Compliance Digest - 5th January 2023
Happy New Year, and welcome to 2024. I hope you were able to enjoy your Christmas break and are back into the New Year refreshed and revitalised. This is a summary of some of the regulatory issues that will impact our area of financial services into January and beyond (although hopefully not to infinity).
Make sure your certification assessment is fit and proper
FOS says True Potential ‘non-advised’ sale was actually advice.
Duty calls: future-proofing finance for everyone
Payment Systems Regulator: PS23/4: APP scams reimbursement policy statement
The Fraud Files: Decoding the Economic Crime Act
Make sure your certification assessment is fit and proper
In a useful blog, the compliance consultancy b-compliant has produced a reminder about the requirements for certification and annual of recertification of those individuals who are noted as certificated within our firms. In our firms, most of these individuals will be advisers and will be captured by the Training & Competence Scheme. The key is robust record keeping so that if the FCA asks to see the evidence to justify renewing certification, it is already to hand and easily produced.
FOS says True Potential ‘non-advised’ sale was actually advice
In an article published in New Model Adviser, FOS has told True Potential to pay a client compensation after ruling that what the company viewed as a ‘non-advised’ switch into one of its own funds did in fact constitute advice.
The claim, which was brought by the client of an adviser who had recently joined True Potential, highlights how ‘direct marketing offers’ can be used to quickly transfer assets when an adviser moves between firms. Interestingly, the ombudsman ruled that the True Potential adviser did provide advice and made arrangements for the switch. It upheld the complaint, ruling the advice was unsuitable as there did not appear to be ‘any material benefit’ for the client in switching from one cautious fund to another.
A link to the Ombudsman’s decision in the FOS website is here.
There are some specific circumstances with this case and in my last blog on 22nd December, I highlighted the discussions happening about the advice/guidance boundary. While these discussions take place, the key is client perception. Does the client perceive they are receiving advice, or do they believe they are receiving guidance. These lines are much clearer when using a self-select portal than if you are having meetings with your clients. Be very careful with the language that you use if you do not intend to give advice.
Duty calls: future-proofing finance for everyone
In a press release, the FCA returns once again to the Consumer Duty, referring to is as ‘game changing’. In his introduction to the press release Nikhil Rathi, Chief Executive of the FCA, said:
“The financial services sector is vital to the UK economy, and we are committed to supporting its role in long-term economic growth. At the same time, our commitment to reducing and preventing harm remains unwavering, and the introduction of the Consumer Duty reaffirms this. From the digital frontiers where new opportunities and risks are fast emerging, to the competitiveness of UK markets, we are focused on staying ahead and have laid out proposals for far-reaching reforms across our remit. We know at the FCA our role is not just about regulating financial services, it's about safeguarding futures, supporting innovation and informed risk-taking and maintaining a resilient financial
ecosystem.”
Payment Systems Regulator policy statement: PS23/4: APP scams reimbursement policy statement
The Payment Systems Regulator (PSR) has published a summary of how they are taking bold action (their words) against Authorised Push Payment (APP) scams. In its June 2023 policy statement, the PSR outlined a new reimbursement requirement within Faster Payments (FPS) to improve fraud prevention and focus firms’ effort on protecting consumers. The policy start date is 7th October 2024. The full policy statement is here.
The Fraud Files: Decoding the Economic Crime Act
And finally, a slight change of tack is a podcast from Herbert Smith Freehills who have recorded a bonus episode of their Fraud Files podcast series which an overview of other changes introduced by the Economic Crime Corporate Transparency Act 2023 (ECTA 2023). In this episode, hosted by Elizabeth Head, Sarah Hawes talks through the Act’s extensive reforms to Companies House, and Susannah Cogman provides an overview of other changes introduced by the Act, including in particular in relation to the Proceeds of Crime Act. There is the potential carrot of 20 minutes CPD if you listen to the whole podcast!
Ian Ashleigh
