15Jul

FSCS publishes guide for pension savers affected by Covid

With coronavirus having caused a sharp drop in share prices, particularly in the period between late February and late March 2020, seven organisations have collaborated to produce a guide for pension savers who may be worried about their pension pot. These organisations are:

  • Financial Conduct Authority
  • Financial Ombudsman Service
  • Financial Services Compensation Scheme
  • Money and Pensions Service
  • The Pensions Regulator
  • Pension Protection Fund
  • The Pensions Ombudsman

Introducing the guide, Pensions Minister Guy Opperman MP said:

“I would urge anyone considering making changes to their pension to think carefully and to avoid making rash decisions.”

The nation’s financial advisers could certainly have a role to play here in re-assuring their clients. No-one with any form of equity-based investment will have been able to escape the stock market crash that developed as the pandemic took hold, but share-based investments have always delivered the best long-term returns. As of early July, the FTSE 100 had partially recovered, with the rise since the end of March comprising more than 50% of the earlier Covid-related decline.

For those who were close to their intended retirement date though, there can be no denying that coronavirus has had a significant financial impact, and many are now facing the choice of accepting a lower retirement income or delaying their retirement.

The guide also warns consumers about the threat of scams, and the authorities are concerned that the present uncertain situation could lead to more people being persuaded to either cash in their pension or accept an offer to transfer it elsewhere to somewhere where the promised returns are just too good to be true. The FCA warns consumers that a cold call offering a pension review from a firm that an individual has not dealt with previously is highly likely to be a scam. It also advises consumers that they can check if a firm is legitimate by searching the Financial Services Register, or by phoning the FCA’s helpline. Even if a firm shares the same name as one on the Register, this is not itself a guarantee of authenticity, as there is a growing problem with ‘clone firms’; so the FCA says consumers should ensure they use the contact details given for the firm on the Register, rather than any different details that the caller might provide.

In their section of the guide, TPR says that the average amount lost in a pension scam is £82,000 and that some have lost their entire life savings.

TPR also say that, for the foreseeable future, anyone who is looking to transfer their benefits out of a defined benefit pension scheme will be sent a new warning letter – signed by TPR, the FCA and MAPS. It says transferring out of a DB pension is unlikely to be in the individual’s long-term interest.

For the millions of employees who have been furloughed, they should continue to contribute to their workplace pension scheme, if at all possible. If they do so, then employer contributions will still be made to the pension scheme, except it will now be the Government that does this, via the Coronavirus Job Retention Scheme. The government will pay the minimum 3% employer contribution based on the furloughed salary, which is capped at £2,500 a month.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

10Jul

FCA announces plans to move to RegData reporting system

The Financial Conduct Authority has urged firms to check the accuracy of their information in the existing Gabriel reporting system, ahead of the forthcoming change to the new RegData reporting system. This is the first occasion on which the regulator has announced that ‘RegData’ is the name of the new system that authorised firms will use to report data to the FCA.

Firms will not be able to access the new RegData system until their information has been transferred across from Gabriel. The FCA will email each firm’s principal user of Gabriel and each of the firm’s associated users three weeks before their transfer date. Reminder emails will then be issued five days and one day prior to the transfer. Where a compliance consultant is shown as having an association with a firm’s Gabriel account, the consultant will also receive these emails.

Until their transfer date, firms need to continue to use Gabriel in the usual way.

If they have not already done so, firms also need to log into Gabriel and complete the RegData registration process ahead of their transfer date. Firms will require the same login credentials as they use to log in to Connect – anyone who isn’t currently a Connect user will be able to set up a Connect account through this registration process. When completing the RegData registration process, firms should have to hand their Connect username, password and six-digit passcode.

Ahead of the transfer, firms also need to check the following:

  • All of the contact details in Gabriel are up to date
  • They have nominated the correct principal user and associated users in Gabriel
  • There is accurate information in Gabriel about all users
  • All non-active users still shown in Gabriel, such as those who have left the firm, have been disabled

Firms will be able to view previous Gabriel submissions via RegData.

