FCA makes final crowdfunding rules: FCA has made its final rules on crowdfunding following its consultation. It has taken forward most of its proposals and made changes to several parts of its rules to bring in new requirements for loan- and investment-based crowdfunding. Key changes, which will take effect from 1 April, with the benefit of various transitional provisions, include:
- to the Senior Management Arrangements, Systems and Controls Sourcebook (SYSC) to require operators of electronic systems in relation to lending to have in place plans to ensure the P2P arrangements they facilitate can continue should the operator cease business;
- to the Interim Prudential Sourcebook for Investment Business (IPRU(INV)) to set out the financial resources requirement for operators of electronic systems in relation to lending. Following responses to consultation, FCA has allowed a transitional period for firms to build up their financial resources and has also made some changes to the methods of calculation which will result in a lower requirement than originally proposed for some operators;
- to the Conduct of Business Sourcebook (COBS) to prohibit the communication or approval of a direct-offer financial promotion relating to a non-readily realisable security to a retail client unless certain conditions apply. The conditions are based on the client being a sophisticated, high net worth or restricted investor. Further amendments set out information firms must provide on the nature and risks of P2P agreements;
- to the Client Assets Sourcebook (CASS) to apply chapters 7 and 7A to operators of electronic platforms in relation to lending; and
- to the Supervision Manual (SUP) in relation to reporting of data items.
Most of the new rules relating to loan-based crowdfunding will not apply while the operator firm in question has only an interim permission. (Source: FCA Makes Final Crowdfunding Rules)
FCA to start debt collection review: FCA has announced it will start an in-depth thematic review of how payday lenders and other high-cost short-term lenders collect debts and manage borrowers in arrears. The review will start as soon as FCA takes over responsibility for regulation of consumer credit. FCA has also said that payday lenders will be one of the groups that will first have to seek full FCA authorisation and it expects around a quarter of these firms will decide they cannot meet FCA's consumer protection standards and will have to leave the market. (Source: FCA to Start Debt Collection Review)
FCA tells exiting CC firms to notify now: FCA has published details of why, and how, firms that currently hold a consumer credit (CC) licence but are not applying for interim permission must tell it how they plan to exit the market. It will publish a list of all firms that hold licences but not interim permissions, so firms that do not wish to be on the list because they have an orderly exit plan must notify FCA. (Source:FCA Tells Exiting CC Firms to Notify Now)
FCA publishes provisional add-on findings: FCA has published the provisional findings of its market study on general insurance add-ons. It has concerns that its study has borne out that:
- the add-on mechanism affects consumer behaviour and whether consumers make good decisions;
- the add-on channel gives the primary product provider with a clear point of sale advantage;
- restricted competition would result in high mark-ups or lower-quality products; and
- consumers risk buying inappropriate products or receive poor value for money, or both.
FCA wants to remedy these consumer disadvantages by:
- imposing a deferred opt-in on sales of guaranteed asset protection (GAP) so the add-on cannot be bought at the time of car or car finance purchase, and mandating that the consumer must also receive information about alternatives whenever the product is offered at point of sale;
- banning pre-ticked boxes (opt-outs) for the sale of add-ons;
- making firms publish claims ratios; and
- improving how add-ons are presented on comparison websites.
It asks for comments by 8 April. (Source: FCA Publishes Provisional Add-On Findings)
FCA consults on miscellaneous Handbook changes: FCA's latest quarterly consultation proposes:
- minor changes to various parts of the Handbook that impact on Alternative Investment Fund (AIF) Managers (AIFMs), UCITS managers and certain AIF depositaries. The changes will refer to appropriate ESMA guidance and make various changes to implement guidance on risk management systems, capital requirements for custodians and remuneration requirements;
- changes to the complaints data reporting forms and to the mortgage product sales data reporting arrangements; and
- changes to implement the Financial Policy Committee's (FCP) recommendation on interest rate stress tests for mortgages.
FCA asks for comment on the proposals by 4 April and on its other proposals by 6 May.
FCA is also consulting on changes to adviser and consultancy charging reporting, again to make its expectations clearer and the information it collects more valuable. It asks a number of detailed questions, some of which it asks for comments on by 7 April and the others by 6 June. (Source: FCA Consults on Miscellaneous Handbook Changes and FCA Consults on Adviser Charging Reporting Changes)
FCA updates forms: FCA has updated several of its Handbook forms in anticipation of its role in the regulation of credit-related regulated activities. (Source: FCA Updates Forms)