29 million are not comfortable opening up about their money worries

Research issued by the Money and Pensions Service during its annual Talk Money Week reveals that 55% of UK adults are not comfortable talking about their money worries. This was the central finding of a survey of 5,225 people conducted by Opinium on behalf of MAPS, and when extrapolated across the entire adult population, it suggests that some 29 million people are uncomfortable in opening up about personal financial issues.

This is despite the survey also finding that the UK adult population in general has not inconsiderable financial concerns. 48% of respondents – equivalent to around 27 million people – said they had worried about money at least once a week in the month prior to being surveyed, while 16% said they worried about money every day. In the 18-24 age group, the proportion who said they were worried on at least a weekly basis was much higher, at 71%.

When asked to give an overall assessment of whether they were worried about their current financial situation, 35% of respondents said they were concerned. This rose to 45% amongst BAME groups.

60% said that Covid-19 had increased their financial worries, but only 11% of respondents said they had opened up about Covid-related money concerns to family or friends.

The most common reasons respondents gave for wishing to keep their financial concerns to themselves were:

  • Shame / embarrassment (18%)
  • Not wanting to burden others (18%)
  • Saying they weren’t brought up that way (15%)
  • Saying it would cause additional stress or anxiety if they did so (15%)
  • Thinking they should be more successful than they are (13%)

Amongst the 18-24 age group, the ‘shame/embarrassment’ factor was cited by 26%.

Sir Hector Sants, Chair of MAPS, said:

“This year has shone a spotlight on the fundamental links between physical, mental and financial wellbeing. Yet shame and embarrassment about our financial circumstances continues to be a deep-seated barrier keeping many people from openly discussing their concerns and fears about their money. A good start is for everyone to recognise this issue and ensure there are safe spaces for people to open up about their concerns.”

Sarah Porretta, Strategy and Insights Director at MAPS, said:

“The pandemic continues to make the world an uncertain place. It is clear that the impact on people’s financial wellbeing is acute, particularly for young adults and Black, Asian and Minority Ethnic (BAME) communities.

“We know that talking about money – and money worries in particular – can be hard and there are lots of reasons why people find it difficult to reach out and ask for help, and feelings of shame about money can be more common in certain communities. It’s essential to remember that you are not alone; many others are in the same boat or have experienced money worries in the past themselves. Speaking to someone, whether a family member, friend or professional, can help break the money-worry cycle, which can occur when people are concerned about having money conversations, often feeling worse for bottling up their money worries.”

Scott Robert are compliance consultants delivering solutions to regulated businesses.


Brexit and Data Protection – is your firm prepared?

At 11pm on the 31st December, the United Kingdom will see a substantial shift in the law of data protection.

With Brexit officially coming happening on the 31st December 2020 many firm’s have demonstrated the perplexity of what is in store for the UK at the end of the transition period. For us at Scott Robert, our clients have focused mainly on what happens with financial services who passport their activities to other countries within the European Economic Area, however, many firm’s haven’t been focusing on their data protection arrangements post Brexit.

At Scott Robert we recognise that many firm’s are forgetful to their data protection obligations, we have therefore decided to put together a quick brief below to ensure you are adequately prepared for data protection and Brexit.

What Happens?

On the 31st December, the UK officially leaves the European Union at the end of the transition period. Currently the data protection law is located within the General Data Protection Regulation 2016 (“GDPR”), which is EU law directly applicable to U.K entities, what confuses many firms is that the UK already has in place the Data Protection Act 2018, however, this doesn’t implement the data protection law, it just supplements the areas which it is admitted to do so under the GDPR.

What happens on the 31st December is that through the withdrawal statutory instruments, the GDPR will be directly copied over to UK law and be termed the UK GDPR, of course changes are going to occur with the powers (such as the Commission no longer has the power to make adequacy decisions, this will lay with a secretary of state).

So first things first, all firm’s should be affirmative to the following tick box exercise:

Tick Box Firm Question
  Our firm understands the term “personal data”.
  Our firm understands what type of “personal data” we hold on individuals, including our employees.
  Our firm understands the data protection “Principles”
  Our firm understands the lawful bases for processing.

