Welcome to this month’s Regulatory Round-Up, which summarises the FCA’s announcements and other regulatory information we have circulated during November.
Overview
This month, Brexit has dominated both the political and regulatory agendas, with the FCA having published a second consultation paper on a range of Handbook and Binding Technical Standards amendments. The regulator also produced an EU Withdrawal Impact Assessment (together with a letter from Andrew Bailey) and general information about how consumers may be affected by the UK’s withdrawal from the EU. We will shortly provide an update to members on changes required to both the SECCI and ESIS pre-contractual disclosure forms, used in the consumer credit and mortgage markets.
The FCA extended its remit on price capping, by publishing proposals for a cap in the Rent-to-Own sector, which will apply to both the cost of the product and the charge for credit from 1 April 2019. Credit charges cannot be more than the cost of the product and RTO firms will need to benchmark the cost of products against prices charged by three other retailers. This is the first time the FCA has sought to cap the cost of goods purchased, which could have broader implications which we are exploring in more detail. The FCA is considering ‘fair pricing’ across all financial services via its current Discussion Paper.
The Credit Information Market Study has been delayed, with Terms of Reference now expected in June 2019. Areas of focus are expected to include inconsistent coverage of data between the credit reference agencies; the difficulties experienced by consumers with ‘thin credit files’ when trying to access credit, and the timeliness of the data – particularly delays in recording new credit accounts with the CRAs. We are working with the CRAs and other trade associations to identify additional areas that the Study might cover.
We hosted a Roundtable for members and the FCA Team responsible for producing guidance on assisting vulnerable consumers, which is expected in Q1 2019. We outlined some of the challenges lenders currently experience, including the recording of data on vulnerability and data protection requirements.
FLA Emails issued in November
We have circulated emails summarising the regulatory developments listed below. These can be found on the Members Section of the FLA website www.fla.org.uk If you do not have access to the website, please select “register” and follow the instructions.
FCA speech on Purposeful Leadership?????? – 01/11/2018
Jonathan Davidson, FCA Director of Supervision for Retail and Authorisations, delivered a speech on ‘Realising the benefits of purposeful leadership’, and shared his views on what culture change within financial services should look like.
CCA Review – FCA Interim Report – 05/11/2018
In our response to the FCA’s Interim Report on the review of the CCA, we welcomed the FCA’s recognition that change is needed in many areas of the Act which do not work well for consumers or credit providers. We have proposed that the FCA extend the period of the Review, in light of Brexit preparations dominating both the regulator’s time and the legislative timetable.
Proposed Duty of Care – 05/11/2018
In our response to the FCA’s Discussion Paper on a proposed new Duty of Care (New Duty), we noted that there is already an extensive legislative and regulatory framework to ensure consumers are well protected, treated fairly and assisted in making informed financial decisions. A New Duty would be vague in scope and so could be interpreted differently by the FOS and the courts.
FCA’s final rules on Regular Premium PPI – 07/11/2018
The FCA issued final guidance clarifying its expectations about the handling of certain regular premium payment protection insurance (PPI) complaints – and in particular where there was recurring non-disclosure of commission (RND). There is a short consultation on the pro-active contact requirements for firms.
The Financial Conduct Authority – 8/11/18
The FCA has published general information about how consumers may be affected by the UK’s withdrawal from the EU.
CMI PPI Order Review – Final decision – 13/11/2018
The Competition and Market Authorities (CMA’s) final decision in the review of the PPI Order has now been published and is available here.
UK and EU publish draft EU Withdrawal Agreement – 15/11/2018
The UK Government and the European Union published a draft EU Withdrawal Agreement alongside a statement on the nature of the future UK/EU relationship. Running to 585 pages, it sets out citizens’ rights, the ‘divorce bill’, and the Irish border arrangements.
Regulatory fees and levies: policy proposals for 2019/20 – 15/11/18
The FCA has published a consultation paper (CP 18/34) setting out proposed policy changes to the way that FCA will raise fees from 2019/20 This is part of their annual cycle of consultations on fees, however this is not their main fee CP which will be published in March/April 2019.
