FCA makes CC rules: FCA has made the bulk of its final rules to effect the transfer of consumer credit (CC) regulation from 1 April. The rules:
- fill in most of the detail of the Consumer Credit Sourcebook (CONC) on prudential and conduct of business requirements for firms carrying on credit-related regulated activities. Many chapters differentiate between areas of business;
- include specific provisions on firms providing high cost short term credit (HCSTC); and
- make amendments to other parts of the Handbook consequent on CONC.
FCA consults on further CC amendments: FCA is consulting on further changes to its Handbook in respect of the transfer of CC regulation. It proposes amending the Decision Making Policies and Procedures Manual (DEPP) and Enforcement Guide (EG) in respect of the powers under the Payment Services and Electronic Money Regulations to prohibit payment services providers and e-money issuers from conducting consumer credit business. The proposals set out how FCA plans to issue warning, decision and supervisory notices. FCA asks for comments by 14 March. (Source: FCA Consults on Further CC Amendments)
FCA updates on incentives risks: FCA has published an update on its thematic review on risks from incentives. It is pleased at the changes firms have made in response to its paper of September 2012, and appreciates change cannot happen overnight. However, it has outlined the areas where it thinks firms need to carry out further work. At this stage, it is not taking any further action. Its research shows that around one in ten firms with higher-risk incentive schemes were not managing the risk properly at the time of FCA's assessment. All the larger retail banks have changed their arrangements in some way. Some smaller firms, however, had not appreciated that their entire remuneration structures were based on incentives. FCA has made some suggestions for areas on which firms should focus, including:
- checking for spikes or trends in the sales patterns of individuals to identify areas of increased risk;
- doing more to monitor poor behaviour in face-to-face sales conversations;
- managing the risks in discretionary incentive schemes and balanced scorecards, including the risk that discretion could be misused;
- monitoring non-advised sales to ensure that staff who are incentivised to sell do not give personal recommendations;
- improving oversight of incentives used by appointed representatives; and
- recognising that remuneration that is effectively 100% variable pay based on sales, increases the risk of mis-selling and managing this risk.
(Source: FCA Updates on Incentives Risks)
FCA makes new rules: Apart from the instruments amending CONC and other aspects of the Handbook, FCA made the following rules at its 27 February Board Meeting:
- the Alternative Investment Fund Managers Directive (AIFMD) (Consequential Amendments) Instrument 2014 amends several parts of the Handbook to make it consistent with the rules FCA introduced to implement the AIFMD;
- the Employers’ Liability Insurance: Disclosure by Insurers (No 5) Instrument 2014 amends a transitional provision within the Insurance: Conduct of Business Sourcebook (ICOBS) to allow firms an additional six months from 1 April 2014 to use "best endeavours" to obtain Employer Reference Numbers, before the requirement to do so takes effect;
- the Conduct of Business Sourcebook (COBS) (Platforms) (Amendment No 2) Instrument 2014 amends COBS from 6 April to clarify the treatment of cash rebates on certain legacy business; and
- the Designated Investment Exchanges (No 2) Instrument 2014 removes the term "designated investment exchange" from various parts of the Handbook from 1 March.
(Source: FCA Makes New Rules)
FCA sets up payment systems page: FCA has set up a new page on its website explaining the role of the payment systems regulator and how it will function when it becomes operational in April 2015. It has also published a "call for inputs" inviting views that will help the new regulator understand the current concerns of the UK payments industry, develop its regulatory approach and design, and identify early priorities for action. The call for input asks several detailed questions but welcomes all views. FCA asks for input by 15 April. (Source: FCA Sets Up Payment Systems Page)
FCA bans ex-CEO: FCA has banned Arnold Eber, former CEO of CIB Partners Limited. The firm was dissolved some years ago. FCA found Mr Eber had given the misleading impression that bonds issued by the Luxembourg entity SLS Capital S.A. (which underpinned some of the Keydata investments) were soundly backed assets when he had serious concerns about them. It also found he failed to advise the regulator of his concerns but continued to publish misleading materials about the bonds. (Source: FCA Bans ex-CEO)
FCA presents findings of platforms review: FCA has published slides and a video presenting the results of its thematic review of platforms' preparations for the rules on payments to platforms and cash rebates, which start applying on 6 April 2014. It has found that further attention needs be paid to client communications, contingency planning and consumers who lose their adviser. It also wants to see more progress on re-registration, which should take place in a reasonable timescale. (Source: Review of Implementation of Platform Rules)
FCA publishes commodity markets update: FCA has published an update and guide on its regulation and supervision of the commodity markets. The documents discuss FCA's analysis of key trends and market data, provide an overview of the existing regulatory framework and set out FCA's approach to promoting its objectives within the commodity markets. FCA comments on conduct, reputational and market abuse risks specific to the commodities markets and encourages firms to understand and comply with the relevant requirements. (Source: Commodity Markets)
FCA updates on hedging review: FCA has published its latest statistics on how banks are progressing their reviews of sales of interest rate hedging products. (Source: FCA Updates on Hedging Review)