The Consumer Duty (the Duty) comes into force on 31 July 2023 for all new and existing products and services. From this point firms will need to make sure, and be able to show us, that they are acting to deliver good customer outcomes.

Our latest Financial Lives survey highlights the importance of the Duty, which sets a higher standard of consumer protection.

The survey found that 7.4 million people unsuccessfully attempted to contact one or more of their financial services providers in the 12 months before May 2022, with the most vulnerable in society most likely to struggle with this.

Less than half of UK adults, or 21.9 million people, had confidence in the UK financial services industry and just 36% agreed that most financial firms are honest and transparent in the way they treat them. Although a more positive picture emerged when people were asked to rate their own provider rather than the sector in general.

The Consumer Duty will bring about a step change in the way financial services firms treat their customers and we welcome the work firms have done to implement it.

Our analysis of data from principal firms shows that some do not have adequate Professional Indemnity Insurance (PII).

Principals must have compliant PII in place to cover the activities of current and former Appointed Representative (ARs) and Introducer ARs. This must not have any exclusions or excesses that unreasonably limit indemnity.

They must also hold adequate financial resources, taking into account their ARs’ activities.

Firms without required compliant PII should get adequate cover, and submit a SUP 15 notification.

Read more about PII requirements, responsibilities for principal firms and assessing adequate financial resources.

As part of our approach to improve oversight of Appointed Representatives (ARs), we’ve published information for principal firms who operate as regulatory hosts to help ensure they know how to meet our standards.

Regulatory hosts receive more complaints and create more supervisory cases on average than other principals. We’ve intervened where we’ve uncovered harm, refused authorisation where firms aren’t meeting our requirements, and we’ll continue to take assertive action to ensure regulatory hosts comply with our rules.

Read our regulatory host page if you operate this model or intend to do so in future.

From 1 December 2023, all principal firms will need to send us regular data about their ARs. Using data is key to our strategy to ensure we can reduce and prevent harm from principal firms and Appointed Representatives (ARs).

Read more about what AR data principal firms must report to us and when.

The Financial Services and Markets Act 2023 requires us to establish and maintain a new Cost Benefit Analysis (CBA) Panel to give the Financial Conduct Authority and the Payment Systems Regulator advice on cost benefit analysis.

The CBA Panel is in the early stages of creation and has started recruitment with the aim of being fully operational by the end of 2023.

If you currently work at an FCA-authorised firm (or for a payment system operator), have a background in economics and interested in CBA, see the role description with details on how to apply.

We have set out new rules to give retail investors and more defined contribution pension schemes access to Long Term Asset Funds (LTAF).

The LTAF is a new type of open-ended authorised fund, which we introduced in 2021. It is designed to invest efficiently in long-term, illiquid assets, such as venture capital, private equity and private debt, real estate and infrastructure.

We encourage firms who are considering making an authorisation application for an LTAF to engage with us prior to submitting an application.

We also welcome feedback on the questions in Chapter 4 of our recent Policy Statement by 10 August 2023.

To support the implementation of the Government’s Mortgage Charter we introduced changes to our rules to enable firms to allow mortgage borrowers to:

• reduce their capital repayments (including to zero, and paying interest only) for up to 6 months
• fully or partly reverse a term extension within 6 months of extending the term

The new rules enable firms to vary a mortgage contract in this way without assessing affordability.

We recognise the urgency with which firms are seeking to deliver their Charter commitments.

We will therefore allow firms time to bring their systems into compliance where they are currently unable to provide the disclosure required under MCOB 7.6.28R, when giving effect to these 2 new options.

Together with the Information Commissioner’s Office (ICO) we have clarified that savings providers can give their customers information about the best rates available to them, even where they have objected to direct marketing.

Now we’ve provided this clarification, we expect firms to point customers to the best possible saving deals.

The US dollar LIBOR panel has now ceased 

The start of July marked another milestone in the transition away from LIBOR. The overnight and 12-month US dollar LIBOR settings permanently ceased. The 1-, 3- and 6-month US dollar LIBOR settings will continue to be published using a synthetic methodology. They are intended to cease in end-September 2024.

