6 mars 2023
Financial services update – 3 de 41 Publications
In this month's update:
On 28 February 2023, the Financial Services Regulatory Initiatives Forum published the sixth edition of the Regulatory Initiatives Grid, which provides an outline of upcoming regulatory work. Among the new initiatives included in the Grid is the review of the Senior Managers & Certification Regime, which is due to commence in Q1 2023 and will take the form of a Call for Evidence from the government and a joint discussion paper from the FCA and PRA. The next edition of the Grid will be published towards the end of 2023.
On 15 February 2023, the Financial Ombudsman Service (FOS) published its quarterly complaints data and a webpage on financial products and services for October to December 2022 (Q3 2022/23).
In Q3 2022/23, the FOS received 68,342 new enquiries and 41,303 new complaints about financial products. On average it upheld 35% of the complaints resolved in the period. Current accounts, credit cards, hire purchase (motor), car or motorcycle insurance and personal loans were the most complained about products in that period.
On 9 February 2023, the European Parliament's Committee on Economic and Monetary Affairs (ECON) published a study entitled "Recent trends in UK financial sector regulation and possible implications for the EU, including its approach to equivalence". The study:
On 3 February 2023, the FCA published a webpage on financial promotions data for 2022. It has increased its intervention activity against authorised firms being the financial promotion rules and referrals and investigations into unregulated activity. In particular:
The FCA also published a webpage containing its financial promotions quarterly data for Q4 2022, which showed that:
The FCA has sent Dear CEO letters on how firms should implement the Consumer Duty to various portfolios and sectors, including:
We have summarised those marked with an asterisk in the relevant sections below.
The Consumer Duty will come into force on 31 July 2023 for new and existing products or services that are open to sale or renewal, and 31 July 2024 for closed products or services.
On 22 February 2023, Sheldon Mills, Executive Director, Consumers and Competition, FCA, gave a speech entitled "Call of Duty: How putting customers front and centre will help industry innovate", in which he reminded firms of the practical requirements and key milestones of the Consumer Duty and explained how by improving their processes and developing new approaches, firms will innovate.
On 15 February 2023, the Joint Regulatory Oversight Committee (The Committee) published a report by the Strategic Working Group (SWG) on the future of open banking. The report focuses on:
The Committee expects to lay out its proposals in Q1 2023.
On 14 February 2023, the FCA used its powers to enter and inspect several sites in Leeds suspected of hosting illegally operated crypto ATMs (machines that allow customers to buy or convert funds into cryptoassets) issuing warning letters, requesting the operators to cease and desist using the machines and warning that any breach of regulations would result in an investigation under AML regulations.
In the UK, cryptoasset exchange providers, as well as Crypto ATM operators, must be registered with the FCA and comply with the UK AML Regulations; however at the moment, no crypto ATM operators are registered under the FCA, despite the warnings from the FCA. The FCA will review evidence gathered during these visits before taking further enforcement action against the crypto ATMs.
On 9 February 2023, the FCA published a feedback statement following its Call for Input on the use of synthetic data to support financial services innovation where the FCA identified the following key themes. The respondents to the Call for Input:
The FCA notes that it will host an academic roundtable in early 2023 with the Alan Turing Institute and the Information Commissioner's Office to address the challenge of validating synthetic data. It will follow this up in the coming months with a paper on its principal findings and next steps.
As we mentioned in our February 2023 update, the FCA has launched a Synthetic Data Expert Group to enable collaboration across industry, regulators, academia and wider civil society on synthetic data issues. The group will be a sub-group of the Innovation Advisory Group and will hold its first meeting in April 2023.
On 9 February 2023, the UK Jurisdiction Taskforce of the LawtechUK Panel issued a legal statement on the issuance and transfer of equity or debt securities using a system using blockchain or DLT under English law, following its earlier consultation paper, which we covered in our September 2022 update. In summary, the legal statement concluded that digital securities could be issued by UK or foreign companies and governed by English law, using a blockchain or DLT-based system although a fully decentralised and permissionless blockchain or DLT-system would not be acceptable as a register of members.
On 7 February 2023, the Bank of England (BoE) published a speech, given by Jon Cunliffe, BoE Deputy Governor, in relation to its joint consultation paper with HM Treasury, seeking feedback and setting out their assessment of the case for a retail central bank digital currency (digital pound). BoE also published a technical working paper focusing on technical requirements and design considerations for the digital pound. The consultation paper discusses the following points:
The deadline to give views on both papers is 7 June 2023.
On 6 February 2023, the FCA published a statement on the new UK financial promotions regime it wants to introduce for firms that provide cryptoassets to UK consumers, referring to the policy statement published by HM Treasury on 1 February 2023 in which HM Treasury set out the government's intention to introduce an exemption in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 for cryptoasset businesses registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs) – for further detail please see our insight article on this topic. This would enable cryptoasset businesses that are registered with the FCA under the MLRs, but that are not otherwise authorised persons, to communicate their own cryptoasset financial promotions to UK consumers.
