The FCA has proposed a significant number of changes that will have an impact on regulatory policy with many of these changes forming elements of the government’s wider Edinburgh Reforms.

ComplyPortal recently hosted a brunch where Complyport director Richard Corbyn facilitated a session highlighting some of the key areas of change and how these changes can impact firms.

We have gathered some questions and insights from this event that your organisation may want to consider if you haven’t already.

Consumer Duty

The FCA unveiled the Consumer Duty, a new set of rules intended to enhance consumer protection within retail markets and minimize the amount of harm to retail consumers.

In 2021, the FCA issued two consultation papers, and on 27 July 2022 the FCA released its finalised guidance that incorporated the vast majority of its proposals from those consultations. Firms must adhere to the rules for open products and services by the end of July 2023, and for closed books of business by July 2024.

Taking this into account, Richard presented the following considerations to guests in attendance:

  • Have you evidenced your plan and implementation?– A solid implementation plan should consider the following areas: define the end state target for gap assessment, consider how the elements of consumer duty come together, evidence outcomes and review products and services to meet higher standards.
  • Have you read FCA’s areas of focus for firms implementing the Consumer Duty? – Upon reviewing a sample of implementation plans, the FCA has found that many firms have shown a thorough understanding and embrace the shift towards delivering good customer outcomes that the Duty will entail. But the FCA has also found that some firms are further behind in their planning and may be at risk to apply the Duty effectively once the rules come into force.
  • Have you read the sector-specific “Dear CEO” letter recently issued by FCA? – From February 2023, the FCA rolled out sector-specific letters to CEOs as part of its publication of information and assistance in relation to the Consumer Duty.

The extensive proposals will oblige firms to assess their suite of products, communication practices, and the entire customer journey, as well as to contemplate modifications in various areas including governance and accountability, management information and reporting, product design, pricing, distribution, service delivery, and staff training.

Financial Promotions 

The FCA released a consultation paper titled “Introducing a Gateway for Firms that Endorse Financial Promotions” on December 6, 2022. The consultation paper outlines the FCA’s proposed framework for implementing a new gateway, which would mandate that firms seeking to continue approving financial promotions for unauthorised individuals must first seek permission to do so.

At present, according to S21 of the Financial Services and Markets Act (FSMA), authorised firms bear the responsibility of guaranteeing that financial promotions comply with FCA regulations. These regulations include the stipulation that promotions must be transparent, impartial, and devoid of any misleading information, and that they must be either (i) promoted from an authorised firm; (ii) approved by an authorised firm; or (iii) it benefits from an exemption.

The Financial Services and Markets Bill (the Bill) will introduce changes to the S21 regime. Among these changes is a new regulatory gateway for S21 approvals, which will be established through an amendment to FSMA. The FCA intends to set up the gateway as soon as the legislation is passed.

With The Gateway on the horizon, Richard asserted “S21 approvers wanting to carry on this activity will likely need to submit a Variation of Permissions application later on this year.”

For now, we must stay tuned to see how this Bill progresses and how it will be implemented in its’ final form.

SMCR

The Senior Managers and Certification Regime (SMCR) was first implemented for banks in 2016

across the banking sector and PRA-designated investment firms. SMCR replaced the previous Approved Persons Regime (APER). Later, in December 2018, insurers were also included under the SMCR. Then, in December 2019, the scope of the SMCR was further extended to encompass FCA-solo-regulated firms.

SMCR was established in order to drive further responsibility and accountability within the UK finance industry, thus driving greater individual responsibility, behaviour and corporate governance within firms.

Guests in attendance were keen to understand “what can we expect to see from the review of the SMCR announced by the Chancellor back in December 2022?” At present, clear objectives and possible outcomes from the reviews carried out by regulators and the government are pending.

Firms also asked “is the current regime working well since it was introduced?” SMCR is still a relatively new regime only being introduced in 2018. However, Richard expressed that “greater levels of individual responsibility is a step in the right direction in firm’s undergoing due diligence and corporate governance”.

How Can ComplyPortal Help?

To conclude this session, Richard posed an important question for firms to consider:

“What are some ways of testing your processes?”

ComplyPortal is leading RegTech Software, which is designed by compliance professionals to help regulated firms simplify and digitise their regulatory compliance management in an easy-to-use cloud-based platform. ComplyPortal is assisting firms to prepare for these changes with a built-in assessment to identify gaps for Consumer Duty and Financial Crime programmes. These tools include:

  • Our Consumer Duty Readiness Assessment questionnaires
  • The management and approval of Financial promotions in ComplyPortal’s approval module
  • Our Cloud-based training resources
  • And more!

CLICK HERE TO GET STARTED!

About ComplyPortal:

First developed in 2011 by compliance professionals for compliance officers, ComplyPortal offers workflow, automation, and several modules to help firms with control and regulatory compliance monitoring.

ComplyPortal simplifies financial services regulatory compliance management on an easy-to-use cloud-based comprehensive compliance platform. It enables compliance officers, risk officers and senior management to keep track of their firm’s regulatory responsibilities and workflows. Our platform includes the following modules, among others:

  • Monitoring: a year-round schedule pre-populated with monitoring questionnaires to ease compliance processes.
  • Registers: lists controlled by the Compliance officer, but easy for staff to view.
  • Risk: map and control risk areas to effectively identify and manage risk for your firm.
  • eKYC solution: perform comprehensive searches, including client identity verification, document authenticity, and more for a comprehensive KYC and AML approach

CLICK HERE TO GET STARTED!