  • Consent.
  • To perform a contract.
  • To perform a legal obligation.
  • To protect the vital interests.
  • For the performance of a public task.
  • For the purposes of pursuing a legitimate interest.
  Our firm understands the meaning of consent and what is genuine consent.
  Our firm understands that if we rely on legitimate interests as a lawful basis to process personal data we have to have legitimate impact assessments.
  Our firm understands what is “special category” data
  Our firm understands the different requirements which must be fulfilled in order to process special category
  Our firm understands how to correctly identify a data subject access request
  Our firm has processes in place to correctly investigate a data subject access request and respond accordingly
  Our firm has a privacy policy on its website.
  Our firm understands our overall responsibilities as controller.
  Our firm has records of our processing activity.
  Our firm has the correct data protection impact assessments in place.
  Our firm has adequate security for personal data.
  Our firm has documented due diligence on third-party processors.
  Our firm conducts regular audits of our data protection framework.

The above covers the most basic obligations on firm’s right now under the GDPR which will become directly enforceable by the UK GDPR.

The most important thing which firms must be reminded of is the need for documentation of all of the above, without the required documentation how can you demonstrate compliance with the above?

Scott Robert has assisted numerous firms with their data protection compliance, ensuring they have all required documentation to maximise protection of personal data but also ensuring the viability of the firm’s service. Remember, any breaches of the GDPR can amount to substantial fines, so act before you become one of the thousands of firms fined for being neglectful of their data protection obligations.

So what changes?

The biggest change on the 31st December for U.K firms is that we will no longer be a part of the European Economic Area, which means we can no longer freely transfer data to other European Economic Area countries.

The ICO have confirmed that after Brexit the UK will still be free to share data with countries in the EEA, however, what will be changed is EEA countries sending data to the UK, this is because the UK will be regarded as a “third country” as part of the EU GDPR regime. In simple terms, this means:

The EU Commission must make an adequacy decision on the UK data protection framework to determine whether the UK will be adequate, if the Commission makes this decision affirmatively then EEA firm’s can transfer personal data to the UK without the need for any other pre-requisite for transfer. However, if no adequacy decision is made then firms will be required to comply with:

  • Standard Contractual Clauses.
  • Binding Corporate Rules; or
  • Exemptions

Put simply, right now in the UK we do not know whether an adequacy decision will be made by the Commission on the UK, although it is likely this is not guaranteed. Therefore, firm’s must act now to pre-emptively ensure that they are prepared on the 31st December to make sure all data their receive from the EEA will be compliant with the UK GDPR. Firm’s should likely be using standard contractual clauses to ensure data is held safely and a risk assessment undertaken on the contract to ensure the firm is meeting the requirements of a level similar to the GDPR.

Without the above, the firm will likely be acting unlawfully when receiving data from the EEA after the transition period ends.

It is also important to note, that under the UK GDPR, existing rules still apply in relation to third-country transfers which means all transfers are restricted to third countries unless the UK secretary of state makes an adequacy decision on the country. Existing third-country decisions will remain applicable to the UK.

What to remember.

Firms should remember that existing data protection obligations apply (as above).

Firms should be prepared to audit their data protection framework to ensure that they are compliant.

Firms should be reminded that the above is only a summary of the UK GDPR changes and does not cover PECR.

If you are concerned about your data protection practices and whether you can tick all of the checkboxes above please get in touch with one of our team members today or contact your direct adviser.

Scott Robert.


Over 55s Vulnerable Making Financial Decisions

Large numbers of over 55s feel vulnerable when making financial decisions, but many say they welcome the support of an adviser 

Research by equity release lender More2Life has revealed that many older people feel uncomfortable making financial decisions. However, the study also shows that many over 55s very much welcome the support of a financial adviser.

Research agency Opinionmatters surveyed 1,400 homeowners aged 55 and over on behalf of the lender, and 30% of respondents said they felt “vulnerable” to some extent when making a financial decision. 32% of women and 28% of men said they felt vulnerable.

40% of those surveyed agreed that vulnerabilities increased with age.

When the homeowners were asked how they would react if their adviser offered them support, with the adviser having assumed that they were vulnerable before doing so, 74% of respondents said they would be comfortable with this. However, 8% went as far as to say that they would be upset that their adviser had assumed they were vulnerable when they were not.