The FCA confirmed that:
We are pleased to announce that we have recently launched our ESG Collection, a series of articles in which our cross-sector ESG team discusses current ESG topics. Part one focuses on the environmental pillar of ESG. In our first article, we review the UK's proposed framework for climate-related transition plans.
On 22 February 2023, the Treasury Sub-Committee on Financial Services Regulations held an inquiry on "Greenwashing: sustainability disclosure requirements". The Committee took evidence from industry (the Investment Association, UK Sustainable Investment and Finance Association and E3G) and the FCA on the FCA's proposed Sustainability Disclosure Requirements and investment labelling regime.
On 10 February 2023, the FCA published a discussion paper (DP23/1) on finance for positive sustainable change to kick-start an industry-wide dialogue on firms' sustainability-related governance, incentives and competence. The discussion paper includes 10 commissioned articles from experts and closes for comments on 10 May 2023. The FCA will use the feedback it receives to understand how it can help the financial services industry in reaching an economy wide transition to net zero.
In addition, the FCA has published a blog by Sacha Sadan, the Director of ESG at the FCA, highlighting the importance of starting such discussions.
On 8 February 2023, the FCA published a speech by the FCA Chief Operating Officer (COO) and Executive Director of Authorisations, Emily Shepperd, on how to organise a COO, which discussed the following points:
On 6 February 2023, the Network for Greening the Financial System (NGFS) published a user feedback survey to ensure the NGFS climate scenarios are relevant and encouraging users from all sectors to participate in the survey. The survey closed on 27 February 2023. The NGFS expects to publish the key findings in spring 2023.
On 23 February 2023, the PSR published a speech by its Managing Director, Chris Hemsley, regarding the role of collaboration between relevant authorities (including HM Treasury, the Home Office, the police and Ofcom) in tackling APP scams. In summary, his views are that:
Consumer Duty – portfolio letter for payment services and e-money
On 21 February 2023, the FCA published a portfolio letter to payment services and e-money firms on implementing the new Consumer Duty. Annex 1 of the letter notes that the payments portfolio includes a wide range of business models undertaking a number of activities that impact nearly all consumers and notes that authorised or registered firms will be responsible for ensuring agents or distributors comply with the Duty.
In Annex 2, the FCA flags the following key things payments firms need to consider to deliver good consumer outcomes across the four outcome areas:
The FCA also highlights the issues with account freezing and fraud reports and bad financial crime controls.
On 10 February 2023, the PSR published its summary of the developments of 2022, which include:
On 9 February 2023, the Payment Systems Regulator (PSR) published a consultation paper containing draft reporting guidance for authorised push payment (APP) scams (Measure 1: data collection and publication) and a draft reporting template. In the consultation paper, the PSR sets out a draft guidance for payment service providers (PSPs) that will have to publish data on their performance on APP scams under Measure 1, which will be reviewed by the PSR every six months. Feedback on the draft guidance closed on 23 February 2023, after which the PSR will publish a policy statement on Measure 1, the reporting guidance and template.
On 6 February 2023, the House of Commons Treasury Committee published a report on its concerns in relation to the PSR proposals to introduce mandatory reimbursement for APP scams to Pay.UK through Faster Payment scheme rules.
The House of Commons Treasury Committee also published:
The PSR published its response to the House of Commons Treasury Committee's report and will publish its final position in May 2023.
On 1 February 2023, the FCA published a press release to announce the appointment made by the FCA Board with the approval of HM Treasury, of Aidene Walsh as Chair of the PSR for the next three years. Ashley Alder's appointment as the Chair of the FCA also took effect in February 2023.
On 14 February 2023, HM Treasury published a consultation paper on draft legislation and the regulation of buy-now-pay-later (BNPL) credit products, and a draft version of the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2023. The consultation will close on 1 April 2023, after which the government plans to lay the legislation. For further detail, please see our article here.
On 3 March 2023, the FCA published a portfolio letter on implementing the Consumer Duty to credit brokers.
Annex 1 of the letter describes how the Consumer Duty applies to credit brokers. Annex 2 of the letter describes the issues for credit brokers to consider, including the following:
On 1 March 2023, the FCA published a portfolio letter on implementing the Consumer Duty to motor finance providers.
Annex 1 of the letter describes how the Consumer Duty applies to motor finance providers. Annex 2 of the letter describes the issues for motor finance providers to consider, including the following:
On 3 March 2023, the FCA published a portfolio letter on implementing the Consumer Duty to retail finance providers.
