Quick links for this month:
The FCA issued its April 2019 regulation round-up, addressing in particular its annual business plan, mortgages market study, the investment platforms market and Brexit.
The FCA issued a policy statement (PS 19/7) setting out final rules on the Directory of key individuals working in financial services, requiring firms to report timely and accurate information. Some changes were made in light of comments received following publication of CP18/19. The Directory is expected to go live in March 2020.
The FCA issued finalised guidance (FG 19/2) on statements of responsibilities (SoR) and responsibilities maps under SMCR, which is extended to all authorised firms on 9 December 2019. From that point, all senior managers will need an SoR and all enhanced firms a responsibilities map.
The FCA published its business plan for 2019/2020, saying its priority will remain be Brexit planning. It also published its research agenda and an updated fees and levies proposal in consultation paper CP19/16.
The PRA also published its business plan for 2019/20 and a fee proposal in consultation paper CP9/19.
The FCA issued a Dear CEO letter reminding firms that approve financial promotions for the unauthorised of its expectations, following a letter on the same subject in January.
The FCA published its ‘Approach to supervision’ document, explaining how it prioritises how it supervises firms and individuals in practice. The FCA notes that it uses judgement and that rules represent minimum standards.
The European Payments Council (EPC) has approved an application from UK Finance for the continued participation of UK payment service providers in Single Euro Payments Area (SEPA) schemes in the event of a no-deal Brexit.
The FCA announced that it intended to extend the notification window for the temporary permissions regime for passporting EEA firms and funds until 30 May 2019. It also published a guidance document on notification for passporting funds.
The PRA, however, confirmed that its notification window closed on 11 April 2019.
The FCA issued final instruments and guidance to apply if the UK leaves the EU without agreement.
The BoE and the PRA issued a joint policy statement (PS5/19) on Brexit, further to recent consultations, together with EU Exit instruments, supervisory statements and a statement on the interpretation of EU guidelines.
The FCA confirmed that a price cap in the rent-to-own (RTO) sector is in force from 1 April 2019, saying this would protect vulnerable customers in the UK. It applies to any new products RTO firms introduce. For products already on offer, the rules will apply either when a firm raises the price or on 1 July 2019, whichever is sooner. The details are set out in policy statement 19/6. The FCA will begin a review to assess the impact of the price cap in April 2020.
The FCA published final findings of its work on motor finance, covering commission structures, transparency, lender controls and affordability assessments. It said it has concerns about the way lenders reward retailers and other brokers and is assessing options for intervening in the market, including banning certain commission models or limiting broker discretion.
The FCA published the results of a review on reducing the risk of harm for customers who cannot afford to repay debt, noting concerns about credit card fees. The review looked at whether firms were identifying indicators of potential financial difficulty and found that in many cases they risked worsening customers' positions. The FCA notes changes made by some firms since the review and encourages firms to consider the impact of fees on fair customer outcomes.
The FCA published a letter to CEOs of high cost lenders on the key risks these firms can pose to consumers and markets, asking the CEOs to consider the degree to which they present such risks and explaining the FCA's focus for high cost lenders in general and guarantor lending in particular.
The FCA has published a final report following its mortgages market study (MS16/2.3), as well as a consultation paper (CP19/14) on proposed changes to responsible lending rules and guidance. The focus is on mortgage prisoners. The consultation closes on 26 June 2019.
Oral evidence given at a Treasury Committee hearing on consumer access to financial services has been published, together with written evidence from the FCA. The Committee heard from representatives of the FCA, the Equality and Human Rights Commission and the Equality Advisory Support Service. The FCA said that it would publish guidance in the next few months on vulnerable customers, including on identification, fair treatment and redress.
The FCA has issued a final report following its study of investment platforms. It also issued a consultation paper (19/2) on proposed rules to allow consumers to switch platforms while remaining with a fund, and to ban or cap exit fees. The consultation runs until 14 June 2019.