Some of the 74% who said they were comfortable with being offered support also gave some caveats to their response, with 37% of this 74% saying they would question their adviser as to why they believed support was required, and 21% of the 74% saying that they would only welcome the adviser’s assistance if it didn’t slow down the application process.

The survey also sought the views of around 600 equity release advisers. 82% of the advisers who responded agreed with the FCA’s plans to introduce a duty of care for firms to protect the interests of vulnerable individuals. 81% called on the regulator to provide more resources to assist them in identifying vulnerable clients and in responding to their needs.

84% of the advisers said identifying vulnerable clients was one of their biggest priorities and 94% said it was very important to have an understanding of issues surrounding vulnerability. However, only 12% of adviser respondents believed it was easy to identify these clients.
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Those surveyed were equity release advisers, so it isn’t surprising that 52% said their clients were of “advanced age”. 42% said they had clients with significant financial worries, while 37% said that their clients had experienced life-changing events which had contributed to their vulnerability.

64% of the advisers reported that their clients were keen to have family members accompanying them to assist with the advice process. This represents a significant increase from the equivalent figure of 36% in the 2018 survey – it was 48% in 2019.

Dave Harris, CEO of More2Life, commented:

“Vulnerability is a tricky topic for advisers and lenders as while we are committed to supporting people who need additional help, clients may very well not identify themselves as being vulnerable. So the challenge becomes helping them make the right financial choices for both the short and the long term while at the same time encouraging them to realise they may be vulnerable and that this is entirely okay.

“Today’s research suggests that three-quarters of older homeowners would welcome support if they were vulnerable which should act as a reassurance to advisers as they have these conversations with their clients.  That said, there is still a disconnect between believing that vulnerable people need more support and being vulnerable themselves, so advisers are keen for more resources and tools to help with these tricky conversations.”

Scott Robert are expert compliance consultants delivering solutions to your regulated business.


FCA believes 4,000 smaller firms could be at risk of failing

The Financial Conduct Authority has admitted that around 4,000 mostly small and medium sized firms within financial services could be at risk of failure as a result of the pandemic.

The FCA says these 4,000 firms have “low levels of financial resilience” and that 1,200 of these firms could cause “a higher degree of harm” to the market were they to fail. Only around 800 of these 1,200 firms would be covered by the Financial Services Compensation Scheme were the worst to happen. The FCA made these admissions in an exchange of letters between its chief executive Nikhil Rathi and Treasury Select Committee chairman Mel Stride MP.

These estimates were made at the end of October, and the regulator hopes that the position has improved slightly since then and will continue to improve. October 31 saw the announcement of increased Government support, and the massive nationwide vaccination programme is about to commence.

In his letter, Mr Rathi writes:

“In response to the crisis, we are monitoring the effects of economic downturn on firms’ solvency through 1) existing regulatory reported data; 2) enhanced data purchased from a third-party provider, 3) in-depth analysis of liquidity for a large number of the most significant firms and 4) data collection on the impact of Covid-19 on cashflow and income from 23,000 firms through our financial resilience surveys.

“We have rapidly increased our available data. We have used this to provide more granular monitoring across the majority of 49,000 firms we prudentially regulate to give an early warning about firms’ financial resilience.

“Alongside assessments of financial resilience, we have considered which types of firms could potentially cause the greatest economic harm in failure.

“We have prioritised consumer harm through loss of client assets or segregated funds, failure to pay redress claims/Ombudsman award and lack of FSCS cover.

“We are also considering the potential loss of access to services for particularly vulnerable markets and are generally concerned about any threats to competition and the effective functioning of markets.”

The FCA has been speaking about the importance of financial resilience since the start of the health crisis. On March 26, it told firms they should be “taking appropriate steps to conserve capital, and to plan for how to meet potential demands on liquidity,” advice which certainly remains every bit as relevant today.

Unfortunately, the FCA cannot intervene to assist firms who may be struggling. Its focus remains on protecting the interests of consumers, such as the obligation for mortgage and credit providers to grant additional payment deferrals to borrowers. Where a firm does fail, the FCA will seek to protect the interests of the firm’s customers and investors as much as possible.

