FCA makes Solvency 2 rules: FCA has published its policy statement and its made rules arising from four consultation papers on Solvency 2. The changes, and made rules, cover:
- transposition of Solvency 2: the key items relate to FCA's decision to keep the list of assets for permitted links, require incoming EEA firms to appoint a claims representative and amend the rules on information for policyholders;
- changes to the Conduct of Business Rules: with-profits and unit-linked business: FCA has clarified some of its proposed changes in response to feedback, especially as they apply to mutual firms;
- other consequential changes to the Handbook, mainly to prudential and systems and controls requirements but also to the Supervision manual; and
- governance in insurance firms: FCA is introducing revised guidance on the fit and proper test for approved persons in Solvency 2 firms as originally proposed.
The changes take effect on 1 January 2016. (Source: FCA Makes Solvency 2 Rules)
FCA consults on approved persons for non-Solvency 2 insurers: FCA is consulting on changes to its approved persons regime for insurers who fall outside Solvency 2 and hold assets of £25 million or less, including UK branches of third country firms (it will consult separately on larger non-Directive firms). FCA wants to apply a broadly consistent regime across Directive and non-Directive firms, but will do so proportionately. It plans changes to the significant influence functions (SIF), the SIF approval applications, and new conduct rules. The rules will sit alongside PRA's rules (which will require these firms to have at least one approved individual). FCA intends to turn into FCA SIF holders those individuals who are currently in governing roles but will not be pre-approved by PRA under its new regime. It also intends to make all Chairmen, Senior Independent Directors and those who chair the Remuneration, Risk, Audit or Nomination Committee FCA SIF holders. It will apply conduct rules mirroring those for banks and Solvency 2 firms, but will disapply the PRA CF28 and the FCA CF8 functions. FCA asks for comment by 15 May. (Source: FCA Consults on Approved Persons for Non-Solvency 2 Insurers)
FCA and PRA consult on approved persons changes for Solvency 2 firms: FCA is consulting on changes to the approved persons regime for Solvency 2 firms, consistent with previous consultations and its joint initiative with PRA. FCA and PRA are consulting on consequential changes, transitional arrangements and forms required following previous consultations. FCA alone is consulting on governance arrangements for Solvency 2 firms. Certain rules will depend on Treasury, so the changes are likely to take effect in stages. It asks for comments by 15 May. (Source: FCA and PRA Consult on Approved Persons Changes for Solvency 2 Firms)
FCA publishes consumer credit waiver documents: FCA has published information for firms seeking a waiver or modification of requirements under the Consumer Credit (Agreements) Regulations, where it is not possible to disclose certain information. (Source: FCA Publishes Consumer Credit Waiver Documents)
FCA publishes MCD rules: FCA has published its feedback statement and final rules on implementation of the MCD. Overall, respondents agreed with FCA's consultation proposals. However, FCA has had to make a change to its rules so that all consumers who remortgage with a new lender must have an affordability assessment, even if the consumer is not looking to borrow more. Some respondents also asked for more time to adapt to the changes, so FCA has decided to introduce product sales data and performance reporting a year later than originally proposed. FCA has now published its main set of rules implementing the MCD, together with related fees rules. It plans to make its rules on CBTL before the end of June. This will include feedback on the changes to the complaints handling rules. FCA will publish changes to its rules relating to lending that is not secured on residential property but is used to acquire or retain property rights in it by the end of July. It will then consult on how its knowledge and competence requirements will apply to firms that passport into the UK, and on passporting generally. It will await EBA guidelines on creditworthiness and on arrears and foreclosure before assessing whether it needs to change its rules further. The paper also includes an indicative timetable, and FCA says it will work with firms whose approach is to implement the changes while minimising customer disruption. Feedback on the main changes focuses on:
- how and when MCD requirements apply;
- implications for the transitional period;
- the sales pipeline;
- binding offers;
- lifetime mortgages;
- foreign currency mortgages; and
- the European Standardised Information Sheet language.
FCA has also published supplements to its application form for second charge mortgage brokers, and for second charge mortgage lenders or administrators. (Source: FCA Publishes MCD Rules,Supplement for Second Charge Mortgage Brokers and Supplement for Second Charge Mortgage Lenders and/or Administrators)
FCA consults on ex-post risk adjustment: FCA is consulting on proposals to amend its draft guidance on applying ex-post risk adjustment to variable remuneration. FCA wants to clarify how firms should comply with the dual-regulated firms Remuneration Code requirements. It asks for comment by 7 May. (Source: FCA Consults on Ex-Post Risk Adjustment)
FCA consults on fee rates: FCA is consulting on its rates proposals for 2015/16, covering itself, FOS and MAS. It explains:
- the reasons for the increase in its annual funding rate and how it proposes to allocate the increase;
- that no consumer credit firm pays a fee while it has only interim permission, so there will not be a full population of consumer credit firms until 2017;
- the fees incurred in setting up PSR and proposals for recovering its annual funding requirement;
- the need to raise pensions guidance levies; and
- the FOS and MAS levies.
