FCA publishes fees for 2014/15: FCA has published its policy statement on regulated fees and levies for 2014/15. Responses to the consultation expressed some strong views:

  • almost all respondents challenged the amount of the increase: FCA has explained the reasons for this, including that it could not return as much under-spend to fee-payers as it could last year;
  • half the respondents supported the proposal not to change minimum fees: FCA has confirmed these remain unchanged;
  • respondents in several key fee blocks wanted to see more sub-divisions within the blocks so the annual funding requirement (AFR) allocation could better reflect variations in businesses: FCA does not plan any further split and thinks its current model reflects the right proportionality;
  • financial advisers felt they still pay too much in proportion to other fee blocks, although acknowledging recent changes will mean a likely reduction for many advisers: FCA commented that recent changes mean a number of larger firms will now be in the A.13 Fee Block so the AFR allocated to the block is larger. However, financial advisers will still pay less;
  • there was a suggestion that allocation of prudential costs should reflect FCA's prudential categories of firm: while FCA accepts the current basis does not take this into account, it says it does distribute the recovery in proportion to the overall size of regulated activity as measured by the total fees firms pay; and
  • some respondents queried why the proposals did not treat all firms subject to the Client Assets Sourcebook (CASS) the same: FCA says the firms excluded would represent only a negligible contribution, but it will be consulting on bringing them within the relevant fee category.

FCA has not changed its stand on consumer credit fees, the Ombudsman Service levy or the Money Advice Service levy. It has now made its final rules, which took effect from 1 July. (Source: FCA Publishes Fees for 2014/15)

Up next from FCA: FCA's latest Policy Development Update highlights only one paper due in July—a consultation on a price cap on high-cost short-term credit. Other publications before the end of the third quarter include a consultation on the Mortgage Credit Directive and transfer of second charge mortgages. (Source: Policy Development Update June 2014)

FCA looks at off-the-shelf banking: FCA has published a note of considerations firms should take into account if using third-party technology banking solutions. It reminds firms of the outsourcing rules requirements and suggests a checklist of questions they should consider. (Source: FCA Looks at Off-the-Shelf Banking Solutions)

FCA consults on fairness in mortgage contracts: FCA has published a discussion paper on the fairness assessment when lenders change terms in mortgage contracts. The paper looks at current rules and practices, and highlights the distinctions between fairness under the FCA's Principles and the contractual fairness assessment under the Unfair Terms in Consumer Contracts Regulations. It asks consumer respondents to give their views on a number of situations where mortgage terms might change, or where lenders reserve the right to change them.  FCA also seeks views on whether it needs to take any action, whether by changes to rules or to guidance, better to meet its regulatory objectives. It asks for comment by 30 September. (Source: FCA Consults on Fairness in Mortgage Contracts)

FCA calls for views on cash savings markets: FCA has published its interim report on the effectiveness of competition in the cash savings markets. Initial findings suggest that banks pay lower interest rates to savers who keep their accounts over a number of years as consumers do not tend to shop around. It also found the larger institutions provide easy-access deposits but generally with lower rates. FCA now wants views on what is stopping more consumers getting better deals. It will also carry out further research and look at how it can promote better consumer engagement. If necessary, it will make regulatory changes, provide guidance or seek better industry self-regulation. It asks for comment by 8 August. (Source: FCA Calls for Views on Cash Savings Markets)

FCA starts wholesale competition review: FCA is considering whether any areas of the wholesale markets would merit a thorough competition review.  It plans to focus predominantly on the wholesale securities and investment markets, but also to look at related areas such as corporate banking and asset management. It has published a paper with examples of the type of issue that might lead it to make further enquiries. It asks for input by 9 October. (Source: FCA Starts Wholesale Competition Review)

FCA issues new Market Watch newsletter: The latest FCA Market Watch newsletter discusses:

  • the price spike in HSBC shares on 30 January, which triggered a circuit breaker at the London Stock Exchange. The spike was caused by a trader breaking up an order to avoid a limit set by the Electronic Trading Services provider, without decreasing the participation rate in line or setting a price limit to the execution of the orders. FCA recommends that firms should consider setting limits on price or participation rate, and involve compliance whenever a trader wishes to circumvent a limit; and
  • the Final Notice served on Mark Stevenson for manipulation of the gilt market in advance of a reverse auction by the Bank of England. FCA advises firms to be alert to traders' patterns of market share and volume in a fixed income security, particularly around key market events. It also suggests other checks, including introducing human-based front office oversight and reviewing trading in a benchmark in the lead-up to the pricing of a new issue.    

(Source: Market Watch 46)