The FCA recommends firms have the following IT resources to get the best out of RegData:

  • Adobe Acrobat Reader 7.0 or above (this is available for free download)
  • Google Chrome
  • A screen resolution of 1028 x 960 pixels

The move to the RegData system is part of the FCA’s wider Data Strategy. The FCA is aiming to deliver some real changes in the way it collects data, which could lead to some significant changes in the way it regulates firms. Some media reports suggested that this need for a change in its vision was one of the reasons why Nikhil Rathi was preferred to Christopher Woolard when recruiting the regulator’s new permanent CEO. The FCA is expected to regulate a very large number of firms, without an increase in its resources, so it now needs to examine ways in which it can ‘work smarter’. 

The FCA says it will take the following steps:

  • Investment in new technology
  • Greater use of data from external sources
  • Investment in new working practices
  • Setting up data science units in certain areas of the organisation
  • Migrating to cloud-based IT infrastructure
  • Reviewing historical data and how these indicate consumer harms
  • Deciding whether current and recent data mean that it needs to intervene in a particular sector
  • Deciding whether current and recent data indicates that financial crime has occurred
  • Greater use of predictive analytics, especially with regard to identifying trends amongst firms

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article

10Jul

FCA announces new protections for motor finance and high cost credit borrowers affected by Covid

With the financial effects of coronavirus on UK consumers showing no sign of ending, it is no surprise that the Financial Conduct Authority has instructed lenders to provide additional forbearance to customers with high-cost short-term credit (HCSTC), motor finance, buy-now-pay-later (BNPL), rent-to-own (RTO) and pawnbroking arrangements.

Numbers of daily cases and deaths may be declining slowly in the UK, and society may gradually be inching back towards normal, but many people have lost their jobs, been furloughed on reduced earnings, seen their self-employed earnings reduce etc. The hospitality sector may have been permitted to re-open, but not every outlet has re-opened, so job security for those employed in this sector is very limited. The entertainment sector may remain closed for many months to come.

For customers who have motor finance, pawnbroking, HCSTC, BNPL or RTO agreement and are yet to request a payment freeze, the period in which they can apply for one will be extended until October 31 2020.

For customers who have already been granted a pay freeze for one of these products, firms should make contact with them at the end of their payment freeze period to ascertain what their financial situation is at that time.

The FCA’s first point is very clear – if the customer is in a position to resume repayments, then they should do so, as otherwise significant arrears could accumulate on the account.

If a customer needs additional support, the FCA says that firms may need to provide additional forbearance as follows:

  • For motor finance, BNPL or RTO agreement – either a further three-month payment freeze should be agreed if the customer is unable to afford to pay anything, or a reduced payment arrangement should be set up at a level they can afford
  • For BNPL customers – the promotional period of the loan could be extended, where applicable
  • For a pawnbroking agreement – if the agreement is still in the redemption period, that period could be extended by another three months. If the redemption period has ended, the firm could agree not to sell the item for a further three months
  • For HCSTC – if a customer has already had a one-month payment freeze, the new FCA rules do not dictate that another one needs to be offered if the customer remains in financial difficulty. However, the FCA says “firms should be providing a range of support – including formal forbearance – in accordance with the FCA Handbook”

The ban on re-possessing any goods provided as security under any of these arrangements continues until October 31 2020.

Firms are responsible for ensuring any forbearance they provide to borrowers affected by Covid-19 does not have an impact on their credit files.

Christopher Woolard, Interim Chief Executive at the FCA, said:

“It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need. For those who have already taken a pay freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article

09Jul

MAPS delivers its assessment of the impact of Covid on financial wellbeing

One of the buzzwords used by the Money and Pensions Service is the ‘financial wellbeing’ of the nation, something that is of course rather strained at the present time.

MAPS comments that more than one-fifth (22%) of UK adults are struggling to pay their bills, including essential bills. More people are worried what the future holds – will they keep their jobs for example? This is inevitably having an impact on larger spending decisions.

The latest MAPS Financial Wellbeing report for June 2020 is not a single new survey, but a report that collects relevant data from various other sources.

In the Opinions and Lifestyle Survey, conducted by the Office for National Statistics, almost one- quarter (23%) said their household finances had been impacted in some way by Coronavirus. Other ONS work found 40% of adults reporting that the health emergency had resulted in some form of impact on their work situation, with 22% of those whose work situation had been affected saying they had been furloughed and 18% saying their working hours had been reduced. The ONS says 27% of the overall UK workforce have now been placed on furlough.

