Financial institutions general regulatory news 29 November 2019

Recent regulatory developments of interest to financial institutions generally.

Contents

Approving unauthorised persons' financial promotions: FCA guidance

The Financial Conduct Authority (FCA) has published new guidance on firms' approving financial promotions for unauthorised persons. The guidance explains some practical implications of the FCA's existing requirements relating to financial promotions, rather than setting out new standards.

The FCA has published this guidance following particular concerns about the promotion of unlisted debt securities or "mini-bonds". However, the FCA states that the broad principles outlined in its new guidance are also likely to be relevant to the approval of financial promotions in other sectors.

In its guidance, the FCA highlights considerations under the following topics:

  • ensuring that a promotion is fair, clear and not misleading;
  • reliance on others;
  • promotion through social media and digital communications;
  • systems and controls related to the approval of financial promotions; and
  • the consequences of breaching FCA requirements.

The FCA stresses that its guidance is not exhaustive and is not a complete description of the steps a firm should take when approving a financial promotion relating to a retail investment. It is for firms to determine the extent of the analysis or review needed to confirm that a financial promotion complies with its rules on a case-by-case basis.

FCA Handbook Notice 71

The FCA has published Handbook Notice 71, which sets out changes to the FCA Handbook made by the FCA board on 24 October and 21 November 2019. It also sets out changes made by the Financial Ombudsman Service board on 30 October 2019.

The Handbook Notice reflects changes made to the Handbook by the following instruments:

  • Mortgages (Responsible Lending) Instrument 2019 (FCA 2019/92);
  • Exiting the European Union: Dispute Resolution: Complaints (Amendments) Instrument 2019 (FOS 2019/5);
  • Training and Competence (Amendment No 8) Instrument 2019 (FCA 2019/95);
  • Supervision Manual (Reporting No 12) Instrument 2019 (FCA 2019/96); and
  • Over-the-Counter Derivatives Central Counterparties and Trade Repositories (No 3) Instrument 2019 (FCA 2019/97).
Cyber resilience: FCA and PRA self-assessment questionnaire

To help both firms and the regulators to understand their cyber resilience capability, the FCA and the PRA have created a self-assessment questionnaire (CQUEST). CQUEST consists of multiple-choice questions covering aspects of cyber resilience, such as:

  • Does the firm have a board-approved cyber security strategy?
  • How does it identify and protect its critical assets?
  • How does it detect and respond to an incident, recover the business and learn from the experience?

The answers provide a snapshot of a firm's cyber resilience capability and highlight areas for further development.

LIBOR transition: FCA Q&As on conduct risk and speech

As reported in this bulletin last week, the FCA has published a webpage on conduct risk during LIBOR transition, including some Q&As for firms. It encourages all firms that currently rely on LIBOR to consider them.

Read more in our briefing: UK FCA gives guidance on conduct risk during LIBOR transition.

Separately, Edwin Schooling Latter, Director of Markets and Wholesale Policy at the FCA, has made a speech on the transition from LIBOR, in which he addresses the following topics:

  • key next steps in sterling swaps and loan markets;
  • contractual fall backs in global derivatives markets;
  • loss of representativeness of the LIBOR benchmark; and
  • how market participants should avoid LIBOR-related risks.
Robo advice: FCA Insights article

The FCA has published an Insights article, "Robo Advice – will consumers get with the programme?". The author considers the results of research carried out by FCA economists on the varying degrees of acceptance or rejection of robo advice by consumers.

Financial services sector competition investigation: CMA extension

The Competition and Markets Authority (CMA) has updated the timetable for its ongoing investigation into alleged anti-competitive arrangements in the financial services sector. The CMA indicates that the initial investigation, including a review and analysis of information gathered, will continue until April 2020.

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Authored by Yvonne Clapham

 

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