As we enter 2023, we have put together a useful guide containing some of the key highlights for Financial Conduct Authority (“FCA”) regulated firms which occurred over the last 12 months.
January 2022
New motor and home insurance renewal quote rules come into force.
As of the 1 January 2022, insurance firms must ensure that they do not quote customers renewing their home or motor insurance a higher price than they would pay if they were a new customer.
FCA Covid-19 Impact Survey
The FCA will be repeated their Covid-19 Impact Survey for the sixth time throughout January and February 2022. The first of the Covid-19 Impact Survey was sent in June 2020, covering around 13,000 firms across 15 Supervision portfolios (Tranche 1). This was rolled out to a further 9,500 firms in 21 portfolios (Tranche 2) at the beginning of August 2020. Since then the FCA have repeated this survey for both Tranches four more times to understand the change in firms’ financial positions with time. The survey aims to assist the FCA to obtain an accurate view of the impact of Covid-19 and supported our work to mitigate risks of harm to consumers, the market and competition within it.
FCA update their authorisation application fees
On 10th of January, the FCA published their policy statement, PS22/1, detailing the regulator’s latest authorisation application fees. The new fee structure came on the 24th January 2022.
FOS budget consultation closes
Each year, the Financial Ombudsman Service (FOS), publicly consults on their proposed plans and budget for the coming financial year. On 15th December 2021, the Financial Ombudsman Service (FOS) opened a Consultation in relation to their Budget and Operational proposals for the year 2022/23.
Feb
FCA ensures that Buy-Now-Pay-Later firms make changes to unfair and unclear contract terms
The FCA have secured changes to Buy-Now-Pay-Later (“BNPL”) contracts to tackle potentially unfair and unclear contract terms.
BNPL agreements are not yet regulated by the FCA however the Regulator said it wanted to protect consumers at a time when demand for these services is soaring.
FCA publish statement on funeral plan provider applications
On 29th of July 2022, the FCA will took over responsibility of the regulation of funeral plan providers. Unlike previous regulatory transitional periods, there is not a temporary permissions regime in place for funeral plan providers. Application for authorisation for funeral plan providers opened in September 2021.
FCA publish quarterly whistleblowing data for Q4 2021
The FCA published it’s whistleblowing data for quarter 4 2021. The FCA assess each whistleblowing case it receives and uses the data to inform how the regulator monitor and tackle consumer harm.
March
CMC Fee Cap and Rule introduced
New rules are being imposed by the FCA on 1 March 2022 that will restrict the level of fees that financial product/services CMCs can charge to customers. The amount you can charge will depend on the level of redress your customers receive. The FCA have devised 5 bands relating to the level of redress received. Each band allows for a specific maximum % that can be charged or the maximum total charge that can be imposed.
April
FCA makes three senior hires including two Directors of Authorisations
The FCA filled 95 of it’s new authorisations roles including the appointed of two new Directors of Authorisations.
Laura Dawes and Dominic Cashman will take up new roles of Director of Authorisations. Dawes is currently interim Director of Strategy, Policy, International and Intelligence in the FCA’s Enforcement and Market Oversight Division. Cashman joins the FCA from TP ICAP, an interdealer broker, where he held the role of Head of Integration and Transformation and, previously, Interim Group Head of Operations.
FCA finalises proposals to boost disclosure of diversity
The FCA finalised rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management. The new rules aim to make it easier for investors to see the diversity of their senior leadership teams.
May
FCA warns credit firms about misleading credit adverts
The FCA has warned consumer credit lenders and brokers to stop using misleading terms in their advertising. The FCA have written to over 27,000 consumer credit firms warning them not to use terms such as ‘no credit check loans’, ‘loan guaranteed’, ‘pre-approved’ or ‘no credit checks’ when marketing their products. Those firms which use such adverts should not give consumers the impression that they will automatically be granted a loan if they apply, or that they can get a loan without the lender checking whether they can meet affordability assessments.
FCA speed up removal of unused regulatory permission
The FCA began to use new powers which will allow the regulator to remove unused regulatory permissions from firms within just 28 days. The FCA will provide 2 warnings to firm and should firms fail to take appropriate actions, the FCA will then be able to cancel those permissions within 28 days of the firms first warning.
June
FCA tells lenders to support consumers struggling with the cost of living
In a Dear CEO letter from the FCA, the regulator reminded more than 3,500 lenders of the standards they should meet as consumers are affected by the rising cost of living. As household bills continue to rise into quarter 3 and 4 of 2022, the regulator pressed the importance for firms to act now to make sure borrowers struggling with payments and customers in vulnerable circumstances can access the help they need.
Changes to FCA Firm Reference Numbers (FRNs)
The FCA will begin to introduce new seven digit Firm Refence Numbers (“FRN”) to firms applying to the regulator for authorisation. The FCA currently use a six-digit FRN to uniquely identify firms but the regulator has stated that it will likely reach the six-digit limit (999999) during 2023.
