Contents:
- New rules on Consumer Duty
- Fund managers’ value assessments – meeting the FCA’s required standards
- FCA metrics – how is the Authority performing against its own metrics?
- Principal firms for appointed representatives – new requirements from 1 December 2023
- Cryptoassets and their promotion
- Consultation on the use of Social Media
Consumer duty
On 31 July this year the new rules on Consumer Duty came into effect. These are wide-reaching and require firms to focus on consumer outcomes.
The FCA has been quick to utilise the new rules and has recently published a report on cash savings. It set out an action plan to ensure banks and building societies are offering the best interest rates to customers.
This is a current area of high interest for the FCA, so firms within its scope should ensure they have implemented any necessary changes as a result of the new legislation.
Fund managers’ value assessments
The requirement for fund managers to publish value assessments has been in effect for some time. It requires them to analyse their costs and services to ensure they are providing the best value to underlying investors.
The FCA undertook a review in 2021 of how well fund managers were performing value assessments and recently revisited this with a further review. While the latest review was broadly positive, the FCA identified that some firms were falling short and that fees could be reduced further.
Fund managers would be advised to read the outcomes of the review here to ensure they are meeting the FCA’s required standards. See: Authorised fund managers’ assessments of fund value 2023 | FCA
FCA Metrics7
Firms may be interested to see how the FCA is performing given its internal targets, particularly in relation to the sometimes slow response time for new authorisations or other changes. The latest review is here and shows how the FCA is faring: Authorisations operating service metrics 2023/24 Q1 (fca.org.uk)
The FCA has advised that they are continuing to invest and work on these targets.
The forms for initial authorisations are being updated with the view that this will make it quicker and easier for firms to initially register for authorisation with the FCA.
Principal firms for appointed representatives
From 1 December 2023, all principal firms will need to send the FCA regular data about their Appointed Representatives (ARs).
Greater accountability for principal firms with appointed representatives started with the SM&CR regime and the FCA is now rolling out further monitoring.
Read more about what principal firms must report here How to report Appointed Representatives data – information for principal firms | FCA
Cryptoassets
The FCA is supervising the promotion of cryptoassets and firms must ensure they are complying with the rules, which are due to come into effect from October 2023.
The FCA is classifying cryptoassets as ‘Restricted Mass Market Investments’. This allows them to be mass-marketed to UK consumers subject to certain restrictions. This is in addition to the overarching requirement that financial promotions must be fair, clear and not misleading.
The restrictions proposed include clear risk warnings, banning incentives to invest, positive frictions, client categorisation requirements and appropriateness assessments.
Social Media
In Guidance Consultation GC23/2: Financial promotions on social media (fca.org.uk) the FCA has asked for feedback on their approach to monitoring the promotion of regulated investments on social media.
In recent years, and especially since the pandemic, there has been a rise in financial influences on social media and younger generations are looking more to social media for guidance on their investments.
The FCA is consulting on guidance which clarifies the rules around financial promotion, as well as some of the specific considerations and challenges which firms should be aware of when using social media.
CAN WE HELP?
If you would like to discuss any of these developments or have questions for our specialist Financial Services team, please do get in touch.
Specific advice should be obtained before taking action, or refraining from taking action, in relation to this summary. If you would like advice or further information, please speak to your usual Shipleys contact.
Copyright © Shipleys LLP 2023
Related Resources
Financial Services Update – May 2023
Financial Services Update – January 2023
Financial Services Update – September 2022
