Work on crypto regulation, new pension proposals and an update on the operation of FMIs feature in our latest roundup.
Enforcement
An unauthorized mortgage broker and its associates have been fined a total of £4m ($5.08m) after the FCA found vulnerable customers were exploited.
London Property Investments (U.K.) Limited (LPI) arranged mortgages while NPI Holdings Limited (NPI) bought properties and rented them back to the sellers, both without FCA authorization. Daniel Stevens, the director of LPI and NPI, and his father, Tony Stevens, were also found liable.
Funds will need to be recovered before any compensation can be paid, and LPI has been ordered to remove restrictions against the titles of four properties. The restrictions were used to coerce individuals into paying large fees to LPI, trapping some of them into high-interest bridging loans.
Steve Smart, executive director of enforcement and market oversight at the FCA, said: “These sham brokers preyed on vulnerable people who were struggling financially and trapped them with exorbitant fees. The defendants used a smokescreen of deception which cost consumers and lenders dearly.”
Great Point Investments Limited (the Firm) entered Creditors’ Voluntary Liquidation (CVL or liquidation). Andrew Charters, Christine Mary Laverty and Nicholas Nicholson of Grant Thornton UK LLP, have been appointed as joint liquidators.
A total of €250m ($273m) is to be paid to investors by asset manager H20 AM LLP following an FCA investigation.
The investigation found H2O failed to carry out proper due diligence on investments relating to the Tennor Group of companies owned by Lars Windhorst, or other companies he introduced. Further, H2O did not have adequate policies or procedures or exercise due skill and care in managing potential conflicts of interest.
This included over 50 cases in which hospitality was received but not properly declared. H2O was also found to have provided false and misleading statements and documentation to the regulator.
The FCA said it “would have imposed a substantial fine on H2O for its serious breaches.” But it has “agreed the firm will make €250m available to all those whose investments remain trapped.”
It continued: “A significant part of this sum has been made available by way of voluntary contribution from the H2O Group. H2O has waived its rights to fees and investments totalling €320m ($350m) and will apply to cancel its UK authorisation by the end of the year.”
Rules and consultations
A review of how certain crypto firms are complying with implementing personalised risk warnings, the 24-hour cooling off period, client categorisation and appropriateness assessments has been carried out by the FCA.
The regulator said: “We recognise this is the first set of rules for all crypto firms marketing to UK consumers and adjusting to new regulation can be challenging” and found some examples of good practice. But “we also found multiple instances where firms did not meet the required standards” and “more work needs to be done to improve compliance”.
Firms are urged to read the good and poor practice guide, and guidance GC23/1. The FCA said: “We have seen firms relying on industry comparisons to benchmark what is acceptable. Given the levels of poor practice in the market, firms should not be doing this. Instead, we expect firms to engage with us directly to drive up standards across the sector.”
A new framework for workplace defined contribution pension contribution schemes is being drawn up by The FCA, the Department for Work and Pensions (DWP) and the Pensions Regulator (TPR). The aim is to “to shift the focus from costs to long-term value, and ultimately deliver better retirement savings.”
Sarah Pritchard, executive director of markets and international at the FCA, said: “We want to see a focus on long-term value, not just costs and charges. Given the impact these changes could have we are consulting now to ensure that the pension system can be ready to go when the legislative changes that need to happen are ready.”
Emma Reynolds MP, Minister for Pensions, said: “Last year, over £130 billion ($166 billion) was saved into workplace pension schemes. Our Pension Bill and Pensions Review will make pensions fit for the future, and having an effective Value for Money framework will lay the foundations for this. I would encourage responses from across the industry, including trust-based schemes, to this consultation.”
Some 16 million people pay into defined contribution pension schemes in the UK.
Publications
The FCA has published an update on its Memorandum of Understanding with the Bank of England for supervision of financial market infrastructures (FMIs). Following consultation to see how cooperation is working, both have concluded that “the arrangements for co-operation remain effective and in line with the existing Memorandum of Understanding”.
Speeches and media
The FCA is to expand its presence in Leeds in the north of England by taking another 5,000 square feet of space at its queen Street offices, and basing 100 more of its staff there. The move bolsters the city’s position as the leading UK financial centre outside London.
