Connected 72 - Summer 2019


Current themes continue to be a focus for the regulator… Who would have thought that Brexit would have a silver lining? The fact that the Government and the FCA have been so focused on preparing for Brexit however has meant that the volume of activity on the regulatory front has taken a definite gear change down and given us all some welcome breathing space. That’s not to say it’s been radio silence however, so let’s have a look through some of the activity of note over the past few months. FCA’s Business Plan 2019/20 Outside of supporting a smooth transition, post-Brexit, the FCA’s priorities for the coming year were mapped out in its latest business plan and included working to improve firms’ culture and governance and operational resilience, fighting financial crime and improving the treatment of customers. No surprises therefore as we are generally seeing continuations on current themes. Ensuring the fair treatment of customers will be achieved by monitoring firms’ practices, including the information they give prospective and current customers. This will include remedies proposed in the Mortgages Market Study and will be fed into by current work being carried out in a market study on general insurance pricing practices and a focus on competition in the cash savings market. We’ll touch more on the Mortgages Market Study further on, but in their other areas, the regulator will consider what action will best address any perceived issues, including whether price interventions may be appropriate. Unsurprisingly, the FCA remains concerned about the potential harm to consumers’ retirement income from unsuitable pension transfers and its future work includes implementing the remedies from its retirement outcomes review and starting a wide ranging programme of activity with firms who have pension transfer permissions, based on its 2018 information request in this area.

The message on financial crime is that it is still very much on the agenda and firms must remain diligent and declare any criminal activity that they become aware of, as well as have appropriate safeguards in place. Over the coming year, the regulator expressed its intention to monitor firms’ progress in improving their AML controls as one indicator of whether the potential harm to consumers and market integrity is likely to have reduced. In summary, all firms need to ensure that their client’s needs, (both new and existing) are at the heart of everything they do in pursuit of a good client outcome, delivered by appropriate and fairly priced products and services. This is underpinned by good MI capabilities and ensuring client files are complete and in order. Second Assessing Suitability Review This leads neatly to the FCA committing to conducting a second Assessing Suitability Review in 2019, following on from the results it published in May 2017, to examine the advice and disclosure firms give to different consumers, across different product types and by different types and sizes of firms. In 2017, the watchdog assessed 1,142 cases in 656 firms and said it was ‘disappointed’ to find the advice sector provided ‘unacceptable disclosure’ in 41.7% and ‘uncertain disclosure’ in 5.4% of the cases it had looked at. In this second review, regulator will use the results to assess how firms have implemented the requirements introduced by MiFID II, the Packaged Retail and Insurance-based Investment Products (PRIIPs) regulation and the Insurance Distribution Directive. It is possible we could be approached as a network in relation to this and again underlines the importance of having good client files as the suitability of advice and quality of disclosure will be an ongoing area of focus for the regulator. PFS Pension Transfer Gold Standard As you would expect, Tenet is a huge advocate of the recently launched PFS Pension Transfer Gold Standard and is fully supportive of member firms adopting it. The regulator’s focus in this

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