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Five million savers’ pensions could be at risk: This week in regulation

15/08/19

The speed read

  • Up to five million savers’ pensions could be at risk from scammers
  • New research into the exchange-traded fund market amid FCA concerns
  • FCA announces phased implementation of Strong Customer Authentication rules

Up to five million savers’ pensions could be at risk from scammers

The FCA and The Pensions Regulator (TPR) have reacted to new research that shows 42% of pension savers, up to five million people, could be at risk from one of the six most common pension scam tactics.

These tactics include:

  • Pension cold calling
  • Free pension reviews
  • ‘Guaranteed’ high rates of return
  • Exotic investment types, e.g. biofuels and storage units
  • Time-limited offers
  • The offer of early access to cash.

In an attempt to raise greater consumer awareness of this issue, the regulators have released the latest stage of their ScamSmart campaign and are urging consumers to check who they are dealing with before taking any action about their pension.

 

New research into the exchange-traded fund market amid FCA concerns

The FCA has released new research into the exchange-traded fund (ETF) market as the regulator has concerns that the market’s rapid growth creates the risk of financial instability and low levels of investor protection.

The research found:

  • There is a high level of concentration in the ETF primary markets, giving rise to ‘liquidity mismatching’
  • The initial analysis of stress events shows that alternative liquidity providers do step in during times of market disruption
  • At this initial stage there are no further concerns about the financial stability of these markets.

The next stage of this research will further explore the link between the ETF markets and stability.

 

FCA announces phased implementation of Strong Customer Authentication rules

The FCA has announced plans to give payments and e-commerce firms more time to implement the Strong Customer Authentication (SCA) rules, designed to enhance the security of payments and minimise fraud.

Given the complexity of the requirements, the potentially significant impact on consumers and a general lack of preparedness across the industry, the European Banking authority (EBA) believes more time is needed to implement the SCA. As a result, the FCA has agreed an 18-month plan to implement the requirements.

No enforcement action will be taken against firms which don’t meet the requirements from the 14th September 2019, if they have taken the necessary steps to comply with the plan. At the end of the 18-month period, all firms should be fully compliant with SCA and have undertaken the necessary testing.

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