FCA fines insurance broker £7.8m for financial crime control failings
The Financial Conduct Authority (“FCA”) has fined an insurance broker £7,881,700 for financial crime control failings, which in one instance allowed bribery of over $3m to take place.
The UK based firm provided insurance broking, risk management and insurance claims services and had a number of subsidiaries around the globe.
July
FCA publish its Q2 2022 financial promotions data
The FCA published key data showing its intervention of financial promotions between 1st of April and 30th June 2022.
374 out of 451 financial promotions the FCA reviewed in during Q2 of 2022 resulted in 374 amends/withdrawals of the promotions. Retail investments and retail lending were the sectors with the highest amend/withdraw outcomes, amounting to 83% of interventions. Some of the most common breaches involved credit brokers, mortgage intermediaries and investment platforms.
FCA publish finalised rules on the new Consumer Duty
The FCA has published its latest policy statement which sets out their plan for a new Consumer Duty. PS22/9: A new Consumer Duty outlines a fundamental shift for UK financial services firms and sets higher and clearer standards of consumer protection.
FCA warns firms to review financial promotions for Buy Now Pay Later agreements
The FCA warned firms which offer Buy Now Pay Later (“BNPL”) products that although some agreements are unregulated, the financial promotions of all BNPL products must comply with the financial promotion rules.
August
FCA publish finalised rules on the new Consumer Duty
The FCA published its policy statement which sets out their plan for a new Consumer Duty. PS22/9: A new Consumer Duty outlines a fundamental shift for UK financial services firms and sets higher and clearer standards of consumer protection.
FCA warns firms to review financial promotions for Buy Now Pay Later agreements
The FCA warned firms which offer Buy Now Pay Later (“BNPL”) products that although some agreements are unregulated, the financial promotions of all BNPL products must comply with the financial promotion rules.
October
FCA warns insurers to protect customers’ wellbeing during cost of living squeeze
The FCA raised concerns that the raise in cost of living could lead consumers to cut-back on household expenses such as insurance policies, leaving them without protection.
FCA publish further information on the Consumer Duty
The FCA published further information to assist firms which include common queries the FCA have received about the implementation of the Consumer Duty.
In FG22/5, the FCA set out its expectations for firms to have in place implementation plans which were approved by its Board (or equivalent management body) by the end of October 2022. The FCA expect that firms are able to show they have scrutinised and challenged these plans to ensure they are deliverable and robust to meet the new standards set out in the Consumer Duty. The FCA also indicated that firms should expect to be asked to share implementation plans, Board papers and minutes with supervisors and be challenged on their contents.
FCA publishes its Financial Lives Survey data
The FCA published data of its Financial Lives survey which found 7.8 million people are finding it a ‘heavy burden’ to keep up with their bills. This marks an increase of around 2.5 million people since 2020.
Nov
FCA publish Q3 2022 Financial Promotions data
The FCA published its latest quarterly data of actions they have taken against authorised firms breaching financial promotion rules and referrals and investigations into unregulated activity.
Preparing Your People for Consumer Duty
The Compliance Company partnered with ThriveWell Global to run live, virtual webinar which focuses on how to build employee resilience for the implementation and delivery of Consumer Duty, cultivating a positive, supportive environment where your employees can thrive and your consumer’s feel safe, confident and well-informed.
Dec
FCA begin new Principal/Regime
The FCA’s new rules for Principals and Appointed Representatives (“ARs”) came into force on the 8th of December 2022. These new rules solidify the FCA’s expectations for Principal firms and how they monitor their ARs. Between the 8th and 12th of December, the FCA will begin to send Section 165 information requests to Principal firms, including firms with Introducer Appointed Representatives (“IARs”), which request information in line with the FCA’s new rules.
FCA to introduce a gateway for firms who approve financial promotions
The FCA proposed new measures to clamp down on illegal, unfair or misleading financial marketing.
In CP22/27- Introducing a gateway for firms who approve financial promotions, the regulator outlines new checks for firms that wish to approve financial promotions. The new measures will require firms to demonstrate they have the right expertise for the promotions they wish to approve.
Upcoming Changes to Consumer Credit
On 9th of December the Edinburgh Reforms, which includes around 30 reforms to existing financial regulation, was published. As part of these reforms HM Treasury published its first consultation on the Consumer Credit Act. The proposals aim to simplify the regime to encourage innovation in the credit sector. The proposals will also look to cut costs for consumers and businesses, while also increasing equality and fairness in the credit market by improving accessibility.
FCA to consultation for firms who approve financial promotions
The FCA proposed new measures to clamp down on illegal, unfair or misleading financial marketing.
In CP22/27- Introducing a gateway for firms who approve financial promotions, the regulator outlines new checks for firms that wish to approve financial promotions. The new measures will require firms to demonstrate they have the right expertise for the promotions they wish to approve.