This week’s roundup includes the results of an internal FCA review, enforcement actions and some speeches by key figures at the regulatory body.
Consultation
The FCA has said that, following a review, it has improved its disclosure processes in regulatory enforcement cases. The step follows recommendations from the Upper Tribunal and relates to disclosure of evidence as part of any regulatory case.
According to the press release, some of the changes that have been made as a result of the review include:
- taking a broader approach to disclosure which will mean the review of documents is not focused only on identifying potentially undermining material;
- enhancing existing training on disclosure to include additional specialist training for those managing and overseeing disclosure exercises;
- providing additional training for staff and more detailed guidance on quality assurance;
- clarifying the roles and responsibilities of staff and managers involved in disclosure;
- giving greater emphasis to the importance of disclosure in measuring and rewarding staff performance.
The FCA has said “overall, the aim of our changes is to improve the quality of our disclosure by providing greater support for case teams.”
Separately, the FCA has said it has set out the next steps in its work on closing the advice gap, following feedback on its Discussion Paper (DP23/5).
In a media note the regulator has said: “We want people to be able to make informed decisions about their finances with confidence – and for people to have access to the help, guidance and advice to do so.”
It goes on: “In December 2024, we will consult on high-level proposals for targeted support in pensions, which would allow firms we regulate to provide support to pension savers in a new way.”
Also last week, the FCA said it will “consult on extending the time motor finance firms have to handle commission complaints.”
A statement by the regulator says: “The decision to consult follows the Court of Appeal’s judgment in Hopcraft v Close Brothers Ltd, Johnson v Firstrand Bank Ltd, and Wrench v Firstrand Bank Ltd.”
According to the statement, “The proposals are expected to be published within two weeks and, if taken forward, would mean the complaint extension is in place by mid-December 2024.”
You can read more details of the UK motor finance commission complaints and the related Court of Appeals judgement here.
Enforcement
In a latest enforcement action, the FCA says it has fined Metro Bank £16m for financial crime failings. The failings are said to have happened between 2016 and 2020.
A press release by the regulator says during that time, “Metro failed to have the right systems and controls to adequately monitor over 60m transactions, with a value of over £51bn, for money laundering risks.”
You can read more details of this particular enforcement action in our GRIP story here.
In another enforcement action last week, the FCA said: “Craig Buchan and Martin Cooke, former partners of MedDen Financial Services LLP (MedDen), have been fined £6,037 and £6,020 (respectively) and banned by the FCA for recklessly breaching an asset requirement imposed on the firm.”
According to a press release: “The FCA imposed an asset requirement on MedDen, meaning the firm could not diminish the value of any of its own assets. The asset requirement was imposed to safeguard MedDen’s assets for the benefit of its customers who were owed redress for financial losses suffered because of advice they had received.”
But despite the requirement imposition: “Mr Buchan and Mr Cooke recklessly withdrew funds from MedDen’s bank account for their own benefit. This meant MedDen’s bank accounts held no funds for customers who were owed redress. Both individuals also failed to report the breach of the asset requirement to the FCA,” the regulator has said.
And the FCA has banned Mr Ari Harris from working in financial services. A press release by the regulator says: “In July 2020, Mr Harris was convicted of inflicting grievous bodily harm without intent after stabbing a man twice in the neck. He was sentenced to three years’ imprisonment in July 2022.”
“Mr Harris and Reeds Motors Ltd (the firm), of which he was sole director, deliberately failed to notify the FCA of his offending, conviction and custodial sentence, despite obligations to do so. They deliberately provided false and misleading information to cover up the fact that he was in prison,” the press release adds.
The regulator has also cancelled the firm’s permissions.
Regulation
The FCA has said in a statement: “UK financial regulators have confirmed new rules to bolster the resilience of technology and other third parties providing key services to financial firms.”
The regulator says: “Financial firms and financial market infrastructures (FMIs), such as payment systems, have become increasingly reliant on the services of a small number of third party providers, known as critical third parties.
“While these third parties can enhance competitiveness for the sector, disruption or failure to one of them – such as a cyber-attack or power outage – could affect a large number of consumers and firms, and threaten the stability of the UK financial system,” the statement reads.
UK regulators were given new powers in 2023 to oversee how these third parties performed, and the FCA, Bank of England and Prudential Regulation Authority have now set out how they intend to use their new powers.
The FCA says the final rules “will not only strengthen the resilience of the services that critical third parties provide to individual firms, but will improve the resilience of the UK financial services sector as a whole.”
And in a separate statement around regulation, the FCA has said it “welcomes the Government’s publication of their consultation response and the draft legislation on bringing environmental, social and governance (ESG) ratings providers into regulation.”
The statement adds that: “As financial services firms integrate ESG into their activities and expand their products in this space, they are increasingly reliant on third party ESG data and ratings services.
“We have previously said we support bringing ESG ratings providers into regulation, to improve transparency and trust in the market.”
The regulator has also said it “will continue to work closely with the Government on their next steps as they welcome technical comments on their draft legislation.”
Media and speeches
The FCA has said it welcomes the Treasury’s national payment vision, and that it “shares the vision of an innovative, safe and competitive payments sector, embracing technological change to better serve people and business.”
In a brief statement the UK regulator has said: “The changes announced today will help ensure better coordination and clearer regulatory responsibilities. We will continue to work closely with the Payment Systems Regulator (PSR), the Bank of England and the government to deliver the vision we share.”
Also last week, the FCA responded to Chancellor Rachel Reeves Mansion House speech, in which she once again emphasized that regulators should pave the way for economic growth.
In a detailed statement the UK regulator has said: “We’re a partner for growth and we support the Chancellor’s vision for achieving it. Our regulation enables a fair and thriving financial services sector that allows people to spend, save and invest in their own future.”
The FCA says it “will work quickly with the Government, industry, consumer groups and other interested parties as we deliver this important work.”
You can also read the key takeaways from Rachel Reeves’ debut Mansion House speech in our GRIP story here.
Publications
And finally, the FCA said last week that, together with the Financial Ombudsman Service, it has “published a joint call for input to seek views on how to modernize the redress system, so it better serves consumers and provides greater stability for firms to invest and innovate.”
A statement by the regulator says: “The organisations will also improve how they work together, and with industry and consumer groups through the Wider Implications Framework, to prevent the escalation of issues that can result in mass complaints and create significant redress liabilities for firms.”
