FCA and ICO publish joint update on GDPR
As you’ll all know by now, GDPR comes into play on the 25th May 2018, with the aim of improving the privacy and security of personal data and putting control back into the hands of individuals. The FCA urges firms to think how the regulations apply to their businesses and make sure they’re ready to comply. We are running a GDPR webinar, providing 5 steps to implementation success, on Wednesday 14th February which will help.
The FCA and ICO joint update clarifies that GDPR does not enforce rules that are incompatible with the FCA’s rules and that there are common themes within both regulatory regimes, such as treating customers fairly. The FCA also considers the need for compliance with GDPR under their rules i.e. the need to maintain robust systems and controls (SYSC).
Recognising that some details of GDPR are still to be ironed out, the FCA is working closely with the ICO to ensure consistent implementation within the wider regulatory landscape and to answer any queries raised by firms.
Remember, GDPR is a board level responsibility and you must have evidence to prove compliance. With only four months to go, you’ll have to be quick in order to comply on time.
FCA and TPR to set out their strategy for tackling key risks in pensions sector
Automatic enrolment and pensions freedoms have changed the regulatory landscape over the past five years. The FCA and the TPR want to make sure that their regulation provides consumers with the right level of protection. The FCA will do this through the establishment of committees and ongoing review work, whereas the TPR will focus on improving standards and governance of schemes and ensuring that employees have access to the pensions they’re entitled to.
The FCA and TPR are developing a strategy which will set out how the regulators will work together and with stakeholders over the next five to ten years. An initial part of this will involve engagement with stakeholders via a series of events in London, Manchester, Edinburgh and by webinar over the next few months.
FCA seeks input on competition in the personal pensions market
Following its intervention in the workplace pension market, the FCA is now turning its attention to personal pensions. The regulator is therefore looking for input from industry participants on whether competition in this market is working well for consumers and whether it needs to intervene in order to better protect consumers.
The FCA has released a discussion paper, in which it outlines its particular concerns about the personal pensions market and the potential parallels it sees with workplace pensions. Interested parties should provide feedback by 27th April. In essence, the FCA will be looking at:
- Product complexity and product performance;
- Factors influencing consumer motivation;
- Consumers’ ability to switch and barriers to identifying and choosing more competitive products;
- Fund choice and defaults;
- Charges and the impact on competition.
IDD to be delayed?
The European Commission has proposed to delay the application date of the Insurance Distribution Directive (IDD) until 1st October 2018 (as opposed to 23rd February 2018) and this is currently being considered by the European Parliament and European Council.
Despite this delay, the final rules which were published in near-final form on the 19th January, are unlikely to change.
Man found guilty of acting as an illegal money lender
A man, describing himself as a ‘lender of last resort’ has been found guilty of acting as an illegal money lender. Over a period of four years, the man entered into 147 credit agreements, lending out over £1m to new customers and collected on pre-existing agreements without authorisation to do so. These customers were often vulnerable and the man set up a complex agreement that effectively saw customers’ sell their homes for the value of the loan (often as little as £2000-£5000) without understanding or knowledge of what they were doing.
The future of the City in the face of Brexit
Andrew Bailey, Chief Executive of the FCA, this week delivered a speech on the future of the City in the face of Brexit.
Underpinning freedom of trade is the mutual recognition of regulatory standards which are in place to protect the public interest. Brexit has the potential to close market access and disconnect the EU from the benefits of the global markets, adversely impacting the UK and EU as a result.
If not mitigated, Brexit has the potential to impact financial stability in the following ways:
- A range of financial contracts between UK and EU counterparts could cease to be serviceable, impacting up to £26 trillion of derivative contracts and impacting individuals and businesses;
- EU and UK central counterparties (CCPs) may find they are in breach of regulation by providing clearing services in the other’s jurisdictions, requiring rapid and abrupt close-outs of positions;
- The UK and EU holding and sharing each other’s data could be in breach of law, impacting the data flows between businesses and between regulators.
In order to mitigate this happening and provide certainty to businesses, the FCA is working with the Government to ensure the same rules and laws will apply across the transitional period. Bailey also asserted that mutually agreed and enacted solutions to the above are required by the end of March, along with a defined transitional period, so that there is time for regulators to help firms. He believes that there is growing agreement across the EU on this approach.
The FCA has introduced a contingency plan that will enable firms to gain interim permissions in the event that they may be left without authorisation without warning, as well as safeguarding financial stability.
At the heart of a well-functioning financial services industry post-brexit is a commitment to continued open markets and mutual recognition of regulatory standards. It is in no one’s interests to even consider regulatory divergence and fragmentation of financial markets.
In Bailey’s view, the principles would be fairly simple and would be similar to the way in which we authorise branches of banks outside of the EEA – affinity with regulation in terms of outcomes, supervisory co-operation and information sharing – along with a dispute resolution arrangements.