FCA commences review of the financial advice market
On the 1st of May, the FCA announced a Call for Input which welcomes feedback on its approach to reviewing the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR). This will help the FCA assess whether these reviews have been successful and helped achieve wider objectives.
Looking ahead, the regulator will also be considering how advice and guidance services will develop with changing market trends – such as technology and intergenerational challenges.
The deadline for initial feedback from the Call for Input is the 3rd of June 2019.
Duty of care feedback statement outlines consumer protection initiatives
The FCA has published its feedback statement for its discussion paper on ‘duty of care’ (published in July 2018), in which it outlines its initial proposals for reviewing its Principles of Business and regulatory approach. The discussion paper set out to discover industry views on whether the current regulatory framework provides the right level of consumer protection and whether a formal Duty of Care should be imposed to address deficiencies.
The feedback includes options for change, such as:
- A review of the application of the regulatory framework i.e. Principles in authorisations, supervisory and enforcement functions; and
- Revised Principles to bring clarity to firms’ duties to consumers.
This will play a key role in its work on forming a view on the future of regulation – see the FCA’s Business Plan. Work doesn’t stop here though. The FCA is on a quest to obtain further views on specific options, with the next steps communicated in the autumn.
5% drop in complaints in H2 2018, says FCA
For the first time since the FCA changed the way in which firms report complaints, the number reported has dropped. The second half of 2018 saw a 5% decrease, falling from 4.13m to 3.91m.
Here are the key stats:
- 40% of complaints related to PPI, which continues to be most complained about product;
- PPI saw a decrease in complaints by 8%, possibly attributed to the new exclusion whereby firms did not have to report complaints where the complainants had not actually purchased PPI;
- Current account complaints decreased by 13%;
- Credit card complaints increased by 10%;
- The speed of complaint closures increased – 3% increase for complaints closed in 3 days and 3% increase for those closed within 8 weeks;
Read the full report here.
Delay on publication of final rules for CFD products
The FCA has stated it has pushed back the publication of final rules for CFD products and CFD-like options until the summer as it is still deliberating over the consultation feedback. In the meantime, ESMA’s temporary restrictions on the marketing, distribution or sale of CFDs to retail clients still apply.
The FCA says the final rules for CFDs, when published, will apply from the date that the ESMA’s restrictions expire, whereas rules for firms selling CFD-like options will need to comply within two months.
FCA promotes further success in promoting innovation and progresses GFIN pilot
As highlighted by the FCA’s Christopher Woolard in a recent speech, after taking a step back and looking into a number of factors, the FCA has decided that its Innovate programme is effective.
An evaluation report cited nearly 700 firms received support with innovation. Those going through the programme have been able to go to market up to 40% quicker than equivalent firms.
In his speech, Woolard also drew attention to the five-year growth of a fledgling FCA sandbox that is now well-established and works in collaboratively leading the Global Financial Innovation Network (GFIN).
Meanwhile, GFIN has reached a milestone in its cross-border testing pilot. From the 44 applications from 17 regulators, GFIN has decided to take eight firms to the next phase where testing plans will be developed, some including live transactions.
Many of the applications from firms were cryptoassets or RegTech related which is positive, but the regulator would welcome a diverse range of applicants representing the wider financial services sector.
Back at home, the FCA’s own regulatory sandbox saw 29 businesses accepted into cohort 5. These firms were selected from an application pool of 99 and will test and prove themselves in this environment. Check out the list of the firms here. The regulator also announced the successful applicants that will take part in its inaugural Green FinTech Challenge – find out more here.