Compliance Roundup - 14 December 2022

In this issue:

Government launches consultation on reform of Consumer Credit Act
Chancellor announces ‘Edinburgh Reforms’; CSA chief executive offers initial thoughts
Debt Camel reports on StepChange plans for mass IVA variation
Scottish Parliament publishes stage 1 report on Moveable Transactions (Scotland) Bill
FCA advises of s165 requests for principal firms regarding their appointed representatives
FCA consults on guidance on options for firms supporting existing mortgage borrowers affected by the cost-of-living crisis
FCA shares findings from review into diversity and inclusion in financial services
HMT policy statement on future regulatory framework released; FCA outlines approach to implementing outcomes
FCA publishes insights from 2021 Cyber Coordination Group meetings
FCA enforcement - final notices and decision notices
Consultations

Government launches consultation on reform of Consumer Credit Act

HM Treasury has issued a consultation seeking stakeholder views on reform of the Consumer Credit Act 1974 (CCA).

The consultation paper outlines the government’s intended approach to reforming the CCA and invites views on how certain provisions may be replicated in FCA rules. Views are also sought on how reform can make the consumer credit market fairer, increase access to credit and enhance financial inclusion.

Any members wishing to contribute to an industry response should share their comments as soon as possible with the CSA’s head of policy, Henry Aitchison (henry.aitchison@csa-uk.com). The CSA set out its thoughts on the need for CCA reform in a paper published earlier this year, available here.

The government’s consultation paper is available here and closes for responses on 17 March 2023.

Chancellor announces ‘Edinburgh Reforms’; CSA chief executive offers initial thoughts

The Chancellor of the Exchequer, Jeremy Hunt, announced a number of financial services industry reforms on Friday 9 December 2022 in a speech delivered in Edinburgh, widely referred to as the Edinburgh Reforms. 

The CSA’s chief executive, Chris Leslie, made the following comments on the announcements on Friday:

“Most of the reforms announced today are a collection of changes aimed at enhancing the UK’s banking sector competitiveness following Brexit. Pressure has been on Ministers to illustrate a post-Brexit ‘regulatory dividend’ of the decoupling from EU rules and so reform of the insurance sector’s Solvency II regime and a review of Mifid II in respect of research regulation should be viewed in that regard.

"However, the Chancellor and his City Minister Andrew Griffith have gone further and are changing some of the rules introduced after the global financial crisis, most significantly on capital requirements. 

"For our sector, the talk of a less stringent senior managers’ regime (SMCR) will be worth watching. And clearly, we’ll be taking a close look at the implications for members of the government’s consultation on CCA reform, which has been released alongside the Chancellor’s Edinburgh Reforms. However, there is as yet no signal from Ministers that there will be any slowdown on the FCA’s ‘Consumer Duty’ plans, which remain the principal compliance focus for many firms ahead of this summer’s implementation.”

As part of the Edinburgh Reforms, HM Treasury also published its statutory recommendations for the FCA, outlining aspects of the government’s economic policy to which the FCA should have regard when advancing its objectives and discharging its duties.

The CSA’s comments can be viewed here. More information about the Edinburgh Reforms is available here and the HMT recommendations to the FCA can be found here.

Debt Camel reports on StepChange plans for mass IVA variation

Debt advice website, Debt Camel, has reported on StepChange’s plans to propose a mass variation for its clients on Individual Voluntary Arrangements (IVAs).

The article notes that StepChange intends to issue a mass variation for all of its existing clients. This would give StepChange more flexibility to reduce payments without asking for creditor approval. 

The article includes a link to the variation proposal, which would allow StepChange to reduce a customer’s agreed surplus “by up to 50% or down to a minimum of £50.00 per month, whichever is higher”. It would also permit StepChange to extend an IVA term by up to three months to cover payments that have been missed due to cost-of-living problems. IVAs would not changed immediately; the variation would just give StepChange permission to make changes if an individual is affected by the cost-of-living crisis.

The Debt Camel article can be found here.

Scottish Parliament publishes stage 1 report on Moveable Transactions (Scotland) Bill

The Scottish Parliament has released a stage 1 report on the Moveable Transactions (Scotland) Bill, which will reform the law around transactions relating to moveable property, including law relating to the assignation of claims.