On September 24, at the regulator’s annual public meeting, the FCA’s then interim chief executive Christopher Woolard said bluntly:

“We expect to see a number of business failures”.

On November 12, Mr Rathi gave his first speech since taking the permanent CEO role, and said:

“The financial impact of the pandemic is being felt by the firms we regulate. Ultimately, we can’t intervene to stop firms from failing in the face of economic distress and sadly we do expect a significant number of regulated firms, particularly smaller firms, to fail in the months ahead.”


Importance of Affordability Checks

The Financial Conduct Authority has frequently spoken of the importance of consumer credit firms having robust procedures for assessing affordability and for fair treatment of customers in arrears. These are once again the main areas of focus in the Portfolio Letter sent by the FCA on December 2 to all firms in the Mainstream Consumer Credit Lenders portfolio.

The letter acknowledges that coronavirus has increased the operational and financial pressures faced by many lenders. The FCA says that, prior to the pandemic, it had already identified four principal ways in which the actions of credit firms could lead to harm for customers, but that Covid-19 has only increased the risk of unfavourable customer outcomes. These four scenarios are:

  • Inadequate affordability checks, leading to over-indebtedness
  • Firms not having clear, effective and appropriate policies and procedures for customers in arrears, resulting in poor outcomes for those in financial difficulties
  • Poor outcomes for credit card customers when their cards are inappropriately and expensively used for long-term borrowing
  • A potential lack of transparency in the pricing structures and features of products

The FCA says the customer outcomes it wishes to see include:

  • Customers are treated with forbearance and due consideration
  • Customers are provided with sustainable arrangements, which take into account their other debts and essential living costs and which give them a reasonable opportunity to repay their debt
  • Customers are not pressurised into repaying their debt within an unreasonably short timeframe
  • Customers are protected from escalating debt once they have entered into an affordable forbearance arrangement
  • Firms recognise vulnerability and respond to the particular needs of vulnerable customers. Firms have clear, effective and appropriate policies and procedures for dealing with customers in payment difficulties and for those who the firm understands or reasonably suspects to be vulnerable. Firms have adequately trained staff who can provide customers with the help they need
  • Customers are allowed time to consider their options and, if necessary, seek debt advice
  • Customers are referred to debt advice if this is appropriate

Specifically regarding affordability assessments, the FCA says that firms’ business models must be designed to deliver good customer outcomes. The regulator says it is concerned by firms whose business models appear to be based on over-ambitious lending growth targets; and those who emphasise to prospective applicants how quickly and/or easily they can approve their loan, perhaps by using automated tools, without the need for the applicant to provide detailed information regarding their income and outgoings.

Regarding customers in arrears, the letter says the FCA is concerned about the adequacy of firms’ monitoring arrangements where they have outsourced arrears management activities such as debt collection and/or debt administration.

The letter also advises firms to ensure they are fully aware of how Brexit and the end of the transition period on December 31 will affect them.


FCA publishes evaluation of the effect of RDR and FAMR

The Financial Conduct Authority has published an evaluation of the impact of two of its recent initiatives – the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).

RDR, where most of the requirements came into force in 2012, required investment and pension advisers to obtain a suitable Level 4 Diploma qualification. It banned advisers from receiving commission for investment and pension advice and imposed new disclosure rules.

FAMR, commissioned in 2015, sought to improve consumer access to financial advice.

The FCA says it has observed these positive developments:

  • 1 million UK adults (6% of the total) received professional financial advice in 2017, but this has since risen to 4.1 million (approximately 8%)
  • 56% of those who have received advice in the 12 months prior to the review said they were satisfied with that advice, up from 48% in 2017
  • Total adviser numbers have risen 4% between 2012 and 2019, from 35,000 to 36,400
  • More firms are developing automated advice models. Estimated assets under automated advice models rose by a factor of eight between 2016 and 2019, from £400 million to £3.2 billion. 19% of consumers say they are now aware of automated advice services, compared to just 10% in 2017. 32% of consumers with £20,000 or more in investible assets have indicated they would be prepared to take digital advice in the future

However, the regulator says the following challenges remain:

