Issue 82 - July 2021

Welcome to the latest edition of Gem Compliance’s monthly regulation newsletter. The aim of the newsletter is to present a summary of relevant industry news which has occurred during the month in an easily digestible format. As such, not all sources of industry information or FCA publications (and no PRA publications unless specified) may be included.  

Clients and associates of Gem Compliance should periodically check the FCA’s, and where relevant, the PRA’s websites for regulatory developments. We hope you find this newsletter useful and should you have any feedback, compliance queries or require advice on any of these topics, please do not hesitate to contact us.


Other Newsletters & Updates

The general news in the UK continues to be dominated by Covid-19 topics including restriction easing and vaccine roll outs. Whilst the UK government has decided to proceed with the full easing, at present the devolved governments appear to be taking a slightly more delayed approach.  The FCA continues to remind firms to check the dedicated coronavirus section (for firms and consumers) on the FCA’s website on a regular basis for updated information. We are also aware that the FCA intends to send a further Covid-19 survey to regulated firms in August, which will be the 5th survey of 1st tranche of recipients (i.e. those that received the original in June 2020).   

The FCA also continues to update its designated Brexit webpage and firms are encouraged to regularly review.  

Otherwise in relation to regulation, July has been a very busy period for communications issued by the FCA including a raft of papers published as part of its annual reporting cycle, and including its Business Plan and Report and Accounts. Further detail on the Business Plan, other corporate documents and regular publications such as consultation and policy statements during the period are covered in more detail below. The latest version of the Regulation Round up is shown here.  

Otherwise during this month, FCA Handbook Notices no. 89 and no.90 have been issued and the latest policy developments updates can be found here. The FCA has also updated where there are to be changes in the progress of certain regulatory development workstreams. The FCA has also highlighted that it is running a second phase of its digital sandbox. FCA Board minutes of its meetings on 27 May and 3 June were issued during the last month.   

For other regulatory newsletters, the Financial Ombudsman Service (FOS) published its newsletter, edition no. 162 and the PRA regulatory digest for June 2021 has been issued, There has been no new ICO newsletter since March 2021 and no new FCA Market Watch newsletter since no. 67 in May.  

Finally we would like to update on recent staff changes at Gem Compliance with Agie Mackay going on maternity leave from mid July, and a new member of staff, Hari Selvam, joining us in late June in an intern role until Q2 2022 as a Compliance Assistant.  

Main Features

1. Financial Promotions Framework

HM Treasury has issued a recent response paper in relation to previous consultation on proposals on changes to the UK Financial Promotions regime.  

Section 21 of the Financial Services and Markets Act 2000 (FSMA) currently states that an unauthorised person is able to communicate a financial promotion only if it has been approved by an authorised firm. However, the UK government is concerned regarding the effectiveness of this current regime. This is due to the lack of sufficient assessment procedure for authorised firms to undergo in order to be declared fit to approve financial promotions. 

In July 2020, HM Treasury issued a consultation on Regulatory Framework for Approval of Financial Promotions. This proposed two options in its consultation to rectify the identified problem with the previous regime. The first option proposed the restriction of financial promotions of unauthorised persons through the imposition of requirements by the FCA. Secondly, it proposed the approval of financial promotions communicated by unauthorised persons as a ‘regulated activity’ under FSMA.  

This prior consultation aimed to gauge responses form the industry on three aspects:  

  • FCA establishing a gateway to assess suitability of firms before it is permitted to approve financial promotions for unauthorised persons. 

  • Gauging the risks and benefits of the two options proposed and evaluating the unintended consequences arising from implementation. 

  • Finally, investigating the industry on its preference of the two options if the government proceeded with a single option strategy.  

Following this consultation, HM Treasury has now issued its feedback on responses and also outlines its proposed approach to new and existing firms. The government agreed with the majority consensus of the respondents and proposed the introduction of the gateway under FCA supervision.  

