FCA updates consumer credit pages: FCA has added several new pages to its website to help firms prepare for consumer credit authorisation by it. The pages relate to:
- preparing for authorisation;
- approved persons; and
- principals and appointed representatives.
(Source: FCA Updates Consumer Credit Pages)
FCA fines HomeServe for widespread failings: FCA has imposed its largest ever retail fine of £30,647,400 to HomeServe Membership Limited (HomeServe). It found that HomeServe had serious, systemic and long-running failings, extending across many key aspects of its business. In particular, for nearly seven years following the regulation of insurance mediation, it missold insurance policies, it failed to investigate complaints adequately, its Board was insufficiently engaged with compliance matters and its senior management were reluctant to address risks to customers if there was a cost implication involved. FCA stressed that HomeServe had not put its customers' interests first, by putting quantity before quality. HomeServe has started a remediation exercise and has already paid over £12 million in redress. FCA found a number of significant breaches including:
- failure to act on regulatory reports and guidance on misselling;
- failure properly to train senior management;
- failure to address conflicts in remuneration policies, including in the complaints handling department; and
- failure to have in place proper IT systems.
FCA publishes annuities review: FCA has published its thematic review on annuities, together with a guidance consultation and details of a retirement income market study. FCA is worried that most consumers buy their annuities from existing providers without considering whether they could get a better deal on the open market. In 80% of cases, it thinks the open market would provide a better outcome. The then Financial Services Authority introduced rules in 2002 requiring firms to tell their customers of the choices available, but only last year the Association of British Insurers introduced a Code of Conduct and the Pensions Regulator published guidance for trustees of Occupational Pension Schemes. FCA's study looked at consumer behaviour, at shopping around and switching and at the drivers for change. It found certain consumers were particularly likely to be disadvantaged - those with small pension funds who are generally not offered good deals whether by their existing provider or by shopping around and those who could get enhanced annuities who would be better served by shopping around. As a result of its review, FCA has decided it should undertake a competition market study on retirement income products. FCA may ask firms to change their behaviour immediately following the results of the study and may take further action if it finds poor practices. In tandem with the review and market study, FCA is consulting on guidance on good and poor practices in the annuity comparison website market. It seeks comments on the guidance by 14 March. It expects to publish interim findings from the market study in the summer, and to publish the final report within a year. (Source: FCA Publishes Annuities Thematic Review, FCA Guidance Consultation on Annuity Comparison Sites and FCA Annuity Market Study)
FCA updates on AIFMD: FCA has reconsidered its interpretation of the definition of “funds under management” for the purposes of Article 9(3) of AIFMD. It has decided that the current requirement can lead to disproportionate outcomes in certain circumstances and plans to amend it so that derivatives can be valued at their market value rather than requiring them to be converted to their underlying positions when calculating the value of portfolios. In the meantime, and so that prospective alternative investment fund managers (AIFMs) will not need to delay their applications, FCA has made available a "modification by consent", to allow individual AIFMs and UCITS firms subject to the rules in chapter 11 of the Interim Prudential Sourcebook for Investment Firms (IPRU(INV)) to take advantage of the proposed change. Firms applying for AIFM status that wish to benefit from this can note in their application for authorisation that they have been granted the modification. It has also updated its fees pages in relation to AIFM applications and the National Private Placement Regime (NPPR). (Source: FCA Updates on AIFMD and Funds Under Management, FCA Updates on AIFMD Fees and FCA Publishes Funds under Management Modification)
FCA announces redress scheme for YBS mortgage customers: FCA has announced that Yorkshire Building Society (YBS) will set up a redress scheme to refund administration fees, and the interest accrued on those fees, charged to mortgage customers in arrears. FCA had raised concerns that YBS may have charged fees to customers incorrectly. The redress scheme will extend to all fees charged since January 2009, regardless of whether they were charged correctly or not, to avoid delays and uncertainty. YBS will publish details of the redress scheme on its website and will contact current and former customers proactively. The total bill is expected to reach £8.4 million. (Source: Over 30,000 YBS Customers to be Refunded Mortgage Arrears Fees)
FCA obtains favourable ruling on unauthorised CISs: FCA has announced that the High Court has ruled in its favour in the case it brought against firms and individuals for promotion and operation of collective investment schemes (CISs) without authorisation. Leave to appeal has been granted. (Source: FCA Wins Case Against Capital Alternatives)
FCA offers new modifications by consent: FCA has given directions making the following modifications available to firms:
- Modification by consent of COBS and COLL, available to authorised fund managers of non-UCITS retail schemes.
- Modification by consent of COLL 5.6.22R, available to the depositary of a non-UCITS retail scheme (NURS) whose investment objective and policy include the power to invest in immovable property.
- Modification by consent of CASS 1A.1.1R (3), for CASS Medium or CASS Large firms that have wound up their client money holdings and cancelled their client money positions.
(Source: Modification by Consent)