  • Many consumers are still holding large sums in cash and are not receiving advice that could enable them to make better investment decisions. 54% of UK adults with £10,000 or more of investible assets (around 8.4 million people) did not receive any formal support to help them make investment decisions over the last 12 months. Of those consumers with more than £10,000 of investible assets, 37% did not have any investments at all and were holding their assets entirely in cash, and a further 18% were holding more than 75% of their investible assets in cash
  • Of those consumers who hadn’t received professional financial advice in the last 12 months, 67% said it was because they didn’t think they needed any advice. Only 11% said they hadn’t sought advice because they had concerns over being able to afford it
  • There remains significant clustering around certain service types and price points
  • Greater innovation in services could help drive greater competition between firms across the market
  • More tailored guidance services and simpler advice services could help to attract more consumers receive the assistance they require

(The evaluation exercise was completed prior to the Covid-19 pandemic)

Sheldon Mills, Interim Executive Director of Strategy and Competition at the FCA, said:

“We want consumers to have access to high-quality advice and guidance at the right time in their lives, to give them the confidence to make better investment decisions.

“Our evaluation has found the advice and guidance market is moving in the right direction, but still has further to go. We will play our role to support the market to improve further, in the interest of more consumers. We will use the evidence base this evaluation has given us, along with the responses to our Call for Input on consumer investments, to shape our work to improve the market.”

Scott Robert are experts in FCA Authorisation and can help your company with regulatory advice.


Rent to Own Price Cap Reduces Costs

FCA says it believes that rent to own price cap has been effective in reducing prices

The Financial Conduct Authority has claimed that its price cap for rent-to-own products has delivered significant cost savings for consumers since it was first introduced in April 2019.

The FCA says that the average prices charged by the two largest firms in the sector have fallen by 19%. It also claims that the highest prices being charged in the market have fallen by 36% – prior to the cap some firms’ financing prices were 3.6 times the average retail price of the goods, but this has now fallen to 2.3 times average retail price. It says that these reductions are in line with what it expected to see when the cap was proposed.

The regulator adds it has seen no evidence of firms increasing other prices and charges to compensate for revenue lost as a result of the price cap.

The FCA’s statement concludes by saying:

“We continue to supervise high-cost credit firms carefully and the consumer credit market remains a key priority for the FCA.”

The price cap requires that:

  • Total credit charges do not exceed the cost of the product
  • The cost of products is ‘benchmarked’ against the prices charged by three other retailers. Only one of the three can be a catalogue credit retailer, and the other two must be mainstream retailers. Firms are unable to charge more than the median average of the prices offered by these retailers (if one of the three was a catalogue credit firm), or the highest of the three prices (if none of the three was a catalogue credit firm)
  • Customers are not charged higher prices for insurance premiums, or for going into arrears, purely with the aim of recouping reductions in revenue caused by the price cap. If a firm wants to raise its charges, it must prove that this is a legitimate business need

Rent-to-own products are included in the programme of assistance announced by the FCA for borrowers who have been affected by coronavirus. Borrowers have until March 31 to apply for payment breaks – they can receive six months’ worth of payment deferrals, and anyone who already has a three-month payment deferral can apply for an additional three-month holiday. Deferrals can last until July 31, provided these payment breaks cover consecutive payments and cover no more than six payments in total.

Areas of concern the FCA has identified in the rent-to-own market in the past include:

  • Firms failing to carry out adequate affordability checks
  • Some customers being charged late fees for arrears on their insurance contracts, even though this was contrary to the firm’s own policy
  • Some customers being required to pay for insurance before receiving any goods
  • Other customers not receiving a refund of their first payment where their agreement with the firm was cancelled before the goods were delivered


Scott Robert are compliance consultants delivering solutions to regulated businesses.


Senior Managers and Certification Regime “SM&CR”

The onset of the Senior Managers and Certification Regime “SM&CR” was one of the largest regulatory changes for solo regulated firms the financial services sector has seen for some time. On December 9th 2019, the first part of the SM&CR took effect, with firms being required to implement the necessary changes. Fast forward to December 2020, firm’s should have implemented the second stage of the SM&CR, however, COVID19 has significantly effected many firms ability to do this. The FCA recognised this and has extended the deadline to implement phase two of the SM&CR up to the 31st March 2021.

