Issue 86 - November 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 but has also revolved around the COP26 summit that took place in Glasgow from the 31st of October. 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.
The FCA published the Handbook Notice no. 93 and the latest policy developments updates can be found here. The minutes from the FCA Board meeting on 30 September 2021 have been published.  
For other regulatory newsletters, the Financial Ombudsman Service (FOS) published its most recent newsletter, edition no.166 and the latest PRA regulatory digest for October 2021 has been issued. There has been no new ICO newsletter since March 2021 and the FCA have released a new version of the Market Watch issue 68  this month.
The FCA has recently issued an Investment Firm Prudential Regime (IFPR) ‘set up’ questionnaire to all MiFID firms that it considers will be within the scope of the new regime from 1 January 2022. If any MiFID investment firm considers it is covered by the new regime but hasn’t received a questionnaire yet, they are advised to contact this email address to check or request this. In addition, following two recent FCA webinars on the IFPR, the FCA has indicated that if firms who have submitted their questionnaire consider they need to change their set up information following guidance given in the webinars, they should also email this address and ask for a questionnaire to be re-issued to them for re-submission.

Main Features

1. Joint statement by the FCA, PRA, TPR and FRC on the publication of the Climate Change Adaptation Report 

This joint statement by the regulators has been in recognition of the ever-increasing risks from climate change and the potential opportunities arising from the transition to a net zero future. Therefore, these reports highlight how climate change has affected the respective responsibilities of the regulators and the actions undertaken.
Financial Conduct Authority (FCA): The FCA released a report which sets out its strategy to adapting to climate change and the transition to a net zero future. The FCA has identified areas, such as retail investments and mortgages, where more needs to be done to mitigate the risks climate change poses to the sector. Also, this will see climate considerations embedded in the FCA’s operational strategy, policy choices, supervision, and enforcement actions. 
This includes the publication of the final rules on disclosures aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations for standard listed issuers, asset managers, life insurers and FCA-regulated pension funds. It also includes the FCA’s work on the Sustainability Disclosure Requirements and product labelling. Finally, this report sets out the FCA’s view on how the industry is transitioning to net zero and how capital is being mobilised to tackle climate change. For instance, the membership of net zero alliances is expanding across the ecosystem of asset owners, asset managers, banks, and insurance companies. This will be vital if the Government’s target of achieving net zero by 2050 is to be met.
Prudential Regulation Authority (PRA): In a similar form of report, the PRA has responded to the risks posed by climate change to its operations and policy functions. Firstly, as the risks from climate change are economy-wide and global, the PRA works collaboratively on these issues with domestic and international partners. Furthermore, the PRA issued the world’s first supervisory expectations for the management of climate-related financial risks in April 2019. The report states that firms have made tangible progress against these expectations. However, some firms are materially more advanced than others, and there is still much further to go. As we move into 2022, the PRA will actively supervise firms to ensure they meet expectations, with firms needing to demonstrate a good understanding and good management of climate-related financial risks on an ongoing basis.
The report also highlights the PRA’s latest thinking on the relationship between climate change and the regulatory capital framework. Capital is a key part of the supervisory and regulatory toolkit and the PRA already expects firms to hold capital against material climate-related financial risks.
The Pensions Regulator (TPR): This report is the contribution of The Pensions Regulator (TPR) towards the drive to assess the resilience of the UK to climate change. It highlights that climate change is systemically significant to pensions, the regulatory regime, and its statutory objectives. These include objectives to protect member benefits, reduce calls on the Pension Protection Fund (PPF), and promote good administration of schemes. If trustees of occupational pension schemes fail to consider risks and opportunities from climate change or fail to exercise effective stewardship, they face the risk that investment performance will suffer and savers with defined contribution (DC) schemes will miss out on good outcomes. Meanwhile, defined benefit (DB) schemes are sponsored by employers whose prospects depend to varying extents on how they respond to climate change.
Finally, the report states the TPR has designed draft proposals that include a requirement to assess climate-related risks and opportunities as part of the system of internal controls. The TPR will work with the Department for Work and Pensions to share best practice in climate risk reporting.  
Financial Reporting Council (FRC): The CEO, Sir Jon Thompson, stated that the FRC encourages companies to report using the TCFD and SASB (Sustainability Accounting Standards Board) frameworks and supports the development of global standards for sustainability reporting by the IFRS (International Financial Reporting Standard) Foundation. Through the cross FRC ESG Climate Group, the aim is to develop a strategy on ESG and manage the external and internal focus. In early 2021, the FRC released its ESG statement of intent which sets out some challenges in respect of ESG reporting and outlines the FRC's future actions.
2. Anti-money laundering and counter-terrorist financing: Supervision Report 2019-20 (HM Treasury)

