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How the pensions sector can support consumers to make the most of their savings
Sarah Pritchard, Executive Director, Markets
Together with The Pensions Regulator and the government we are focused on delivering a pensions system that provides good products with value for money; supports savers to make well informed decisions; and ensures strong confidence in pensions and consumer protection – including preventing scams and other serious harm.
The new pensions dashboard, which will make it easier for savers to understand their pension savings, is an important development. So we’ve recently confirmed our rules for pension providers to support the dashboards, and published our consultation on the framework for those looking to provide the dashboards themselves.
We’ve also confirmed our rules to support consumers saving into a non-workplace pension. These aim to help savers receive an investment solution that’s right for them. We are also requiring providers to warn consumers with significant and sustained cash holdings to ensure that they understand the impact of inflation on their savings.
Along with The Pensions Regulator (TPR), we have published an update on our 2018 joint regulatory strategy. The update demonstrates the work we have done since 2018 and the joint work we will do.
Our work includes developing a consistent framework for assessing value for money, intervening in DB transfer advice, and our ScamSmart campaign.
Throughout, we’ll continue to work closely with the government, other regulators, pension providers, advisers, and the rest of the sector, in our determination to support good outcomes for consumers.
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How mortgage firms should support borrowers
We are consulting on draft mortgage guidance setting out the support firms can offer borrowers affected by the rising cost of living.
The guidance sets out the flexibility firms have to support customers who have missed monthly mortgage payments or are worried they may not be able to make payments in future. It covers options such as extending the term of their mortgage, switching to interest-only for a temporary period, moving to a different interest rate or making reduced monthly payments for a temporary period.
Making financial advice more accessible
The proposals will create a separate, simplified financial advice regime, making it cheaper and easier for firms to advise consumers about certain mainstream investments within stocks and shares ISAs.
The changes aim to prevent in-person financial advice from being too costly for many potential investors, as this can stop them from investing when it may be in their interest to do so.
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streamlining the customer ‘fact find’ so advice is more straightforward for both firms and customers
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limiting the range of investments within the new regime so the advice is easier to deliver and understand
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making the qualification requirements for the new regime more proportionate so delivering the simplified advice is less costly for firms
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allowing advice fees to be paid in instalments so customers aren’t burdened by large upfront bills
Strong regulation is essential to maintain the UK’s high standards and protect consumers. However, we recognise that adjusting the regime could help the advice market support mass-market consumers with simpler needs.
Read the proposals and have your say by 28 February 2023.
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Consumer Duty
We are consulting in the December 2022 Quarterly Consultation Paper (QCP) on changes to make certain points clearer in the rules. This follows discussions with firms since publishing the final Consumer Duty rules in July, where we have identified a few areas where clarification is needed on how the Duty applies. The clarifications in Chapter 8 of the QCP are consistent with our position in Consultation Paper CP21/36.
For updated information on the Consumer Duty, visit the firm information page on our website. Resources include our sector-based webinars which are available on demand alongside their transcripts, and our detailed Finalised Guidance.
For further information on the Consumer Duty you can sign-up for our email alerts.
How you log into FCA systems is changing
We are introducing multi-factor authentication to strengthen how you log into our systems and to further protect and control access to our data.
You will need to authenticate and enter a one-time passcode every time you log into:
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Connect, Reg Data, Fees Portal or Shared Intelligence Service (SIS) – from 20 January 2023.
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Electronic Submission System (ESS) – from 16 February 2023.
You will be prompted to register and turn on multi-factor authentication when you log in from 20 Jan 2023 (16 February for ESS). See our website for more information and to prepare for the changes.
British Steel pension redress scheme
We are requiring advisers to review the advice they gave to former members of the British Steel Pension Scheme (BSPS) and pay redress to those who lost money because of unsuitable advice.
We will be monitoring firm readiness in advance of the rules coming into force as we expect firms to be able to begin any work required on 28 February 2023.
We are also proposing to extend our temporary BSPS asset retention rules so that the rules apply until firms have resolved all relevant cases. This will help prevent firms seeking to avoid the cost of redress liabilities and reduce the potential burden on the FSCS.
Firms warned against under valuing motor insurance claims
We have seen evidence that some consumers who have had their cars written off after an accident are being offered a price lower than the vehicle’s fair market value.
In some cases, claims staff are only increasing that offer to the fair market price when a consumer complains. Offering a price lower than fair market value is not allowed under FCA rules.
We have set out the actions that firms should be taking and have been clear that we will act against those firms who break the rules.
General insurance pricing attestation multi-firm review
We have published the findings of our multi-firm review to understand the extent to which firms, who provided an attestation on compliance with our home and motor insurance pricing rules, have implemented systems and controls to enable them to do so.
