The Partly Contested Process – a part success?

A recent speech by the Director of Enforcement and Market Oversight at the Financial Conduct Authority (“FCA”) has highlighted the progress of the partly contested process for disciplinary action. The first three cases using the process have now completed, although only details as to the first two cases were available as the time of going to press.

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FCA gives a final warning on misleading adverts

Back in January, the Financial Conduct Authority (“FCA”) published a letter to the CEOs of regulated firms warning them against misleading financial promotions. As we noted in our previous blog, onthe subject, the letter specifically concerned firms not making clear which parts of their business are subject to FCA regulation and, importantly, which are not.

It appears that the letter may not have had the desired effect.

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FCA hands out second large fine in as many weeks for transaction reporting failures

The Financial Conduct Authority has imposed a fine of £34,344,700 on Goldman Sachs International (“GSI”) for breaches of transaction reporting obligations. The fine comes just over a week after the FCA imposed a £27,599,400 fine against UBS (which we considered in an earlier blog post).

Both fines result from breaches of obligations imposed by MiFID (the Markets in Financial Instruments Directive (2004/39/EC), as well as a breach of Principle 3 of the FCA’s Principles of Business, under which firms must take reasonable care to organize and control their affairs responsibly and effectively, with adequate risk management systems.  Continue Reading

FCA insights on cyber risk

The Financial Conduct Authority (“FCA”) has just published an Industry Insights document (“Insights”) on cyber security. Whilst not containing any formal guidance or rules, the Insights highlight the risks of cyber attacks to FCA regulated firms and confirms industry best practice around the key areas relating to cyber resilience: governance, identification, protection, detection, situational awareness, response and recovery, and testing.

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FCA puts the spotlight on debt management firms in second thematic review

In 2014 the FCA took over responsibility for regulation of consumer credit. In 2015 it conducted its first thematic review of the debt management sector, looking at commercial and not-for-profit firms that provide debt advice and administer debt management plans. The FCA’s goal was to improve outcomes for customers in what is perceived to be a high risk sector in terms of potential customer detriment.

In its 2015 review, the FCA identified significant concerns with the quality of advice provided, particularly by commercial providers, and significant non-compliance with consumer credit rules. The FCA found an unacceptably low standard of advice provided by fee-charging debt management firms. Consequently, the FCA decided to engage in ongoing supervisory work to ensure debt management firms ‘raised their game’. To that end, it conducted a second thematic review, the results of which have just been published.

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UBS fined £27.6m for transaction reporting failures

The Financial Conduct Authority has imposed a fine of £27,599,400 on UBS AG for breaches of transaction reporting obligations imposed by MiFID (the Markets in Financial Instruments Directive (2004/39/EC), as well as a breach of Principle 3 of the FCA’s Principles of Business, which requires regulated firms to take reasonable care to organize and control their affairs responsibly and effectively, with adequate risk management systems.

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HM Treasury advisory notice on money laundering and terrorist financing controls in high-risk jurisdictions

Overview

HM Treasury published an updated advisory notice on money laundering and terrorist financing controls on 26 February 2019, identifying risk ratings and measures to be adopted by the UK regulated sector when dealing with high-risk countries.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 require the UK regulated sector to apply enhanced customer due diligence measures and enhanced ongoing monitoring to any business relationship or transaction with persons in high risk countries. The 2017 Regulations mandate the UK regulated sector to take into account “geographical risk factors” when assessing risk and the extent of measures that should be taken to manage and mitigate that risk. Continue Reading

Financial Ombudsman Service compensation limit increases to £350,000 on 1 April 2019

The Financial Conduct Authority (“FCA”) has published a policy statement detailing that the Financial Ombudsman Service (“FOS”) compensation limit of £150,000 will increase to £350,000 from 1 April 2019. This follows a Consultation on the topic of the FOS award limit, which was open between October and December 2018.  

The new limit of £350,000 applies to complaints about actions or omissions of firms, which took place after 1 April 2019. For complaints about actions/omissions occurring prior to 1 April, but referred to the FOS after that date, there is a smaller increase in the limit to £160,000. The policy statement further confirms that the financial awards limit will now automatically adjust annually in line with inflation.

Finally, the FCA has also announced that recourse to the FOS will now be available to larger small and medium-sized enterprises (“SMEs”) as well as individual consumers. To qualify, the SME must have an annual turnover of under £6.5 million, an annual balance sheet total of under £5 million, or fewer than 50 employees. This extension has been introduced by the FCA in recognition of the cost and time difficulties faced by consumers and SMEs when considering taking firms to Court. In particular, Andrew Bailey, Chief Executive of the FCA, stated that “…it is essential [that consumers and SMEs] can receive fair compensation from the Financial Ombudsman Service when things go wrong”.

These changes could significantly increase the value and number of financial awards made as a result of complaints to the FOS. Firms should also note that the implementation period for these new rules is relatively short.

 

 

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