Regulation Matters July 2019

July 2019

Regulation Matters Welcome to this edition of Regulation Matters covering regulatory updates which impact financial advisers. If you have any questions about any of the subject matters and would like further information on the additional service available to support directly authorised firms, please contact 0800 085 0825 .

Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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IN THIS ISSUE

Who is it relevant to? Summary

Action recommended / for your information?

Subject

FCA CONSULTATION, PROPOSING A BAN ON CONTINGENT CHARGING FOR PENSION TRANSFER ADVICE

Firms who provide advice on DB transfers

Proposals to ban contingent charging in respect of DB transfer advice and other related measures.

Action recommended

FINALISING SM&CR RULES

All firms

The FCA has issued finalised SM&CR rules for solo regulated firms and provided further clarification with regard to the scope of the Certification regime. Part one of a two-stage FCA consultation, which will result in updated guidance from the FCA on dealing with vulnerable clients The FCA, FOS, FSCS and MAPS have announced further events for consumers who are concerned about the advice they received when transferring out of the British Steel scheme.

Action required

VULNERABLE CUSTOMERS

All firms

Action recommended

TRANSFERS FROM THE BRITISH STEEL PENSION SCHEME

Firms with clients who transferred benefits from the British Steel Pension Scheme

For your information

REMINDER OF KEY REGULATION MATTERS

All firms

Actions recommended in last month’s issue of Regulation Matters (issue 142).

For your information

REGULATORY MATTERS ON THE HORIZON

All firms

Overview of FCA planned activity.

For your information

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FCA proposal to ban contingent charging for DB transfer advice AT A GLANCE The headline proposal in this Consultation Paper is to ban contingent charging for pension transfer advice by requiring advisers to charge clients the same amount for DB transfer advice, regardless of whether the advice results in a recommendation to transfer or not to transfer and regardless of whether a transfer is arranged unless: • The client is in serious ill health (supported by documentary that a registered medical practitioner has confirmed that life expectancy is likely to be lower than age 75); • The client is experiencing financial hardship such as being in danger of losing their home due to missing mortgage repayments (again, evidence is required). • ‘Abridged’ advice results in a recommendation not to transfer The Consultation puts forward a number of other related proposals that could have a significant impact on firms in this market.

Want to know more? CLICK HERE (or turn to page 7) for a more detailed summary, including recommended actions.

FCA finalisation of SM&CR rules AT A GLANCE

The finalised rules have now been published by the FCA together with some feedback and clarification with regard to the application of the Certification Regime. The key aspects for our readers will be: • The finalised rules, including on the operation of the directory of financial services workers, as consulted on in CP 19/7 • The clarification of how the Client Dealing Certification Function will not apply where the individual’s tasks do not involve the exercise of judgement/discretion or require them to exercise significant skill. Firms will now need to be progressing their work on implementing SM&CR.

The FCA’s Policy Statement and Finalised Rules can be found here: https://www.fca.org.uk/publication/policy/ps19-20.pdf

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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FCA consultation on the fair treatment of vulnerable customers AT A GLANCE This is to be a two-stage consultation, with the FCA at this stage asking firms for initial feedback on the scope and potential cost of its proposals before then issuing a second consultation, including a cost-benefit analysis in the usual way. The ultimate objective is to provide greater clarity on the FCA’s expectations of firms with regard to ensuring that vulnerable people are not excluded from receiving financial services and ensuring that

they are protected when they do receive services. The initial consultation closes on 4th October 2019

The FCA consultation paper can be found here: https://www.fca.org.uk/publication/guidance-consultation/gc19-03.pdf

AT A GLANCE Following the two events in June that we referred to in the previous issue, the FCA has announced two more events for anyone concerned about advice they received on transferring from the British Steel Pension Scheme. The FOS, FSCS and MAPS will also be in attendance at the events. Attendees will be given information on what their adviser should have done when giving them advice in order to help them decide whether they wish to make a complaint about that advice. The FCA’s announcement can be found here: https://www.fca.org.uk/news/news-stories/fca-august-and-september-events-former-members-bsps Firms will need to ensure that records relating to transfers from the British Steel Pension Scheme are complete and robust. Transfers from the British Steel Pension Scheme

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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Reminder of key regulatory matters Below is a useful reminder of key regulatory matters affecting financial adviser firms including actions recommended in last month’s issue of Regulation Matters June 2019.

Subject

Recommended Action

Further Information

1

SM&CR

https://www.fca.org.uk/firms/ senior-managers-certification- regime/solo-regulated-firms

Download the FCA’s guidance and consider what action your firm needs to take.

CLICK HERE to return to page 2.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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Regulatory Matters on the Horizon

It’s an ever-changing market with a constant stream of new and updated regulation for financial advisers to worry about. We have provided a brief overview of the FCA’s planned activity as we currently understand it, but please be aware that the FCA does sometimes change the timing. Rest assured, as part of our service we will keep you informed and provide guidance to help you remain compliant.

Subject

Publication Type

Expected Date

Intended Audience

1

Feedback on Investment Platforms Market Study Remedies

Policy statement and final rules

Q4 2019 Firms that distribute retail investment products.

2

Mortgage Advice & Selling Standards – Policy Statement to CP19/17

Policy statement

Q4 2019 Firms

operating in the mortgage market.