HM Treasury has released its ninth annual report on Anti Money Laundering (AML) and Counter Terrorist Financing (CTF) supervision based on its supervisory and enforcement data from 6th April 2019 to 5th April 2020. The investigation has reported improvements in several areas of supervision, that includes the Treasury’s and AML/CTF supervisors commitments to further strengthening their approach and tightening the UK’s defences against Money Laundering. For instance, in December 2018, the UK’s Mutual Evaluation Report (MER) recognised that the UK’s AML/CTF regime is the strongest of over one hundred countries assessed by FATF and its regional bodies to date. However, it found that there were significant weaknesses in the risk-based approach to supervision among all the UK AML/CTF supervisors. The UK accepted these findings and in July 2019 the government and the private sector published a landmark joint Economic Crime Plan. In May 2021 the Economic Crime Plan Statement of Progress stated that 20 of the 52 original actions had been delivered.

OPBAS (Office for Professional Body Anti-Money Laundering Supervision) reveals in its most recent report that the Professional Body Supervisors (PBSs) have made marked progress in their compliance with the technical requirements of the Money Laundering Regulations over the last couple of years. However, the report notes that there are still significant improvements to be made to the effectiveness of many of the PBSs’ supervisory approaches. Finally, this report concluded by highlighting the Treasury’s wider work to strengthen the supervisory regime. Moreover, there is a legal obligation to conduct a review of the MLRs and OPBAS regulations by 26 June 2022. As part of this obligation, the Treasury (HMT) published a call for evidence seeking views on a broad set of questions on the overall effectiveness of the supervisory regime; the extent to which businesses can effectively pursue a risk- based approach; and how enforcement measures are applied under the MLRs. HMT consulted with key stakeholders on both publications, through a series of engagement sessions, throughout Autumn 2021.

3. Lessons Learnt from the Covid-19 Pandemic from a Financial Stability Perspective 

The Financial Stability Board (FSB) released a final report as an update from its July interim report outlining lessons learnt for financial stability triggered by the pandemic. This report highlights actions undertaken by the FSB and other Standard Setting Bodies (SSBs) and reveals feedback from external stakeholders. The FSB is taking forward a comprehensive work programme to enhance Non-Bank Financial Intermediation (NBFI) resilience while preserving its benefits. Firstly, the FSB has issued policy proposals to address vulnerabilities in money market funds (MMFs). The focus of the NBFI work programmes is to develop a systemic approach to NBFI, by deepening the understanding and monitoring of associated risks and developing policies to address them.

The report also identifies that there are some major concerns about excessive procyclicality that remain in the financial system. Simply, procyclicality refers to the tendency of financial variables to fluctuate around a trend during an economic cycle.  The report emphasises that work on procyclicality should consider that support measures may have dampened or delayed the impact of potential amplification mechanisms. This may apply to further analysis of potential procyclicality of the impact of expected credit loss provisions on banks’ capital positions and call for further monitoring by the BCBS (Basel Committee on Banking Supervision), which would in turn inform policy and/or supervisory considerations on bank provisioning.

