UK Government
Competition objective - BEIS publishes two consultation papers - 20 July 2021
The Department for Business, Energy & Industrial Strategy has published two consultation papers: ‘A new pro-competition regime for digital markets’ and ‘Reforming competition and consumer policy’. The digital markets consultation seeks feedback on the government’s proposals for the Digital Markets Unit and how it will work with other regulators including the FCA and the PRA. The competition and consumer policy consultation covers proposals organised around three key themes: (i) promoting competition to drive enterprise, innovation, growth, and productivity; (ii) updating consumer rights to keep pace with markets; and (iii) strengthening the enforcement of consumer law by individuals and regulators, for example strengthening prepayment protections for consumers.
Responses to the consultations are due by 1 October 2021.
A new pro-competition regime for digital markets
Consultation page
Reforming competition and consumer policy
Consultation page
Press release
HM Treasury
Overseas Framework - HM Treasury publishes response to Call for Evidence - 22 July 2021
HM Treasury has published the response to its Call for Evidence on the framework for overseas access to UK markets published in December 2020 and previously reported in this Bulletin. The response summarises the 34 submissions received and outlines proposed next steps.
Key points emerging from the response are as follows:
- there was general support for the continued existence of the Overseas Persons Exclusion (OPE) set out in article 72 of the Regulated Activities Order, albeit with some suggested amendments, including clarification of the scope of activities covered;
- respondents saw benefit in the UK maintaining the equivalence provisions in Article 47 of the onshored Markets in Financial Instruments Regulation (600/2014) (MiFIR); however, they noted that if the UK were to make a positive equivalence determination under MiFIR Title VIII provisions then firms using that equivalence determination would be subject to more onerous regulation than firms from other jurisdictions that were servicing UK clients via the OPE and who had not been deemed ‘equivalent’ by the UK;
- some respondents expressed a preference for a clearer approach to the application process for recognition of an overseas exchange, in particular whether MTFs are eligible to apply for recognised overseas investment exchange (ROIE) status; and
- some respondents recommended a review of the thresholds included in Article 48 of the Financial Promotion Order on what constitutes a high net worth individual. They also called on the government to consider whether there is scope to allow a wider range of financial promotions to be made in the UK by overseas firms who are not authorised in the UK.
HM Treasury, working closely with the FCA, the Bank of England and the PRA, will now begin a review of the overseas regulatory perimeter to seek to identify whether there are elements of the overseas framework that need updating to reflect modern working patterns and advancements in technology, such as the “in the UK” test (described in the document as the “first consideration for firms assessing their regulatory compliance”).
Following this review, the government will consult on potential changes to the UK’s regime for overseas firms and activities, most likely in the fourth quarter of 2021. In particular, it will look to consult on proposed changes to the overseas regulatory perimeter, the OPE (including the option to remove the overlap between the OPE and equivalence provisions under MiFIR Title VIII) and whether further regulatory powers are needed for the ROIE and OPE to address any deficiencies in regulatory oversight. It will also consider options for amendments to the FPO exemptions relating to insurance distribution with an overseas element. The consultation is also expected to cover the more general question of whether the current operation of the regime appropriately balances openness whilst mitigating risks to the resilience and safety of financial markets, the protection of consumers and market integrity, and the promotion of competition.
HM Treasury Response to the Call for Evidence
Updated webpage
Treasury Committee
Frozen bank accounts - Treasury Committee publishes letter sent to FCA - 22 July 2021
The House of Commons Treasury Committee has published a letter sent to the FCA in light of press reports that the bank accounts of some vulnerable customers are being frozen without good reason. Banks can freeze accounts for various reasons including suspicion of fraud or money laundering. The Chair of the Treasury Committee, Rt. Hon. Mel Stride MP, has asked the FCA to share its thoughts by 9 August 2021 on whether it believes this is a widespread problem across the banking sector and how it can ensure that banks treat customers fairly in relation to the freezing of accounts.
Letter from Treasury Committee to FCA: Frozen Bank Accounts
Press release
Bank of England and Prudential Regulation Authority
Complaints Commissioner’s annual report 2020/21 - Bank of England and PRA publish response to recommendations - 20 July 2021
The Bank of England (BoE) has published a summary of its response to the recommendations in the Office of the Complaints Commissioner’s annual report for 2020/21. Among other things, the BoE and the PRA have accepted the recommendation that they, together with the FCA, develop a better way of collaborating on joint complaints and are now working to establish a process to identify and respond to joint complaints. The BoE and the PRA have also committed to consider the recommendation to put in place an indicative scale for ex gratia payments for distress and inconvenience caused by delays in complaints handling as part of the PRA’s review of the responses to its revised complaints scheme consultation (PRA CP8/20).
Summary of response to the Complaint’s Commissioner’s Annual Report 2020/21: ‘Reviewing how the financial services regulators consider complaints’: On behalf of the Bank of England and the PRA
Financial Conduct Authority
COVID-19 - FCA publishes statement on workstreams delayed due to pandemic - 16 July 2021
The FCA has published a statement providing an update on four key workstreams that had been delayed due to COVID-19. These are:
- Assessing Suitability Review (ASR 2): The FCA put this on hold in April 2020 and has decided not to continue work on it in order to focus on other priority work including defined benefit pension transfers work and the issues raised in the 2020 consumer investments call for input;
- Diagnostic review of business models: This work has been completed, despite delays in 2020. The aim was to identify retail lending business models that benefit from consumers not repaying their debts. The FCA has now identified indicators of such business models and has embedded its methodology and findings into its wider business model analysis across relevant sectors;
- Rules extending SME access to the Financial Ombudsman Service: Following its October 2018 policy statement (PS18/21), the FCA planned to start a post-implementation review of these rules. It is delaying this review so that it can include information drawn from COVID-19 related SME complaints and will report by April 2023; and
- De-anchoring remedy for credit cards: In July 2018, the FCA announced its intention to consult on requiring removal of the minimum repayment anchor. The work will now form part of the FCA’s 2022 review of the effectiveness of the credit card market study remedies.
Statement: Workstream updates
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Fair treatment of vulnerable consumers - FCA publishes FAQs - 19 July 2021
The FCA has published a set of frequently asked questions (FAQs) on the fair treatment of vulnerable consumers following its finalised guidance published in February 2021. The FCA’s answers link to key chapters and paragraphs in FG21/1, its feedback statement (also published in February 2021) (FS21/4) and other relevant documents, including its recent consultation paper on a new consumer duty (CP21/13).
The themes covered in the FAQs include:
- why the fair treatment of vulnerable customers is important;
- how the FCA will supervise firms on whether they are treating vulnerable customers fairly;
- practical actions firms can take in relation to product and service design, customer service and communications; and
- what firms need to do in terms of monitoring and evaluation.
FAQs: Finalised Guidance on the fair treatment of vulnerable customers
See the Beyond Brexit section for an item on an FCA statement regarding the non-enforcement of financial promotion breaches and a related statutory instrument that makes technical amendments to exemptions in the Financial Promotions Order.
See the Financial Crime section for an item on HM Treasury’s call for evidence on the AML and CTF regime and a consultation paper on the MLRs 2017.
See the Enforcement section for an item on the publication of a report by the Treasury Committee on an inquiry into Greensill Capital.
