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Regulation Matters April 2020

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Regulation Matters April 2020

April 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.

2 | Regulation Matters - April 2020

IN THIS ISSUE

Who is it relevant to? Summary

Action recommended / for your information?

Subject

FCA BUSINESS PLAN 2020/21

All firms

On 7th April the FCA published its 2020/21 business plan setting out its priorities for the year ahead.

Action Recommended

REGULATORY FEES & LEVIES

All firms

The proposed FCA fees for the next round of invoices have been published.

Action Recommended

FOS COMPLAINTS

Mortgage Advisers

New FOS resources for consumers and businesses on complaints concerning fraud and scams. Mortgage lenders renew and expand on their commitment to help existing customers. Actions recommended in last month’s issue of Regulation Matters (March 2020). Overview of FCA planned activity including publications currently delayed due to COVID-19.

Action Recommended

EXISTING MORTGAGE CUSTOMERS

Mortgage Advisers

For your information

REMINDER OF KEY REGULATION MATTERS

All firms

For your information

REGULATORY MATTERS ON THE HORIZON

All firms

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.

3 | Regulation Matters - April 2020

FCA Business Plan 2020/21 AT A GLANCE

On 7th April the FCA published its 2020/21 business plan setting out its priorities for the year ahead. Unsurprisingly their immediate focus is to address the challenges presented by the COVID-19 pandemic. In the medium term, the FCA’s key priorities are to: 1.Transform how it works and regulates 2.Enable effective consumer investment decisions

3.Ensure consumer credit markets work well 4.Make payments safe and accessible, and; 5.Deliver fair value in a digital age.

The FCA has also identified six cross sector priorities (including financial crime, culture and operational resilience) along with its planned sector specific work in general insurance and protection, as well as the wholesale financial markets, investment management and retail banking. They specifically note that their supervisory focus will be shifting towards smaller firms over the coming year.

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

Regulatory Fees & Levies AT A GLANCE

On 7th April, the FCA published its annual consultation paper (CP20/6) on regulated fees and levies to fund itself, the FOS, the Money and Pensions Service, debt advice delivered by the Devolved Authorities and HM Treasury’s illegal money lending expenses. The FCA’s annual funding requirement for 2020/21 is £587.6 million, an increase of 5.2%.

Want to know more? CLICK HERE (or turn to page 12) for a more detailed summary, including recommended actions.

FOS Complaints – Fraud & Scams AT A GLANCE

The FOS has published a new webpage to help consumers avoid scams and fraud. They also provide a summary of how they deal with complaints related to these areas (including a range of case studies). They also remind firms that they must be able to demonstrate that a complaint about a scam or fraud has been investigated thoroughly and have reflected carefully on the circumstances of the events.

Want to know more? CLICK HERE (or turn to page 13) for a more detailed summary, including recommended actions.

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Existing Mortgage Customers On 28th April 2020, UK Finance issued a blog post noting that mortgage lenders have renewed and expanded on a cross-industry voluntary commitment to help existing mortgage customers easily switch to a new deal when they reach the end of their term. The original commitment was announced in July 2018 by UK Finance, the Building Societies Association (BSA) and the Intermediary Mortgage Lenders Association (IMLA). The renewed commitment has been agreed as a result of the COVID-19 pandemic. IN SUMMARY

ELIGIBILITY To be eligible for a product transfer, the following criteria need to be satisfied: n Payments need to be up to date n The end of the fixed-rate term is approaching n No further borrowing is being sought n T here is a minimum remaining mortgage term of two years, and n An outstanding loan of at least £10,000. UK Finance also highlights that the commitment only applies to customers of lenders that are able to offer alternative products to their existing borrowers. They also highlight that advice is widely available from both mortgage brokers and lenders for those who want help to select the right mortgage product for them. Eligible customers will be contacted by their lender when the end of their term approaches, with around one million customers expected to reach the end of their fixed rate deal between now and the end of 2020. This clearly highlights the need for Mortgage Brokers/Advisers to ensure their planning in terms of future client contact is managed effectively.