Furthermore, the pandemic highlights the importance of effective operational risk management arrangements being in place before a shock hits. This report also suggested that the FSB will continue to provide a forum for discussion to address threats to business continuity that could arise from information and communications technology (ICT) and cyber related vulnerabilities. One common solution has been outsourcing to third-party providers, which have enhanced operational resilience at financial institutions, particularly in several Emerging Markey Economies (EMEs) with less developed ICT (Information and Communications Technology) infrastructures. However, the FSB reports that this method possess challenges for operational risk management. For example, dependence on one or a small number of outsourced providers could create a single point of failure with adverse consequences for financial stability. This risk has also significantly increased due to Covid-19.

The FSB has also reported that cyber-attacks have increased significantly due to the pandemic. It was reported that cyber activities such as phishing, malware and ransomware have increased from 5,000 incidents per week in Feb 2020 to 200,000 incidents in April 2021. Therefore, the BCBS has set out high-level expectations for financial institutions to improve their resilience to cyber-attacks, which includes adoption of tools, frameworks, and effective practices. Meanwhile, the pandemic has also highlighted the importance of effective cross-border cooperation, coordination, and information sharing. The FSB has identified a set of existing good practices and emerging practices of Crisis Management Groups (CMGs) to enhance preparedness for, and facilitate the management and resolution of, a cross-border financial crisis that may affect a global systemically important bank (G-SIB). Finally, the FSB has advocated the use of SupTech, RegTech and other tools to conduct analysis to address financial risks from the COVID-19 pandemic.

Other Publications

Consultation Papers

CP21/30: Debt packagers: proposals for new rules. This FCA proposal aims to reduce the risk that consumers receive non-compliant debt advice that is biased towards debt solutions which may not meet their needs but generate referral fees for the debt advice firm. The FCA has imposed rules which require firms to reassure customers that they are being given appropriate advice with their best interests. This advice is also meant to be given based on a sufficient full assessment of a customer’s financial circumstances.

Policy Statements

PS21/15: Regulation of funeral plans: Feedback to CP21/20 and final rules. In this statement, the FCA summarises the feedback to the consultation and publishes its final rules. The final rules include new guidance for funeral plan providers to help them ensure their arrangements for trust-backed funeral plans meet the FCA requirements.

Feedback Statements

FS21/11: Article 23D BMR Decision for 6 Sterling and yen LIBOR versions.

News Stories

The FCA has released an update to the former customers of Finteractive Ltd (FXVC) after it imposed requirements that prevented it from carrying any further activities in the UK. The former customers of FXVC have been targeted by scammers claiming that they are able to recover customers’ funds lost through trading with Finteractive. These emails have generally required consumers to make an upfront payment, often using crypto assets. The FCA has warned that it would never propose that consumers should make payments to recover lost funds, and that customers should be wary of these scams.

The FCA has released an article confirming the removal of permissions to carry out regulated activities by Marvell Enterprises Ltd. The FCA advised that Marvell has carried out investment-related activities with consumers without permission from the FCA to provide regulated investment services. Marvell’s actions may pose significant risks to consumers due to the potential lack of regulatory protection that would otherwise be afforded to them. The FCA highlighted that consumers may have been misled about the scope of Marvell’s permissions and the protection afforded to their investments.


The FCA has published a latest edition of the Dear CEO letter on authorisation requirements for funeral plan provider. As of 29th July 2022, the government has legislated for pre-paid funeral plans markets to be statutorily regulated by the FCA. This regulation is aimed to extend to both providers and intermediaries and continuation without appropriate authorisation will be classified as a criminal offence.

