The regulator had a busy week setting out its expectations for insurers, bank and building society lending policies, and firms’ focus on liquidity. Also notable was the announcement of a consultation on setting up a UK Consolidated Tape.
Enforcement
After a review of the home and car insurance sector, the FCA has warned insurers that it expects to see an improvement in the handling of claims and treatment of vulnerable customers.
The handling times for complaints were too often too lengthy, and settlements not appropriate. Monitoring of customer outcomes was often poor, and information sharing with intermediaries needed to improve. Some firms could not show how they were able to identify vulnerable customers.
New guidance on how to support customers has been issued.
In the latest enforcement action arising from the sprawling British Steel Pension Funds case, Advisor Paul Steel of Estate Matters Financial has been banned from working in financial services. He was found to have provided unsuitable advice to transfer out of defined benefit pension schemes, and to have sold his client book to himself for less than its value.
Steel is also required to pay £850,000 ($1.08m) to the Financial Services Compensation Scheme.
City Credit Capital (UK) Ltd (CCCUK) has entered administration following action taken by the FCA to restrict its permissions to carry on any regulated activities.
A letter was sent to asset managers outlining the FCA’s wish that firms increase their focus on liquidity risk. “As things stand,” the regulator said, “gaps observed in liquidity management could result in investor harm”.
A number of issues were identified, including a lack of sufficient building blocks and tools for effective liquidity management, insufficient weight giving to liquidity risk management in governance processes, and wide variations in the application of ant-swing tools.
The letter warned firms “risk regulatory intervention if they don’t take this opportunity to address weakness”.
In a meeting with some of the UK’s largest banks and building societies, the FCA set out its expectation that consumers were offered “fair and competitive” saving rates.
Rules and Consultations
Following the mortgage summit between lenders and the Government, the FCA made changes to its rulebook to enable the key changes agreed to be made.
Lenders will now be able to offer borrowers a switch to interest-only payments for six months, and offer extensions to mortgage terms to reduce monthly payments, with the option to switch back within six months.
The amendments made are to the Mortgages and Home Finance: Conduct of Business (MCOB) sourcebook and are detailed in PS23/8.
Section 137A, Financial Services and Market Act 2000
The US dollar LIBOR panel, the last remaining LIBOR panel, ceased on 30 June 2023. One, three, and six-month US dollar LIBOR settings are now designated Article 23 benchmarks and LIBOR rates must now be published in synthetic form.
The FCA reinforced the message that firms should be preparing for final synthetic LIBOR settings to cease at the end of September 2024.
Financial Services Act 2021
Critical Benchmarks (References and Administrators’ Liability) Act 2021
Further measures set out, which are being described as aiming to “help strengthen the UK’s leading position as a global and vibrant financial centre”. These were:
- consulting on setting up a Consolidated Tape;
- issuing guidance on trading venue perimeters; and
- launching a new pre-application support service for firms wishing to expand into the UK.
The launch of the IRSG and International capital Market Association industry group’s voluntary Code of Conduct on ESG data and ratings providers was welcomed.