Structure of the proposed gateway  

The proposed gateway will prohibit new and existing firms from approving the financial promotions of unauthorised persons. For existing authorised firms, the new procedure will enforce firms to seek approval of FCA through application from the prohibition on financial promotions to be removed.  New firms will require to consider this as part of authorisation. Finally, permission of approval can be subjected to a specific type or types of products or services depending on the expertise of the firm.  

The government has also decided against grandfathering-in permissions for sectors that approve financial promotions as part of their core business model.  

The new structure will implement a transitional period to protect firms from the impact of this significant amendment to the regime and also permit time for the FCA to determine applications for firms pursuing to carry on this new regime.  

Proposed changes to legislation 

The government will have to amend section 21(2)(b) of FSMA that removes the ability to communicate financial promotions which have been approved by authorised firms.  The changes to the FSMA will allow firms undergoing authorisation application to have the financial promotion requirement varied or cancelled.  

Supervision and enforcement of gateway  

Once introduced, if any authorised firm approves a financial promotion directly in breach of the new requirement, it will be a direct breach of their part 4A permission.  Furthermore, the proposed amendment to the FSMA will enforce a criminal offence on any unauthorised person communicating a financial promotion that is not been approved by an authorised firm or was approved in breach of the new requirement. Finally, this new gateway will ensure that the FCA has a permanent record of which firms are approving financial promotions which eases to proactively supervise the market.  


The government recognises the realities of intra group business and the way in which businesses are interconnected. Therefore, it has decided to exempt firms approving financial promotions of an unauthorised person within the same group. The government also proposes to exempt enforcement of these new requirements for appointed representatives in relation to regulated activity, for which the principal has agreed to accept responsibility.  

Analysis of benefits  

It is believed that this new legislation will enable the FCA to specifically supervise and assess the suitability of authorised firms to approve financial promotions. It will also provide the FCA with more oversight of firms approving financial promotions. Also, implementation of the gateway method will preserve the current distinction within FSMA between regulated activities and financial promotions.  This distinction will ensure consistency of treatment across promotions, reduce potential confusion about regulatory protections and decrease the potential disruption to the market of approver firms.  

Next Steps  

A link to the current response paper is attached here. In terms of legislation, the government intends to bring forward this proposal to parliament when time permits. The FCA will also be required to consult on these changes in due course with a policy statement being issued in the future with final rules once it has fully considered consultation responses. No guidance has been given in relation to the timescales involved.  

2. FCA Review of Authorised Corporate Directors

The FCA has published its findings from a thematic review to test the viability of host Authorised Fund Managers (AFMs) business models and to assess whether conflicts of interests were being managed effectively.  

The review focused on a range of AFMs that delegate investment management to third parties outside of their governance, controls and monitoring. These are often referred to as host AFMs or host Authorised Corporate Directors (ACDs) with authorised sub-managers in place.  

The FCA reviewed a sample of firms to carry out this review including firms which operate a significant number of authorised firms. Firms already under investigation as reported in Q4 2020 were not included in the review. The review focused on the following areas:  

  • How well host AFMs understand their responsibilities for the funds they operate;  

  • Whether these firms had adequate governance, controls and resources to carry out their role;  

  • How effectively the host AFMs considered their regulatory responsibilities including under the COLL sourcebook; 

  • How their oversight of delegated third-party investment managers considered the interests of under investors; and  

  • Whether the AFMs had appropriate resources for the nature and scale of the business they carried out.    

Findings were evaluated against relevant rules and guidance including COLL, SYSC, PROD, COBS and FCA Principles for Firms.  

Observations were grouped into 4 main areas as follows:  

  • Due diligence over delegated third-party investment managers and funds  

  • Oversight of delegated third party managers and funds  

  • Governance and oversight  

  • Financial resources.  

