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See Scott Robert’s regulatory roundup for the first half of July:


  1. The Financial Conduct Authority has released its Business Plan

The FCA has published its Business Plan along with a summary speech delivered by the new FCA Chief Executive Nikhil Rathi. Within the speech and Business Plan, the FCA has outlined three overarching objectives.

Innovative: The FCA has committed to taking a more data centric approach. Sensing data collection and analysis as the way forward, the FCA described data as ‘the lifeblood of a modern regulator’. Thus, the FCA pledged within the next five years to become a data regulator as well as a financial one. The FCA recognises that data is essential for the operation of most financial services therefore it has taken strides in modernising its systems and technological capabilities. The FCA is aiming to keep pace with the rapid technological advancements of the industry but is still encouraging caution with cryptocurrencies. A particular highlight within the speech was Nikhil Rathi describing a new type of young investment consumer seeing the activity as a form of ‘entertainment’. To counteract this, the FCA is creating a digital marketing campaign focusing on these types of consumers, informing them on the risks of investing in the accessible but highly volatile cryptocurrency market.

Assertive: The FCA has pledged to be more proactive and unafraid of stepping outside the traditional confines of its regulatory perimeter. Nikhil Rathi described an approach that if an issue fell outside the scope of the FCA, the FCA will no longer simply ignore it. Instead, it will use other resources and tools to liaise with other regulators to intervene in suspect activity. To bolster its more assertive stance, the Government has agreed to review the FCA’s scope and perimeter annually meaning potential expansions to FCA oversight in the near future. The regulator illustrated past examples of its assertive behaviour such as its first ever criminal proceedings for anti-money laundering breaches and it removed four temporary permissions for EU based firms to prevent them from marketing ‘contracts for difference’ to UK retail customers. The FCA has overall outlined it will no longer be passive and will act decisively on grey areas of regulation, aiming to be undaunted if its actions do not end always in its favour.

Adaptive: The FCA plans to be flexible in light of the the unprecedented year the finance sector has experienced. It praised firms adapting to the difficulties and its own measures which were designed to assist consumers and businesses through the pandemic. Going forward, into a post-pandemic world, the FCA wishes to continue this approach to ensure its Regulatory Gateway remains uncompromised as the sector expands. This includes preventing phoenixing to stop ‘bad actors returning to the system’. More systemic changes requiring an adaptive regulator such as Brexit and the transition away from LIBOR will allow for more flexibility from the FCA over the next few years. Structurally, the FCA has pledged over the next few years for more staff to join its authorisation team, more office locations in the UK (Leeds, Cardiff, and Belfast), and reaching its diversity targets in its workforce. Finally, the FCA is planning to be more transparent, releasing metrics from April 2022 which will measure the success of the regulator.

The Business Plan can be found here.

  1. The FCA has released feedback to its consultation on Regulations of Funeral Plans
    Various firms, stakeholders, and interested parties provided feedback to the FCA’s CP21/4 outlining proposed rules and regulations to be placed on Funeral Plan firms. The FCA has reaffirmed that commission payments will be banned as funeral plan intermediaries’ reasoning it did not receive ‘compelling evidence on the value of commission arrangements to consumers in this sector’. Whereas the FCA has provided some amendments to other rules, in line with the feedback received. Initially, the FCA wanted all funerals under funeral plan arrangements to be guaranteed without additional payment being required if the funeral plan holder becomes deceased. This change will still happen, however the FCA has decided to implement a 24-month moratorium period to allow firms to adapt to the change. Another key adaptation from the FCA is the initial blanket ban on funeral plan intermediaries holding client money, in light of the feedback received, the FCA will amend its rules to allow for this arrangement in limited circumstances i.e. allowing customers to pay the cash total to the intermediary for a third-party funeral plan.

The policy paper with published feedback can be found here.

  1. The FCA has published feedback received on its regulated fees and levies consultation
    In response to CP/08 FCA regulated fees and levies, numerous firms responded to a particular new proposal, the Principal firm AR fee. This levy will be annually charged at £250 on the principal firm, per Appointed Representative maintained. Initially, this fee was to be £250 for IARs (introducer appointed representatives) and ARs however, upon the feedback provided, the FCA has revised the fee for IARs to be £75. This fee has been revised as the FCA agrees the level of risk and involvement within an IAR relationship compared to a full AR relationship is substantially lower. Firms acting as principals with many IARs may welcome this amendment. The full policy paper can be found here.
  2. Google to introduce a verification system for firms wishing to use Google Ads for Financial Products and Services
    Google has emailed current ad word campaigners notifying them of a policy change with the availability of firms using Google Ads for financial products and services. Firms that, according to Google, appear to be marketing for financial products and services will be required to go through a verification process to continue to do so. The respective firm seeking market Google Ads will need to demonstrate they are authorised by the FCA before being able to distribute their marketing material. Failure to comply with the policy will result in Google suspending the account. Google is asking for firms to complete the verification process or notify them that the firm does not require authorisation by September 6th, Google will publish the full policy by August 30th, 2021.

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Scott Robert.