Financial Promotions non-compliance – 20/11/18
The FCA has reiterated concerns they have with some consumer credit financial promotions which breaches CONC rules (CONC 3). This will be of interest to all firms. The FCA draws attention to its Social Media Guidance.
FCA Price Cap for Rent to Own and proposals for alternatives to high cost credit – 22/11/18
The FCA published Rent to Own and alternatives to High-cost-credit, which proposes a cap on the Rent to Own (RTO) sector, to be introduced from 1 April 2019. The cap will limit both the cost of the product and the charge for the credit. In addition, a two day cooling-off period will be introduced for the sale of extended warranties.
Publication of Modification by Consent on PPI complaints (complaints return form) (DISP 1.10.1) – 26/11/18
The FCA published a Modification by Consent that will allow firms to exclude from their complaints return form (found in DISP 1 Annex 1R) any PPI complaints where upon investigation it was established that the complainant had not purchased a PPI policy from the firm. The text of the Modification direction is available here.
Brexit SIs including consultation on interchanges fees – 26/11/18
See email for a selection of draft SIs including:
Draft Interchange Fee (Amendment) (EU Exit) Regulations 2018
Draft Mortgage Credit (Amendment) (EU Exit) Regulations 2019
Preparing for 2022: What you need to know about LIBOR transition – 27/11/18
The Working Group on Sterling Risk-Free Reference Rates has published an introductory starter pack regarding LIBOR transition entitled “Preparing for 2022: What you need to know about LIBOR transition”. The Group was established by the Bank of England in 2015 to implement the Financial Stability Board's recommendation to develop alternative risk-free rates (RFRs) for use instead of LIBOR-style reference rates.
FCA delays Credit Information Market Study (CIMS) – 27/11/18
The FCA has announced that it is delaying the launch of its Credit Information Market Study (CIMS) and now plans to publish Terms of Reference for the CIMs in June 2019.
FCA speech on cyber and technology resilience in UK financial services – 27/11/18
Megan Butler, Executive Director of Supervision – Investment, Wholesale and Specialists at the FCA, gave a speech on cyber and technology resilience in UK financial services at Bloomberg in London. The full speech can be found here. The full report can be found here.
FCA publishes its Approach to Authorisation – 28/11/18
The FCA has published final guidance and a feedback statement on its Approach to Authorisation. The guidance provides clarity to firms and individuals applying to be authorised or approved by the FCA and outlines the minimum standards that both firms/individuals must meet before becoming authorised. The guidance picks up on a number of improvements suggested by the FLA.
FCA 2nd Brexit CP on amendments to Handbook & Binding Technical Standards – 28/11/18
The FCA has published a second consultation paper (CP) on a range of Handbook and BTS amendments which were not included in earlier consultation papers issued in October (see email dated 10 October). It seeks views on further amendments to the Handbook regarding the Temporary Permissions regime and its approach to non-Handbook guidance and forms that appear in the Handbook.
FCA publishes EU Withdrawal Impact Assessment – 29/11/18
The FCA has published an EU Withdrawal Impact Assessment following a request by the House of Commons Treasury Committee together with a covering letter from Andrew Bailey, the FCA Chief Executive.
ICO Publications
The Information Commissioner is calling for views on introducing a direct marketing code of practice, providing practical guidance and promoting good practice. New guidance about passwords and encryption under the GDPR has also been published.
FCA Publications
FLA Newsletters
Mortgages and Housing News
Fraud and Financial Crime Update
Vulnerability & Debt News
If you would like to receive these Newsletters on a regular basis, please contact Hanifa.Teladia@fla.org.uk
FLA meetings in December 2018
5 December – Legal Committee
5 December – VAT Group
6 December – Financial Crime Committee
10 December – Responsible Lending Roundtable (Full)
11 December – Litigation Committee
11 December – CMC Committee
13 December – CFD Management Committee
13 December – Secured Lending Group
17 December – General Insurance Group (GIG)
19 December – MFD Management Committee
FLA Events
FLA Christmas Drinks – 4 December 2018