Due diligence over delegated third-party investment managers and funds  

Overall the FCA found that firms performed poorly in this area. While some firms followed a set process, others relied on more informal conversations to assess and understand proposals. Where firms did identify risks and inconsistencies, they were often addressed inadequately. The FCA saw a lack of effective challenge from AFMs to sub-managers and included such areas as a lack of analysis on the actual distribution of a fund versus the plan, and poor analysis of how the investment manager could achieve a stated performance or income targets. In addition, in relation to fund authorisation applications, questions often had to be referred to the third-party manager, which the FCA considered implied a lack of understanding on the part of the AFM.  

Oversight of delegated third party managers and funds  

The FCA confirms that delegation of the investment management does not change the regulatory responsibility of the AFM for the fund or its investors. Therefore where delegation takes place, the AFM must ensure that it can monitor effectively and must retain the necessary resources and expertise to do so. The FCA often observed AFMs referring to a third-party investment manager as a ‘client’ and considered this was an incorrect description of the nature of the relationship. The FCA also expected the AFM to have direct and relevant experience of the types of instrument and investment strategies being adopted by the sub-managers.  

Governance and oversight  

The FCA found that a number of AFMs were unable to provide evidence of robust governance procedures. Minutes of board meetings and discussions did not show effective challenge by independent non-executive directors. In some cases, decisions seem to have been taken outside of formal meetings with little or no discussion or challenge. On occasion limited attendance by non-executives was also observed. Conflicts of interest was a specific element of this review and that whilst most firms had a framework for managing conflicts, not all were considered effective including registers which were often static and not evidenced as reviewed.  

Assessment of value was another area of concern, which was a recent requirement introduced including annual reporting. Amongst other observations on the specific requirements of value assessments, some firms were found to have applied a ‘broad-brush’ approach to their value assessments for example by reviewing performance at fund level rather than share class level. With regard to assessment of value, the FCA has also issued specific additional feedback and guidance on their findings in this area.  

Financial resources 

The review reiterated previous general guidance in FG20/1 regarding firms having adequate financial resources, and that firms should consider forward looking financial projections and strategic actions plans, both in respect of ‘business as usual’ and adverse circumstances.  The FCA considered that several firms were operating at relatively low margins and also cited fee pressure from sub-managers. And although all firms had some level of risk framework in place, the FCA found wide differences in their effectiveness, coverage, governance and use within the business. This included not being able to demonstrate how they use capital risk assessments in operations and decision making and also reliance on group/parental financial support or Professional Indemnity Insurance in relation to risk management.   

The FCA expects all AFMs to consider the messages in this review and where necessary, identify and address any relevant gaps. Although the thematic review focused on authorised fund managers i.e. managers of authorised funds, the FCA also considers that any ‘host’ managers of funds (i.e. including unauthorised funds) should consider this review on a principles basis where relevant.  

A link to the full thematic review is shown here.

3. FCA Annual Report and Accounts and Business Plan 

The FCA has issued its Annual Report and Accounts and also its Business Plan, along with several different corporate annual reports. The following is a brief summary of both of these documents given the overlapping messages in both.  

Annual Report and Accounts 

This document focuses on a review of the activities of the last year although also touches on priorities going forward which are expanded upon in more detail in the Business Plan.  

Areas included during the year refer to the global pandemic, Brexit, the transformation plan for the FCA, firms’ culture and changes to prudential supervision. It also refers to the new Consumer Duty being introduced.  

The report and accounts summarises the highlights of the year for FCA activity including:     

  • responding rapidly to the economic impacts of the pandemic 

  • issuing guidance to firms ensuring 4.5 million payment deferrals for mortgage and credit customers during the pandemic 

  • introducing new rules on home and motor insurance pricing which will save consumers an estimated £4.2 billion over 10 years 

  • continuing to focus on helping to educate and inform consumers on scam prevention 

  • imposing financial penalties totalling £189.8m 

  • ensuring £21.7m in consumer redress for unauthorised investment business and freezing nearly £7m of funds following our enforcement work 

  • working with Government on a range of issues during EU Withdrawal to ensure continuity for consumers, for firms operating in the UK and to protect the integrity of UK markets as far as possible 