Overall, while most firms in the review had taken appropriate action to implement appropriate systems and controls to enable them to comply with our rules, many smaller firms had more limited records to effectively demonstrate their compliance.
All firms setting the price of motor or home insurance should consider our findings, the examples of good practice and areas for improvement. Where applicable, we expect firms to take appropriate action to address any shortcomings identified and be able to evidence this.
Calculating redress for non-compliant pension transfer advice
We have confirmed updated rules on calculating redress payments for unsuitable defined benefit pension transfer advice. These rules will apply to calculations for the British Steel pension redress scheme (see above) and all other cases of unsuitable advice.
This will better ensure that, as far as is possible, redress puts consumers back in the financial position they would have been had they remained in their defined benefit scheme.
Update on proposals for debt packagers
In November 2021, we consulted (CP 21/30) about new rules to ban debt packagers from receiving fees or other remuneration for referrals to debt solution providers. Following our analysis of the feedback we had, we have decided to gather some additional evidence from the debt packager market.
We will set out our proposed next steps including a further 4-week consultation early in the new year.
Introducing a gateway for firms who approve financial promotions
We have published a consultation on how we plan to operate a new gateway for firms wanting to continue approving financial promotions for unauthorised persons.
Subject to changes being introduced by Parliament, the new measures will ensure those approving ads have the appropriate expertise. In turn, this will help equip consumers with the information they need to make good financial decisions.
The consultation is open until 7 February 2023.
Compensation Framework Review
We have published the feedback to our call for input on the compensation framework.
We want to make sure the FSCS continues to provide an appropriate level of consumer protection, with costs to industry distributed in a fair and sustainable way.
We are continuing our action to tackle the root causes of high redress liabilities as part of our consumer investments strategy, which should help reduce the levy over time.
For the next phase of this work, we will review compensation limits and funding class thresholds. We will also carry out research to understand the impact of FSCS protection on consumer decision making and firm behaviour.
Regulatory fees and levies
We have published our annual consultation paper which sets out our policy proposals for FCA fees from 2023/24. This applies to all FCA fee-payers and to any businesses considering applying for FCA authorisation or registration. We cover a range of issues including our proposed approach to the assumptions we will need to set for next year’s consultation on fee-rates, looking closely at inflation and the cost of living. We also cover appointed representatives and firms subject to the Investment Firms Prudential Regime, the new financial promotions regime, and the new Economic Crime Levy.
Our expectations of life insurers in relation to the cost of living
We are concerned that as pressure mounts on household budgets, some customers may cut-back on the insurance they need, leaving them without protection.
Where we find poor practise, we will quickly intervene to protect customers from harm.
Customers, including businesses, in financial difficulty are more likely to need to pay for their insurance monthly through premium finance.
They may also be the most affected by general interest rate rises and have a higher likelihood of not being able to make payments.
General Insurance PROD Rules
We have published our Quarterly Consultation No 38 with proposed amendments to our Product Governance Rules (PROD), relating to the assessment of fair value for the manufacture and distribution of non-investment insurance products to customers based outside the UK.
The proposed changes are different depending on whether the product is exclusively for overseas distribution, or whether it is intended for both the UK and overseas markets.
We will publish our final rules after considering responses to this consultation.
Firms should read this and send their responses to cp22_xx@fca.org.uk within 5 weeks of this publication.
Code of Conduct for ESG data and ratings providers
As financial services firms integrate ESG into their activities and expand their ESG-focussed products, they are increasingly reliant on third party ESG data and ratings services.
We will work closely with the Government as it consults to give us powers to regulate these firms.
While the Government considers this, to maintain momentum, we have worked to convene, support and encourage industry participants to develop and follow a voluntary Code of Conduct.
Understanding Approaches to D&I in the Financial Services Industry
On 12 December, we published findings from our review of firms’ approaches to Diversity and Inclusion (D&I). Driving change and working with industry towards a more diverse and inclusive financial sector is a core objective set out in our Business Plan and Strategy for 2022 - 2025.
In July 2021, we started a discussion on driving positive change. We noted there is considerable work to do; large gender and ethnicity pay gaps still exist. Our latest research shows that firms are taking important steps and aims to provide useful insights to help them develop their approaches.
Respond to our request for information on appointed representatives (ARs)
If you are a principal firm, you must respond to a mandatory Section 165 request that we sent between 8 and 12 December to ask for information about new and existing ARs.
The request reflects new rules that strengthen the responsibilities and expectations of principals and requires them to provide more information about their ARs. See our S165 guidance for principal firms for more information.
Principals must also provide 60 calendar days’ notice using a Sup 15 form if you intend to start providing regulatory hosting services.
