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Sheldon Mills, Executive Director, Consumers and Competition
In 2021, we banned discretionary commission arrangements. This removed the incentive for brokers to increase the interest rate that a customer pays for their motor finance.
There have been a high number of complaints from customers to motor finance firms claiming compensation for commission arrangements prior to the ban.
Firms are rejecting most complaints because they consider that they have not acted unfairly nor caused their customers loss. Complaints are likely to increase further after the Financial Ombudsman Service recently found in favour of two complainants.
So, we are reviewing historical motor finance commission arrangements and sales across several firms. If we find there has been widespread misconduct and that consumers have lost out, we will identify how best to make sure people who are owed compensation receive an appropriate settlement.
In the meantime, we have paused the 8-week deadline for motor finance firms to provide a final response to relevant customer complaints until 25 September 2024. This is to prevent disorderly, inconsistent and inefficient outcomes for consumers, and knock-on effects on firms and the market while we assess the issue and determine the best way forward.
Motor finance firms can find out more about what the changes mean for you on our page for firms.
Our work should provide certainty for consumers and firms. Throughout, we will be driven by our statutory objectives to protect consumers, ensure market integrity and promote competition in the interests of consumers.
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Deadline to apply to approve financial promotions
Under the new regime, those who approve financial promotions for unauthorised persons will require a specific permission from us, unless an exemption applies. This change will be reflected on the FCA Register for all Part 4A authorised persons.
Firms applying for this permission will have to demonstrate, among other things, that they have the necessary skills and expertise to approve promotions. Firms will also be required to report regularly to us on their approval activity.
The initial application window for firms to apply for this new permission closes on 6 February 2024. The new legislative restriction comes into force on 7 February 2024.
To help firms prepare, we have published information on applying to approve financial promotions.
Firms who submit an application on or before 6 February 2024 can continue to approve promotions until they receive a decision on their application. They will be subject to the new reporting requirements from 7 February 2024.
Firms that do not apply during this initial window will be subject to a restriction which will mean they cannot approve financial promotions for unauthorised persons with effect from 7 February 2024 (other than within the scope of an exemption).
Firms can still apply for this permission after 6 February 2024, but they will not be able to approve financial promotions unless and until their application has been granted.
Expectations of firms selling client banks
A client bank is a name for a list of clients or accounts maintained by someone who provides financial services and it is an important part of a firm’s business.
We accept that client banks may be sold for legitimate reasons, for example, to merge with another firm. However, evidence has shown that some firms have sold a client bank when they either knew they had redress liabilities or had failed to detect them.
If considering selling or transferring a client bank, firms must comply with FCA Principles and rules. They must also consider their Consumer Duty obligations to be open and honest, act in good faith, and avoid causing foreseeable harm.
We also expect firms to assess and set aside adequate financial resources to meet any potential redress liabilities.
Firm failure and phoenixing remain key areas of focus in the financial advice sector. This is why we recently published CP23/24 - Capital deduction for redress on proposed changes to the prudential regime for personal investment firms. We also wrote to firms setting out our expectation that they should not seek to avoid their existing liabilities before any new rules are implemented.
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Cancelling your authorisation – 31 March deadline to avoid fees for 24/25 financial year
If you submit your cancellation application to us before 31 March (or before the last day in February, if you're also regulated by the PRA), you won't have to pay the annual fee for the following financial year. If, however, your business continues to operate for 3 months beyond this deadline – past 30 June – then you'll have to pay the annual fee for the financial year.
We have more information about:
Industry-led sustainable working group for financial advisers
We are convening an industry-led working group for financial advisers focused on building capability in sustainable finance across the sector. This follows the publication in November of a package of measures to support the UK's position as a world-leading centre for asset management and sustainable investment.
We will be an active observer of the group and has asked that it be ready to report on how the advice sector can be supported in delivering good practice in the second half of 2024.
Find out more in our news story announcing the appointment of the group’s chairs and secretariat.
Changes to financial promotion exemptions for investments
Firms who promote investments to consumers in reliance on these exemptions should ensure they are ready to comply with the changes from this date. The changes include amendments to the thresholds and eligibility criteria for consumers to self-certify as high net worth individuals and sophisticated investors, and to the statements that investors are required to sign.
Principals – check when your REP025 return is due
December 2023 accounting reference dates (ARD) have passed. Please log onto RegData to check when your return is due.
Firms must submit their REP025 within 60 business days after their ARD.
Do you have multiple ARs/IARs to report on? Read our REP025 FAQs for help on how to upload the data in bulk.
Failure to report on time will incur a late return notification and £250 administration fee.
Attest to your Appointed Representative details
Attest your ARs/IARs details and check they are up to date.
Find out more about how to attest your AR/IAR details here.
Firm Details Attestations must be completed within 60 business days of your accounting reference date.
Failure to report will incur a late return notification, £250 late return fee, and possible enforcement action.
Financial Services Compensation Scheme - Management Expenses Levy Limit 2024/25
Each year, we and the Prudential Regulation Authority (PRA) have a statutory duty to set a limit on the total management expenses that the FSCS can levy on financial services firms for its operations, known as the MELL.
The proposed MELL for 2024/25 is £108.1 million, including a £5 million unlevied reserve (or contingency fund) that the FSCS can access without further regulatory approval.
Our joint consultation with the PRA on the proposed MELL runs from 11 January to 12 February 2024. The final approved MELL will apply from 1 April 2024 to 31 March 2025.
Report on Quantum Security for the financial sector
Our new report on Quantum Security for the financial sector, in partnership with the World Economic Forum, explores the transformative impact of quantum technologies on finance. The paper outlines key principles and a strategic roadmap to prepare for a quantum-secure future, emphasising a unified, global approach.
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Have your say - respond to our open consultations and discussions:
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Portfolio letters
Over the last month, we've published portfolio letters for the following sectors:
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Speech - Leaning in on making consumer tech a force for good
Nikhil Rathi, Chief Executive, delivered a speech at the Imperial College London Business School. How can consumer-facing technology help keep consumer markets honest?
Financial inclusion TechSprint
The TechSprint aims to tackle challenges including access to financial services and issues encountered on the consumer journey. We're looking for participants to explore technological solutions that can dismantle barriers to inclusion. The TechSprint will end with a Demo Day on 30 May, when the solutions will be presented live at the Technology & Innovation Centre, University of Strathclyde, Glasgow, Scotland.
The deadline for applications is 13 February.
See the latest speeches from our executive team and our latest events
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