Regulation Matters March 2019

Regulation Matters March 2019

March 2019

Regulation Matters Welcome to this edition of Regulation Matters covering regulatory updates which impact financial advisers. If you have any questions about any of the subject matters and would like further information on the additional service available to support directly authorised firms, please contact 0800 085 0825 .

IN THIS ISSUE

Who is it relevant to? Summary

Action recommended / for your information?

Subject

FG19/2 SMCR: GUIDANCE ON STATEMENTS OF RESPONSIBILITIES

All firms

Practical assistance from the FCA on preparing statements of responsibility FCA rules for uploading and validating information to the FCA Directory. Covers the impact of the increase in the FOS Limits SFGB gets an official name and replaces MAS, TPAS and Pension Wise. Proposes new rules to support platform switching. Will mainly impact platform providers but will increase Summary of the Final Report findings likely to be of interest to firms Actions recommended in last month’s issue of Regulation Matters (issue 139). Overview of FCA planned activity. focus on intermediary activity in this area.

Download either from the FCA directly or contact us for further information on the SM&CR support available

PS19/7: THE DIRECTORY

All firms

Download either from the FCA directly or contact us for further information on the SM&CR support available Review and update client facing material appropriately and ensure that staff are made aware of the changes Review and update client facing material where previously referring to one of the component organisations Consider updating your process for platform reviews including any template review suitability letters. Firms may wish to respond to the FCA directly by 14th June 2019

PS19/8: INCREASING THE AWARD LIMIT FOR THE FINANCIAL OMBUDSMAN SERVICE SINGLE FINANCIAL GUIDANCE BODY (SFGB) CP19/12: CONSULTATION ON INVESTMENT PLATFORMS MARKET STUDY REMEDIES MS17/1.3 INVESTMENT PLATFORMS MARKET STUDY FINAL REPORT REMINDER OF KEY REGULATORY MATTERS

All firms

All firms

Investment firms only

Investment firms only

For information and background to the changes being proposed in CP19/12

All firms

For your information

REGULATORY MATTERS ON THE HORIZON

All firms

For your information

Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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FG19/2 SMCR: Guidance on statements of responsibilities AT A GLANCE The FCA has provided examples of good and bad practice in respect of the completion of statements of responsibility (SoRs) and of responsibilities maps. Firms will need to write their own SoRs and this guidance reflects the learning from the implementation of this requirement in banks and insurers. AT A GLANCE The FCA has published the policy statement to CP18/19. Some changes have been accepted e.g. timescales for uploading notifications for “Directory Persons” will be 7 working days and information on membership of relevant accredited bodies such as the PFS is to be included, but otherwise the proposals are largely unchanged. The timeframe for implementation is aligned to the certification regime under SMCR requirements so 9th December 2020 at the latest, and firms will need to notify the FCA that the information on the directory remains valid where there have been no changes notified during a 12 month period. PS19/7: Financial Services Directory Want to know more? CLICK HERE (or turn to page 6) for a more detailed summary, including recommended actions.

Want to know more? CLICK HERE (or turn to page 7) for a more detailed summary, including recommended actions.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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PS19/8: Increasing the award limit for the Financial Ombudsman Service AT A GLANCE As a result of the award limit being increased you will need to review any of your static documents and/ or templates that refer to the previous limits and update these. Your PII cover requirement is unlikely to be affected by the increase in the award in so far as the cover you have in place needs to comply with the levels set out in the FCA Handbook https://www.handbook.fca.org.uk/handbook/IPRU-INV/13/1.html but it is widely expected that premiums will increase as a result of the risk of higher compensation awards.

Want to know more? CLICK HERE (or turn to page 8) for a more detailed summary, including recommended actions.

Single Financial Guidance Body

AT A GLANCE The SFGB now has been officially named the Money and Pensions Service. You will need to review your static documents and templates and update prior references to Pension Wise, The Pensions Advisory Service (TPAS), or the Money Advice Services (MAS).

Want to know more? CLICK HERE (or turn to page 9) for a more detailed summary, including recommended actions.

CP19/12: Consultation on Investment Platforms Market Study Remedies AT A GLANCE The FCA has published a new consultation paper alongside its final report on investment platforms. This mainly impacts platform providers and aims to make switching from one platform to another easier and cheaper for consumers in particular. Firms need to ensure they are already complying with the rules surrounding orphan clients and that ongoing platform suitability is explicitly considered as part of the client review process.