Annex 1 of the letter describes how the Consumer Duty applies to retail finance providers. Annex 2 of the letter describes the issues for retail finance providers to consider, including the following:
On 3 February 2023, the FCA published a portfolio letter on implementing the Consumer Duty to consumer credit lending firms.
Annex 1 of the letter describes how the Consumer Duty applies to firms in the mainstream consumer credit lender portfolio. Whereas Annex 2 of the letter describes the issues for firms under the four outcome areas:
On 3 February 2023, the FCA published a portfolio letter on implementing the Consumer Duty to mortgage lending firms. Annex 1 describes how the Consumer Duty applies to firms in the mortgage portfolio and gives examples of some distribution chains common among mortgage lenders and administrators. Annex 2 flags the following key issues that firms should consider:
On 3 March 2023, the FCA published a portfolio letter on implementing the Consumer Duty to mortgage intermediaries.
Annex 1 of the letter describes how the Consumer Duty applies to mortgage intermediaries. Annex 2 of the letter describes the issues for mortgage intermediaries to consider, including the following:
On 10 February 2023, the PRA published a policy statement on its supervisory expectations concerning unvested pay, deferred sums awarded to material risk takers (MRTs) and public appointments. The PRA described the final version of the revisions to its supervisory statement of renumeration (SS2/7), clarifying that after an award has been made, unvested and deferred claims of MRTs should not be converted from an equity claim into a claim on other instruments (or the other way round), unless exceptional circumstances apply (eg, potential conflict of interest). Following the July 2022 consultation on the revision to SS2/17, the PRA also published a revised version of SS2/17, which came into force on 10 February 2023.
On 8 February 2023, the PRA published a consultation paper on how it plans to deal with insurers in financial difficulties, as required under the draft clauses of the Financial Service and Markets Bill 2022-23. The PRA proposes:
Comments on the PRA proposals will close on 31 March 2023, after which the PRA will propose an implementation date in July 2023.
On 3 February 2023, the FCA published a portfolio letter on implementing the Consumer Duty to firms in the banking and building societies sector. Annex 1 describes how the consumer duty applies to retail banks and building societies. In Annex 2, the FCA flags the issues these firms should consider, including:
On 3 February 2023, the FCA published a portfolio letter on implementing the Consumer Duty to general insurance and pure protection firms. Annex 1 discusses how the consumer duty applies to firms in the general insurance and pure protection portfolio, while in Annex 2 the FCA flags the following key issues that firms need to look into:
On 8 February 2022, the BoE published a policy statement on outsourcing and third party risk management in financial market infrastructures (FMIs). The policy's Annex sets out the final Supervisory Statements and Code of Practice:
From 9 February 2023, FMIs must comply with the requirements in the CoP/relevant supervisory statement. Outsourcing arrangements entered into on or after 8 February 2023 must comply with the requirements of the CoP/relevant supervisory statement by 9 February 2024. Outsourcing agreements entered into prior to 8 February 2023 should be revised accordingly as soon as possible.
On 3 February 2023, the European Securities and Markets Authority (ESMA) published an updated version of its Q&As on the EU Prospectus Regulation, containing a Q&A (15.10) in relation to the Article 1(4)(d) exemption from the requirement to publish a prospectus, where ESMA clarified that the purchase of securities by a joint account can be considered as "one investor" for the purposes of Article 1(4)(d), as there is no condition regarding the mode of payment.
On 2 February 2023, ESMA published a final report coupled with its opinion on the trading venue perimeter under the MiFID II Directive. The opinion gives guidance on when systems and facilities qualify as multilateral and thus seek authorisation as a trading venue. ESMA wants national competent authorities to ensure:
On 30 January 2023, the FCA published a portfolio letter to firms in the consumer investment sector on how they should implement the new Consumer Duty. Annex 1 sets out how Consumer Duty applies to firms in consumer investment. Annex 2 flags the following key issues firms should consider against the FCA's desired outcomes:
On 20 February 2023, the FCA published a discussion paper (DP23/2) on the UK asset management regime in light of the Future Regulatory Framework and the government's proposal that the FCA becomes responsible for retained EU laws that set requirements for firms. The FCA is seeking feedback on how to update and improve the current UK regime for asset managers:
Comments will close on 22 May 2023. The FCA expects to publish a feedback statement later in 2023, which may be part of a consultation paper on some of the topics in the discussion paper.
On 15 February 2023, the European Parliament published a press release stating that it has adopted the proposed Regulation amending the Regulation on European long-term investment funds (ELTIFs) (ELTIF Regulation) in order to make ELTIFs easy to invest in.
On 9 February 2023, the European Parliament's Economic and Monetary Affairs Committee (ECON) published the report (published on 2 February 2023) it has adopted on the European Commission's proposal for a Directive amending the UCITS and Alternative Investment Fund Managers Directive (AIFMD) relating to delegation, liquidity risk management, supervisory reporting, provision of depositary and custody services, and loan origination by alternative investment funds.
