Compliance Digest: 23rd February 2024
This week’s digest has a focus on the Consumer Duty which will be high on the FCA’s agenda throughout 2024. I also have revisited appointed representatives because the FCA will want to know that firms with ARs are applying suitable oversight and monitoring, including discussions about the Consumer Duty.
House of Lords Financial Services Committee
Consumer Duty: the gift that keeps giving
Consumer Duty: implementation: good practice and areas for improvement
Open regulators and open markets
Appointed Representatives
King Charles III bank notes
House of Lords Financial Services Committee
UK Finance has announced the creation of a House of Lords Financial Services Committee. It represents an important and positive innovation in financial services regulation and is another step in completing the post-Brexit regulatory architecture.
Consumer Duty: the gift that keeps giving
In a speech at KPMG, Sheldon Mills Executive Director, Consumers and Competition at the FCA summarised the FCA’s view of firms’ progress in implementing the Consumer Duty.
Highlights of the speech include:
Firms have made solid progress in many areas of the Consumer Duty and the clock is now ticking for closed products and services to comply.
The FCA is ready to work with the industry on meeting the closed product deadline and urges firms to prioritise areas where there is the greatest risk of consumer harm.
The FCA has published its small firms survey and a good and bad practice guide to help firms on their Consumer Duty journey (see below).
Consumer Duty implementation: good practice and areas for improvement
The Consumer Duty came into force for open products and services on 31 July 2023. The FCA welcomes the improvements made by many firms to deliver better outcomes for their customers. However, some firms are lagging behind. Under the Duty, firms must act to deliver good outcomes for retail customers. Firms should aim to continuously address issues that risk causing consumer harm.
The FCA committed to highlight good practice and areas for improvement. This publication builds on its review of firms’ implementation plans and their fair value frameworks and previous communications. It:
reminds firms of the consumer outcomes required by the Duty
sets out recent good practice, including in response to the FCA’s early supervisory work, to deliver these outcomes
highlights areas for improvement where firms have more to do
Some of the examples cite particular markets or products. The FCA recognises they may not apply to every scenario, but firms of all sizes across retail sectors will benefit from considering them.
Open regulators and open markets
In a speech at the UK Mission to the European Union, FCA Chair, Ashley Alder highlighted:
Global cooperation amongst regulators is vital for cross-border risks.
The FCA’s three primary statutory objectives are fully aligned with an open markets philosophy.
The FCA is committed to finding consistent international responses to challenges that increasingly give rise to cross-border risks, including ESG, Fintech and NBFI.
The 2023 UK-EU MOU on regulatory cooperation on financial services will enable us to deepen relationships with our EU counterparts as we pursue similar reforms.
Appointed Representatives
The FCA revised its rules in relation to appointed representatives in 2023 putting more responsibility on Principal Firms to supervise and monitor their ARs and requiring increased and more detailed reporting. There may well be regulatory activity in conjunction with Consumer Duty during 2024 to test Principal Firms’ implantation of the revised rules. This is a useful reminder to Principal Firms of their responsibilities: Principal Firms and Appointed Representatives.
King Charles III Banknotes
Away from regulation, the Bank of England has announced that banknotes carrying the portrait of King Charles III will be issued for the first time on 5th June 2024.
Ian Ashleigh
