This weekly update from Clyde & Co's Financial Services Regulatory Team summarises new developments as reported by the FCA, the PRA, the UKLA, the Upper Tribunal, the Financial Ombudsman Service and the London Stock Exchange over the past week, with links to the full documents where these are available.
We hope that you will find this update useful.
Consultation papers:
9 April: CP13/1 – FCA Regulated fees and levies: Rates proposals 2013/14. The FCA has published a consultation paper (CP13/1) on the proposed 2013/14 regulatory fees and levies. The paper consults on the fee rates to raise the £432m Annual Funding Requirement (AFR) needed to meet the strategic priorities set out in its business plan on 25 March 2013. The paper also sets out the factors determining the combined FCA/PRA AFR from 2013/14, which totals £646.3m, representing a 15% increase over the 2012/13 FSA AFR, explaining reasons for the above average increases. This increase will be borne mainly by larger firms, reflecting the resources applied to the intensive conduct and prudential supervision of high impact firms. This paper only relates to the consultation on the FCA fees rates and the PRA will be publishing a separate consultation paper on its 2013/14 fees rates. The paper also consults on the allocation of the FOS general levy between industry blocks, and explains that the FCA does not propose to change the Money Advice Service levies for 2013/14, which the FSA consulted on in January. Responses to this consultation must be sent by 9 June 2013.
Press release: http://www.fca.org.uk/news/annual-funding-requirement-2013-14
Consultation paper: http://www.fca.org.uk/your-fca/documents/consultation-papers/cp13-01
9 April: PRA Regulated fees and levies: rates proposals 2013/14. The PRA has published a consultation paper (CP3/13) on the fee rates to meet its 2013/14 annual funding requirement (AFR). The paper provides an overview of the PRA's strategic priorities and business aims. It also includes a fees timetable with invoicing arrangements, and the 2013/14 allocation to fee blocks. Finally, the paper sets out the PRA Financial Penalty Scheme, whereby financial penalties received by the PRA must be paid to HM Treasury net of certain enforcement costs incurred in the financial year in which the penalties are received. Responses must be sent to gillian.boundy@bankofengland.co.uk by 9 June 2013.
Discussion papers:
No new developments this week.
Policy statements:
No new developments this week.
Press releases:
9 April: FCA investigation of RBS IT failure. The FCA has announced that it has commenced an investigation into the IT failures at RBS which affected the bank's customers in June and July 2012. The FCA will reach its conclusions in due course and then decide whether or not enforcement action should follow.
http://www.fca.org.uk/news/fca-investigation-of-royal-bank-of-scotland-rbs-it-failures
Speeches:
10 April: Human face of regulation. The FCA has published a speech delivered by its Chief Executive, Martin Wheatley, at the London School of Economics on 10 April 2013. The speech focused on how the FCA will be using behavioural economics in the years ahead. Mr Wheatley highlighted how recognising that we operate within a very human environment is one of the most significant challenges for modern financial regulators, who have historically focused on robotic compliance without taking account of the human processes influencing consumer choices. He argued that the 'buyer beware' approach is less appropriate when consumers are buying seriously complicated financial products with long-term implications. Mr Wheatley also acknowledged that there is a darker side to behavioural economics and explained that the FCA won't be afraid to shine a light on the murkier psychological enticements and entrapments that exist in financial services. Finally, he noted the lack of competition across some of our most important markets, commenting that the FCA will empower consumers to switch products more easily. In conclusion, Mr Wheatley described how the FCA will be much more consumer-focused in order to help rebuild confidence in financial services, but noted that that does not mean the FCA will be biased towards consumers.
http://www.fca.org.uk/news/speeches/human-face-of-regulation
Bulletins and newsletters:
No new developments this week.
Final notices:
No new developments this week.
Application refusals:
No new developments this week.
Approved person refusals:
No new developments this week.
Research publications:
No new developments this week.
Consumer research:
No new developments this week.
Other FCA and PRA publications:
11 April: FCA Mortgage Market Review Q&As. The FCA has published a set of questions and answers which have been developed from Mortgage Market Review lender roadshows. The Q&As cover a variety of topics including:
- Responsible lending including affordability
- Advice
- Execution-only sales
- Arrears and payment shortfalls
- Qualifications
- Scope of service / disclosure
- Trapped borrower transitional rules and contract variations
- Interest-only mortgages
- Bridging loans
- High net worth and business lending
- Mortgage professionals
- Change in reporting requirements
http://www.fca.org.uk/static/documents/mmr-q-a-lenders.pdf
10 April: FCA publishes occasional papers on behavioural economics exploring how people make financial decisions. The FCA has published two occasional papers on behavioural economics to explore how people make final decisions, with the aim of understanding mistakes consumers make, how firms respond, how this affects competition, and what interventions the FCA might consider. The first paper focuses on how consumers choose and use financial products, and how behavioural biases lead to firms competing in ways which are not in the interests of consumers. The second paper explores how best to encourage consumers to respond to customer contact letters.
Press release: http://www.fca.org.uk/news/fca-publishes-occasional-papers-on-behavioural-economics
OP/1: http://www.fca.org.uk/your-fca/documents/occasional-papers/occasional-paper-1
OP/2: http://www.fca.org.uk/your-fca/documents/occasional-papers/occasional-paper-2
UKLA publications:
No new developments this week.
Upper Tribunal (Tax and Chancery Chamber) (formerly Financial Services and Markets Tribunal (FSMT)):
No new developments this week.
Financial Ombudsman Service (FOS):
No new developments this week.
London Stock Exchange (LSE):
No new developments this week.
Legislative updates
No new developments this week.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
