Application forms and the Consumer Duty
We are now asking firms applying for permission for the first time, and those applying to vary their permissions, to explain how they’ve incorporated the Consumer Duty into their businesses.
The 'requirements for firms seeking authorisation' section on our information for firms gives an idea of the types of supporting information we will need firms to provide.
Gateway for firms who approve financial promotions
A new Authorisations gateway is being introduced, subject to legislation, which will mean firms need to apply to us if they wish to continue or start approving financial promotions for unauthorised persons.
We published a consultation in December with proposals on how we will assess applications and the reporting we intend to require from firms that apply. Firms should consider whether this change affects them and if they will need to apply for permission to approve financial promotions.
We’re inviting feedback to the consultation by 7 February 2023.
Financial Services Compensation Scheme – Management Expenses Levy Limit 2023/24
We and the PRA are jointly consulting on the FSCS’s proposals for the annual Management Expenses Levy Limit (MELL) for the financial year 2023/2024.
This is something we consult on each year as we and the PRA are required to set a limit on the total management expenses that the FSCS can levy financial services firms. The MELL covers the FSCS’s day to day operating costs but does not include compensation costs, which are levied separately and decided by the FSCS.
The consultation on the MELL will end on 9 February 2023.
Respond to our request for information about appointed representatives (ARs)
In December 2022 we sent a mandatory Section 165 (S165) request to principal firms. This request reflects new rules requiring principals to provide more information about their ARs and strengthens the responsibilities and expectations of principals.
Principal firms with ARs must respond to this request by 28 February 2023.
If you plan to remove your ARs, you need to apply to do this by 30 January 2023 otherwise you are required to submit the S165 on your AR population.
We have provided S165 guidance for principal firms to help you complete the request.
Margin requirements for non-centrally cleared derivatives
The PRA and FCA previously consulted on amendments to margin requirements for non-centrally cleared derivatives in FCA CP22/13 to address issues previously raised by industry.
In response to the comments made during the consultation, the PRA and FCA have made some minor changes to the proposals consulted on which are confirmed in FCA PS11/22. These are:
- Extending the eligibility of EEA UCITS as collateral to provide a transitional period for firms to become compliant with the new requirements on the treatment of third-country funds as eligible collateral.
- Increasing the fall-back transition period for circumstances where firms come into scope of the margin requirements for the first time, and the rules would otherwise apply immediately.
OPBAS updates
Following the consultation on the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) sourcebook review, OPBAS has published an updated sourcebook and a summary of feedback FG23/1. This is part of its continuing work to drive improvements in professional body supervisors’ (PBSs) anti money laundering supervision of the accountancy and legal sectors.
The key changes we made are a new chapter outlining OPBAS’s approach to supervision and expanding existing guidance with examples of the outcomes which can demonstrate effective supervision, including more examples of good and poor practice.
The updated sourcebook will provide additional guidance for PBSs on OPBAS’s expectations and the outcomes the PBS need to achieve to improve consistency and effectiveness of AML supervision in the sectors they oversee.
The updated sourcebook is now in effect and we will begin to use it in our PBS assessments after publication of the OPBAS 4th report, and not before April 2023.
High-frequency traders and dealer banks
As part of our research agenda, we have published an Occasional Paper on the behaviour of high-frequency traders (HFTs) and dealers in the FX market. The paper characterises the liquidity provision and price discovery roles of these participants.
Our analysis finds that HFTs and dealers respond differently to adverse market conditions. HFT liquidity provision is less sensitive to spikes in volatility, while dealer liquidity is more robust ahead of scheduled macroeconomic announcements. Although in the only period of extreme volatility in our sample, the ‘Swiss Franc de-peg’ event, HFTs appear to withdraw almost all liquidity.
Changes to Firm Reference Numbers (FRNs) and Product Reference Numbers (PRNs)
We use 6-digit Firm Reference Numbers (FRNs) to uniquely identify firms, and 6-digit Product Reference Numbers (PRNs) to identify funds. We’re likely to reach the 6-digit limit (999999) during Quarter two 2023, given the volume of applications and notifications we receive.
We are planning a move to 7-digit FRNs and PRNs for newly registered firms and funds.
Firms previously allocated a 6-digit FRN or PRN will keep that number. We are on track to change our internal systems to start allocating 7-digit numbers when our 6-digit range is exhausted.
Competition and Markets Authority (CMA) – Private Motor Insurance (PMI) compliance report
If you are a PMI insurer or broker you must submit a compliance report to the CMA by 1 February 2023. This obligation arises from the CMA’s PMI Market Investigation Order 2015. The Annual PMI Compliance Statement should be submitted online and by uploading tables of Average No Claims Bonus Discounts.
You can email the CMA at PMIFormRequest2023@cma.gov.uk to get your personal link to the form and information about submitting your compliance report.
If you offer both insurance and brokerage services, please follow the instructions for the primary role of your business.
For more information, please visit the CMA submission reminder webpage.
Thematic review of retirement income advice
We will be undertaking a thematic review on retirement income advice. This work will explore how financial adviser firms are delivering retirement income advice and assess the quality of outcomes consumers are getting.
We will use the findings to help inform our future strategy for the sector. The results will also be an important indicator of how firms are implementing the Consumer Duty.
We will start the review in early 2023 and aim to publish findings towards the end of the year. We have begun engagement with trade bodies and will contact firms selected for the review in the coming weeks.
General Insurance Value Measures – Claims Reporting Requirements
We expect firms to follow the rules and guidance for value measures reporting.
In SUP 16 Annex 48BG we set out a variety of scenarios and how firms should report their claims data. This includes ‘number of claims registered’ and how firms should report in scenarios such as claims within the policy excess, claims where the loss is not covered and claim walkaways.
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ensure that their reporting follows this guidance, and
- correct any historical inaccuracies via a resubmission on RegData
British Steel pension redress scheme – legal challenge
A legal challenge has been made against our decision to set up a redress scheme for former British Steel Pension Scheme (BSPS) members. We are confident that our decision to set up a redress scheme is appropriate and will vigorously defend it. In making our decision we considered extensive stakeholder feedback from the consultation process. Read our news story.
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