Firms must ensure they are prepared for these final synthetic LIBOR settings to cease by this date.

We recently published finalised new guidance for insurance firms about how they should support their customers, providing further clarity to firms about what they should do if they identify customers in financial difficulty.

The guidance complements the customer’s best interests rule as well as the Consumer Duty.

In May we also consulted on strengthening protections for borrowers in financial difficulty (including for premium finance).

We have launched a consultation about our proposals to set up a consolidated tape (CT).

A CT is designed so all investors can get clear and low-cost trading data. It will increase transparency and access to trading data by lowering its cost and improving data quality.

We are proposing a CT first for bonds, where the UK has a leading global market, followed by equities. We will run a competitive tender process to appoint a single CT provider for bonds. We would like to hear your views.

We recently issued new guidance on the regulatory perimeter for trading venues.

The guidance gives greater clarity on when firms may be operating a multilateral system and so require authorisation as a trading venue.

Greater clarity about the perimeter gives firms greater certainty about their regulatory status. It also helps promote a level playing field in the market, while allowing firms to innovate and develop new technologies.

The guidance will come into force on 9 October 2023.

We have launched a new pre-application support service (PASS) for overseas wholesale firms and their advisers wanting to expand into the UK, firms already in the UK, but planning to set up in the devolved nations and outside the South-East, and those with innovative, complex or high-risk business models.

The service provides more support, such as pre-application meetings and the opportunity for FCA speakers to talk about the wholesale firm authorisation process at industry events, roundtables and conferences.

We welcome an industry group consultation on a new Code of Conduct for Environmental, Social and Governance data and ratings providers.

In 2022, we appointed the International Capital Market Association and the International Regulatory Strategy Group to convene an industry group to develop a voluntary code. As firms increasingly rely on third party ESG data and ratings products, we support this industry-led solution to increase transparency and trust in this growing market.

We continue to work closely with the Treasury as it consults on extending our regulatory perimeter to include ESG ratings providers. The Code plays an important role in raising standards in the short-term.

The consultation runs until 5 October 2023.

Gaps we have seen in liquidity management create a risk of investor harm. We have therefore called on asset managers to improve their focus on liquidity via a Dear CEO Letter and multi-firm review.

Asset managers need to manage liquidity effectively. Doing so is vital so investors can redeem their investment in line with their expectations and at an accurate price that reflects its value.

While some firms demonstrated very high standards, the quality of compliance with regulatory standards varied widely. Our multi-firm review sets out detailed observations and a guide to good practice.

We’ve published an update on our work to develop an effective competition approach for Big Tech firms in financial services.

This includes launching a call for input by the end of the year on the competition risks of Big Tech firms as ‘gatekeepers’. 

Read our feedback statement and see Chapter 3 for further details about our actions and next steps.

In July we set out our latest action against unregistered crypto ATMs in the UK. Since the start of 2023, we have inspected 34 locations suspected of hosting crypto ATMs. 26 machines have been disrupted as part of the joint enforcement action across the nation.

We continue to remind people that if they use a crypto ATM, they are using a machine that is operating illegally. Also, that crypto remains high risk and people are not likely to have any protections if anything goes wrong.

Following 2 successful pilots, our Digital Sandbox will be made available permanently on 1 August 2023. This will open up the platform to an even broader range of innovative businesses, start-ups and data providers.

Our website has more information about the permanent Sandbox and how to apply.

It is part of our range of market facing tools and initiatives to support innovative firms to launch new products and services.

We would like your views on our initial thinking about rules for the new regulated activity of operating a public offer platform under the new Public Offers and Admission to Trading regime.

This regime will allow us to set specific rules for types of public offers of securities that are not admitted to a public market.

We want to make sure this framework gives investors sufficient information to assess the benefits and risks of investing in securities offered outside of public markets, and that platform operators undertake appropriate due diligence to prevent fraud.

