The insurance industry has been in the regulator’s sights, with measures to ensure fair value in the car and homes sectors rolled out. There were also two major speeches, one on reshaping the regulatory environment and the other on financial inclusion, plus proposals to boost diversity at work.
Enforcement
High-cost lending firm Naylors Finance Limited has gone into administration, with Ed Boyle and Howard Smith of Interpath Ltd appointed administrators. They will update customers as soon as possible.
The British Steel Pension Fund saga rolled on with action taken against two more advisers, this time for providing dishonest pension transfer advice to members of this and other schemes. The FCA described it as “one of the worst cases we’ve seen”.
Rules and consultations
Proposals to boost diversity and inclusion to support healthy work cultures have been set out in consultation papers issued by the FCA and the Prudential Regulation Authority (PRA).
FCA chief executive Nikhil Rathi said that data gathered suggested the best talent was not being attracted, retained or promoted, and PRA chief executive Sam Woods said: “Stronger diversity and inclusiveness should also make firms more competitive by enabling them to attract a wider pool of talent”.
The regulator has acted to ensure insurance firms are required to act in the best interests of leaseholders. From now on, leaseholders must be treated as customers when products are designed, and insurance firms will be banned from recommending an insurance policy based on commission or remuneration levels. Additionally, firms will have to show products provide fair value.
The winners of the first Global Financial Innovation Network Greenwashing TechSprint have been announced. Participants from 13 firms and 15 international regulators took on two problem statements centred around greenwashing in financial services, and came up with solutions.
The full list of winners and details of the problems set and solutions found are on the FCA website.
Publications
The findings of an initial data exercise on access to bank accounts and account closures have been published, with the regulator emphasising the data was gathered from firms “at speed”. It concluded that “By far the most common reasons providers gave for closing, suspending or declining an account was because it was inactive/dormant or because there were concerns about financial crime.”
The statement set out further work the FCA intends to carry out in order to fill gaps in the data. This will culminate in “A financial inclusion sprint in Q1 2024 focussed on improving consumer access to financial services.”
Insurers have been reminded of their obligations to provide fair value to customers in a letter from the FCA. This comes amid concern over Guaranteed Asset Protection (GAP) products and their value to customers, with FCA data showing just 6% of the amount customers pay in premiums is paid out in claims, while up to 70% of the value of premiums is paid in commission to third parties.
The FCA letter gives firms a three-month ultimatum to prove customers are getting a fair deal, after which the regulator will intervene.
The move is an early indication of how the FCA will be enforcing the requirements of the new Consumer Duty.
Speeches and media
An FCA advert aimed at helping consumers understand the impact of hype on investment decisions is to be screened immediately before screenings of the film Dumb Money, Hollywood’s adaptation of the Gamestop saga. The advert is part of the regulator’s InvestSmart campaign and is the first it has produced tied to a single film.
The role of regulation in encouraging investment in the City was the subject of a speech given by Sarah Pritchard, Executive Director of Markets, and Executive Director of International at a City & Financial event in London.
She emphasised the value of “proportionate regulation” and encouraged greater debate on risk appetite as key elements of ongoing efforts to rest the UK’s approach to financial services.
FCA chief executive Nikhil Rathi called for “an Enlightenment on financial inclusion” in a speech delivered at PwC Glasgow’s Extending Financial Inclusion event. The speech was another instance of the regulator emphasising that genuine solutions needed to come from within the industry and through technology. He told his audience that the FCA was looking for solutions to spread financial inclusion, but that it didn’t have the levers at its disposal to justify making it a statutory requirement.