What do firm’s need to do in order to implement phase two of the SM&CR?

Conduct rules training

Firms subject to the FCA’s SM&CR are required to ensure they provide all their employees with training on the FCA’s “Conduct Rules” on at least an annual basis.  With the first anniversary of the implementation of the regime for FCA solo-regulated firms now upon us, it’s likely that many firms will need to carry out this annual training in order to ensure their employees understand what the Conduct Rules mean for them and to enable the firm to meet this important regulatory obligation.

One important thing that every firm must be mindful of is that if a firm does not provide training on the Conduct Rules to its employees then the firm itself can be held liable if there are mass breaches of the Conduct Rules – act now to avoid being culpable for something you didn’t even know you could be culpable for.

Ensuring training is meaningful, relevant and effective can be a challenging at the best of times, and with the current working environment, with many people still working remotely is likely to make the task even more difficult than normal.

Scott Robert can help.  We have considerable experience of delivering training sessions to employees within regulated financial services businesses covering a wide range of topics, including Conduct Rules. Our sessions can be delivered remotely via a Zoom meeting or through “Teams”, with the content both shared on screen during the session and made available to attendees after the session.  Content can be tailored so as to make it relevant for your business, with examples of good and poor conduct that are specific to the types of products and services you provide, and our sessions are always structured and delivered in such a way as to encourage engagement and questions from attendees.

For more information, or to arrange a training session for your employees, please contact us on 0161 914 5757.

Wider SMCR topics

Although the implementation of the SM&CR happened for FCA solo-regulated firms was nearly a year ago, firms subject to the regime will be aware that there are further deadlines approaching in respect of the certification of employees and the reporting of information to the FCA for the new “directory”, and that the regime imposes ongoing “maintenance” obligations on firms, including:

  • ensuring they carry out periodic checks of fitness and propriety for Senior Managers and that their “Statements of Responsibility” are accurate and up to date;
  • reviewing the apportionment of responsibilities amongst Senior Managers, including both business responsibilities and “prescribed responsibilities”; and
  • providing annual conduct rules training for all employees other than “ancillary staff”.

With the FCA likely to be checking firms’ compliance with the new requirements, and with an increasing regulatory focus on conduct and standards of behaviour, there is no room for complacency and firms need to ensure they have taken the necessary steps to comply with the obligations.

Scott Robert can help.  Our experienced team of consultants can provide support by:


  • reviewing existing governance and Senior Manager arrangements and benchmarking against regulatory requirements and industry best practice
  • assisting in the design and implementation of appropriate and compliance policies and processes around the certification of employees and reviewing existing policies around fitness and propriety
  • delivering conduct rules (and other) training to employees, ensuring this is relevant to your business.

For more information and to find out how Scott Robert can help your business to meet its regulatory obligations, contact us on

Quick Check

Scott Robert has provided a quick check below to see if you are ready for phase two implementation:

  • Have you trained your staff on the Conduct Rules?
  • Have you certified your relevant staff for fitness and propriety?
  • Have your SMF approved senior managers been assessed for fitness and propriety?
  • Have you reviewed your SMF approved senior managers’ statement of responsibility?
  • Have you submitted your Directory information to the FCA?

If you haven’t done any of the above, and need the assistance of Scott Robert Compliance, please don’t hesitate to get in touch.


Last Weeks of the Brexit Transition Period

FCA highlights to firms there is only one month to the end of the Brexit transition period and explains the actions to be taken by firms

We are now into the final month of the Brexit transition period. December 2020 will be the last time that UK firms will be able to trade with their EU counterparts on the same terms that existed when the UK was a member of the Union.

At the time of writing, it was still unclear whether the two sides would strike a trade deal, or whether the UK would exit the transition period on ‘no deal’ / World Trade Organisation terms.

However, regardless of the outcome of these final negotiations, the UK financial services industry must be prepared for significant changes, as any trade deal will not provide arrangements similar to the passporting and equivalence regimes that have been in force in the financial sector for many years now.

The Financial Conduct Authority’s statement, issued on December 1, says:

“When the transition period ends at 11pm on December 31, firms will need to be prepared for a number of changes to the regulatory environment in which they operate. EU laws will no longer apply and passporting will end.

