UK: Weekly Financial Services Regulatory Update - Week To 21.09.12

This weekly update from Clyde & Co's Financial Services Regulatory Team summarises new developments as reported by the FSA, 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. If you have any queries about any of the information in this update or financial services regulatory matters generally, please contact one of the individuals listed in the 'Contacts' section of this publication.

If you have any comments on the content or format of the update or if you no longer wish to receive it, or have a colleague who would like to receive it, please email

Consultation papers:
No new developments this week.

Discussion papers:
No new developments this week.

Policy statements:
No new developments this week.

Press releases:
No new developments this week.


18 September: Financial promotions: keeping connected and compliant. The FSA has published a speech by Clive Gordon, FSA Head of the Conduct Risk Department, on financial promotions. Going forward, the FCA will have the power to ban misleading financial promotions with immediate effect, and publish the promotion and the reasons for banning it. In his speech, Mr Gordon considers these new powers with a specific focus on digital media and how firms might consider the new regulations when reviewing their compliance procedures. He outlines five key points for consideration:

  • Digital media exists in circulation much longer than traditional publications and, as such, regular review of publications is advisable
  • Consideration of the type of media channel and its suitability for the product or service promoted
  • Risk information should be prominent and clearly displayed
  • Digital communications need to meet all relevant financial promotion rules regardless of where or how they are communicated
  • If the promotion cannot be made compliant within the allocated space of the medium it should not be advertised, for example, character limitations may not allow sufficient information communication/speeches/2012/0918-cg

18 September: How Conduct regulation will be changing and how the new regulators will seek to get a fair deal for consumers. The FSA has published a speech by Martin Wheatley, Managing Director, FSA, which was given at the ABI conference 'A way ahead for conduct regulation'. His speech sets out three key themes:

  • That in order to meet the changing environment, the FSA itself is changing to become the FCA and so too are its expectations of firms
  • The FSA in this endeavour will continue to work with firms to ensure that customers interests are at the heart of firms' business models
  • A stable and trustworthy insurance sector plays a vital role in ensuring a thriving financial services sector speeches/2012/0918-mw.shtml

13 September: Beating the Fraudster. The FSA has published a speech by Bob Ferguson, Head of Financial Crime & Intelligence, FSA, given at the ABI Fraud Conference. In it, he discusses the transition from the FSA as an integrated regulator, to the new regime with the FCA as a conduct regulator and the PRA as the prudential regulator. He considers the financial crime responsibilities of the FCA and considers money laundering risk, corruption risk, investment fraud against consumers and, insider dealing on the markets side, as the areas of highest risk. The FCA will continue the work of the FSA to identify dishonest conduct and exclude persons from the regulated population. He concludes by summarising how, going forward, the insurance industry can internally devise stronger and smarter preventative measures against professional and opportunistic fraud, via intelligence sharing and collaboration with public agencies and the FCA. speeches/2012/0913-bf.shtml

Bulletins and newsletters:

No new developments this week.

Final notices:

20 September: Nasreen Begum Hussain trading as My Insurance Solutions. The FSA has issued a Final Notice, dated 20 September 2012, cancelling the Part IV permission that had been granted to Mrs Hussain. On 3 July 2012, a First Supervisory Notice was issued to Mrs Hussain, varying her Part IV permission by removing her regulated activities with immediate effect as she was no longer able to satisfy the FSA that she is a fit and proper person to conduct regulated activities. The FSA's powers under subsection 3 of section 45 of the Financial Services and Markets Act 2000 require that the FSA must cancel the permission entirely if it is satisfied that it is no longer necessary and, as the FSA is so satisfied, the permission has now been cancelled.

18 September: Pi Financial Limited. The FSA has issued a Final Notice, dated 18 September 2012, issuing a financial penalty to Pi Financial Limited of £58,300 in respect of breaches of Principle 3 (Management and Control) and Principle 9 (Customers: Relationships of Trust) of the FSA's Principles for Businesses (the "Principles"). The FSA found that the firm had failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems, in breach of Principle 3. Further, the FSA found that it had failed to take reasonable care to ensure the suitability of its advice to clients with regard to the clients' attitudes to risk, in breach of Principle 9. The company agreed to settle at an early stage of the FSA's investigation and therefore qualified for a 30% discount on the full penalty of £83,363.

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 FSA publications:

21 September: FSA confirms timetable for Solvency II has not changed. On 21 September 2012, the FSA updated its Solvency II webpage, announcing that following comments made by Michel Barnier, European Commissioner for Internal Market and Services, regarding a possible delay of one year, the timetable for the Solvency II Directive (2009/138/EC) has not changed. The announcement follows a trialogue meeting (between the European Commission, the Council and the European Parliament) on 18 September 2012. The current timetable for Solvency II, with transposition by member states on 30 June 2013, and implementation by firms from 1 January 2014, remains in place.

20 September: FSA letter to firms with FAQs on preparations and transitional arrangements towards the PRA. On 20 September 2012, the FSA published a letter to firms (dated 12 September 2012), together with a set of FAQs, on the preparations and transitional arrangements for the establishment of the Prudential Regulation Authority (PRA). The letter refers to a number of proposed publications that the FSA and the Bank of England (BoE) will issue in the run up to "legal cutover", when the PRA acquires its legal powers, currently expected to be around April 2013. The FAQs also contain detailed information on some of the key practical transitional issues that will affect firms, including authorisations, supervision and the development of the PRA Handbook.

19 September: FSA modification by consent relating to SUP 16.11 no longer available. On 19 September 2012, the FSA updated a webpage relating to a modification by consent available to providers of home reversion and home purchase plans. The modification relates to rules on product sales data reporting in Chapter 16.11 of the Supervision manual and is no longer available as home purchase plan and home reversion plan product sales data can now be submitted through Gabriel. Waiver/Consent/sup16_11.shtml

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):

20 September: Complaints as insight. The FOS has published a speech by Tony Boorman, deputy chief ombudsman, speaking at a conference on "Customer experience management for banking and financial services" about welcoming complaints as an insight for improvement. It focuses on addressing customer complaints and achieving success through:

  • Improving the customer experience of banking and financial services
  • Introducing smoother, more consumer-intuitive processes
  • Helping staff to see serving customers as the central focus of their role;
  • Providing staff with the right tools and training to deliver
  • Developing the services and products that better meet consumer needs speech/2012/TB-customer-experience-sep-12.html

18 September: Complaints, regulation and re-building trust. Natalie Ceeney, chief ombudsman, spoke at the ABI conference on conduct regulation on why complaints are more than just "compliance activities" and are all about reputation, loyalty and trust. In it, she highlights that the conduct of businesses has fallen well below the standard rightly expected of them. The demands for change are increasing following years of mis-selling scandals (such as PPI) and fines during which regulators have not been able to tackle shortcomings head-on. Recently, the Ombudsman has noted a rise in complaints against insurers and she highlights that change is needed, not just in the banking industry, but in the insurance sector as well. speech/2012/NC-ABI-Sep-12.html

London Stock Exchange (LSE):

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.

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