Charles Randell, Chair of the FCA said: 

'2020/21 was a challenging year for everyone – the people we serve, the industry we regulate, and all of us at the Financial Conduct Authority. We prioritised protecting vulnerable people. We helped millions of people and hundreds of thousands of businesses, large and small, through the Covid-19 pandemic. Our targeted litigation achieved fairer and faster outcomes for business interruption policyholders. We continued our work to reduce the harm from unsustainable credit and unfair pricing. We also made sure that essential financial services weren’t disrupted when the UK left the EU transition period.’ 

The FCA’s Annual Public Meeting following its annual report and accounts will take place virtually on 28th September 2021.  

FCA Business Plan  

The FCA’s business plan is forward looking for 2021/2022 and outlines its priorities and focus for the coming year. This includes its intention to become more assertive in its role as the UK regulator for financial services and as part of its transformation program.  The FCA also plans to modernise its use of data and technology to identify and react to harm quickly.  

Key sectors within the business plan include:  


The FCA plans for a greater focus on regulatory authorisations, with the addition of a more robust gateway for new firms. A tougher but more straightforward application process will be implemented including increased scrutiny of firms’ financials and business models. Plans have also been revealed for a regulatory ‘nursery’ in which newly authorised firms will be subject to increased oversight to identify potential harm early. There will also be stronger oversight of firms which are growing significantly. The FCA note that “a smart compliance culture” in addition to good governance, will improve firms’ operational resilience that can allow them to scale sustainability.  

Consumer Priorities:

  1. Cryptoassets: The FCA note that cryptoassets have increased in the interest of millions of UK consumers, particularly those in 18-30 age category. It views the highly volatile nature of cryptoassets as well their potential use in financial crime as bringing significant risks to both consumers and market integrity. While cryptoassets are currently unregulated, the FCA states its intention to warn consumers where types of products, like cryptocurrencies, are high risk. The FCA would like to see that consumers do not receive unsuitable advice and participate in inappropriately risky investments.  

  1. Enabling consumers to make effective financial decisions The FCA want to ensure that consumers understand the risks they are taking when investing as well as the regulatory protections they have. The FCA will be working with the Treasury on fast-tracking the implementation of a regulatory gateway which a firm must pass through before it is able to approve the financial promotions of unauthorised firms. As detailed in Feature (1) above, any firm wishing to approve the financial promotions of unauthorised firms would first need to obtain the consent of the FCA. A new ‘Financial Promotion Requirement’ imposed on all authorised persons would prohibit them from approving the financial promotions of unauthorised persons.  

  1. Vulnerable customers and the new ‘Consumer duty’. The FCA has reiterated its desire for firms to ensure vulnerable customers are treated fairly. The FCA has stated its commitment to intervening as required to ensure vulnerable customers are not unfairly disadvantaged. The FCA is also consulting on a new ‘Consumer Duty’ that would set clearer and higher expectations for firms’ culture and conduct and require firms to place their customers’ interests at the centre of their business and to ensure that communications allow consumers to make informed decisions about financial products and services.   

Wholesale Priorities  

  1. EU exit and harmonisation of rules The Government is adapting the financial services regulation framework, following the exit from the EU. The new regulatory framework will transfer some rulemaking responsibilities to regulators like the FCA which should strengthen accountability, scrutiny, and transparency.  

  1. Libor. The FCA aims to ensure UK markets continue to transition away from LIBOR alternative risk-free rates and have stated this will help increase the resilience and transparency of key interest rate markets.  

  1. Appointed Representatives regime. The FCA considers that more recently, there have been increased issues from principal firms undertaking poor due diligence and oversight of their Appointed Representatives (“ARs”). Principals and AR firms should be competent, financially stable and ensure fair outcomes for consumers. The FCA will carry out targeted supervision to reduce significant risks from ARs in wholesale markets, and plan to consult on changes to improve elements of the AR regime, later this year.  