“If a firm currently relies on a passport to provide services to or from the UK, and proposes to cease those services at the end of the transition period, the FCA expects them to ensure the right outcomes for their customers, and provide timely communications to enable them to make appropriate decisions.”

Nausicaa Delfas, Executive Director of International at the FCA, said:

“With just a month to go until the end of the transition period, firms need to make sure they are prepared for the end of passporting, and for the new financial services landscape after the end of the transition period.

“To help minimise disruption, we have onshored EU legislation and established temporary regimes to allow non-UK firms and funds to operate in the UK after 31 December 2020.

“We remain committed to open markets, international co-operation and high international standards of regulation.”

The FCA has announced it will make use of the Temporary Transitional Power (TTP), which will hopefully make life easier for many firms over the next 15 months. The TTP will apply from the end of the transition period until March 31 2022. This means firms do not generally need to make preparations for imminent changes to regulatory obligations. However, the TTP will not apply in a number of areas, and here firms should expect their regulatory obligations to change from the start of next year. These include:

  • Transaction reporting
  • Rules relating to handling of client assets
  • Use of credit ratings for regulatory purposes
  • Payment services
  • Mortgage lending secured on property in the European Economic Area

The FCA’s Temporary Permissions Regime (TPR) allows an EU firm to continue operating in the UK within the scope of its current permissions for a limited period after the end of the transition period. While the firm operates under the TPR, it can then arrange its application for full authorisation from the FCA to operate in the UK in the longer term. The TPR covers both a firm’s pre-existing business and any new business activities it may enter into during the TPR period.

UK firms wishing to operate in the EU from 2021 onwards need to investigate whether other national regulators have their own arrangements of a similar nature to the TPR.


Mortgage approvals at highest levels since 2007

The Bank of England’s monthly money and credit statistics report shows that the number of mortgages approved for UK house purchases in October 2020 was 97,400, which is the highest monthly figure since September 2007.

The total number represents a rise of 6% from the 92,100 approvals reported in September. Approvals have also risen more than tenfold since the low point of 9,400 in May 2020 at the peak of the Covid-19 first wave, but approvals are also 33% higher than in February 2020, which was before the effects of the pandemic began to be felt.

Approvals for re-mortgages with new lenders remain below the levels seen prior to the pandemic. The total number of re-mortgage approvals in October was 9,400, which was similar to September’s figure, and this figure is around 40% lower than the volumes of re-lending seen in February 2020.

Net mortgage borrowing for October was £4.3 billion, which was actually lower than September’s figure of £4.9 billion. The lowest monthly figure seen here this year was £200 million, which occurred in April, and net monthly borrowing has now recovered to pre-Covid levels when you consider that average net monthly borrowing in the six months to February 2020 was £3.9 billion.

Effective interest rates on new mortgages taken out in October were 1.78%, an increase of 0.04% from the previous month. These rates are still slightly below the 1.85% seen in January of this year. Effective interest rates on all mortgages currently stand at 2.12%, and this figure is little changed since September.

The data also shows that the consumer credit market remains weak, with many consumers continuing to prioritise paying down debt – total net repayments on consumer credit debts were £600 million in October, including net repayments of £400 million on credit cards. UK households have repaid £15.6 billion of debt since March of this year.

The annual growth rate for the credit market is now minus 5.6%, which is the lowest recorded figure since records for this started to be kept in 1994.

Effective rates on new personal loans averaged 5.15%, which is an increase of 37 basis points when compared to September but is still somewhat lower than the 7% figure reported in the early months of the year.

Aneesh Varma, founder and chief executive at Aire, which provides credit assessment services, commented:

“Levels of consumer borrowing on credit cards have fallen by almost a fifth since before the pandemic. Lenders might reasonably expect these levels to tick up again during November and December as people put Christmas on credit.

“The fundamental challenge for lenders is that the impact of Covid-19 is not equal. Some people with spotless credit histories and healthy savings going into the pandemic are now defaulting on their credit commitments through no fault of their own, while others have more disposable income now.”

Scott Robert assist businesses in all areas of FCA Regulation from attaining FCA Authorisation to SMCR assistance.

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