FCA reports on annuity sales: FCA has published its market study on retirement income and thematic review into annuity sales practices where firms sell annuities to existing customers. The review confirmed that the market could work better, but that the right annuity is often a good option for consumers with average pensions and low risk appetites. The results of the review suggest that:
- firms should make clear to consumers how their quote compares to others on the open market;
- there may be a need to review the current "wake-up pack" system;
- the pensions guidance service and firms should take account of the market study on consumer behaviour when designing tools to support decision-making; and
- a "pensions dashboard" would be a useful tool.
FCA found that firms' sales practices are contributing to consumers not shopping around and switching, and plans regulatory changes to improve this. It is asking most of the firms it surveyed to carry out further work, so FCA can establish whether there is a more widespread problem. (Source: FCA Reports on Annuity Sales)
FCA consults on GAP changes: FCA is consulting on changes to its rules designed to promote competition in the guaranteed asset protection (GAP) insurance market. FCA's previous review of insurance add-ins showed that consumers often buy insurance at point of sale without having thought about it or having looked at alternatives. FCA proposes changes to the Insurance: Conduct of Business Sourcebook (ICOBS):
- to impose a deferred opt-in or pause in the sale, so that the sales process can start in a showroom but customers will have a set time period to consider whether they want to proceed with the sale. FCA proposes the period should be at least two clear days after the firm provides required information (although it may be one day if the customer initiates the contract conclusion and consents to its early conclusion); and
- to require GAP product distributors to provide information that will encourage consumers to shop around (including a clear description of the cost and features and an indication that other distributors also sell GAP contracts).
FCA asks for comment by 13 March 2015. (Source: FCA Consults on GAP Changes)
FCA publishes new rules: FCA has made various new rules since its last Handbook Notice, and has now published:
- the Consumer Credit (Cost Cap) Instrument 2014: this amends the Consumer Credit Sourcebook (CONC) from 2 January 2015 and imposes a price cap on what high-cost short-term credit lenders can charge;
- the Consumer Credit (Credit Broking) Instrument 2014: this amends CONC and the Supervision Manual (SUP), also from 2 January 2015, to ban credit brokers from charging fees until they have made disclosures to customers and received acknowledgement of the notice;
- the Handbook Administration (No 36) Instrument 2014: this makes minor corrections to various parts of the Handbook mainly from 1 January 2015. Certain changes, particularly to the Client Assets Sourcebook (CASS), take effect from 1 June 2015 to coincide with major changes to CASS that come into force on that day;
- the Client Assets Sourcebook (Amendment No 7) Instrument 2014: this amends CASS from 1 April 2015 in relation to the AIFMD to explain when small registered UK alternative investment fund managers (AIFMs) must comply with CASS 6, to ensure the custody rules protect all assets held by a depositary of an authorised AIF and to make it clear when small AIFMs must complete the appropriate SUP return;
- the Immigration Regulations Instrument 2014: this makes changes to various parts of the Handbook, mainly the Decision Procedure and Penalties Manual and the Enforcement Guide (EG), from 12 December 2014, to put in place a regime to monitor compliance with the Immigration Act provisions that prohibit banks and building societies from opening current accounts for certain persons; and
- the Supervision Manual (Direction and Determination Process) (Amendment) Instrument 2014: this introduces further changes to SUP and EG, also from 12 December 2014, mainly to introduce a new reporting requirement to enable FCA to monitor compliance with the Immigration Act restrictions described above.
(Source: FCA Publishes New Rules)
FCA consults on complaints handing changes: FCA is consulting on suggested amendments to complaints handling following a thematic review. Proposed changes include:
- an extension of the period a firm has to deal with less complex complaints without the need for a formal letter to three days;
- complainants will be able to refer the matter to the Financial Ombudsman Service (FOS) as soon as they have received the firm's response, and firms will have to inform customers of this fact;
- a requirement for firms to report all complaints to FCA, and to analyse and report their causes and nature. FCA will publish this data with details about the size of firms, allowing for better comparisons; and
- imposing a maximum basic rate of call charge for any post-contractual call to a regulated firm. This will not allow firms to use premium rate or 0845 numbers.