Other priorities  

  1. Fraud: The FCA considers that fraud can cause significant harm to consumers and businesses as well as posing a risk to the integrity of the UK financial system. The amount of fraudulent activity in the UK is increasing, and as such the FCA is taking action to combat this through its ScamSmart campaign, and by information sharing and cooperation with its partners. The FCA is focused on keeping fraudsters out of financial services at the gateway, and ensuring FCA regulated firms do not facilitate fraud;. This includes identifying potentially improperly unauthorised or unapproved fraudsters. The steps also include empowering the public so that they can protect themselves.  

  1. Environment, Social and Governance (ESG). The UK’s target for a net zero economy by the year 2050 will require a different approach to markets and investment products. The FCA has stated its desire to achieve climate and sustainability related disclosures to support accurate market pricing, which turn while will allow consumers to choose sustainable investments and drive fair value. It also wishes to support innovation in sustainable finance by making use of technology. But it also wants to ensure that consumers are protected from misleading marketing and disclosures around ESG related products. The FCA affirmed its commitment to continue to work with the Government and international partners to promote a standardisation of ESG related disclosures by listed companies and regulated firms.  

  1. Diversity: This is a key topic in the business plan particularly around diverse representation at all levels of management in regulated firms and listed companies. Firms are encouraged to foster inclusive cultures so that all staff are able and willing to share their diverse experiences and backgrounds. The FCA noted firms that represent society more accurately are more likely to design financial services and products that improve consumer outcomes. Further, inclusive cultures allow concerns to be raised and ensure decisions are challenged effectively.  

The above is only a brief summary of the key messages from both of these documents. Firms are recommended to ensure that they have reviewed the documents and message n full to identify any topical or business critical issues to their own particular business model 

The Annual Report and Accounts can be found here and links to the Business Plan here (for a summary) and here (for the full plan).  

Other Publications

Consultation Papers

CP21/17: Consultation issued on proposals to introduce climate-related financial disclosure rules and guidance for asset managers, life insurers and FCA regulated pension providers. The consultation appears to be proposing to exempt wealth managers and ‘boutique’ fund managers (assets under management less than £5bn) from the disclosure requirements. Consultation to close on 10 September 2021.  

CP21/18: has also been issued, consulting on proposals to extend the application of climate related disclosure requirements to issuers of standard listed equity shares, and is seeking views on certain environmental, social and governance (ESG) topics in capital markets.  

CP21/19: Proposed decision regarding Benchmarks Regulation in respect of LIBOR.  

CP21/20: Further proposals on the regulation of funeral plans have been issued, in advance of this industry being regulated in 2022. Consultation closes on 31 August 2021. This includes additional requirements to deliver the consumer outcomes the FCA expects to see if regulated firms fail.   

CP21/21: Consultation relating to Primary Markets Effectiveness review. 

CP21/22:  Consultation issued on LIBOR transition and the derivates trading obligation.  

CP21/23: Post Brexit, the FCA is taking the opportunity to consult on changes to the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation. The proposals aim to address the areas of the Regulation that are considered to pose the most harm to consumers including the lack of clarity on PRIIPS scope and improved clarity on disclosures including on required performance figures. The proposals also include clearer guidance on a key area of debate as to what constitutes making a PRIIP ‘available’ to a retail investor. Consultation is due to close on 30 September 2021.  

Consultation on guidance (GC21/3): Updating previous finalised guidance under FG18/4 from May 2018 relating to the FCA’s review of Part VII (of FSMA) insurance business transfers.   