The Parliament published a legislative procedure file for the proposals of this Directive which states that the report has been tabled for discussion and waiting for a first reading.
On 24 January 2023, ECON voted to adopt the report and to enter into interinstitutional negotiations with the Council of the EU – for further details, please see the funds and asset management section of our February 2023 update.
On 3 February 2023, the FCA published a portfolio letter to firms in the asset management, custody and fund services and alternatives sectors, on how they should implement the new Consumer Duty, even when they have an indirect relationship with the consumer (discussed in Annex 1). Annex 2 flags the following key issues firms should look into:
On 3 February 2023, the FCA published a portfolio letter setting out its supervision strategy for the asset management sector to help firms and CEOs mitigate harm to consumers and markets, particularly in relation to:
On 20 February 2023, the FCA published a short statement in relation to its proposed enforcement action against Link Group's subsidiary, Link Fund Solutions Ltd (LFS). The FCA states that it is in "advanced confidential discussions" with Link Group and LFS "to determine whether its proposed enforcement action can be resolved by agreement." It is focused on ensuring that consumers affected by the suspension of the Woodford Equity Income Fund get redress and will provide a further update as soon as it is able to.
On 15 February 2023, the FCA published its final notice to Stratton Leasing Ltd, a credit broking firm. The FCA removed Stratton's Part 4A permission finding that:
FCA censures Amigo for failing to conduct adequate affordability checks
On 14 February 2023, the FCA published a final notice, censuring Amigo Loans Ltd for failing to conduct adequate affordability checks on borrowers and guarantors, thus breaching Principle 2 (skill, care and diligence), Principle 3 (management and control) and Principle 6 (customers' interests) of the FCA's Principles for Businesses. It breached these principles by:
Amigo would have been fined £72.9million by the FCA, however the FCA decided against doing so because this would have made it difficult for Amigo to meet its commitments to a High Court-sanctioned scheme of arrangement, which aims to pay redress to customers.
On 7 February 2023, the FCA published a press release announcing that it had commenced proceedings in the High Court against Argento Wealth Ltd (AWL), an unauthorised firm, and its sole director, to secure restitution due to the following alleged unauthorised investment activities:
The FCA considers that AWL and its director have failed to produce credible evidence that AWL can repay the funds borrowed from both retail investors and EMB (plus the interest due) and that AWL is therefore insolvent.
The FCA has obtained undertakings equivalent to interim orders freezing AWL and its director's remaining assets and is seeking a restitution order compensating 13 lenders who lent money to AWL and anyone else affected. The FCA recognises that investors who lent money to AWL are likely to suffer very significant losses because AWL's remaining assets appear to be below what would be required to return all investors' money.
A date is yet to be set for the High Court trial concerning the restitution order.
On 10 February 2023, the Wolfsberg Group issued a press release regarding its publication of the following questionnaire and updated materials:
On 3 February 2023, HM Treasury published a webpage, providing a collection of Fundamental Elements documents created by the G7's Cyber Expert Group in relation to cyber security issues in the finance sector.
On 31 January 2023, the BoE, PRA and FCA published a joint Dear Senior Management Function (SMF) letter on the themes from 350 findings from the 2022 annual cycle of CBEST assessments conducted on 14 participating firms and addressed to the SMFs responsible for cyber. The findings found thematic weaknesses, which have been communicated to the SMFs.
On 31 January 2023, the National Crime Agency announced that the new Suspicious Activity Reports (SARs) Portal would soon go live. The National Crime Agency also published the following:
All the firms and individuals submitting SARs through the portal now need to register to do so.
The answer to last month's question: the total amount of FCA fines for the calendar year ending 2022 was £215,834,156.
In 2022, the Payments Systems Regulator issued 7 specific directions. How many of these related to Confirmation of Payee?
4 May 2023
6 April 2023
6 March 2023
2 February 2023
13 January 2023
1 December 2022
2 November 2022
7 October 2022
1 September 2022
4 August 2022
11 July 2022
9 June 2022
12 May 2022
7 April 2022
3 March 2022
3 February 2022
13 January 2022
2 December 2021
4 November 2021
7 October 2021
20 September 2021
5 August 2021
1 July 2021
3 June 2021
6 May 2021
1 April 2021
4 March 2021
4 February 2021
14 January 2021
3 December 2020
5 November 2020
1 October 2020
3 September 2020
6 August 2020
2 July 2020
4 June 2020
7 May 2020
2 April 2020
5 March 2020
6 February 2020
8 January 2020
par Charlotte Hill et Daniel Hirschfield
par Charlotte Hill et Daniel Hirschfield
par plusieurs auteurs