Welcome to the latest edition of Gem Compliance’s monthly regulation newsletter. The aim of the newsletter is to present industry news in an easily digestible format. As such, not all sources of industry information and FCA publications (and no PRA publications unless specified) will be covered. Therefore, clients and associates of Gem Compliance should periodically check the FCA’s and PRA’s websites for regulatory developments. We hope you find this newsletter useful and should you have any compliance queries or require advice on any of these topics, please do not hesitate to contact us.
In advance of the forthcoming SM&CR firms should have or will be receiving notifications from the FCA regarding their firm’s categorisation under the SM&CR. Some firms have identified that these emails have gone to spam folders. Therefore, if you have not received such a notification, to ensure that the firm’s nominated contact for FCA communications checks their emails/spam folders for this. If it looks like no notification has been received, they may wish to contact the FCA to confirm the position.
The UK’s exit from the EU has been delayed with a flexible extension until the end of January 2020. Please see feature 1 below for further updates from the FCA.
Following Discussion Paper 18/8, the FCA has now published Feedback Statement 19/6. The FCA acknowledges the impact of climate change and legislative responses thereto on the UK financial services on one hand, and rising demand for green investment and finance products on the other. The regulator has set itself three outcomes:
Issuers provide markets with readily available, reliable and consistent information on their exposure to material climate change risks and opportunities.
Regulated financial services firms integrate consideration of material climate change risks and opportunities into their business, risk and investment decisions.
Consumers have access to green finance products and services, which meet their needs and preferences, and receive appropriate information and advice to support their investment decisions.
The statement summarises feedback over the following five categories: Climate-related disclosures by securities issuers; Climate-related disclosures by regulated firms; Common metrics and standards on sustainability; Stakeholders’ concerns, commercial priorities and barriers to growth and Industry engagement.
The FCA is planning to take the following steps:
Publish a consultation paper in early 2020 on issuers’ climate change disclosures.
Publish a feedback statement on firms’ integration of climate change risk.
The FCA also has expectations around green financial products and services from firms and will challenge firms who engage in greenwashing.
The regulator will continue collaboration on the matter with other bodies, such as the Fair and Effective Markets Review working group.
The FCA has fined electronic and voice inter-dealer broker Tullet Prebon £15.4m for failing to conduct its business with due skill, care and diligence, failing to have adequate risk management systems and for failing to be open and cooperative with the FCA.
The FCA has fined Prudential almost £24m for failures relating to non-advised annuities sales. The assurance company failed to explain to customers that better deals may be available if they shopped around.
The Financial Services Compensation Scheme has paid out £53.2m for 1,385 claims against IFAs for pension transfer advice related to a Berkeley Burke Sipp. The funds were placed in high-risk, non-standard investments, many of which have now become illiquid. The Sipp provider entered administration on 19 September as it was unable to cover the costs of defending claims made against it in respect of alleged due diligence failings.
Following allegations made against the Financial Ombudsman Service (FOS) by the Dispatches TV programme in March this year on unfair treatment of consumers, the Complaints Commissioner ruled in favour of the FCA. The regulator has however been told to review its monitoring and oversight of FOS.
Rory Percival, the FCA’s former technical specialist has said that advisors are still not client centric, quoting suitability reports as an exmple.
The FCA is working with Google and other tech giants to ensure that online financial promotions are not misleading customers.
A committee’s request to increase FCA powers to act on unregulated business without government approval has been refused by HM Treasury.
Southwark Crown Court has issued confiscation orders against a trio of scammers who defrauded retired and vulnerable customers out of £1.4m. The three men ran an unauthorised investment scheme and were previously convicted. The FCA urges victims to come forward.
The FCA is urging victims of the £8.5m Churchgate Trading Syndicate Ponzi scheme to come forward.
A survey of 1000 investors has shown that more than half of retail investors prefers to speak to a human advisor when it comes to fees and chargers. This percentage drops to less than a quarter when it comes to investment methodology explanation.
FCA data shows that the amount of investigations into cryptocurrency businesses has nearly doubled in the last year.
Research shows that while financial services firms are investing in AI and automation, the role of the adviser could become more meaningful.
This newsletter contains generic information and has been generated for professional clients and associates of Gem Compliance Consulting Limited only and should not be regarded as advice. We will not be liable for loss, however caused by parties acting on the information contained herein.