A ‘Fundamental Shift’ in Financial Regulation – Further FCA Consultation on New Consumer Duty

2022 looks set to be a busy year for regulated firms dealing with retail customers. Following its initial consultation in May 2021, on 7 December 2021 the FCA issued a further consultation (CP21/36), announcing its desire to “fundamentally shift” the mindset of regulated firms, by implementing a new consumer duty later this year.

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The FCA Perimeter Report 2020/21 – Key Points for Firms

The scope of the FCA’s powers and remit is not a simple matter, as the FCA readily acknowledges. The FCA’s regulatory “perimeter” derives primarily from from FSMA and the universe of secondary legislation surrounding it, particularly the Regulated Activities Order (“RAO”). However it also derives powers and responsibilities from various UK and on-shored EU-legislation in relation to areas such as payment services, competition, money laundering, consumer credit, fund management, and so on.

At a time when the UK financial services market place is undergoing profound change due to rapid technological advances, increased digitalisation, the pandemic, Brexit and the drive to a greener economy, the FCA’s perimeter needs to be under constant review and revision.

The FCA’s annual Perimeter Report attempts to clarify some of this complexity and identify where it sees gaps in its remit that could result in consumer harm. While it may seem arcane, the Report forms part of a dialogue with Government that will shape the regulatory landscape in coming years. The perimeter is also important in determining what activities are protected by the Financial Services Compensation Scheme (“FSCS”) and what falls within the compulsory jurisdiction of the Financial Ombudsman Service (“FOS”). The Perimeter Report is keenly watched for these reasons.

Our takeaways from the recently published Perimeter Report 2020/21 are as follows: Continue Reading

PRA increases pressure on firms to improve regulatory reporting processes

The Prudential Regulation Authority (PRA) recently a Dear CEO letter titled “Thematic Findings on the reliability of the regulatory reporting“, outlining the current inadequacy of finance firms’ regulatory reporting procedures and the importance of comprehensive processes. The letter summarizes the PRA’s findings following its investigations carried out since October 2019, and a number of s.166 skilled person reviews on the topic. The investigation focused on governance arrangements, systems and controls to produce returns, schedules of key interpretations and assessing the accuracy of firms’ reporting returns. Overall, the PRA said it was disappointed with firms’ regulatory reporting processes. Whilst the PRA recognises potential historical reasons for the gap between the quality of financial reporting and regulatory reporting, it does not consider that an excuse for inaccurate regulatory reporting. Continue Reading

FOS warns on scam complaints – are banks doing enough?

The Financial Ombudsman Service has noted a “dramatic rise” in complaints by consumers concerning financial scams and fraud. With the hope of embuing safer financial habits and a reduction in these types of complaints, FOS reminds consumers to be careful, but also expects banks to respond fairly and effectively to customers’ complaints. Continue Reading

LCF mini-bond holders withdraw appeal against FSCS

The Financial Services Compensation Scheme (FSCS) confirmed on 23 August that London Capital and Finance (LCF) mini-bond holders have withdrawn their appeal against an important March 2021 High Court decision dismissing their judicial review claim.  FSCS confirmed that the litigation had been concluded without any change to any of its earlier decisions on LCF claims.

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FCA Business Plan 2021/22 – transformation, accountability, and regulatory priorities for the coming year

The FCA’s annual business plan is a closely watched indicator of what we can expect from the regulator in the coming year. The recently published Business Plan for 2021/22 indicates the FCA’s focus on continued transformation and greater accountability as a regulator. It also sets out key priorities for the FCA for  the coming years across a mix of familiar focus areas and more nascent emerging themes.

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Compulsory ADR – Coming soon to a dispute near you?

Alternative dispute resolution (or “ADR”) has long played an important role in dispute resolution. A recent report by the Civil Justice Council (the “Report”), commissioned to consider the legality and desirability of making ADR compulsory, could see ADR playing an even more prominent role in future. Continue Reading