FCA Press Releases

The FCA released a Discussion Paper (DP21/4) in parallel with the COP 26 Finance Day, in order to gauge views on the new Sustainability Disclosure Requirements for asset managers and FCA regulated asset owners. The Paper notes that in a recent Financial Lives survey, 80% of respondents wanted their money to ‘do some good’, while also providing a financial return, 71% wanted to ‘invest in a way that is protecting the environment’, and 71% would not put their money into ‘investments which are unethical’. The FCA highlighted that if the financial sector is to respond effectively to this growing demand and help encourage positive change across the economy, consumers need high quality information and clear standards. It also discussed that consumers need to be able to trust firms to deliver on their promises. The FCA encourages stakeholders to engage with the Discussion Paper (closes on 7 January 2022) so that it can design a disclosure and labelling system to achieve this. 
The FCA has confirmed through a press release that it will permit the use of temporary ‘synthetic’ sterling and yen LIBOR rates in all legacy LIBOR contracts. However, these rates will not be eligible for use in any new contracts. The FCA is requiring the publication of 1-, 3- and 6-month synthetic LIBOR rates for sterling and Japanese yen until the end of 2022. Moreover, the FCA has informed lenders replacing LIBOR with alternative rates in contracts, to treat customers fairly. It is emphasised that lenders must communicate with customers in a timely manner to allow sufficient consideration of options in advance of LIBOR being unavailable. Although 5 US dollar LIBOR settings will continue to be calculated by panel bank submission until end-June 2023, the FCA has also confirmed that the use of US dollar LIBOR will not be allowed in most new contracts written after 31 December 2021.
The FCA has released the latest edition of the Grid highlighting latest developments on regulatory initiatives. This edition contains 134 initiatives in total, which is an increase from the total number of initiatives cited on the previous edition in May. Some of these initiatives may cause operational burden, however they are aimed at streamlining regulation. The FCA has obliged by the request from industry stakeholders to disintegrate some of the larger initiatives to aid user comprehension. The Grid also highlights several strategic reviews aimed at reforming and enhancing the UK’s regulatory framework. For instance, these include the Future Regulatory Framework Review and the Wholesale Market Review.


Nilhil Rathi, the CEO of the FCA, delivered the speech ‘A strategy for positive sustainable change’ during the COP26 conference session.  Mr Rathi emphasised that the FCA core strategy still revolves around trust and transparency, however, there is growing scepticism about some companies’ and financial firms’ ‘‘green’’ claims. Furthermore, the FCA highlighted that it can’t let this greenwashing persist and risk the flow of much-needed capital to help secure our futures. Thus, the FCA places environmental, social and governance (ESG) issues high on its regulatory agenda.  The speech also announced the launch of the International Sustainability Standards Board. The FCA will work with the International Organisation of Securities Commissions (IOSCO) and others to promote adoption of the new Board’s global baseline sustainability reporting standards. Finally, the speech concluded by highlighting the need to help mobilise the capital needed to keep emissions in check by building a trusted market and internationally consistent frameworks and standards.

Jessica Rusu, the FCA’s Chief Data, Information, and Intelligence Officer, gave the speech “Drivers of change in the financial services industry and how we are responding” during the event, ‘CDO Exchange for Financial Services’. The speech highlighted how the threat landscape has shifted for consumers, with fraudsters and scammers benefitting from new technologies and new consumers being drawn to high-risk markets and products. Therefore, to alleviate this risk, it was proposed to coordinate intelligence across organisations, involving the sharing of strategies, approaches, tools, and techniques. This allows early detection of threats, which results in quick interventions. Finally, Ms Rusu remarked that the financial services industry has a vital role in enabling the fintech sector to achieve its potential and position the UK at the forefront of technological growth.