The new Bill would create a Register of Assignations and registration on the Register would represent an alternative means to completing an assignment. The Bill was discussed in more detail at a recent CSA virtual members’ meeting.

The Scottish Parliament’s stage 1 report is available here and CSA members can access the recording of the October 2022 virtual members’ meeting here.

FCA advises of s165 requests for principal firms regarding their appointed representatives

The FCA has confirmed that it will be issuing mandatory section 165 data requests to principal firms between 8 and 12 December, requesting more information about the principal’s appointed representatives.

The FCA advises that it will be asking for information including the nature of appointed representatives’ regulated business, the nature of financial arrangements between principal and appointed representative and whether the appointed representative carries out any unregulated business.

Further details of the request can be found on the FCA website here.

FCA consults on guidance on options for firms supporting existing mortgage borrowers affected by the cost-of-living crisis

The FCA has launched a brief consultation on guidance aimed at explaining how firms can support existing mortgage customers impacted by the rising cost of living.

The guidance includes measures firms may want to consider that may help customers and sets out the flexibility firms have when providing forbearance. It also discusses the scope firms have to vary contract terms for borrowers that want to reduce their monthly payments.

The draft guidance can be found here and responses are due by 21 December 2022.

FCA shares findings from review into diversity and inclusion in financial services

The FCA has shared its findings following its multi-firm review into how financial services firms are designing and embedding diversity and inclusion (D&I) strategies. 

The aim of the FCA’s review was to gain a better understanding of the current state of D&I within regulated firms and to give firms and others a picture of the current position. The review would also help the FCA develop a supervisory approach for future engagement with firms. The findings are not considered guidance, but may be useful for firms in developing their own D&I strategies.

The FCA’s findings can be found here.

HMT policy statement on future regulatory framework released; FCA outlines approach to implementing outcomes

HM Treasury (HMT) has published the policy statement on ‘Building a smarter financial services framework for the UK’ which follows its review of the future regulatory framework for financial services.

Economic secretary to the Treasury, Andrew Griffith, notes that the pace of change “must be manageable for industry” and confirms that the approach outlined in the policy statement will be taken forward in phases.

The FCA has set out how it intends to deliver the outcomes for which it is responsible. Once the Financial Services and Markets Bill becomes law, the FCA notes that the regulatory framework will change and it will then begin its implementation work.

The HMT policy statement can be found here and the FCA’s approach is detailed here.

FCA publishes insights from 2021 Cyber Coordination Group meetings

The FCA has published a range of insights brought up at during meetings of its Cyber Coordination Groups (CCGs) throughout 2021. 

The publication covers a wide range of cyber-security topics, including emerging trends and threats in cyber security, the importance of board engagement in setting organisational cyber risk appetite and a number of good practice that can be used for implementing cyber security in the early stages of the software development cycle.

The CCG insights webpage can be found here.

FCA enforcement - final notices and decision notices

The FCA often publishes final notices and decision notices following investigations into alleged regulatory breaches or the refusal of applications for authorisation. These notices can often provide useful insight into what the FCA considers to be poor practice and the potential consequences of those practices. The FCA will also occasionally publish press releases detailing the outcome of cases pursued through the courts.

In the last week, the FCA has issued the notices listed below. You can read more about the FCA’s investigation and findings by clicking on the relevant link.

Santander UK Plc – final notice
BGC Brokers LP / GFI Securities Limited / GFI Brokers Limited – final notice
Metro Bank Plc – final notice
Craig Donaldson – decision notice
David Arden – decision notice

Consultations

The following are consultation papers that are currently open for responses and may be of relevance to some or all CSA members.

If an industry response is warranted and you want to contribute, please contact CSA head of policy, Henry Aitchison (henry.aitchison@csa-uk.com). 

FCA: Quarterly Consultation No. 38: CP22/26
Closing date: 9 January 2023

ICO: Draft guidance on monitoring at work
Closing date: 11 January 2023

FCA: Regulatory fees and levies: policy proposals for 2023/24: CP22/23
Closing date: 16 January 2023

ICO: Draft guidance on use of workers’ health information
Closing date: 26 January 2023

FCA: Credit Information Market Study: interim report
Closing date: 24 February 2023

HMT: Reform of the Consumer Credit Act
Closing date: 17 March 2023