Regulation Matters March 2020

Regulation Matters March 2020

March 2020

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 .

Regulation Matters is prodRegulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it inot 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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IN THIS ISSUE

Who is it relevant to? Summary

Action recommended / for your information?

Subject

MEETING YOUR FIRM’S CAPITAL RESOURCES REQUIREMENTS – SUBORDINATED LOANS

All firms

Short term reductions in turnover entered onto a firm’s RMAR could cause its capital resources to dip below the required level. Subordinated loans might be solution in some cases. FCA commentary on some known issues and information which may inform our approach to market and regulatory changes. FCA believes there is a need to intervene to encourage customers to consider switching. A collection of essays from industry leaders and other experts on how to drive sustainable and healthy cultures in financial services firms.

For your information

FCA ANNUAL “SECTOR VIEWS”

All firms

For your information

FCA RESEARCH ON MORTGAGE SWITCHING

Mortgage Advisers

For your information

FCA DISCUSSION PAPER DP20/1 – TRANSFORMING CULTURE IN FINANCIAL SERVICES

All firms

For your information

FCA QUARTERLY CONSULTATION 27

All firms

Covering some proposed handbook amendments.

For your information

FCA INSIGHTS FROM CYBER COORDINATION GROUPS FCA PROPOSED BAN ON CONTINGENT CHARGING FOR DB PENSION TRANSFER ADVICE (AND RELATED MEASURES)

All firms

Not guidance or rules; insight from working groups and common identified themes.

For your information

All firms active in the DB Pension Transfer Advice Market

Publication of the Policy Statement and final rules delayed to later in the year.

For your information

REMINDER OF KEY REGULATION MATTERS

All firms

Actions recommended in last month’s issue of Regulation Matters ( February 2020 ).

For your information

REGULATORY MATTERS ON THE HORIZON

All firms

Overview of FCA planned activity.

For your information

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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Meeting your firm’s capital resources requirements – subordinated loans AT A GLANCE

n F irms are required to meet their capital resources requirements at all times n W e have seen some press comment indicating that the FCA has indicated that firms of financial advisers can allow their capital resources to reduce to below the minimum level at this time. However, the FCA was not referring to financial advisers when it issued the relevant update, which can be read here: https://www.fca.org.uk/news/statements/fca-expectations-financial-resilience- fca-solo-regulated-firms n S hort term reductions in turnover at this time, when entered into a firm’s RMAR could cause a firm’s calculated level of capital resources to dip below the required minimum level n W here that happens, the FCA expects firms to notify it and to provide a plan for correcting the breach n S ubordinated loans from directors/shareholders will be a potential solution but legal advice is a must to ensure all parties understand what they are committing to

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

FCA Annual ‘Sector Views’ AT A GLANCE

The FCA annual publication identifies the following key risk areas: n A desire to increase consumer engagement and switching for products such as general insurance and mortgages in order to deal with the ‘loyalty penalty’ paid by some consumers n E nsuring that firms make allowances for vulnerable consumers n S cams and high risk unregulated investments n C oncern about poor DB pension transfer advice n T he costs of drawdown pension plans and whether conflicts of interest arising from ongoing adviser charges are being managed n A lack of availability of ‘one-off’ transactional advice for retail clients, resulting in consumers making poor decisions without advice n A ttempts to combat ‘Phoenixing’ because of the damage this causes to the sector and, ultimately, consumers n P ricing in mainstream collective investment funds and their exposure to higher risk/potentially illiquid assets n T he risks of increasing demand for ESG investments while there are no recognised standards n H igh-risk retails investments (such as mini-bonds and CFDs) being marketed and sold to customers who don’t have full understanding of the complexity of the products and the level of risk they are taking.

Want to know more? The full publication can be accessed here: FCA Annual ‘Sector Views’

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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FCA Research on Mortgage Switching

AT A GLANCE

The FCA has published an article summarising its findings from its research into mortgage switching. The FCA have concluded from the research that there is a case for intervening to help mortgage customers who do not switch. The research found that those who did not switch tended to be older, have a lower average income by household, and tended to have dealt directly with a lender instead of an adviser. The FCA intend to consult on their proposed remedies and responses in Q2 2020.

Want to know more? The FCA research can be accessed here: https://www.fca.org.uk/news/news-stories/fca-issues-research-mortgage-switching

FCA Discussion Paper: DP20/1 Transforming Culture in Financial Services Firms

AT A GLANCE

The FCA has published a collection of essays covering various elements of surrounding culture transformation. The essays range from being firm- and sector-specific through to being thematic, from various authors ranging from Heads and Chief Executives of Banks and Building Societies to Executives of the CII and CBI, and researchers from Universities and Business Schools. Each essay looks at a specific factor or consideration underpinning business culture and how to deliver positive cultural change.

Want to know more? The FCA’s discussion paper can be accessed here: https://www.fca.org.uk/publication/discussion/dp20-1.pdf

FCA Quarterly Consultation 27

AT A GLANCE

Proposed developments in this consultation are relatively minor but readers might wish to take a particular interest in proposals to: n M ake minor changes to the Financial Crime guide as a result of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (SI 2019/1511), which came into effect on 10th January 2020 n M ake changes to the notification form in the Handbook that is used to amend firms’ details as held by the FCA, albeit firms in practice use the online form via Connect.

Want to know more? The FCA Consultation is available here: Quarterly Consultation 27

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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FCA: Insights from the Cyber Coordination Groups

AT A GLANCE

The FCA has published a research paper summarising the key themes and risks identified by the CCG. n R isks existing in the supply chain where the overall service is dependent on partner practices supporting the end to end service effectively. n S ocial engineering and the risk it poses to >Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11

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