Cyber security threats are constantly evolving. We’ll work with you to develop and test robust people, process and technology defences to protect your data and information assets.
Working with borrowers and private equity financial sponsors on raising and refinancing debt. We can help you find the right lender and type of debt products.
Regulatory change, pressure on cost management and growth, and increased investment in technology and data are dominating the financial services industry.
Welcome to our weekly round-up for UK financial services regulation. Paul Staples summarises the key announcements and developments. Be sure to subscribe to receive our updates in your inbox every week.
Get the latest insights, events and guidance for financial services professionals, straight to your inbox.
As I write, the Chancellor will be delivering her highly-anticipated Mansion House speech. This is expected to focus on the need for regulatory reform to unlock innovation, drive more investment and deliver sustainable economic growth. This amounts to a new, bold agenda to rebalance the regulatory system. More on this next week.
From the future to the past, our leading item this week covers research assessing consumers’ ability to withstand shocks, and provides a useful basis on which to consider ‘customer support’ under a Consumer Duty lens.
Next, we take a deeper look at transaction reporting which has been the focus of many s166 Skilled Person Reviews.
Meanwhile, the next episode for pension dashboards features in the latest policy statement from the Financial Conduct Authority (FCA).
We conclude this week with latest guidance on the incoming ‘failure to prevent fraud’ legislation, as well as proposals to improve the investment research market.
FCA research: impact of income and employment shocks for consumers
The FCA has conducted economic analysis regarding the impact of income and employment shocks, using data from the Covid-19 pandemic to understand how unexpected changes impacted consumers. The regulator has published two research notes setting out its conclusions and key themes.
The first note examined how income changes during the pandemic affected consumer saving, consumption, and borrowing behaviours. The FCA found that consumers generally handled negative income shocks well, reducing spending for permanent shocks and borrowing more for temporary ones without increasing arrears risk.
The second note explored how job loss and long-term illness affect credit repayment. The results showed consumers are almost twice as likely to fall behind on payments after job loss and nearly three times as likely after long-term illness or disability. However, there was no significant increase in the use of credit cards or overdrafts to manage debt.
This will be of interest to all firms with retail customers.
In the latest edition of Market Watch, number 81, the FCA provides crucial updates on market conduct and transaction reporting issues. One significant highlight is the findings from skilled person reviews under the Financial Services and Markets Act (FSMA). These reviews have identified persistent data quality issues in transaction reporting, often stemming from weaknesses in change management, reporting process, logic design, data governance, control frameworks, and governance oversight.
The FCA emphasises the need for firms to enhance their transaction reporting environments to comply with UK Markets in Financial Instruments Directive (MiFID) requirements. Key observations include poor change management practices, fragmented data sources, and inadequate control frameworks. Firms are urged to take note of these findings and implement necessary improvements to ensure accurate and complete transaction reporting.
This update is particularly relevant for firms subject to UK MiFID, the European Market Infrastructure Regulation (EMIR), and Securities Financing Transactions Regulation (SFTR) reporting requirements, highlighting the importance of robust data governance and effective oversight in maintaining regulatory compliance.
The FCA has published a Policy Statement (PS24/15) on the regulatory framework for pension dashboard service firms. The Policy Statement summarises the feedback to the FCA’s consultations earlier this year alongside its responses. The FCA intends the pension dashboards to enable consumer confidence and engagement with their retirement planning.
While the FCA is in the process of finalising its rules and expectations for the initial launch of private sector pension dashboard services, it isn't opening the gateway to receive applications for authorisations and variation of permissions at present. The FCA noted it would open the gateway once the Government and Pension Dashboards Programme have produced all information necessary for a firm to design and build a PDS.
Once the dashboards are available to consumers, to assess whether these are supporting the Government’s expectation that they will reunite consumers with lost pension pots, the FCA will monitor the number of dashboards alongside the level of use of these by consumers.
Guidance on the office of failure to prevent fraud
The UK Home Office has recently published guidance on the Economic Crime and Corporate Transparency Act 2023 (the Act), focusing on the new offence of failure to prevent fraud. This guidance supports large organisations in understanding their responsibilities under the Act, offering clear steps to manage fraud risks in their operations and supply chains. While this offence applies only to large organisations across the UK, the guidance also outlines good practices that may benefit smaller entities.
The guidance defines reasonable fraud prevention procedures and highlights key factors that organisations should consider reducing potential liability. Recommendations include establishing robust anti-fraud frameworks, clarifying management roles, and customising fraud prevention measures to address specific company risks.
With the offence taking effect on 1 September 2025, the Home Office advises organisations to review the guidance thoroughly and start implementing these procedures in advance of the effective date.
The FCA is consulting on expanding a new payment option for investment research, following recommendations from the 2023 Investment Research Review (IRR). This new option finalised in July 2024 allows firms to use joint payments for third-party research and execution services if they meet certain conditions.
The goal is to make it easier for a broader range of asset managers, including those managing pooled funds under AIFMD and UCITS regimes, to access and pay for research flexibly. The proposals apply to various entities including fund managers, alternative investment fund managers, portfolio managers and investment consultants. Responses to the consultations are requested by December 16, 2024. Based on the feedback, any final rules or guidance may be published in early 2025 to further streamline payment options and support the investment research market’s growth and efficiency.
David Morrey and Paul Garbutt discuss the recent Court of Appeal decision regarding motor finance complaints, which requires greater disclosure of commissions paid to brokers and explicit consent from borrowers.