Enforcement Actions and Prosecutions

The FCA and PRA have released a statement on Jes Staley’s investigation indicating they do not comment on ongoing investigations or regulatory proceedings. Since then, Jes Staley has stepped down as Barclay’s chief executive. The bank’s board agreed on the decision for resignation after preliminary conclusion to the investigation conducted by the FCA and PRA into how Stalely has described his relationship with Jeffrey Epstein, convicted sex offender. Finally, the bank has not committed to any penalty regarding the ex-chief’s payments that were received during the investigation, which are understood to hinge on the decisions of the FCA and PRA. Barclays has chosen CS Venkatakrishnan to take over as Chief Executive with immediate effect.
The FCA has fined Sunrise Brokers LLP £642,400 for serious financial crime control failings in relation to cum-ex trading, dividend arbitrage and withholding tax (WHT) reclaim schemes. The FCA had also penalised the entity on the basis that it did not exercise due skill, care, and diligence in applying its AML policies and procedures. Sunrise LLP has agreed to resolve this matter and therefore qualified for a 30% discount, otherwise the entity would have been fined £743,200.
The FCA has served Colin Bermingham a final notice prohibiting him from performing any function in relation to any regulated activity carried on by any authorised/exempt person or professional firm. This penalty was imposed in response to his conviction on 28 March 2019 of one count of conspiracy to defraud, relating to EURIBOR submissions made at Barclays under his supervision. The FCA believes that Mr Bermingham is not a fit and proper person to perform any function in relation to regulated activity. Mr Bermingham has agreed to resolve this matter.           

Industry News:


The European Securities and Markets Authority (ESMA) has released a statement regarding guidance on  Investment Recommendations (IRs) on Social Media. The EU securities market regulator emphasises rules on investment recommendations based in or outside the EU. The EU has defined IRs as implicit or explicit information suggesting an investment strategy concerning financial instruments. This statement concerns anyone that undertakes investment decisions based on IRs conducted through any social media platforms. ESMA is concerned that there is a potential to mislead investors, therefore, IRs must be delivered in a specific and transparent method. Moreover, it is implied that individuals making investment recommendations are required to disclose identities, present recommendations in an objective way, and disclose all relationships or circumstances that would impair objectivity. Finally, if the rules highlighted above are not adhered to, it could result in imposition of fines, further supervisory actions and potentially even referral to Public Prosecutors.

Financial Crime

HM Treasury has released a policy paper on the Economic Crime (Anti-Money Laundering) Levy which affects entities regulated for anti-money laundering (AML) purposes under the Money Laundering, Terrorist Financing and Transfer of Funds Regulation 2017. The government has established this levy on entities that are regulated during the financial year from 1 April 2022 to 31 March 2023, and the amount payable will be determined by reference to their size based on their UK revenue from periods of account ending in that year. All small entities (defined in the paper) will be exempt, whilst medium entities will pay £10,000; large entities £36,000; very large entities £250,000. The objective of this levy is to develop a long-term Sustainable Resourcing Model (SRM) to tackle economic crime. As one part of this SRM, and supported by ongoing government funding, the levy will aim to raise £100 million per year from the AML regulated sector to pay for government initiatives outlined in the ECP to help tackle money laundering.
HM Treasury has published a new statutory instrument, The Money Laundering and Terrorist Financing (Amendment) (No.3) (High Risk Countries) Regulations 2021. This was an amendment to the list of high-risk third countries in the Schedule 3ZA. On the new list, Botswana and Mauritius are no longer classed as high-risk countries for the purposes of enhanced customer due diligence requirements in regulation 33(3). However, Jordan, Mali and Turkey are now classed as high-risk countries requiring enhanced customer due diligence.

Complaints and Compensation

The FCA has published the aggregate complaints data for the first half of 2021 (H1). Latest findings include:
  • In H1 2021, financial services firms received 2.04m complaints, 7% lower than in the second half of 2020 (2.19m). This is the lowest level recorded since the second half of 2016.
  • The insurance and pure protection product group saw the largest decrease in complaints received by firms (13%): from 1.01m complaints in 2020 H2 to 0.88m complaints in 2021 H1.
  • There was also a noticeable decrease in home finance complaints (11%) while there were significant increases in investments (18%) and decumulation and pensions complaints (26%).
  • The decrease in insurance and pure protection complaints continues to be driven by the tailing off of complaints about Payment Protection Insurance (PPI) (256,416 in 2020 H2 to 56,619 in 2021 H1).
  • There has also been a decrease of 63% in travel insurance related complaints, after a spike in 2020 driven by Covid-19.
  • Over the last few years, complaints about platforms have increased from 8,431 in 2019 H2 to 17,090 in 2021 H1 (an increase of 103%).
  • Complaints about workplace personal pensions have also been steadily increasing from 7,642 in 2017 H2 to 14,974 in 2021 H1 (an increase of 96%).
The Financial Ombudsman Service (FOS) released its consultation feedback statement on its report, ‘Temporary changes to reporting the outcomes of proactively settled complaints’. The paper had reported that the pandemic had resulted in a substantial increase in customer demand and an increase of 60% or more in non-PPI complaints. Feedback indicates that participants support the central proposal that the FOS present proactive offers from businesses ‘neutrally’ to customers. However, several stakeholders were concerned about how this approach could inadvertently present a risk to fair and consistent outcomes for consumers, as well as impact the ultimate effectiveness of the initiative. Upon reflection, the FOS has agreed to review the fairness and reasonableness of any offer communicated through this process. This will ensure that only fair and reasonable offers will be put forward to customers, and challenge those that don’t adhere to this criterion.

The Financial Ombudsman Service (FOS) has released its most recent annual report and accounts for the year ended 31 March 2021. The report briefly highlights the FOS’s priorities for the year 2020/21 as follows:
  • Reducing the time people were waiting for their complaint to be answered.
  • Bringing PPI complaints to a conclusion.
  • Managing growing complexity across other areas of complaints.
  • Continuing to shape the FOS’s strategy to 2025 and plans to support its delivery.
The annual report highlighted the key outcomes for the year 2020/21. The FOS has resolved 87% of complaints with an informal view, 72% of business complaint handlers rated the service positively, and 54% of the customers reported being satisfied with the service.


HM Revenue & Customs (HMRC) has released a policy paper on increasing Normal Minimum Pension Age (NMPA) on the 4th November 2021. This measure will increase the minimum age at which most pension savers can access their pensions without incurring an unauthorised payments tax charge, unless they are retiring due to ill-health, from age 55 to 57 in April 2028. This legislation underlines the minimum age at which benefits can be claimed, however, the age at which they can be taken from can be higher than the NMPA. Finally, this policy is motivated to support the UK Government’s fuller working lives agenda, which aims to provide indirect benefits to the economy through increased labour market participation.
The Department for Work and Pensions (DWP) published a press release highlighting the new measures to protect pension savers from scam transfers. The new regulations will come into force from the 30th of November 2021. Where there are tell-tale signs of fraud or methods frequently used by scammers, trustees and scheme managers will be able to prevent a transfer request – giving it a “red flag”. Furthermore, when a request is suspected as fraud, an “amber” flag will be assigned, and this will pause the transfer until the scheme manager can prove that sufficient scam guidance has been undertaken from the Money and Pensions Service (MaPS). Finally, the government has committed to reviewing the new regulations within 18 months to ensure they remain as effective as possible in targeting the evolving methods used by scammers


The FCA has published the 36th edition of the Primary Market Bulletin. This article sets out further information on disclosure expectations and supervisory strategy. The introduction of specific TCFD (Task Force on Climate-Related Financial Disclosures) aligned climate-related disclosure requirements for listed companies is an important new development. In terms of disclosure expectations, the FCA is seeking advice on feedback from listed companies on its proposal to publish a technical note underling further guidance. Additionally, from 2022, the review of TCFD-aligned disclosures will be embedded into the FRC’s routine reviews of premium listed company annual financial reports. And, from 2023, this would be embedded into routine reviews of relevant standard listed company annual financial reports.
In terms of regulatory intervention, if a listed company’s disclosures do not appear to meet the requirements of the Listing Rules, the FRC will contact the company setting out the issues and requesting for further information. Based on this information, the FRC may request the company to undertake corrective actions. Finally, the FRC will refer matters to the FCA which are identified as containing potentially false or misleading information. Also, any non-compliance in reporting requirements in annual financial reports will be met with the full suite of powers, as well as sanctions, where appropriate.


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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