Regulation Matters February 2020

February 2020

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.

2 | Regulation Matters - Issue 147

IN THIS ISSUE

Who is it relevant to? Summary

Action recommended / for your information?

Subject

TRUST REGISTRATION (MLD5)

All firms

HMRC has issued a technical consultation on its plans to implement the Fifth Money Laundering Directive’s requirement to maintain a register of ‘express’ trusts. Policy statement following CP19/17. Important changes to Mortgage Advice and Selling Standards Summary of the outcomes of the lead cases against the Old British Steel Pension Scheme. Consultation paper covering the proposed maximum levy that can be imposed on firms. Bill requiring FCA to make rules for authorised persons to owe a duty of care to consumers is reintroduced to the House of Lords. Actions recommended in last month’s issue of Regulation Matters (issue 146).

For your information

PS20/01: MORTGAGE ADVICE AND SELLING STANDARDS BRITISH STEEL PENSION SCHEME – FINAL DETERMINATIONS

Mortgage Advisers

Action recommended

Firms in the DB transfer market

For your information

FSCS MANAGEMENT EXPENSES LEVY

All firms

For your information

FINANCIAL SERVICES DUTY OF CARE BILL 2019-20

All firms

For your information

REMINDER OF KEY REGULATION MATTERS

All firms

For your information

REGULATORY MATTERS ON THE HORIZON

Overview of FCA planned activity.

All firms

For your information

3 | Regulation Matters - Issue 147

HMRC Technical Consultation: Fifth Money Laundering Directive and Trust Registration Service

AT A GLANCE

HMRC has issued a technical consultation on its plans to implement the new requirements for EU member states to maintain a register of ‘express’ trusts. Financial Planning firms will be relieved to see HMRC’s proposal that trusts of pure protection insurance policies are to be excluded from the obligation to register. Some other trusts, such as trusts of investments arranged for IHT mitigation will be affected. Also, the penalties proposed by HMRC reflects the low risk nature of many trusts set up by taxpayers and also the fact that many trustees will not be aware of their obligations.

Want to know more? The consultation closes on 21st February 2020 and can be accessed here: Technical consultation: Fifth Money Laundering Directive and Trust Registration Service

Policy Statement 20/01: Mortgage Advice and Selling Standards – New Rules and Guidance

AT A GLANCE

New rules and guidance have been introduced following the FCA’s Mortgage Market Study and proposals made in CP19/17. The changes to the Perimeter Guidance are intended to make it easier for lenders to engage with clients without advice. Where an adviser recommends a mortgage that is not the ‘cheapest’ (including product fees) one available to them that would meet the client’s needs, a new rule requires the adviser to explain to the client why cheaper products have not been recommended. This rule comes into effect on 31st July 2020.

Want to know more? The FCA Policy Statement can be accessed here: New FCA Rules on Mortgage Advice/Selling Standards (PS20/1)

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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British Steel Pension Scheme – Final Determinations in Lead Cases

AT A GLANCE

Some members of the Old British Steel Scheme alleged that they were misled when they decided to transfer or taking benefits before new, more generous, CETV/benefits calculation bases were introduced in April 2017. The Pensions Ombudsman has confirmed that none of the lead cases have been successful. Individual member complaints linked to one of the four lead cases are still able to be referred to the Ombudsman if they can show that their case is substantially different from the lead cases.

Want to know more? The Pensions Ombudsman’s update can be accessed here: https://www.pensions-ombudsman.org.uk/2020/01/british-steel-final-determinations/

FSCS Management Expenses Levy 2020/21 – CP20/2

AT A GLANCE

FCA CP20/2 (also PRA CP1/20), jointly published on 15/01/2020 considers the proposed management expenses levy limit for the FSCS for the year 20/21. The proposed amount is £83.2 million, made up of management expenses of £78.2 million and an unlevied contingency reserve of £5 million. The increase is due to an anticipated rise in number and complexity of claims expected to be received by the FSCS.

Want to know more? The FCA paper is available here: GCA/PRA CP

Financial Services Duty of Care Bill 19/20

AT A GLANCE

This Bill failed to proceed when the 2017-19 Parliament was dissolved. It has now been reintroduced in the House of Lords. The Bill requires the FCA to make rules requiring firms to owe a duty of care to consumers and the FCA is expected to publish a paper on the subject this year.

Want to know more? The Bill can be accessed here: https://publications.parliament.uk/pa/bills/lbill/58-01/011/5801011.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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Reminder of key regulatory matters

Below is a useful reminder of key ongoing regulatory matters affecting financial adviser firms including actions recommended.

Subject

Recommended Action

Further Information

1

The FCA Register and Directory

https://www.fca.org.uk/firms/ directory-persons

Firms must update the new Directory with details of all staff who do not hold a Senior Management Function as captured by the SM&CR, but who would have been subject to the Approved Persons Regime. Assess what changes need to be made (see CP19/25) to any processes or documentation. Ensure the boundary between triage and advice services is understood and records are maintained of consumers in receipt of each. Take relevant action if PI exclusions or enhanced excesses for DB transfer advice are in effect on renewal (see CP19/20).

2

Preparing for DB Transfer Proposals

https://www.fca.org.uk/ publications/consultation-papers/ cp19-25-pension-transfer-advice

https://www.fca.org.uk/ publications/consultation-

papers/cp19-20-our-framework- assessing-adequate-financial- resources

3

Mortgage Prisoners

https://www.fca.org.uk/ publications/policy-statements/ ps19-27-changes-mortgage- responsible-lending-rules- and-guidance-%E2%80%93- feedback-cp19-14-and-final-rules

Consider whether the modified affordability rule changes might be beneficial for existing clients or create potential growth in demand from consumers who could not previously meet criteria.

4

IR35 – Off Payroll Working from April 2020

https://www.gov.uk/guidance/ april-2020-changes-to-off- payroll-working-for-clients

Consider whether the rules apply to your firm and, if applicable, whether any off payroll workers need to be treated differently from 6th April 2020.

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 Policy Statement and revised rules Consultation paper

Expected Date Intended Audience

1

Proposed ban on contingent charging for DB Transfer Advice

Q1 2020

Firms that provide advice on pension transfers

2

FCA second-stage consultation on guidance on the fair treatment of vulnerable customers FCA review of RDR and the Financial Advice Market SM&CR (Remaining Certification/F&P and Conduct Rules Training obligations) Upload of bulk data to the Financial Services Directory (PS19/7)

Q1 2020

All firms

3

Report

Delayed to ‘Autumn 2020’ 9th December 2020 9th December 2020

All firms

4

Legislation

All firms

5

Policy Statement and revised rules

All firms

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.

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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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