Want to know more? CLICK HERE (or turn to page 10) for a more detailed summary, including recommended actions.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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MS17/1.3: Investment Platforms Market Study – Final Report AT A GLANCE On 14th March 2019, the Financial Conduct Authority (FCA) published its final report on its market study to examine the investment platforms market (MS17/1.3). The FCA has found that while competition is generally working well, some consumers and financial advisers can find it difficult to shop around and switch to a platform that better meets their needs. Switching can be difficult due to the time, complexity and cost involved. This is driven in part by the exit charges that consumers incur and difficulties switching between unit classes. To address these issues, the FCA is consulting separately on rules to allow consumers to switch platforms and remain in the same fund without having to sell their investments, and is proposing to ban or cap exit fees. The FCA will also review the progress being made by the industry to improve the switching process. The FCA also examined the ability of consumers to shop around and compare platforms. It found that action is being taken by the industry to improve the provision of information about costs and charges. The FCA is therefore not proposing any intervention in this regard at present, but will review industry progress in 2020/21. The FCA has also examined competition between adviser platforms, whether consumers are able to make informed investment choices, and any barriers to entry and expansion. It has concluded that no intervention or action is needed at this time to address any harm in these areas.

Want to know more? CLICK HERE (or turn to page 11) for a more detailed summary, including recommended actions.

Reminder of key regulatory matters Below is a useful reminder of key regulatory matters affecting financial adviser firms including actions recommended in last month’s issue of Regulation Matters (issue 139).

Subject

Recommended Action

1

Preparing for an AML audit

Carry out your self-assessment, looking at Financial Crime Systems and Controls

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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Regulatory Matters on the Horizon

It’s an ever-changing market with a constant stream of new and updated regulation for financial advisers to worry about. We have provided a brief overview of the FCA’s planned activity as we currently understand it, but please be aware that the FCA does sometimes change the timing. Rest assured, as part of our service we will keep you informed and provide guidance to help you remain compliant.

Subject

Publication Type

Expected Date

Intended Audience

1

RDR and FAMR - review of outcomes. This will include an exploration of discretionary services. Retirement Outcomes Review: Policy statement to CP19/5 General insurance value measures reporting FCA regulated fees and levies: rates proposals 2019/20 Mortgages Market Study - Final Report General insurance value measures reporting CP

Unclear

Work to be undertaken during 2019 – it is not clear when the findings will be published

All investment firms

2

Policy Statement and final rules

July 2019

All investment firms involved in income drawdown

3

Consultation Paper

Q1 2019

Insurers, intermediaries and other firms involved in the insurance

market, and trade bodies representing these firms.

4

Notification

March 2019

Fee-payers paying FCA fees, Financial Ombudsman Service, Single Financial Guidance Body, Devolved Authorities and Illegal Money Lending levies Lenders, sourcing and other software providers, and intermediaries. Insurers, intermediaries and other firms involved in the insurance market, and trade bodies representing these firms. It will also be of interest to consumer organisations and consumers.

5

Market study

26 March 2019

6

Consultation Paper

Q1 2019

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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FG19/2 SMCR: Guidance on statements of responsibilities

The FCA recently published new guidance, setting out the purpose of statements of responsibilities in which it provides some questions for firms to ask themselves and outlines examples of good and poor practice. Whilst it also comments on responsibilities maps which are not a requirement other than for firms in the enhanced regime, if as a core firm you decide to use one anyway, this guidance may also be useful. It should be applied in a risk-based and proportionate way. Download the FCA’s Finalised Guidance and review vs your own structure. If you would like access to the further support available to directly authorised firms in preparing for SM&CR, including audits with our team of highly skilled regulatory consultants please call us on 0800 085 0825 for further information on the additional services available to directly authorised firms. WHAT SHOULD FIRMS DO NOW?

CLICK HERE to return to page 2.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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PS19/7: The Directory On 8th March 2019, the FCA published a policy statement on a new directory of financial services workers (PS19/7). The FCA consulted on proposals to introduce the directory and amend the existing financial services register (FS register) in a July 2018 consultation paper (CP18/19) (see legal update, FCA consults on new financial services directory and improvement of financial services register). The majority of the 500 respondents supported the establishment of a directory, with many suggesting ways in which it could be improved. PS19/7 confirms the FCA’s intention to introduce the directory, and outlines the changes it has made to its proposals to take account of the feedback. This includes extending the deadline for updating information. The FCA explains that to make the information more easily accessible and understandable, it is including a health warning on the directory to highlight where information may be out of date, and will allow firms who have many directory persons to submit multiple records at once. The directory will include individuals performing roles that will no longer be made public on the FS register following the introduction of the Senior Managers and Certification Regime (SM&CR). It will also make public information on additional roles, such as those providing mortgage advice, for the first time. The FS register will continue following the extension of the SM&CR, but will contain fewer individuals. This is because only specified senior manager roles at firms will be approved, and so will appear on the financial services register.

The final rules establishing the directory are set out in the Reporting of Information About Directory Persons (Dual- Regulated Firms) Instrument 2019 (FCA 2019/11) and come into force on 9th September 2019 . The directory interface will go live shortly, after information on directory persons has been uploaded in March 2020 for banking firms and insurers, and December 2020 for all other firms. The >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14

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