We are planning significant further work to combat illegal and non-compliant financial promotions.

Our proposals for new social media guidance will modernise the information firms should use when promoting financial products or services online. For example, consulting on extending our guidance to reflect the current ways firms use social media to advertise financial services and products.

On 14 July we published our draft Rule Review Framework for consultation. We have developed this Framework to explain how we plan to monitor and review how our rules are working in practice. This is in line with a new obligation introduced by the Financial Services and Markets Act 2023.

We would like to hear stakeholders’ views on our proposed approach. We have included a short online survey which is open until 15 September 2023 within the draft Framework.

We use 6 and 7-digit Firm Reference Numbers (FRNs) to uniquely identify firms, and 6 and 7-digit Product Reference Numbers (PRNs) to identify funds. We issued the first 7-digit reference numbers on 18 July 2023.

As advised in our news story last year, firms previously allocated a 6-digit FRN or PRN will keep that number.

We’ve introduced multi-factor authentication to strengthen how you log into our systems and to further protect and control access to our data.

You now need to enter a one-time passcode every time you log into:

• Connect
• Reg Data
• Online Invoicing
• Shared Intelligence Service (SIS)
• Electronic Submission System (ESS)

To continue to access FCA systems you will need to register and turn on multi-factor authentication. You’ll be prompted when you log in. See our website for more information and resources.

Later this year we will begin testing a new and improved Form A (used for Senior Management Functions and Controlled Functions applications).

The industry has given us lots of feedback about our application forms. These improvements aim to make the form easier to use and give more guidance on how to complete applications.

For more information, please see our webpage.

We have begun invoicing for the 2023/24 periodic fees. Our website has a summary of the key changes to fee rates since last year.

For more information of the changes please refer to the Fee Policy Statement.

The Government has launched an enhanced digital Midlife MOT. This brings together information, tools and charity resources to help people take stock of their finances, find, progress and stay in work, enjoy a healthy working life; and plan for a more secure retirement.

The digital Midlife MOT will be updated, as the Department for Work and Pensions test and learn, to make sure it offers the right support in the right way. To support this, firms can use this link when directing consumers to it: https://jobhelp.campaign.gov.uk/midlifemot/home-page/?utm_source=stakholder&utm_medium=pension_providers&utm_campaign=Midlife_MOT.

This link can also be input into any digital buttons or Call to Actions.

On 10 July the Chancellor made his Mansion House Speech. This included unveiling an agreement among the biggest DC pension funds to invest assets in unlisted equities and an Investment Research Review.

We welcomed the Chancellor’s Mansion House speech and will work closely with the Treasury to support these proposals. Our Business Plan this year highlights our commitment to a range of work designed to strengthen the UK’s position in global wholesale markets and putting consumer needs first.

Our data shows the number of new whistleblowing reports we received between January and March 2023 and how the information was given to us.

We received 280 whistleblowing reports between January and March 2023, containing a total of 744 allegations.

The reports we receive will typically contain allegations that fall under 5 areas:

• fitness and propriety
• treating customers fairly
• Financial Services and Markets Act 2000 (FSMA)
• culture
• compliance

Speech by Nikhil Rathi delivered at The Economist, London

Nikhil Rathi gave a speech at the Economist impact, Finance transformed event on 12 July on our emerging regulatory approach to Big Tech and Artificial Intelligence.

Highlights include: 

• We welcome the Government’s call for the UK to be the global hub of AI regulation and will open our AI sandbox to firms wanting to test the latest innovations.
• Big Tech’s role as the gatekeepers of data in financial services will be under increased scrutiny.
• Our outcomes and principles-based approach to the regulation, including the Senior Managers Regime and Consumer Duty, should mean firms have scope to innovate while protecting consumers and market integrity. We will only intervene with new rules or guidance where necessary.
• We will regulate firms that are designated as Critical Third Parties where they underpin financial services and can impact stability and confidence in our markets.