Amongst the lowest 10% of UK income earners, as many as one-third work in sectors that were partially or completely closed during the lockdown. For the highest 10% of earners, only 5% work in a business area that was forced to shut, as reported by the Institute for Fiscal Studies.

Only 13% of workers in the C2DE socio-economic groups were able to switch to home working with no loss of income when the crisis began.

YouGov report that one in nine (11%) of households are in serious financial difficulty, while another one in six (17%) say that they are struggling to make ends meet.

One in five (21%) of households are reported to have used their savings to pay their bills since the Covid-related financial pressures commenced, but for many, this is not an option. Covid-19 has exacerbated the already parlous state of the nation’s household finances, where 11.5 million UK adults (22% of the total) have less than £100 in savings. Almost two-thirds of people (63%) say they are saving less since coronavirus hit the UK.

In the absence of any significant savings, many will need to resort to credit in the current emergency situation. Ipsos Mori polling shows that:

  • 12% have used an overdraft and a further 11% are considering this
  • 11% have borrowed more than usual on a credit card, and 9% are considering doing this
  • 9% have sought loans from family/friends, with 8% considering this option
  • 5% have accessed a new credit card and 7% are considering doing so
  • 6% have requested mortgage payments be temporarily stopped, with another 9% considering a request of this nature
  • 4% have obtained a personal loan from a bank, with 8% considering this

Standard Life Foundation data shows that, in a four-week period at the height of lockdown in April, 19% of households in the UK used a credit card, overdraft or other borrowings to buy food and other essentials. This rises to 64% of those in the ‘serious financial difficulty’ segment.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

08Jul

FCA fines banks over AML and arrears failings

The middle period of June saw the Financial Conduct Authority impose two significant fines on two different banks.

Firstly, a large retail banking group was fined £64,046,800 for failing to treat customers in arrears fairly. As a result of its failings, the group has also been forced to pay around £300 million in redress to around 526,000 disadvantaged customers.

The failings persisted for an extended period between April 2011 and December 2015. Throughout this period, call handlers at the banking group consistently failed to gather adequate information to assess customers’ circumstances and their ability to afford certain levels of payment. The FCA was also concerned that often inexperienced call handlers were signing off payment arrangements without requiring sign off from supervisors.

A skilled person appointed by the FCA to review the banking group’s mortgage arrears handling processes looked at a sample of 100 customer files and identified that there was unfair treatment in 38% of them.

The banking group also failed to maintain adequate records, and, in many cases, its staff could not correctly recognise customer complaints and respond to these appropriately.

Mark Steward, the FCA’s executive director of enforcement and market oversight, said:

“Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations.

“By not sufficiently understanding their customers’ circumstances the banks risked treating unfairly more than a quarter of a million customers in mortgage arrears.”

A spokesperson for the banking group said:

“We have since taken significant steps to enhance how we support mortgage customers experiencing financial difficulty, including investing in colleague training and procedures.”

Later in the month, the London Branch of a retail bank active in continental Europe was fined £37,805,400 for having inadequate anti-money laundering systems and controls. Again, the failings persisted for a long period, in this case between October 2012 and September 2017.

The FCA says it made the bank aware of its concerns on three occasions during this period, but that the bank failed to take appropriate action. About poor AML and arrears handling.

As a result, by March 1 2017, the due diligence checks on 1,772 clients were overdue, but many of these clients were still able to continue to do business with the bank’s London branch. The bank’s automated system that it used to flag potential money-laundering was missing some 40 high-risk countries and 1,100 high-risk clients.

The FCA enforcement investigation certainly prompted the bank to take action in one sense – in mid-2016, its Financial Crime Team in Compliance consisted of just three full-time employees, but two years later, staffing levels in this business area had risen to 42!

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

06Jul

FCA appoints Stock Exchange boss as CEO

Nikhil Rathi has been announced as the new permanent chief executive of the Financial Conduct Authority, in succession to Andrew Bailey, who left the regulator in March to become Governor of the Bank of England. Mr Rathi is currently the CEO of London Stock Exchange plc.