CLOSING SOON FCA Smaller Business Practitioner Panel Member Vacancies
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 8 January 2023.
Contracts For Difference
We issued a Portfolio letter which outlines our expectations and highlights poor practice seen in firms.
CFDs are high-risk derivative products which can pose risks to both our consumer protection and market integrity objectives. We have previously acted to mitigate these risks but have ongoing concerns. The letter builds on past Supervision and Policy communications to the sector and is in line with our 3-year strategy and Consumer Investments Strategy.
We expect all firms to have agreed actions and next steps in response to the letter by January 2023.
Loan fee fraud campaign
We have warned of the increasing risk of loan fee fraud this Christmas, with cases already up by a fifth on last year.
Our loan fee fraud campaign is running to help increase awareness and educate consumers on loan fee fraud and encourage consumers to check if a loan provider is authorised before taking out a loan. This is especially prevalent during the cost-of-living crisis and with the festive period fast approaching.
Travel insurance signposting for consumers with more serious pre-existing medical conditions (PEMCs)
Under our rules, firms selling travel insurance, in some circumstances, have to signpost consumers to a directory of specialist firms that provide insurance for people with serious PEMCs. Currently there are 2 such directories - MoneyHelper and BIBA.
Where firms are signposting to the MoneyHelper directory, Money and Pensions Service’s (MaPS’) requests firms display the website link first (ie MoneyHelper travel insurance directory), and set out that where their customers are unable to access the website link they can call MoneyHelper’s free helpline number 0800 138 7777.
Where consumers call MaPS’, staff will direct them to the directory webpage, but will not be able to give other help, beyond giving general information on travel insurance. MaPS’ staff cannot provide any information about existing policies customers may hold.
Climate Financial Risk Forum – newly published guides for industry
A new set of guides to help financial firms from a range of different sectors manage climate-related financial risk have been published by the cross-industry Climate Financial Risk Forum (CFRF). Written by industry, for industry, the guides focus on the transition to net zero, scenario analysis, and disclosure, data, & metrics.
We chair the CFRF jointly with the Prudential Regulation Authority (PRA), reflecting the importance of climate change to our respective strategic objectives.
UK Market Share report
We have published our first Market Share Report for UK registered credit rating agencies (CRAs).
CRA regulation aims to increase competition among CRAs through Article 8d. This requires issuers or related third parties intending to appoint at least 2 CRAs to consider appointing at least 1 CRA with 10% or less total UK market share. Where a smaller CRA is not appointed, the issuer is required to document this decision.
We expect issuers to be able to demonstrate evidence of this and we may reach out to issuers. We will continue to engage with the market to understand the effectiveness of this article.
Primary Market Bulletin 42
We have published the 42nd edition of the Primary Market Bulletin in which we:
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Reminded listed issuers of our guidance and expectations on climate-related disclosures in financial statements.
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Highlighted the relationship between UK MAR, the Listing Rules and the National Security and Investment (NSI) Act 2021.
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Reminded all listed shell companies of their listing rules obligations in relation to reverse takeovers.
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Described some key features of the FCA’s decision to impose a financial penalty on Sir Christopher Gent, the former Chairman of Convatec Group plc, for unlawfully disclosing inside information.
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Highlighted lessons learned from the first year of mandatory structured digital reporting under the TD ESEF Regulation.
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Provided an update on the FCA’s review of its list of exempted shares published pursuant to the UK Short Selling Regulations.
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Publication of value measures data
We recently published value measures data for most Retail General Insurance products for July to December 2021.
Firms must ensure that their products offer fair value to consumers and take the value measures data into account when assessing fair value. We are concerned about how the current picture presented in the data compares with firms stating that virtually all products are providing fair value.
Firms must ensure that their products offer fair value. Where metrics indicate potentially poor value, we expect a firm’s senior management to challenge whether its products are offering fair value to consumers.
Mortgage Lending Statistics Q3 2022
Along with the Bank of England, we have published the 2022 Q3 Mortgage Lending Statistics data for regulated firms carrying out mortgage lending and mortgage administration.
The data we publish includes:
- the outstanding value of all residential loans
- total gross advances by loan-to-value, income multiples and purpose of loan
- value of new commitments
- proportion of mortgage loans above Bank Rate
Our findings show that the outstanding value of all residential mortgage loans was £1,667.1 billion at the end of 2022 Q3, 4.1% higher than a year earlier. Sign up here to receive published data updates.
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Have your say - respond to our open consultations and discussions:
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How culture in financial services can change for everyone’s benefit
Shepperd delivered a speech at City and Financial Global's 8th Annual Culture and Conduct Forum. Emily set out her ideas for how leaders can shape culture and what tools the FCA is deploying to transform financial services – and ourselves – for the better.
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