Following UK government guidance published late last year covering the corporate criminal offence for ‘failure to prevent fraud’, this week we lead with the latest industry guidance from UK Finance. Given the importance of sound interpretation around what constitutes reasonable prevention measures, this guidance includes a series of illustrative examples.
Risks and threats also feature prominently in our second item covering the recently published Office of Financial Sanctions Implementation (OFSI) Threat Assessment for Financial Services, which is centred around the UK sanctions landscape. This comes with added weight given prevailing geopolitical tensions.
Elsewhere this week, we pick up a recent speech by the Governor of the Bank of England, latest developments on pensions dashboards, and changes to streamline capital communications aligned to a regulatory simplification agenda.
Failure to Prevent Fraud (FtPF) became an offence under the UK’s Economic Crime and Corporate Transparency Act 2023 (ECCTA), allowing companies to be prosecuted for insufficient fraud prevention measures. Companies must have reasonable procedures to prevent fraud. In November 2024, the Home Office issued statutory guidance, followed by UK Finance's supplementary advisory guidance for the financial services sector.
This latest document guides firms on interpreting the Act, defining who is covered by FtPF, exceptions or defences, and expectations for fraud prevention. The ‘six principles’ include risk assessments, policies, due diligence, training, monitoring, and fostering a compliance culture through senior management. It also notes situations where procedures may not be expected.
Developed with UK Finance members, this guidance aims to help firms and legal advisors understand and implement these requirements. UK Finance emphasises that the guidance is neither exhaustive nor mandatory.
Read more on the Failure to Prevent Fraud industry guidance
OFSI has published its Financial Services Threat Assessment for 2022 to present, highlighting sector vulnerabilities related to UK financial sanctions. Key findings include:
Andrew Bailey, Governor of the Bank of England, recently spoke on the underestimated changes in financial markets. At the University of Chicago Booth School of Business in London, he highlighted the growing importance of non-banking financial institutions (NBFIs), which now account for nearly 50% of global financial assets compared to banks' 40%. He pointed out that risks to financial stability have increasingly originated from NBFIs over the past fifteen years, including potential illiquidity and sudden market moves.
Bailey advocates a targeted regulatory approach rather than broad regulation and mentioned two Bank of England (BoE) initiatives. The System-Wide Exploratory Scenario (SWES) exercise stress-tests the resilience of the financial system, including NBFIs. Meanwhile, the Contingent NBFI Repo Facility (CNRF) provides liquidity support during significant market stress. These measures aim to reduce panic, market volatility, and emerging risks.
Read more on Andrew Bailey’s recent speeches
The Financial Conduct Authority (FCA) recently published a new webpage, detailing what pension providers are required to do in order to register their connection with the pensions dashboard ecosystem provided by the Money and Pension Service (MaPS).
Pensions dashboards will allow consumers to securely access online information about their pensions that are not yet paying benefits. The rules for pension providers, published in November 2022, are detailed in COBS 19.11 of the FCA Handbook.
Pension scheme providers must register with MaPS, connect to the Pensions Dashboards Programme's digital system, and be ready to handle pension search requests and return information to chosen dashboards by 31 October 2026.
Guidance is set out by the Department for Work and Pensions (DWP), including a staged timetable for connection:
UK Regulatory Handbook 2024
An essential guide to the regulatory landscape for financial services