Mr Rathi is expected to take up his post at the FCA sometime in the autumn, with Christopher Woolard continuing as interim CEO until then, before he is then expected to leave the FCA. In seven years at the FCA in senior roles, such as director of strategy and competition, Mr Woolard became the regulator’s self-styled ‘consumer champion’, but media reports suggested Chancellor Rishi Sunak MP was looking for a different skillset from the next FCA boss. It has been suggested that Mr Rathi has been preferred to Mr Woolard, reported to have been his principal rival for the permanent position, for two main reasons:

  • The Government was looking for someone who could spearhead genuine change at the FCA, as the regulator seeks to make better use of data to change the way it regulates firms
  • A candidate who was better placed to lead cooperation with international regulators in the post-Brexit world was preferred

At 40 years of age, Mr Rathi becomes the FCA’s youngest CEO and its first from a BAME background.

He has experience of the workings of the FCA having served on its Practitioner Panel and chaired its Markets Practitioner Panel. He has also worked as Director of International Development at the Stock Exchange; Director, Financial Services Group at HM Treasury; head of the Treasury’s financial stability unit during the 2008 financial crisis; and as private secretary to prime ministers Tony Blair and Gordon Brown.

Mr Rathi will not receive any bonuses or benefits in the FCA role other than his basic salary and his pension.

Mr Rathi becomes CEO at a critical time, with the economy in dire straits in the midst of the Covid-19 slump. The exact nature of the way UK firms will trade with their European counterparts in the future remains very uncertain, and there has been much criticism of late of the apparent limits of FCA regulation, and the issues on which it has chosen not to intervene, with prominent news stories surrounding a min-bond firm and a well-known fund manager.

Mr Rathi said:

“I am honoured to be appointed Chief Executive of the Financial Conduct Authority. I look forward to building on the strong legacy of Andrew Bailey and the exceptional leadership of Christopher Woolard and the FCA Executive team during the crisis. FCA colleagues can be very proud of their achievements in supporting consumers and the economy in all parts of the UK in recent months.

“In the years ahead, we will create together an even more diverse organisation, /supporting the recovery with a special focus on vulnerable consumers, embracing new technology, playing our part in tackling climate change, enforcing high standards and ensuring the UK is a thought leader in international regulatory discussions.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article

30Jun

FCA announces new measures to protect borrowers affected by Covid

The Financial Conduct Authority has asked providers of credit cards, store cards, catalogue credit, overdrafts and personal loans to provide additional assistance to customers whose ability to make repayments has been affected by the coronavirus pandemic.

The ongoing health emergency has led to an improvement in their financial situation for many – perhaps their incomes have remained the same while they work from home, while their expenditure in areas such as travel and social has fallen significantly.

On the other hand, many other people have seen their financial situation deteriorate. They may have already been laid off or seen their incomes reduced while on furlough, or they may be newly self-employed and unable to access the Self-Employed Income Support Scheme to compensate for lost earnings. Others may be expecting imminent redundancy, perhaps because the Government has still not explicitly confirmed when their business sector can re-open.

Anyone adversely affected by coronavirus now has until October 31 2020 to request either a £500 interest-free overdraft or a three-month payment freeze.

For customers who have already received forbearance from their credit provider, the FCA says that they should resume repayments if they are able to do so, but that many others will require additional assistance.

When customers come to the end of a previously agreed payment freeze period, firms should contact their customers to find out if they can resume payments, and if so, agree on a plan on how the missed payments could be repaid. If the customer is still unable to make any form of repayment, they should be offered a further payment deferral. If they are able to make reduced payments, the firm must ensure that they only repay what they can afford.

For customers who already have an arranged overdraft, they can request up to £500 interest-free for a further three months. If a customer requires an overdraft of greater than £500, providers should also consider providing further support in the form of lower interest rates on the additional borrowing.

As with previous FCA interventions in this area, any forbearance granted to a customer affected by Covid-19 must not have a negative impact on their credit file, and firms are responsible for ensuring that this does not occur.

Firms will also need to consider whether it is appropriate to refer customers to providers of free debt advice and other money guidance services.