The paper looks in detail at the proposals for each type of firm. It asks for comment by 18 May. (Source:FCA Consults on Fee Rates)
FCA makes new rules: FCA's latest Handbook Notice summarises the changes it has made since its last Notice:
- the Conduct of Business Sourcebook (COBS) (Retirement Guidance Guarantee) Instrument 2015 and the Standards for Designated Guidance Providers Instrument 2015: these amend COBS and the Glossary from (at the latest) 6 April and help individuals in making better choices as to how to use their deferred contribution funds at retirement;
- the Benchmarks (Amendment) Instrument 2015: this took effect on 1 April and amends the Glossary, Fees Manual (FEES), Market Conduct Sourcebook and the Supervision Manual and brings benchmarks within the scope of regulation;
- the Handbook Administration (No 37) Instrument 2015 makes minor, insubstantial, amendments to many parts of the rules on various dates;
- the Fees (Miscellaneous Amendments) (No 8) Instrument 2015: this amends the Glossary and FEES from 1 April in respect of fees for regulating second charge mortgages, approved reporting mechanisms and consumer credit firms, and various other changes;
- the Fees (Payment Systems Regulator) Instrument 2015 took effect on 1 April and amends the Glossary and FEES in respect of fees to be raised for funding PSR;
- the Fees (Pensions Guidance) Instrument 2015 also amended the Glossary and FEES from 1 April in respect of arrangements for raising the pensions guidance levy; and
- the Financial Services Compensation Scheme (FSCS) (Management Expenses Levy Limit 2015/2016) (FCA) Instrument 2015 also took effect on 1 April and amended FEES in respect of management expenses and a contingency reserve for FSCS.
(Source: FCA Makes New Rules)
FCA publishes joint sponsor feedback: FCA has published the feedback from its consultation in relation to joint sponsors. Overall, respondents to the consultation were supportive of FCA's proposals, with some minor reservations. As a result FCA is proceeding as proposed in the consultation paper. The Technical Note and the changes to chapter 8 of the Listing Rules it has now made take effect on 1 April. (Source: Joint Sponsor Consultation Feedback and Policy Statement)
FCA publishes final retirement income report: FCA has confirmed that the findings from its interim retirement income market report, issued in December 2014, are final. The majority of respondents agreed with the report's findings, and the remedies FCA proposed to deal with the issues raised, at the time. The proposed remedies are:
- requiring firms to provide an annuity quotation ranking so that consumers can easily identify if they could be getting a better deal by shopping around;
- redesigning and behaviourally trialling the information that consumers receive from their providers, such as wake-up packs, in the run-up to their retirement;
- in the longer term, the creation of a pensions dashboard, which will allow consumers to see all their pension pots in one place.
In addition, FCA wants to see firms framing the options available to consumers so as to enable them to make sound decisions, rather than to drive sales of particular products. FCA will monitor the market to track consumer outcomes and the take-up of the Pension Wise service. Further consultation on annuity comparisons and the replacement of the wake-up packs will take place later in 2015. FCA is working with Government to develop a pensions dashboard in the longer term. The final market report also addresses the issues raised by those who responded to the consultation regarding design and implementation of each of the suggested remedies, as well as alternative remedies to those recommended by FCA. (Source: FCA Publishes Final Retirement Income Market Study Report)
FCA updates benchmarks webpage: FCA has updated its benchmarks webpage to reflect the publication of its Policy Statement "Bringing additional benchmarks into the regulatory and supervisory regime" published on 10 March. (Source: FCA Benchmarks Webpage)
FCA publishes new Market Watch: FCA's latest edition of its Market Watch newsletter looks at:
- how FCA's new structure impacts on its market operations, specifically how its Market Oversight Division operates and its links to enforcement;
- Suspicious Transaction Reporting (STR) data, which FCA has now made available; and
- reminding multilateral trading facility (MTF) operators of their monitoring duties, which FCA has found often to be inadequate. Its update focuses on fixed income securities.
(Source: Market Watch Issue No 47)
FCA feeds back on MIPRU simplification: FCA has published its policy statement and feedback on its plans to simplify the Prudential Sourcebook for Mortgage, Home Finance and Insurance Intermediaries (MIPRU). The changes relate specifically to non-bank lenders, and the application of MIPRU 4. FCA's final rules take effect on 26 April, and will import all relevant requirements previously elsewhere in the Handbook into MIPRU 4. (Source: FCA Feeds Back on MIPRU Simplification)
FCA publishes complaints data: FCA has published its latest complaints data, which shows financial services firms received 2,183,540 new complaints (including those related to payment protection insurance (PPI)) between July and December 2014. Overall complaints decreased by 7% compared to the previous six months and by 12% from the same period last year. However, excluding PPI, complaints increased by 1% to 1,124,622 between the first and second halves of 2014 and by 2% when compared with the same period in 2013. This was mainly because of an 8% rise in the number of complaints relating to banking and credit cards over the six months to the end of December. All other product categories showed decreases in the period. The total redress paid increased by 4% to £2.44 billion in the second half of 2014, from £2.34 billion in the first half of the year. 88% of this amount (£2.15 billion) related to general insurance and pure protection products, which include PPI. The redress paid in relation to banking and credit card products increased by 64% to £145 million between July and December. This constituted 6% of the total redress paid in the last six months of the year against 4% in the previous period. (Source: Complaints on Banking and Credit Cards Up as Total Complaints Fall by 7%)
FCA agrees to share audits: FCA has agreed to provide the Treasury Committee with copies of internal audit reports given to FCA’s Audit Committee one year after the Audit Committee has received them. (Source: Financial Conduct Authority Internal Audit Reports)
FCA updates consumer credit pages: FCA has updated its consumer credit pages on its website to include details of the exemptions for domestic premises suppliers and broking of consumer hire and consumer purchase agreements. (Source: FCA Updates Consumer Credit Pages)
FCA publishes Arch final notices: FCA has published final notices:
- imposing a public censure on Arch Financial Products LLP for breach of three of its Principles and systems and controls and Conduct of Business Rules, mainly in respect of conflicts management. It would have fined the firm £9 million were it not for the firm's financial situation. The final notice follows the Tribunal's decision to uphold FCA's decision, except in respect of a breach of Principle 2;
- fining its former chief executive, Robin Farrell, £650,000 and banning him; and
- fining its former senior manager responsible for compliance, Robert Addison, £200,000 and banning him.
(Source: FCA Publishes Arch Final Notices)