Assessing adequate liquidity for wind-down
Please take a moment to read our recent multi-firm review which highlights good/poor practice on adequate liquidity for wind-down.
We encourage all firms to consider their own arrangements. Although focussed on General Insurance brokers, our observations and the related FCA publications, rules and guidance referenced are relevant to all FCA prudentially regulated firms assessing their compliance with threshold conditions and the principles for business.
Reducing harm from firm failure is one of our strategic commitments. Adequate planning and liquidity for wind-down makes orderly firm failure more likely, reducing the risk of harm to consumers and markets.
Improving Data Quality across regulatory submissions
One of our priorities is to ensure data that firms submit is of good quality and fit for purpose, because we use this data to fulfil our regulatory obligations.
As part of our improved Data Quality controls, we work with firms to correct errors we identify. So we may send firms a request to resubmit where we have identified errors. This can be time-consuming for both us and firms. To help avoid this, we have summarised common issues that arise when addressing the Data Quality of firm submissions:
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Reporting in thousands (000s) or single units
Firms sometimes submit incorrect units within the form.
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Currency
Firms sometimes use the incorrect currency within the form.
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Date Format
Firms sometimes enter dates in the wrong format.
Upcoming information request for Wealth Management & Stockbroking Firms
In early October 2022, we will issue a mandatory data request via an online survey to firms we believe are active in the Wealth Management and Stockbroking sector. Firms will have 8 weeks to submit their responses. We will use this information to drive a more proactive and data-led approach to our supervision.
Based on feedback from a pilot phase with 80 firms earlier this year, we have amended the survey to reduce the burden on firms. We have notified firms in scope of the information request and will send them further information in the coming weeks.
Reminder for firms: Appointed Representatives data request
New rules to improve the Appointed Representatives (AR) regime will take effect on 8 December 2022. As part of improved reporting requirements, we will send principal firms a Section 165 data request in December.
Firms will have 60 days to respond and provide the following information about ARs:
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reasons for any appointments
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nature of regulated business
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whether they conduct any unregulated business
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anticipated revenue
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nature of financial arrangements between principal and AR
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complaints information and whether the AR is part of a group.
Product Governance (PROD) Rules: Application to insurance products distributed through distributors based outside the UK and intended for non-UK customers
The rules in PROD 4.2 require manufacturers of insurance products to assess that their products provide fair value.
On 23 September, we clarified how manufacturers should conduct these assessments if they have requested fair value- related information from overseas distributors but cannot obtain it.
We expect to consult on further changes to these rules in our December Quarterly Consultation paper.
FCA announces decision on cessation of 1- and 6-month synthetic sterling LIBOR at end-March 2023
On 29 September, we announced our decision to require continued publication of the 1- and 6-month synthetic sterling LIBOR y will permanently cease. This is in line with our proposal in our June Consultation Paper.
Market participants must ensure they are prepared for cessation of 1 and 6-month synthetic sterling LIBOR at end-March 2023, and for cessation of the synthetic yen LIBOR settings at end-2022. We are currently considering the consultation responses for 3-month sterling and US dollar LIBOR.
We expect to provide a summary of feedback and our response later this year.
FCA publishes leasehold buildings insurance report
On 21 September, we published our report into the leasehold buildings insurance market. It analysed the market using data from firms operating in the multi-occupancy buildings insurance market.
The report also set out several potential remedies, including risk pooling and giving leaseholders greater information rights about their policies. These aim to help make affordable insurance more widely accessible for leaseholders.
The report was commissioned by the previous Secretary of State for Levelling Up, Housing and Communities, who asked us to analyse the extent to which insurance premiums had risen following the Grenfell Tragedy and put forward practical solutions to work with industry to make premiums more affordable.
DRCF publishes outcome of stakeholder views to algorithmic Discussion Papers
In April 2022, the Digital Regulation Cooperation Forum (DRCF) published two papers about algorithmic processing; harms and benefits of algorithmic systems and the merits of algorithmic auditing and the potential role for regulators. Alongside, a “call for input” was launched inviting stakeholders views. For algorithmic auditing, we sought views to six hypotheses, related to a potential role for regulators in supporting the third-party auditing market.
DRCF has now published a report of stakeholder views. We received 31 responses, including stakeholders in public and private sectors. The majority of respondents were supportive of the papers and welcomed the four DRCF members collaborating on this topic.
CLOSING SOON FCA Smaller Business Practitioner Panel Member Vacancies
Last month, we said we are looking to appoint two members to the SBPP: one ESG specialist and one mortgage adviser.
This is an opportunity to help shape the FCA’s strategy and policies at a time of significant change in UK financial services regulation.
Time is running out - please submit applications to SBPP@fca.org.uk by 2 October 2022.
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