Christopher Woolard, Interim Chief Executive at the FCA, said:

“We have been working closely with other authorities, lenders and debt charities to support consumers in the current emergency. The proposals we’ve announced today would provide an expected minimum level of financial support for consumers who remain in, or enter, temporary financial difficulty due to coronavirus. Where consumers can afford to make payments, it is in their best long-term interest to do so, but for those who need help, it will be there.”

The FCA will announce details of additional support for motor finance, high-cost short-term credit, rent-to-own, pawnbroking and buy-now-pay-later customers in the near future.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

25Jun

FCA chief discusses emergency regulation and learning from the coronavirus crisis in the regulator’s latest podcast

For interim chief executive Christopher Woolard, it’s been something of a baptism of fire. Andrew Bailey has departed to become the new Governor of the Bank of England, leaving Mr Woolard to take over the Financial Conduct Authority’s top job just before lockdown came into effect.

In the latest FCA podcast, Mr Woolard focuses on changes to the regulatory environment caused by Covid-19, and how the FCA and firms might learn from the unprecedented and unexpected changes that have taken place.

One of the FCA chief’s key messages is that firms must ensure they continue to provide high-quality customer service. This overriding requirement applies even though some staff may be absent from work, while others have been instructed to work from home.

Mr Woolard said that the steps the FCA had taken to respond to the crisis generally fell into one of three categories:

  • Measures to ensure support is provided to customers, such as interest-free overdrafts and payment freezes on loan repayments
  • Interventions to ensure the financial markets continue to operate effectively
  • Attempts to obtain judicial rulings on Business Interruption Insurance policies, and to what extent these provide cover for firms during a pandemic

Mr Woolard revealed that 1.7 million people have applied for a mortgage payment holiday since the new FCA measures were announced and that some banks and building societies have received requests from one in five of their mortgage customers. He estimates that 40% of these 1.7 million people are still experiencing financial difficulty as a result of coronavirus.

He added that customers should resume repayments, at some level, where they were able to do so, but also recognised that some people were experiencing real hardship, especially where their finances were already in a poor state prior to the pandemic.

Turning to the changes at the FCA caused by Covid-19, Mr Woolard said most of his staff had been working at home for the last 10 weeks, and that the FCA had postponed around two-thirds of the work it was planning to do. He stressed, however, that supervision and enforcement activities continue to be carried out.

The FCA chief highlighted that coronavirus may have made some consumers more susceptible to scams. For example, if an individual sees the value of their pension pot fall dramatically as share prices fall, they may be more willing to accept a tempting offer of switching it for supposed higher returns.

In the final section of the podcast, Mr Woolard explained some of the changes he wanted to see at the FCA. Many of these relate in some way to technological advances:

  • Understanding changes in firms’ business models and how these could both benefits customers and give rise to additional risks
  • How the regulator can use ‘Big Data’ to more effectively supervise firms (Lexico.com defines Big Data as “extremely large data sets that may be analysed computationally to reveal patterns, trends, and associations, especially relating to human behaviour and interactions”)
  • Reviewing the data the FCA collects from firms via regulatory returns and how this might need to change

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article

 

24Jun

FCA reveals concerns over equity release advice standards

Equity release is something of a growing market and many older people are attracted by the idea of releasing equity from their home to give them a substantial sum of money, whilst also not being required to make any repayments.

However, given the numbers of people wanting to take out this form of mortgage, the Financial Conduct Authority has been monitoring the advice standards of firms active in this area. The regulator says it has five principal areas of concern:

  • Firms’ cases files not evidencing that equity release is suitable for the customer, for example, traditional mortgages may be more suitable in some cases
  • Firms not doing more to challenge customers over what may be inadvisable reasons to release equity. Consumers may contact advisers assuming that a lifetime mortgage is a right solution for them, but advisers must still ensure that this really is the case
  • Firms failing to take into account all appropriate customer circumstances when giving advice
  • Firms failing to fully explain to customers the costs of compounding interest over a long period of time. This means that equity release can be an expensive way to meet a short-term borrowing need. It also means that customers who have the means to pay a fee upfront should do so, with the FCA commenting on one case where the fee effectively increased by a factor of 25 after the interest on the fee accumulated over a long period
  • Firms not making it clear just how significant the costs of exiting an equity release contract can be. Some customers may seek to do this if their financial circumstances change at a later date, such as if they wished to downsize to a new property

The FCA notes that older customers are often also vulnerable customers, and so it is vital that firms treat equity release customers fairly. An equity release contract is a lifetime product, so any advice firms give will have an impact on the customer’s finances throughout the rest of their life.