Policy Statements

The first policy statement in relation to the new Investment Firm Prudential Regime (IFPR) has been issued. This policy statement, PS21/6, provides feedback on the first consultation paper, CP20/24, issued in December 2020. This focuses on the categorisation of firms and Own Funds requirements including definitions and calculations, eligibility of capital, and also transitional arrangements. The FCA has confirmed that PS21/6 largely implements the previous consultation with some additional clarifications on how rules will apply in practice. Chapter 9 of the PS provides a summary of the Handbook changes arising from the first consultation. Paragraph 1.39 of the PS also summarises the implementation roadmap, including a third and final consultation paper to be issued in Q3 2021 and corresponding policy statements with near-final rules providing feedback on consultation paper 2 (CP21/7 issued in April 2021) and on the third consultation. The IFPR is due to be implemented in January 2022.   

The FCA has published its policy statement (PS21/7) regarding final rules on FCA regulated fees and levies for the fee year of April 2021 to March 2022, including periodic fees.  This included feedback on earlier proposals in CP21/8. An updated online calculator is also available for guidance on firm specific costs. Proposals include a new annual fee for Principals of Appointed Representatives.  

PS21/8:  Policy Statement issued relating to the FCA regulation of funeral plans from 29 July 2022 and follows feedback on earlier proposals in CP21/4.  This is also linked to additional proposals now issued in CP21/20 (see above).  


Supervisory statement in respect of operations of MiFID markets post Brexit in relation to commodity derivatives.   


During the course of the month, in addition to the Annual Report and Business Plan covered above, the FCA also issued several other corporate annual reports as follows, all covering the FCA year of April 2020 to March 2021:   

The FCA also published its annual report on Service Standards and also its response to the Complaints Commissioners annual report. 


FCA issues its Product Sales Data analysis for 2020, for mortgages, retail investments and pure protection contracts.   

Primary Market Bulletin no. 35 has been issued which also includes guidance on listing applications for companies with cannabis-related activities.  

As part of a specific consumer warning on dealings with Binance Markets Ltd and the Binance Group, the FCA has also issued a general warning for consumers to be wary of adverts online and on social media promising high returns on investments in cryptoassets or cryptoasset-related products.  

The FCA, PRA and the Bank of England have set out a plan to improve diversity and inclusion in regulated firms. In a discussion paper (DP21/2), the regulators have set out policy options including (amongst other suggestions), the use of targets for representation and measures to make senior leaders directly accountable for diversity and inclusion in their firms.  

The FCA has issued an update on its implementation of the recommendations from the Independent Reviews conducted into the FCA’s regulation of London Capital and Finance plc (the Gloster report) and the handling of the Connaught Income Fund (the Parker report).   

The conclusions from a joint Bank of England and FCA review of open-ended investment funds has been issued including any feedback on the risks posed by any liquidity mismatches. This review also puts forward a suggested possible framework for how a liquidity classification framework for funds could be designed.  

Dear CEO letter has been issued which is relevant to general insurance intermediaries regarding maintaining adequate client money arrangements.  

The FCA has also issued (on 29th June), a Dear CEO letter dated on 21 May which is relevant to retail banking organisations regarding common control failings identified in anti-money laundering frameworks.  

The FCA has updated its webpage relating to financial promotions case studies, outlining examples of good and bad practice when promoting financial services and its expectations for promotions to be clear, fair and not misleading.  It has also published up to date data in respect of financial promotions activity on a quarterly basis.  

The FCA has published a  'Dear chair' letter to the chairs of authorised fund managers, setting out its expectations on the design, delivery and disclosure of environmental, social and governance (ESG) and sustainable investment funds.   

 FCA Press Releases

The FCA has highlighted that scammers have targeted more than £2m in pension pots in the last five months. It is urging anyone saving for their retirement to be cautious on online pension offers and protect their savings.  

Following an FCA review of the practices of debt packager firms, 5 firms have stopped providing regulated debt advice until further notice and the FCA has used formal powers to stop another firm from providing regulated advice.   

The FCA and the Payment Services Regulator have announced they have jointly carried out an updated assessment of the UK’s access to cash infrastructure, taking into account the impact of Covid-19, alongside new research on consumers who rely on cash.  


Nikhil Rathi, FCA Chief Executive, delivered two speeches regarding the future of regulation as follows: 'Transforming to a forward-looking, proactive regulator’ and 'Building a regulatory environment for the future’.   