CLICK HERE to return to page 2.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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FCA proposal to ban contingent charging for pension transfer advice (and related proposals)

As explained above, the headline proposal in this Consultation Paper is to ban contingent charging for pension transfer advice by requiring advisers to charge clients the same amount for DB transfer advice, regardless of whether that advice results in a recommendation to transfer or not to transfer and regardless of whether a transfer is arranged unless: n The client is in serious ill health (supported by documentary evidence that a registered medical practitioner has confirmed that life expectancy is likely to be lower than age 75); or n The client is experiencing financial hardship such as being in danger of losing their home due to missing mortgage repayments (again, evidence is required). Some of the related proposed changes are aimed at ‘anti- avoidance’, such as preventing fees for pension transfer advice to be offset against other fees and creating an expectation that firms recover in full fees from clients who are advised not to transfer. n The introduction of a new, shorter form of ‘abridged’ advice on DB transfers that does not require full analysis of the DB scheme (although full KYC and risk profiling would be required) but which can only result in a recommendation not to transfer. Costs for this advice can be lower and its introduction is intended to deal with some of the criticisms/limitations of the existing Triage requirements. n Significantly increased/enhanced fee disclosure for pension transfer advice, focusing on both initial advice costs and the cost of ongoing services, in a ‘letter of engagement’ to be issued before advice is provided and also, in a one-page summary, in the suitability report. n New requirements with regard to evidencing clients’ understanding and acceptance of the risks and costs involved. n Increased information-gathering on pension transfer activity via RMAR; for example in relation to PI policy terms and numbers of clients advised not to transfer. n Increased CPD requirements for pension transfer specialists n New guidance to the effect that an adviser must start with the assumption that the default fund in an available workplace pension scheme is more suitable than a new personal pension.

The above is a very brief summary of most of the proposals. The Consultation Paper is very detailed and the proposals, if implemented as per the CP, will have a significant impact on firms who provide advice on DB transfers, both in terms of how they interact with clients when providing pension transfer advice and in terms of allocating resource to tasks such as producing/altering disclosure documentation and suitability report templates. Some of the proposals are expected to be introduced just one week after the FCA makes the legal instrument that will (subject to the consultation) implement the proposals. Therefore, firms in this market should read the consultation, respond to it if they have concerns and begin to think about preparations for implementation of the proposals, especially those that are anticipated to take effect relatively quickly (again, subject to the outcome of the consultation). Link to the FCA Consultation Paper: https://www.fca. org.uk/publication/consultation/cp19-25.pdf

CLICK HERE to return to page 3.

DO YOU NEED FURTHER HELP OR SUPPORT? If you have concerns about being compliant, get in touch with TenetSelect, the directly authorised regulatory experts, by calling 0800 085 0825. We have a wide range of services to help your firm, and we would love to have a chat to tell you more. Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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A range of services to add value to your firm At TenetSelect, we provide a wide range of services and expertise to help directly authorised firms meet their compliance requirements and grow their business. If you have a particular compliance concern or any of our services are of interest, please get in touch by calling 0800 085 0825.

COMPLIANCE SUPPORT SOLUTIONS File checking service n Full range of product areas covered, including pension transfers Themed audit n Systems & controls, Training & Competence, disclosure & ongoing servicing, Centralised Investment Proposition Fully outsourced T&C implementation n One-to-one visits, file reviews, observations/role plays Compliance helpdesk for ongoing queries n Access to our regulatory experts as and when you need support Financial promotions and stationery approval n Assessment of your marketing and stationery to help ensure it meets the FCA’s requirements On-site attendance for FCA visit n A regulatory expert on hand to reduce potential risk Comprehensive compliance guidance manual n Manual which you can adopt for your firm Compliance, systems & controls template documentation n Wide range of documentation available via the Extranet Full suite of regulatory registers n Designed to capture a variety of management information and highlight potential risks Regulatory guidance bulletins n Ongoing updates and guidance to help you remain compliant RMAR report completion n Software to help you do it or outsource it to us Complaint handling service n Outsource the handling of client complaints

RESEARCH, TECHNICAL & SPECIALIST INVESTMENT SUPPORT Research & technical support n The Tenet panel, technical guidance, including access to a helpdesk Specialist investment support n Review of EIS/BPR/Tax Planning Schemes and the client profile n Feedback on general suitability of the client and the legitimacy of the scheme n Full paraplanning service including data gathering research, analysis and client report New adviser recruitment n Our recruitment service will find the right adviser for your business Exclusive software discounts n Range of discounts to save you money e.g. software CPD events n Invite to our events where you have everything you need for your CPD Marketing support n Utilise our range of compliant marketing support Protection panels & mortgage club BUSINESS SUPPORT SOLUTIONS Paraplanning

n Access to leading terms via our panels Account management

n Access to a dedicated account manager to help you make the most of our service

WANT TO KNOW MORE? To find out how your firm could benefit from the many services available or for details of packages and costs, please call 0800 085 0825 . Regulation Matters is produced by TenetSelect as guidance only and is based on their interpretation, it is not and should not be relied upon as professional or legal advice. TenetSelect does not accept any liability for any losses arising directly or indirectly in connection with any of the information contained within Regulations Matters to the extent it can be excluded by law.

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