FCA fines Lloyds group firms for sales incentive failings: FCA has imposed its largest ever fine. It
has fined members of the Lloyds Banking Group £28,038,800 for serious failings in their controls over
sales incentive schemes. It found failings relating to branches of Lloyds TSB, Bank of Scotland and
Halifax. FCA found the firms had high-risk features in the financial incentive schemes for their advisers
which they did not control properly and which therefore led to a significant risk that advisers would sell
products that customers did not need or want in order to increase their bonuses and salaries. FCA was
particularly displeased given all its warnings to the industry and its fine on Lloyds TSB 10 years ago for
sale of unsuitable products. The fine related primarily to advised sales of investment and protection
products over a two-year period. FCA found numerous failings in controls, including where advisers still
received bonuses even when the firms themselves found the adviser had made unsuitable sales.
Several advisers received a bonus even when all their sales were deemed unsuitable or potentially
Up next from FCA: Before the end of 2013, FCA plans to issue policy statements on CRD4
implementation and data reporting under the Mortgage Market Review. It also plans feedback on
application of the Financial Services Compensation Scheme (FSCS) to unincorporated associations and
partnerships. Initiatives in early 2014 will include policy statements on crowdfunding, the client assets
review and payments for referrals to discretionary managers. (Source: Up Next From FCA)
FCA updates on COLL requirements: FCA has reminded firms that any UCITS or non-UCITS retail
scheme that indicates in its name, investment objectives or fund literature an intention always to deliver
positive returns will be required under new rules in the Collective Investment Schemes Sourcebook
(COLL) to make additional statements in its documentation. The rule change applies from 26 January
2014, or earlier if the fund's prospectus is updated before then. (Source: FCA Updates on COLL
FCA publishes payday lending correspondence: FCA has published correspondence between Sajid
Javid of Treasury and Martin Wheatley about the payday lending cap. FCA explains how it plans to
design and calculate the appropriate cap. It plans to consult in late spring or early summer 2014 on
whether it is to meet the challenging timeframe of bringing the cap into force by January 2015. (Source:
FCA publishes quarterly consultation: FCA's latest quarterly consultation covers:
  • consequential amendments to the Handbook to make changes associated with the transfer of consumer credit regulation to FCA;
  • an introduction of an administrative charge for dealing with late publication of periodic reports due under the disclosure and transparency rules;
  • amendments to COLL to extend the ability of managers and other persons to communicate electronically with investors, if the investors agree; and
  • removing the provision that requires a decision on waiver applications within 20 days. FCA says this is no longer appropriate, because timing needs of firms often depend on expiry of a previous waiver, or on the date on which a new rule takes effect. It says that, by removing the time limit and communicating better with firms, it can use its resources better to meet the needs of firms and therefore their customers.
Comments on the consumer credit changes are due by 17 January and on the other proposals by 5
FCA updates on NPPR: FCA has updated its Alternative Investment Fund Managers Directive (AIMFD)
pages on the application of the National Private Placement Regime (NPPR) on the marketing of non-EEA
funds and managers. The page contains all necessary forms and an updated list of supervisory
co-operation agreements. (Source: FCA Updates on NPPR)
FCA updates on CCA transfer: FCA's webpage on the transfer of CCA has been updated to put firms in
no doubt that non-compliance is not an option and that FCA can and will enforce penalties for rule
breaches from 1 April. It also notes certain specific rules that are not subject to the general six-month
transitional period. Separately, new information explains how the consumer credit rebate scheme
Treasury has introduced will apply. (Source: FCA Updates on CCA Transfer and FCA Updates on
FCA speaks on the year ahead: Martin Wheatley has spoken on the consolidation of requirements in
trading and market structures that 2014 will bring. He focused on how all firms, with specific reference to
asset managers, must increasingly prioritise good principles and culture so they put their customers first.
He also discussed the forthcoming MiFID changes and said firms must engage with the European
Securities and Markets Authority (ESMA) to get MiFID 2 "in the right place" before implementation. Finally
he spoke on international derivatives markets and urgent points that still need to be addressed despite
significant progress. He said these include detail on trading venues used by firms in both the EU and
the US. (Source: FCA Speaks on Year Ahead)
FCA publishes November IRHP review data: The November figures on progress in the interest rate
hedging products (IRHPs) review show an exponential growth in the redress determinations and pay outs
to customers. (Source: Interest Rate Hedging Products)