FCA publishes mobile payments review: FCA has published its thematic review of mobile banking and payments. This follows its interim findings which it published just over a year ago. The paper looks at:
- how easy it is for consumers to understand their rights and duties when using mobile banking and how firms are helping them to do so. FCA found that firms generally give consumers information, mainly on how to keep their devices secure but suggested they could do more to help consumers understand their rights and how to deal with unauthorised transactions;
- how firms ensure their relevant senior management is up to date with innovation: FCA found that firms with good governance and management information systems were the ones that kept senior management up to date. This enabled them to consider impacts on consumers and the business, and the best firms also carried out studies of consumer behaviour;
- how firms keep customer data and funds safe and how technology can cope with changing patterns of consumer behaviour: FCA found firms understand how important this is and have good security, but warns they must not become complacent. It also said firms that carry out market research, for instance to assess when consumer demand may be highest, place themselves in a better position to ensure sufficient system capacity and therefore minimise the risk of customers not being able to access systems;
- how firms monitor third parties they appoint to help in product delivery: FCA stresses that the regulated firm providing the services must appreciate the need to carry out appropriate oversight over all providers in product delivery. It praised firms who carried out good due diligence before entering into arrangements; and
- how new entrants to the market ensure they understand the payments regulatory framework. FCA hopes Project Innovate will help, by guiding applicants through its application process.
FCA visited regulated banks, building societies and payment institutions and then engaged with other market participants. It now encourages firms to satisfy themselves that they have appropriate controls and says it will use its findings to support its ongoing work. (Source: FCA Publishes Mobile Payments Review)
Regulators outline authorisation process: FCA and PRA have produced a simple presentation on the authorisation process for insurers. (Source: Regulators Outline Authorisation Process)
FCA fines and bans adviser: FCA has fined Peter Carron, formerly a senior partner at St James's Place Wealth Management, £300,000 and banned him from the industry. It found that over a period of 6 years he advised 11 clients to invest a total of £2.4 million in three companies of which he was director and majority shareholder but did not properly disclose this fact. FCA found he also guaranteed returns or gave inappropriate projections which misled clients as to how the investments were likely to perform. The companies went into liquidation and the clients lost £2.2 million. The firm paid compensation of £1.9 million to these investors. It had assessed whether the clients would have been misled into believing they were making a legitimate investment through Mr Carron in his capacity as an adviser with the firm, and paid many investors 100% of their loss. It paid some other investors a proportion of their loss, if it thought they could or should have been aware of the nature of the investment but nevertheless produced some evidence to suggest the firm's involvement. FCA was critical of many aspects of his conduct including:
- he abused his position and the conduct continued over many years;
- having misled clients and not considered whether the investments were suitable, he continued to do so even once he knew the companies were in difficulties; and
- his primary aim was to get funding for the companies.
It said the conduct was partly deliberate and partly reckless. FCA added that the Court has banned Mr Carron for 13 years from acting as a director or managing or controlling a company. FCA has not criticised the firm. (Source: FCA Fines and Bans Adviser)
FCA responds to Lords on HFT: Martin Wheatley has replied to the House of Lords Economic Affairs Committee's letter on high-frequency trading (HFT). He explained that best execution requirements reduce the predictability of order routing and, consequently, the risk that HFT may adopt predatory strategies to exploit such predictability. As regards information asymmetry, he stressed that UK Recognised Investment Exchanges are required to release data to all participants at the same time and participants are free to invest in infrastructure enabling them to receive that information ahead of others. Despite this, he said that colocation will be one of the topics dealt with during the Wholesale Competition Review. Additionally, he noted the new disclosure and transparency requirements under the incoming MiFID 2 and FCA's ongoing monitoring and enforcement function. (Source: Regulation of HFT)