a key FCA priority.

We are increasing our focus on consumer outcomes and needs, looking closely at those in vulnerable circumstances and applying the FCA’s new, more innovative, more assertive and more adaptive approach.  We are consulting on a new Consumer Duty and working on new regulation for buy-now-pay-later products; we’re also focusing on support for borrowers in financial difficulty and people who use high-cost credit products.

sign up for news and publications, banner