Cryptoassets businesses: FCA confirms registration fees
The Financial Conduct Authority (FCA) has updated its webpage on the new anti-money laundering (AML) and counter-terrorist financing (CTF) regime for cryptoassets to announce the registration fees that will be imposed on cryptoassets businesses registering with it.
The FCA consulted on the fees in CP19/29, suggesting a flat rate of £5,000 for all businesses. In response to concerns raised by respondents, the FCA has introduced a lower fee for businesses within a lower income threshold and raised the fee for those in a higher income threshold to compensate for the reduction in revenue.
Accordingly, the charges will be:
- £2,000 for businesses with UK cryptoassets income of up to £250,000; and
- £10,000 for businesses with UK cryptoassets income greater than £250,000.
The FCA expects to publish detailed feedback to CP19/29 in a Handbook Notice it will publish at the end of January 2020.
SMCR extension: FCA update
The FCA has updated its webpage on the senior managers and certification regime (SMCR) for solo-regulated firms with some reminders and clarifications for firms, including:
- senior management functions (SMFs) appeared on the Financial Services Register on 9 December 2019. Firms are encouraged to check the Register to ensure the entries are correct;
- firms must identify the individuals that need to be certified on an annual basis and ensure that annual fitness and propriety checks for certification staff and senior managers fit into a firm's HR processes;
- SMFs are not restricted to members of the governing body. In Core firms, many holders of SMFs will, in practice, be members of the governing body. However, Compliance Oversight (SMF16) and MLRO (SMF17) are examples of functions that are often held by individuals who are not;
- the executive director function (SMF3) extends beyond members of the governing body to include a person in accordance with whose directions or instructions the directors of that body are accustomed to act; and
- senior managers should ensure that any delegation is reasonable in itself, that the individuals to whom they have delegated are appropriate, for example with suitable skills, and they should retain an appropriate level of oversight. There is FCA guidance on this in DEPP 6.2.9E of the FCA Handbook.
Open finance: FCA call for input
The FCA has published a call for input on how open finance could transform financial services. The FCA's vision for open finance is one in which:
- consumers and businesses can grant access to their data to trusted third-party providers and in return gain access to a wider range of financial services and products, have greater control over their data, engage with their finances, and are empowered to make better financial decisions;
- increased use of open finance services spurs greater innovation, benefiting consumers by providing a broader range of products and services that better suits their needs; and
- widespread use of new services improves the financial health of consumers and businesses in the UK.
In the context of this vision, the FCA asks the following questions:
- Is open banking on track to achieve its potential? (Chapter 2)
- What are the potential benefits of open finance in the markets the FCA regulates and to its operational objectives? Will those benefits materialise without intervention? (Chapter 3)
- Could open finance pose any risks to the FCA's operational objectives and would the FCA's current rules be sufficient to mitigate them? (Chapter 4)
- Under what conditions would open finance develop in a way that delivers the best outcomes? (Chapter 5)
- Given the above, what role should the FCA play? Does it need to intervene, and if so, in what way? (Chapter 6)
The FCA hopes that responses to this call for evidence will inform its regulatory strategy toward open finance. It does not assume intervention is necessary or inevitable.
The response period closes on 17 March 2020. The FCA plans to publish a feedback statement in the summer of 2020.
IGCs: FCA PS19/30 confirms extension of remit
The FCA has published a policy statement, PS19/30, confirming its decision to extend the remit of independent governance committees (IGCs) as proposed in its earlier consultation in CP19/15. PS19/30 sets out the FCA's feedback to responses received to that consultation and the FCA's final rules and guidance.
IGCs currently provide independent oversight of the value for money of workplace personal pensions in accumulation, that is, before pension savings are accessed. Firms which offer workplace personal pensions in accumulation, like life insurers and some self-invested personal pension (SIPP) operators, are currently required to have an IGC, or in some circumstances a Governance Advisory Arrangement (GAA). A GAA is a proportionate alternative to an IGC for firms with a smaller number of relevant consumers and less complex schemes.
The FCA is extending the remit of IGCs in two areas:
- a new duty for IGCs to consider and report on their firm's policies on environmental, social and governance (ESG) issues, member concerns and stewardship, for the products that IGCs oversee; and
- a new duty for IGCs to oversee the value for money of investment pathway solutions for pension drawdown (pathway solutions).
The FCA also gives related guidance for providers of pension products and providers of investment-based life insurance products.
The final rules come into force on 6 April 2020.
The FCA sets out next steps for firms, which includes ensuring that they have in place, by 6 April 2020, a GAA or IGC (the FCA's guidance is intended to help firms decide which is the most appropriate).
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