UK: The FS Express – April 2018

Last Updated: 11 April 2018
Article by Michael Ruck and Elena Elia

A quick guide to the FCA's new approach

FCA has published its Approach to Supervision and its Approach to Enforcement

  • The FCA has published a series of documents articulating how it carries out its main activities and its thought and decision-making processes with transparency.

Approach to Supervision

  • This defines supervision as the continuing oversight of firms/ individuals to reduce harm to consumers and markets.
  • The FCA is taking a forward-looking and pre-emptive approach to address risk and associated risk of harm.
  • A proportionate and risk-based approach will be implemented to target firms where misconduct would cause the most harm.
  • Focus is on culture and governance; the firm's purpose, attitude, behaviour, competence and compliance of firm leadership, and controls and key processes.

Approach to Enforcement

  • The overriding principle is a commitment to achieve fair and just outcomes in response to misconduct.
  • A responsive and efficient approach to investigate fairly is to be adopted.
  • Powers include investigation, taking civil, criminal and/or disciplinary action.
  • The FCA will only put their case to a firm/individual once investigation is completed and serious misconduct has been found.

FCA reviews approach to UK financial penalties

  • The FCA is launching a consultation on penalties this year, almost four years after it announced it would in 2014.
  • It will review its approach to how it levies penalties, which have gone from record highs to new lows over the past 5 years.
  • The FCA has denied going soft on misconduct and said it is emphasising redress to customers as much as headline fines.

The FCA and Culture

  • The FCA published a paper "Transforming culture in financial services".
  • Culture is seen as a key root cause of the major conduct failings in the industry.
  • The paper covers what a good culture looks like, role of regulation and how to go beyond incentive to change behaviour.

Click here to read the Out-law article on culture change.

British and Australian regulators strengthen cooperation on FinTech through Enhanced Cooperation Agreement

  • The FCA and ASIC have signed an Enhanced Cooperation Agreement between their Innovation Hubs to extend their existing agreement of cooperation and coordination on FinTech innovation.
  • They have agreed to explore quickening licensing processes of authorisation of innovative businesses authorised in other jurisdictions.
  • They will also look to co-host FinTech and regtech events, conduct joint policy work, research and experimentation.

UK will study crypto-assets before weighing rules, financial secretary says

  • Financial services minister John Glen said that the UK will evaluate virtual currencies before drafting any regulations. A new crypto-assets task force of financial regulators has been set up as one element of a strategy to boost financial technology. Glen stated:

Regulation could be an enabler of a stable, flourishing cryptocurrency exchange in the City of London...But I think it's right that we take appropriate, not really cautious, but proportionate steps to evaluate in a proper way, before we respond as a government.

New credit card rules introduced by the FCA

  • New rules come into force on 1 March 2018, which provide more protection for credit card customers in persistent debt or at risk of financial difficulties.
  • Firms must comply from 1 September 2018. FCA estimates changes will save consumers between £310m - £1.3b. Director of Strategy and Competition said:

Under the new rules firms will have to help customers to break the cycle of persistent debt and ensure customers who cannot afford to repay more quickly, are given help

Cases

Restrictions imposed on Beaufort Securities Limited (BSL) and Beaufort Asset Clearing Services Limited (BACSL) and insolvency.

  • The High Court has appointed administrators of both companies further to an urgent application by the FCA, which has imposed requirements on the firms under FSMA, requiring the firms to cease all regulatory activity.
  • The FCA is also assisting the DOJ with a separate investigation into BSL's involvement in securities fraud and international money-laundering.
  • The investigation continues.

CBL Insurance Europe dac placed into provisional administration

  • The Central Bank of Ireland has made an application to the High Court to have a provisional administrator appointed to CBL Insurance Europe Dac (CBLIE).
  • Central Bank of Ireland recommends policyholders to contact the firm directly or their broker to arrange alternative cover as soon as possible.

FCA bans former Co-operative Bank Chair, Paul Flowers from the financial services industry

  • Mr Flowers was chair of the Co-op Bank between 15 April 2010 and 5 June 2013. Flowers used his work mobile to make inappropriate calls to a premium rate chat line and sent and received sexually explicit and inappropriate emails despite previous warning of earlier misconduct.
  • Mr Flowers stepped down as Chair, and was also convicted for possession of illegal drugs.
  • The FCA stated:

Mr Flowers failed in his duty to lead by example and to meet the high standards of integrity and probity demanded by the role.

The FCA fines Vanquis £1.98m and orders the company to pay compensation to customers

  • The FCA has fined the credit card lender Vanquis £1,976,000 for failing to disclose the full price of an add-on product called Repayment Option Plan (ROP).
  • Customers who bought the product were not told the full cost included an interest component.
  • Vanquis have been ordered to pay back interest to customers charged from 1 April 2014 to the date of being informed of the interest component.

Barclays becomes first UK bank to receive ring-fencing approval

  • A UK High Court judge has given Barclays the go-ahead to complete the ring-fencing of its retail banking activities into a new entity.
  • This will be the first bank to receive approval following recommendation of the Independent Commission on Banking. To read the Out-law article, click here.

Top ten takeaways from the FCA's new approach

1. Business models, culture and prudential soundness are key areas of focus under supervision.

2. Potential, as well as actual risk of harm to consumers and markets will be supervised.

3. Senior individuals with a significant effect on the conduct of their firm will be held accountable in addition to the firm.

4. Effectiveness of governance will be assessed and not merely the design.

5. Various sources of intelligence will be used to target engagement.

6. Firms voluntarily accounting for misconduct and redress are likely to see lower sanctions.

7. Technical or minor breaches are less likely to be seen as serious misconduct, and may not require enforcement action.

8. Assessing the seriousness of misconduct includes weighing the nature, severity and implications of the harm.

9. Sufficient evidence of misconduct is required for an investigation to become a civil/criminal or disciplinary action.

10. A combination of powers may be used to resolve a finding of serious misconduct.

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,

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Squire Patton Boggs LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Squire Patton Boggs LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions