FCA Regulation Round-Up for July

The FCA published its July edition of Regulation Round-Up this week.  Highlights of some of the “hot topics” covered include:

  • interim report of the FCA’s Retirement Outcomes Review;
  • the publication of the final report on its asset management market study;
  • the publication of the MiFID II policy statement and consultation paper VI;
  • first undertaking received under the Consumer Rights Act 2015;
  • the consultation on the implementation of the EU Benchmark Regulation (CP17/17);
  • the publication of the FCA’s finding on its thematic review of customer understanding of transactions (TR17/1); and
  • the consultation on authorisation and reporting forms under Payment Services Directive 2 (CP17/22)

Retirement outcomes review:  interim report

The FCA’s review examined how the retirement market has developed since the Government introduced changes to accessing defined contributions (DC) pensions in April 2015.   From 6 April 2015, individuals aged 55 were entitled to access as much of their savings from their DC pension.  The FCA’s review focused on how these pension freedoms affected consumers who do not take advice.

A summary of the report can be found here

Asset Management Market Study

The findings of the report showed that price competition was weak in a number of areas of the industry despite the large numbers of firms operating in the market.  The FCA also uncovered that investors were not always clear on what the objectives of funds are and that fund performance was not always reported against an appropriate benchmark.

The final report, which sets out the FCA’s proposed remedies to improve competition in the market can be found here .

MiFID II policy statement and consultation paper VI

PS17/14 is the FCA’s final policy statement on how it intends to implement MiFID II from 3 January 2018.  The policy statement sets out the final rules on conduct issues in a number of different areas such as research, inducements, client categorisation, best execution, the appropriateness test, taping, clients assets and perimeter guidance.

The sixth consultation paper seeks comments on further changes to the FCA Handbook and also deals with new guidance on the use of third parties where firms are required to send the FCA financial instrument reference data or commodity derivative position reports.  The consultation closes on 7 September 2017.

First undertaking received under the Consumer Rights Act 2015

London General Insurance Company Limited (LGI) has become the first firm to give an undertaking to the FCA under the Consumer Rights Act 2015 (CRA).

The FCA had concerns that a term in LGI’s extended warranty protection policy  (provided to customers by Nationwide Building Society (Nationwide)) that was also used in information to customers about the policy was capable of having two different meanings.    Under section 68(1) of the CRA firms are required to ensure that a written term of a consumer contract is transparent.

LGI agreed that the relevant term was not as clear as it could or should be and alongside Nationwide, it has reviewed and amended the term.

Consultation on EU Benchmarks Regulation

The FCA is seeking comments on the draft application forms to be implemented under the Benchmarks Regulation (BR) that comes into effect on 1 January 2018.  The consultation on the draft forms will close on 6 August and the wider consultation on changes to the FCA Handbook on implementing the BR closes on 22 August.  The consultation paper can be found here .

Thematic review of customer understanding:  retail banks and building societies

On 17 July,  the FCA published the findings from its review of customers understanding of a financial transaction delivered by retail banks and building societies.  One of the key findings uncovered that firms are increasingly alert to the importance of assessing customer understanding.

The report, which includes the next steps for firms, can be found here .

Consultation on authorisation and reporting forms under Payment Services Directive

On 13 July, the FCA issued a consultation paper (CP17/22 ) on authorisation, registration and reporting forms under the Payments Services Directive (PSD2).

The consultation closes on 18 August, following which the FCA will consider the feedback and publish the final forms in September 2017.


FIN. Team