FCA is also consulting on amendments to the complaints handling rules to implement the Alternative Dispute Resolution Directive (ADRD). It plans to keep current time limits, but to require a firm to tell customers if it would allow FOS to consider a complaint referred to it out of time. Separately, FCA is considering whether to introduce a long-stop date of 15 years for any complaint to the FOS. FCA asks for comments by 13 March 2015. (Source: Improving Complaints Handling Consultation Paper)
FCA bans former Blackrock MD for fare dodging: FCA has banned Jonathan Burrows, former managing director of Blackrock Asset Management, from carrying out any function in relation to any regulated activity. It found Mr Burrows failed the fit and proper test because he had, on several occasions, failed to buy a train ticket and then tapped out his Oyster card on arriving at his destination, which resulted in him paying significantly less than he should have done. Mr Burrows admitted he had done this several times, knowing he was breaking the law. FCA does not consider this acceptable behaviour for an approved person as it showed a lack of honesty and integrity. FCA also noted that Mr Burrows had not told his employer about his behaviour and, while it was not banning him because of this failure, it had also take it into account. (Source: FCA Bans Former Blackrock MD for Fare Dodging)
FCA updates on RRD rules: FCA says it expects to be given the power to make its final rules implementing the BRRD (which it calls the Recovery and Resolution Directive (RRD)) in early January 2015 and will make those rules as soon as possible thereafter. (Source: FCA Updates on RRD Rules)
FCA pleased with post-RDR review: FCA has published the findings from the first stage of its post-implementation review of the Retail Distribution Review (RDR). The RDR rules have now been in effect for two years. FCA is pleased with its effects, saying there is evidence that product bias has reduced, showing that commission is no longer a driving force for recommendations, and more advisers are gaining qualifications. FCA has also not noted any decrease in availability of advice and notes there has been no decrease in advisory costs either. FCA has also published a thematic review on adviser charging and services, which it says shows major improvements in how firms disclose the cost of their advice, their scope of service, and the nature of their services to clients. Previous thematic reviews had shown significant failings but firms have taken on board many of FCA's criticisms following those reviews. It has referred only one firm to enforcement. FCA will now undertake some further work on consumer understanding of advice offered and innovation in advisory services, ahead of the second planned review in 2017. (Source: FCA Pleased with Post-RDR Review)
FCA updates on EMIR priorities: FCA has updated its website on the supervisory priorities that arise from EMIR. (Source: FCA Updates on EMIR Priorities)
FCA publishes charges and benefits audit findings: FCA has published a report by the Independent Project Board (IPB) on charges and benefits in legacy defined contribution workplace pension schemes. The IPB has recommended that providers:
- review their data in the light of any actions already taken to reduce charges and any qualitative factors that might justify high charges;
- identify steps that would improve outcomes for existing savers, and prevent new savers joining poor value schemes; and
- provide the data, any further analysis and proposed governing bodies by the end of June 2015.
The report contains guidance for governance bodies tasked with deciding whether the proposed actions ensure savers receive value for money in future. The IPB recommends that:
- they agree remedial actions and an implementation plan with their provider by the end of December 2015; and
- that the Department for Work and Pensions and FCA should jointly review industry-wide progress in remedying poor value schemes and publish a report by the end of 2016.
UK Regulators Network publishes switching habits review: The UK Regulators Network, of which FCA is part, has published a paper setting out the results of research carried out on consumer understanding and behaviour on switching deals in various sectors, and what consumers believe to be the greatest hurdles to switching. It plans to use the results to assess how best to work together to address the hurdles. (Source: UK Regulators Network Publishes Switching Habits Review)
Complaints Commissioner upholds permission withdrawal: The Complaints Commissioner has supported FCA's decision to cancel a firm's permission. The firm had applied for cancellation and, at the time, there were two complaints outstanding with the FOS. Given that the firm did not have permission to deal with retail clients and in the absence of any other evidence of complaints, FCA granted the cancellation. It then transpired that many customers had claims to bring against the firm, in excess of the Financial Services Compensation Scheme limits. The complainant criticised FCA's approval of the cancellation. The Complaints Commissioner upheld FCA's decision but noted some weaknesses in its policy and procedure for assessing likely problems. (Source: Complaints Commissioner Upholds Permission Withdrawal)
FCA orders debt management firm to repay customers: FCA has ordered Harrington Brooks, a debt management firm, to repay over £185,000 in redress to over 4,500 customers, because communications from the firm to creditors sent on behalf of customers were delayed. The delays resulted in customers thinking their creditors had received letters when they had not, which meant interest payments and other charges were frozen later than the customers expected so they owed more. (Source: FCA Orders Debt Management Firm to Repay Customers)
FCA updates website on CRD4 guidelines: FCA has updated its website to create a page listing guidelines and recommendations issued by EBA under CRD4, with which FCA has confirmed compliance. (Source: FCA Updates Website on CRD4 Guidelines)