Any eligible customer coming to the end of a fixed-rate mortgage is routinely offered a product transfer by their lender. This gives customers the option of switching to a new deal with their existing lender instead of automatically moving onto a reversion rate. It will allow eligible existing borrowers to opt for the security of fixing their monthly mortgage payments going forward, including borrowers who have been granted a payment holiday or have been furloughed.

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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 (March 2020) .

Subject

Recommended Action

Further Information

Capital Resource Requirements

Ensure your capital resources do not dip below the required levels.

Subordinated loans may be the solution in some cases. Refer to the FCA’s recent statement HERE . The FCA believes there is a need to intervene to encourage customers to consider switching. Refer to the FCA research HERE . The FCA has published a discussion paper which can be reviewed HERE .

FCA Research on mortgage switching

Consider your contact and diary management strategies in terms of dealing with existing/ previous mortgage customers.

Transforming Culture in Financial Services

Ensure you are conducting all aspects of your business in the spirit of the Principles, SM&CR and related requirements in pursuit of good client outcomes.

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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 which has currently been deferred/delayed due to COVID-19. Below we have highlighted the current status of relevant FCA publications as we understand it which is under constant review and subject to change. Rest assured, as part of our service we will keep you informed and provide guidance to help you remain compliant.

Delayed Implementation of FCA Rules

Subject

Publication Type Expected Date Intended Audience

Pension Transfer Specialist qualifications.

Policy Statement – PS20/03

1st October 2021 PTS’s who also need to attain a QCF level 4 investment qualification. 1st February 2021 Relevant to individuals and firms with an interest in pension drawdown,

Retirement Outcomes Review

Policy Statement – PS19/21

including those providing advice and information in this area.

Making Platform Transfers Simpler

Policy Statement PS19/29

1st February 2021 Investment Advisers with clients utilising Platform services.

Delayed FCA Consultation Response Dates

Subject

Publication Type Expected Date Intended Audience

Various matters

Quarterly Consultation No. 27 Consultation Paper (CP19/32)

1st October 2020 All relevant sectors

Building Operational Resilience

1st October 2020 Enhanced scope SM&CR firms

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Other Delayed FCA Publications In the table below is a list of proposed publications which are likely to be of relevance to the retail financial advice sector either directly or indirectly. These were all due to be published before the end of June 2020 but are currently delayed pending updates from the FCA at an appropriate point. Regulatory Matters on the Horizon (cont.)

Subject

Publication Type

Expected Date

1 2

Mortgage switching

Consultation Paper

TBC

Vulnerable Clients

Guidance & Research TBC

Options to change the FCA regulatory framework

Ref: Duty of Care Feedback Statement

TBC

4 5 6 7

Consumer Credit Act (CCA) review

TBC

General Insurance Pricing remedies

Final Report & Consultation Paper

TBC

Investment Platforms exit fee remedies

Consultation Paper

TBC

Value for Money

Consultation & Discussion Papers Key Findings – Multi- Firm Review

TBC

Sale & Advice of Equity Release

TBC

General Insurance

Value Measures Pilot

TBC

10 11 12 13 14 15

Intergenerational Differences

Feedback Statement

TBC

Pensions Transfer Advice: Contingent Charging and other proposed remedies

Policy Statement

TBC

Prudential requirements for MiFID Investment Firms

Discussion Paper

TBC

Directory of Certified Persons

Financial Services Register

TBC

Assessing Suitability Review 2

Multi-Firm Review TBC

Prohibiting the sale of investment products to retail clients that reference cryptoassets

Policy Statement

TBC

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FCA Business Plan 2020/21

FCA’S FIVE KEY PRIORITIES 1.Transform how it works and regulates – The regulator acknowledges that it must continually adapt and raise its standards and has ambitious plans to transform itself and fundamentally change the way it works. Work has already started to achieve the following outcomes and will continue as it moves into 2020/21 and beyond: n Make faster and more effective decisions – they will evaluate their range of regulatory tools and the speed at which they use them and identify harm. n Prioritise end outcomes for consumers, markets and firms – they will be clearer with firms about the outcomes firms are expected to achieve. n More effective use of Intelligence and information – they will aim to identify harm and remove it more quickly. They will reduce the regulatory burden on firms by streamlining >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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