The FCA published the findings of its second thematic review of debt management (TR19/1), looking at firms providing debt advice and administering debt management plans. It found improvements on the quality of advice and outcomes, but noted that many firms still had work to do on identification and treatment of vulnerable customers.
The FCA has presented a final report to Parliament on retained provisions in the Consumer Credit Act 1974 and whether their repeal would lessen protection for consumers.
In Pilgrim Rock v Mr Iwaniuk  EWHC 203 (Ch) the High Court upheld a county court decision to vary the terms of a loan on the basis of an unfair relationship between the parties under s 140A, confirming that the relationship between the borrower and the individual behind the lending company was a relevant factor.
The FCA published a statement (FS19/2) summarising feedback to its discussion paper on 'duty of care' and possible alternatives (DP18/5) and making initial proposals for next steps.
The FCA published a webpage with a video on treating customers fairly and assessing customer needs, focusing on the consumer outcomes firms should try to achieve.
The FCA published a webpage with a video on the development and marketing of consumer credit products, setting out its expectations for firms, with an emphasis on vulnerability and accessibility.
The Council of the EU (Council) announced that it had adopted a Regulation amending Regulation (EC) 924/2009 with regard to cross-border payment and currency conversion charges. Most provisions will take effect on 19 December 2019. The aim is to reduce the cost of intra-EU payments and improve transparency for currency conversion charges.
The EBA issued clarifications to issues raised by a working group on application programming interfaces (APIs) under the second Payment Services Directive (PSD2), particularly the reliability of testing platforms, the alignment of scheme functionalities, and the identification of entities not yet authorised. Further clarifications are also due.
Further clarifications were also release on performance and support, third party providers and the timelines for account servicing providers seeking exemptions.
The European Commission adopted a delegated regulation setting out regulatory technical standards on criteria for the appointment and functions of central contact points under PSD2 for cross-border services.
The EBA launched a central electronic register under PSD2 to provide information on the identity of authorised payment and electronic money institutions, including payment initiation service providers and account information service providers, their home countries and the services they provide, including through passporting.
The Payment Systems Regulator (PSR) issued a policy statement on changes to the General and Specific Directions (the ‘day one’ directions) as well as draft proposed directions for consultation. The policy and consultation materials were published together as CP 19/3; the consultation closes on 26 April 2019.
The Open Banking Implementation Entity (OBIE) issued an updated Open Banking Standard (version 3.1.1) following feedback on certain points. Implementation is expected by 13 September 2019 in line with PSD2.
The Payment Systems PSR published its annual plan and budget for 2019/20, suggesting it will shift some attention from infrastructure to consumer experience.
The Court of Appeal ruled that consumers can pursue a £14bn ($18.3bn) class action lawsuit against Mastercard for flouting competition law by charging high fees through retailers.
The EBA published an opinion on passport notifications for payment institutions and electronic money institutions using cross-border agents and distributors.
The PRA issued a consultation paper (CP4/19) seeking views on a draft new supervisory statement on liquidity risk management for insurers. The proposals are relevant to all UK Solvency II firms, and comments are sought by 5 June 2019. The current statement (SS2/13) sets out expectations for banks and insurers engaging in collateral upgrade transactions and considerations about associated risk. The new statement would replace the old.
Following technical advice from EIOPA, the European Commission adopted a delegated regulation amending Solvency II, to make it easier for insurers to invest in equity and private debt.
The PRA used its Brexit webpage to request that insurers with EEA business considering making a transfer under FSMA Part VII contact the PRA as soon as possible, following amended draft legislation allowing parties currently in the process of making such transfers up to two years from Brexit to obtain a court order sanctioning the scheme under pre-exit rules.
The PRA issued a policy statement (PS9/19) following responses to a consultation paper on how group own funds should be assessed as available under Solvency II. The PRA also updated supervisory statement SS 9/15 ‘Solvency II: Group supervision’.
The Treasury opened a consultation on draft regulations setting out the requirement for insurers to pass on to customers cost benefits arising from reforms to low value personal injury claims. The consultation closes on 3 May 2019.