Speech from Edwin Schooling Latter, Director of Markets and Wholesale Policy at the FCA entitled ‘Libor – 6 months to go’.   

Enforcement Actions and Prosecutions 

Active Wealth (UK) director, Darren Reynolds, has been disqualified from being a company director for 13 years after an Insolvency Service investigation found his clients lost more than £24m in unregulated investments.  

The FCA has issued a fine to Crosfill & Archer Claims Ltd, a claims management company, for making unsolicited telemarketing calls to people who had already registered not to receive this type of sales call.  

The FCA has fined Lloyds Bank General Insurance, Halifax General Insurance Services Ltd and other associated firms, £90,688,400 for failing to ensure that language contained within millions of home insurance renewals communications was clear, fair and not misleading.  

Stephen Allen has pleaded guilty to forgery, following a criminal charge laid by the FCA. This is linked to events that followed successful proceedings against an associate, Renwick Haddow, for operating several unauthorised collective investment schemes.  

Director Matthew Creed has been banned by the FCA from performing any regulated activity. This follows an investigation that found Mr Creed failed to inform the FCA about his bankruptcy and disqualification as a company director. 

The FCA has issued an update in respect of its action against Stuart Malcolm Forsyth, the former CEO of a small mutual insurer, where previous action (by both the FCA and the PRA) had included a ban and fine. This was as a result of Mr Forsyth transferring what was considered to be an excessive amount of his remuneration to his wife to reduce his own tax liability and taking steps to conceal that arrangement. The recent update has stated that the Upper Tribunal has found that the FCA has not made its case that Mr Forsyth had failed to act with integrity and therefore that no financial penalty should be imposed. The Tribunal also made a number of recommendations to the FCA which the FCA will consider. 

The FCA has issued a final notice in respect of David Nicholas King, prohibiting him for performing any function in relation to any regulated activity. This follows Mr King being convicted in 2019 in respect of three counts of theft, one count of fraud by false misrepresentation and one count of acquiring/using/possessing criminal property.  

The FCA has secured a conditional agreement with defendants in proceedings which are seeking compensation for approximately 4,500 investors in a failed investment scheme, Park First Scheme. This related to alleged breaches of s. 19 of FSMA by the defendants by operating a collective investment scheme without being authorised by the FCA.  

Following a hearing in Southwark Crown Court, the FCA has secured asset confiscation orders against 6 individuals who had been convicted of criminal charges in relation to an illegal investment scheme. The FCA has urged other victims to come forward if not already done so.  

Industry News


According to KPMG’s evolving asset management regulation report, financial services regulators will put more focus on diversity and inclusion because the recovery phase of the pandemic will raise additional equality and discrimination issues.  

As the FCA’s authorisation gateway begins to process EEA firms applications, FCA CEO Nikhil Rathi has stated that the FCA has already taken action over 133 EEA firms, which includes 111 firms acting in the UK without regulatory registration.    

HM Treasury issued a publication from Rishi Sunak, Chancellor of the Exchequer, outlining the UK government’s vision of a 'New Chapter in Financial Services'. This includes the intention that the UK will set its own path outside of the UK and will not wait for the EU to grant equivalence deals that would give the City access to EU markets.  

The FCA has disclosed that the number of Skilled Person orders (s166 reviews) has increased by over 20% in the last year. The FCA has used its powers in 68 such probes, costing firms £39m.  

It is reported that new FCA CEO, Nikhil Rathi, has earned £228,000 in his first six months since appointment.   

The House of Commons Treasury Committee has published a report following its inquiry into the FCA’s regulation of London Capital & Financial plc (LCF). Amongst other comments, the findings and recommendations set out in the report include that whilst the Committee welcomes the FCA’s ongoing transformation programme, it states that the FCA board should set an end date and create and publish milestones to review changes in culture. In addition, it was considered that the FCA should set itself the same standards that it sets for firms under the Senior Managers and Certification Regime (SM&CR).  