In certain circumstances, equity release can be appropriate as a method of consolidating debts. However, where customers have surplus income that they could use to repay their debts, this may be preferable to consolidating via an equity release plan where a significant amount of interest might accumulate prior to the end of the term. The FCA says that too many firms are assuming consolidation is always an appropriate course of action.

The FCA’s Executive Director of Supervision, Retail and Authorisations, Jonathan Davidson, said:

“Deciding to enter into a lifetime mortgage is a big decision with a big financial impact for consumers.  In many instances it makes sense but whether it does or not depends on personal circumstances and how they might change.

“It is therefore critical that advice offered to consumers looking at lifetime mortgages is suitable for their personal circumstances.  It is clear from our review that advice being offered to such consumers, including some vulnerable consumers, is still not up to scratch.

“All firms offering these products should read our review and take action to make sure consumers are receiving advice tailored to their personal circumstances.

“We’ve continued to engage with firms where we had concerns and, as part of our ongoing supervision of Mortgage Intermediaries, we will be carrying out more detailed follow-up work into the suitability of advice in the lifetime mortgage market.

“If in doubt as to whether a lifetime mortgage makes sense for you as a consumer, you should explore your personal circumstance fully with your advisers or with independent sources such as the Money and Pensions Service.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

24Jun

FCA gives CPD leeway to advisers and other employees

The working arrangements of many firms have altered due to the coronavirus pandemic. The Financial Conduct Authority has stressed that, during the period of disruption, firms still have an obligation to ensure relevant individuals remain competent to carry out their duties.

However, the FCA has acknowledged that it may be more difficult for employees to complete Continuing Professional Development (CPD) during the health crisis. Face-to-face seminars and training sessions have, of course, all but ceased entirely.

Where possible, employees who need to carry out CPD should examine what development activities are still available from the likes of the Accredited Bodies and professional qualifications providers. For example, many online training courses and other resources are still available.

The FCA also stresses that employees who have been furloughed will still need to demonstrate their competence in returning to work, and encourages firms to support furloughed staff by providing them with materials to complete their CPD. Firms should also ensure that anyone who is working from home knows where they can access relevant CPD.

The FCA recognises that there may be “exceptional circumstances” that prevent an employee from completing the prescribed minimum amount of CPD. Retail investment advisers are required to complete 35 hours of CPD each year, while certain employees in the insurance distribution sector need to complete 15 hours.

As well as an individual is unable to access appropriate CPD, the FCA recognises that there are two other scenarios in which an employee might be excused from the requirement to complete their usual amount of CPD. These are:

  • Where the individual’s role within the firm requires them to devote extra time to deal with the consequences of the pandemic. For example, they may now need to provide additional support to affected customers and/or may need to spend more time managing risks that relate to Covid-19
  • Where the individual has additional family responsibilities as a result of coronavirus, such as having to provide additional care for a relative

These scenarios cover the situation where an individual continues to report for work. The FCA already has a rule allowing firms to suspend CPD requirements for those on long-term sick leave.

Where an employee is unable to complete the prescribed amount of CPD, the FCA will allow individuals to defer some of their CPD until the next year. This would mean that, if an adviser could only complete 30 hours of CPD in the current 12-month period, they could compensate for this by completing 40 hours in the following 12-month period.

This special dispensation can be used by employees of any firm whose ‘CPD year’ is scheduled to end prior to April 1 2021.

Where a firm allows an employee to defer some of their CPD, there is no requirement to inform the FCA. However, firms are still expected to document internally why they have allowed the deferral to take place, together with details of how much CPD is to be deferred. In the case of financial advisers, this information will also need to be provided to the Accredited Body that will certify that the adviser remains competent.

The FCA says:

“We expect individuals to stay up to date with our Covid-19 regulatory requirements, which could count towards CPD as relevant. Firms should also look into other available online equivalents to training courses or other ways for their staff to get the necessary CPD. Firms should take these other options into account as part of their decision to carry over CPD hours.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware of the facts, circumstances or legal position may change after publication of the article.

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