The PRA issued consultation paper 7/19 ('Solvency II: Equity release mortgages–part 2') on firms investing in equity release mortgage portfolios, proposing amendments to the current regime, together with a Dear CEO letter.
The FCA published a reminder to general insurance firms regarding the Insurance Distribution Directive and its requirement that all firms in the distribution chain act in accordance with customers' best interests, saying it would not hesitate to intervene where necessary.
The European Parliament approved the draft directive on the protection of persons reporting on breaches of EU law proposed by the Commission in 2018. The new rules would involve EU-wide protection standards in financial services, money laundering, procurement and other areas.
The FCA has issued a document sharing insights from across the financial sector about cybersecurity, aimed especially at small and medium-sized firms.
The all-party parliamentary group (APPG) on fair business banking joined an implementation steering group set up by UK Finance to design a compensation scheme and dispute resolution mechanism for disputes between businesses and financial service providers.
The Council of the EU formally adopted a directive on non-cash fraud and counterfeiting, updating existing rules. Member states will have two years from publication to implement the directive.
The Treasury opened a consultation on the implementation of Directive (EU) 2018/843 on money laundering (MLD5), closing on 10 June 2019. The Treasury is considering the possibility that an transition period is in place after Brexit, requiring implementation by January 2020.
The FCA found three asset managers in breach of competition law by sharing sensitive information in relation to prices for initial public offerings (IPOs). The regulator fined Hargreave Hale Ltd £306,300 and River & Mercantile Asset Management LLP £108,600, while Newton Investment Management Limited was granted immunity under a leniency programme. This is the first time the FCA has used its competition enforcement powers since obtaining them in April 2015. Under these, the FCA can impose fines up to 10% of worldwide turnover.
The FCA confirmed that from 1 April 2019, the current £150,000 limit on compensation that the Financial Ombudsman Service (FOS) can require firms to pay rises to £350,000 for complaints about actions on or after that date. The limit will rise to £160,000 for complaints about actions before 1 April but referred to the FOS afterwards. Both limits will be adjusted every year from 1 April 2020 in line with the Consumer Prices Index. The new limit comes in at the same time as the extension of the service to larger SMEs.
The Financial Services Compensation Scheme (FSCS) announced that the limits on the protection it offers rose to £85,000 on 1 April 2019 for mortgage advice, debt management, life and pensions advice, long-term care insurance and investments.
The FCA fined The Carphone Warehouse £29m for mis-selling a mobile insurance product, saying the firm had failed to give sales consultants proper training to give advice to customers and adequately assess their needs.
The FCA fined Standard Chartered Bank £102m for AML breaches in high risk areas, the second largest penalty for AML failings it has imposed to date. The bank was also fined $164m by the Federal Reserve Board for inadequate sanctions controls and failure to disclose sanctions risks.
The FCA published an ‘Approach to enforcement’ document, noting that its guiding principle is to investigate in a consistent, open-minded manner.
The FCA published a speech given by its chief executive, Andrew Bailey, at the European Independent Research Providers Association on MiFID II. Mr Bailey noted the positive impacts of MiFID II, the challenges and concerns it raised, the FCA’s plans and how competition might evolve in the market for research. Mr Bailey explained that the FCA was completing supervisory work to assess how MiFID II is impacting asset owners, consumers and that market more broadly and would provide feedback in Q2 2019.
The FCA published a speech given by its Executive Director of International, Nausicaa Delfas, at the UK Financial Services Brexit Summit, setting out the FCA’s preparations for Brexit, its expectations for firms and the implications it sees for consumers.
The FCA published a speech given by Jonathan Davidson, executive Director of Supervision (Retail and Authorisations), at the Credit Summit in London. Mr Davidson said the FCA's focus would remain on affordability, business models and culture, as well as relending in the high cost sector. On culture, he suggested that SMCR would supply minimum standards.
The FCA published a speech by Andrew Bailey, its CEO, on the future of conduct regulation, its changing purposes and the impact of Brexit.
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