Amongst other recent initiatives, HM Treasury has issued a consultation on the UK Government’s review of the UK regime for wholesale capital markets. The consultation closes on 24 September 2021.  

It is reported that the UK Government has rejected MPs’ recommendations that financial harms and scams should be included in its online safety bill.  

The EU has delayed the 2nd phase of rules that require asset managers to show how they take environmental and other issues into account by a further six months to July 2022. The Sustainable Finance Disclosure Regulation (SFDR) will impose mandatory environment, social and governance (ESG) disclosure obligations. 

ESMA has issued an up to date summary guide regarding the compliance of each EU member state (including historically the UK) with relevant EU Directives and Regulations.  

Financial Crime

US regulatory body, the Financial Crimes Enforcement Network (FinCen), has issued the first US government-wide summary of priorities for anti-money laundering and countering the financing of terrorism (AML/CFT) policy. The priorities identify and describe the most significant AML/CFT threats currently facing the US. 

HM Treasury has updated its current guidance in relation to higher risk jurisdictions where increased AML/CFT controls are required including the requirement to apply Enhanced Due Diligence.  

On 30 June 2021, the Wolfsberg Group published a statement for financial institutions (FIs) on demonstrating the effectiveness of their anti-money laundering (AML) and counter-terrorist financing (CTF) programmes. 

UK Government has published a circular regarding the confidentiality and sensitivity of suspicious activity reports (SARS) in the context of disclosure in private civil litigation.  

 The Financial Action Task Force (FATF) has issued its second 12 month review of revised FATF standards on virtual assets (i.e. cryptoassets) and virtual asset service providers.  

HM Treasury has issued a 'Call for Evidence' as part of a review of the UK’s AML/CFT regulatory and supervisory regime.  

The National Crime Agency (NCA) has issued its annual report and accounts for 2020/2021 which includes a summary of its operational activities during that period.  

Complaints and Compensation

The Financial Services and Compensation Scheme (FSCS) has issued its annual report for 2020/2021 including at the start a useful summary of the period ‘at a glance’ in respect of FSCS activity.  

It is reported that the FOS is in the midst of a complaints crisis as thousands of consumers wait for their complaints to be handed, sometimes for years. It currently has around 166,000 live consumer complaints, of which more than two thirds have been left waiting for an answer.  


It is reported that by June 2021, HMRC has received over 28,000 reports from workers over potentially fraudulent furlough claims made by their employers. In the meantime, following a Freedom of Information request, it is also reported that by 31 March, HMRC has already launched 13,000 investigations into the use of government-backed Covid-19 business support schemes.  

Data Protection

The Information Commissioner’s Officer (ICO) has issued a statement in response to the EU Commission’s announcement on the approval of the UK’s adequacy in respect of Data Protection laws. This means that the EU has determined UK laws to be robust enough to ensure data can safely flow from the EU and EEA without further amendments to legislation. The ICO welcomed this and considered this as a positive result for UK businesses and organisations.  

The ICO has issued its annual report and financial statements for 2020/2021 which also includes information on its performance and accountability. It also includes information regarding ICO fines and whistle-blowers disclosures. 


In a proposed shake up of requirements for Defined Contribution (DC) schemes, it is reported that pension funds below £5bn will face more stringent tests and disclosures on the value for money they offer. It is considered this in turn may lead to more consolidation in smaller schemes. Sector fee restrictions will also be changed in an attempt to encourage the sector to invest in longer term assets such as private equity and infrastructure.   

Actuarial firm LCP has uncovered what it says is new evidence of the causal connection between adviser contingent charging and client decisions to transfer out of defined benefit (DB) schemes. The FCA announced a ban on contingent charging (in most cases) with this being effective from October 2020.  

The FCA has identified nearly 60 advice firms that need to carry out past business reviews over potentially suitable DB transfer schemes. 

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.

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