FCA fines for client money breaches: FCA has fined SEI Investments (Europe) Limited £900,200 for breaches of the client money rules over a five-year period. It found numerous failings which indicated the firm had failed to arrange adequate protection for client money, including:
- failure to perform internal reconciliations;
- failure to deal promptly or properly with shortfalls or excesses it identified;
- not submitting accurate client money and assets returns;
- not training employees adequately; and
- failing to ensure it kept accurate records and accounts.
FCA was concerned at the breadth of the failings and the length of time they lasted. SEI itself did not identify the problem, despite the high levels of industry awareness at the time of the importance of complying with client money requirements. (Source: FCA Fines for Client Money Breaches)
FCA publishes banking application information: Following publication of a new set of forms for applicants for a banking licence (see FReD 22 November), FCA and PRA have published further information for applicants. (Source: FCA Publishes Banking Application Information)
FCA to carry out comparison website review: FCA has announced it will carry out a thematic review of price comparison websites for motor, home and travel insurance products. The survey will cover 14 websites, and the review will include considering:
- what consumers want from price comparison websites;
- how information is presented and whether it is clear;
- whether there is too much focus on price;
- whether consumers are at the heart of the firms' business models;
- conflicts of interest; and
- use of customer data.
FCA updates on payday lending: FCA has confirmed the Government plans to introduce a cap on the cost of credit. It commented it also wants to require a mandatory affordability check for each loan, cap rollovers to two and limit the number of times a payday lender can "dip into" bank accounts for payment. (Source: FCA Updates on Payday Lending)
FCA updates on EMIR: FCA has updated its pages on the European Market Infrastructure Regulation (EMIR) to remind firms of new publications, and to stress the need for counterparties to have a legal entity identifier for reporting to trade repositories from 12 February 2014 (Source: FCA Updates on EMIR)
FCA clarifies dealing commission rules: FCA has published a consultation paper that proposes changes to clarify what goods and services an investment manager can acquire bundled in the dealing commission paid to brokers. Its recent thematic review on conflicts of interest between asset managers and their customers found instances of firms using the dealing commission to pay for services that did not meet the criteria for acceptable research, such as corporate access or market data services. When parts of the latter could have qualified as acceptable research, firms did not disaggregate those parts from non-research ones, which should not be paid with the dealing commission.
FCA proposes the following changes to the Handbook:
- clarifying what constitutes exempt research and introducing a presumption that a good or service is not exempt research, and therefore cannot be paid for as part of the dealing commission;
- adding corporate access to the list of goods and services that are not exempt; and
- providing guidance on FCA's expectations where exempt and non-exempt goods or services are purchased together.
FCA speaks on retail banking: Clive Adamson spoke on FCA's vision for the future of retail banking. He looked at the new supervisory model and discussed the challenges of:
- rebuilding customer trust;
- addressing technological innovations that have the potential to be dangerous (such as the cloud); and
- distribution strategies to keep up not only with technology but also with customer preferences.
(Source: FCA Speaks on Retail Banking)
FCA updates on broker-operated power trading: FCA has updated on progress on the review that brokers offering trading services in physically settled gas and power forwards are carrying out to establish the appropriate classification of their systems under the Markets in Financial Instruments Directive (MiFID). At the time it announced the review, in September, it said it expected brokers to make the changes necessary to differentiate clearly between their multilateral trading facility (MTF) and non-MTF services, on an appropriate basis, by 16 December 2013. FCA has now decided to give firms until 12 February 2014. (Source: FCA Updates on Broker-Operated Power Trading)