Two speeches explaining key areas of work and the FCA’s approach to them, plus the publication of the organization’s annual report, lead the way in our latest roundup of the regulator’s work.
Enforcement
Facet Investment Management Limited was placed into administration by its director on August 23, 2024, with Ian Lawrence Goodhew and Abigail Shearing from Voscap Ltd appointed as joint administrators.
Reckless pension transfer advice has led to the publication of decisions against three individuals, and fines and bans for a fourth. The individuals, two financial advisers and two partners at St Martin’s Partners LLP (SMP), have been banned from working in financial services and collectively fined £590,544 ($773,188). The regulator’s view is that they were “responsible for a pension transfer advice model that put at risk people’s guaranteed retirement benefits.”
Adrian Douglas, Liam Martin and Frank Oxberry have referred decision notices to the Upper Tribunal. The statement said: “The Tribunal will determine, in the case of the decision to impose a financial penalty what (if any) the appropriate action is for the FCA to take, and remit the matter to the FCA with such directions as the Tribunal considers appropriate and, in relation to the decision to make prohibition orders or a decision to withdraw approval, whether to dismiss the reference or remit it to the FCA with a direction to reconsider and reach a decision in accordance with the findings of the Tribunal.”
Alec Cuthbert agreed to settle the FCA case against him.
Therese Chambers, Joint Executive Director of Enforcement and Market Oversight, said: “People need to be able to trust the advice they receive about their pensions. But these four individuals put SMP’s customers in danger of giving up guaranteed retirement income for high-risk investments, like overseas hotel developments. They received significant financial benefit in doing so, at the expense of their customers.
“There was a reckless disregard for customers’ financial situation, their needs through retirement and how their existing benefits compared to the proposed alternative. It is right the FCA takes steps to prevent these people from working in the financial industry and impose penalties.”
Rules and consultations
The regulator issued a reminder that there is less than one month to go before 1-, 3- and 6-month synthetic US dollar LIBOR settings cease permanently.
Publications
A new report encourages the providers of bank accounts to do more to support people who don’t have accounts but would like to have one. Examples of good practice include work with homeless charities to tailor bank support to vulnerable customers.
The FCA recommends providers review their approach to account denials and closures, making sure people aren’t blocked because they can’t produce standard forms of ID by highlighting what alternative ID is acceptable. Clear communication about the reasons for decisions, in line with Consumer Duty, is also urged.
It’s not just individuals who the FCA wants to see an improved offer for. Organizations including pawnbrokers, charities and in the adult entertainment sector should also, it says, experience fewer problems accessing accounts than they now do. The regulator wants to see clear and properly considered definitions of reputational risk set out by banks in order to facilitate appropriate decision making.
Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: “We’ve seen examples of really good practice – with account providers helping people access a product vital for financial inclusion – but also areas where there is room for improvement. By sharing both, we want to achieve more consistent outcomes, with people being aware of what accounts there are that might be right for them, more support for the vulnerable and people not being denied access without good reason.”
The regulator published its annual report, which is says shows “significant improvements in its authorizations service.” A more detailed look at the report was published on GRIP yesterday.
Speeches and media
In a speech at the Financial Crime Summit in London, Sarah Pritchard, the FCA’s executive director, markets and executive director, international, emphasized the regulator’s commitment to partnership as it prioritises the fight against criminal activity in the financial sector.
She highlighted the fact that:
- In the last financial year 21 individuals were charged with financial crime offences;
- this represents the highest number of charges achieved by the regulator in any single year; and
- £21m ($27m) of assets connected to individuals under investigation has been restrained.
But, she also asserted that she does not want the FCA to “be constantly hosing down fires where they arise” instead she wants the regulator to “be making strategic interventions to stop them breaking out in the first place.”
Carefully-targeted use of technology is key to the FCA’s approach, along with a more proactive and assertive monitoring stance.
Good practice and areas for improvement to help principal firms effectively monitor their Appointed Representatives (ARs) has been set out by the regulator. This follows a review consisting of a telephone survey with 251 principals and in-depth assessments of documentation from 23 firms.
Some firms, however, were found to be “taking a tick-box approach” to compliance , including “relying on basic information like website checks, or using self-declarations from their ARs, to demonstrate effective oversight.”
Other findings included:
- 1 in 5 principals had not carried out a required self-assessment or annual review of their ARs.
- Approximately half of principals were not regularly reviewing their AR agreements.
- A third of principals were not using data or management information to keep tabs on whether ARs were acting within the scope of AR agreements.
- Most firms had not changed their AR onboarding or termination procedures since the rules were introduced.
Jane Savidge, Interim Head of Department for Appointed Representatives said: “Some firms have been embedding our rules well, but some aren’t getting the basics right and are taking a ‘bare minimum’ approach.
“Principals must have clear, written AR agreements from the outset and effectively monitor their ARs to make sure they act within scope.”
Sarah Pritchard also set out the background to the FCA’s new listings rules at the Capital Markets Industry Taskforce conference.
Pritchard said: “We looked at our regime holistically and determined that a change in philosophy was needed – moving towards a more disclosure-based regime, which puts the right information in the hands of investors so they can make their own decisions.”
According to Pritchard the FCA believes that “new rules introduce a simplified regime that maintains high standards, one that is right for the UK, compares well internationally and one which we hope will help boost UK stock markets.” And she emphasized: “Put simply, companies raising capital and investors deploying it have global choices. We want them to choose the UK.”