Compliance News - 14 October 2011
CC:ME WEEK ENDED 14 OCTOBER 2011
FSA SELLING OF GENERAL INSURANCE THROUGH PRICE COMPARISON WEBSITES: FINAL GUIDANCE
Having published draft guidance on their website the FSA has now issued final guidance. Included are the following actions firms should take:
- review your regulated activities and ensure you are appropriately authorised or otherwise exempt;
- ensure that you only enter into contracts with firms holding the appropriate authorisation and permissions to conduct that regulated activity (or who are exempt);
- withdraw your assistance from third parties if they are in breach of general prohibition;
- review your disclosure documentation, sales procedures and your terms and conditions and make sure that these are compliant with all relevant regulatory requirements including our Principles, ICOBS and the Unfair Terms in Consumer Contracts Regulations 1999. In particular, you should ensure they comply with requirements on:
- customer eligibility,
- status disclosure,
- advice suitability,
- providing a proper statement of demands and needs,
- and that you do not seek in your terms and conditions to exclude liability for the regulated activities you are undertaking; and
- establish, implement and maintain adequate policies and procedures to ensure your firm complies with all relevant obligations under the regulatory system and for countering the risk of furthering financial crime, in particular breaches of the general prohibition and restrictions on financial promotion.
Source: Financial Services Authority
FSA website
FSA ‘BUY OUT’ AWARDS TO NEW STAFF: FINAL GUIDANCE
Under the rule on guaranteed variable remuneration (SYSC 19A.3.40R), a firm must not award, pay or provide any guaranteed variable remuneration unless the award is exceptional, occurs in the context of hiring new staff and is limited to the first year of service. An evidential provision and guidance is provided in SYSC 19A.3.41E to SYSC 19A.3.43G.
Although the FSA does not encourage the use of buy out awards, in the view of the FSA, such awards may normally be made without contravening the rule on guaranteed variable remuneration in circumstances where the firm is acting in conformity with SYSC 19A.3.41E(1).
The FSA emphasises that the firm must act in accordance with the Remuneration Code general requirement (of SYSC 19A.2.1R).
Source: Financial Services Authority
FSA website
FSA PROPOSED GUIDANCE ON THE PRACTICE OF ‘PAYMENT ODRER FLOW’
This proposed guidance relates to the following rule(s) in the FSA Handbook
- Senior Management Arrangements, Systems and Controls sourcebook (SYSC): Conflicts of Interest 10.1.3R, 10.1.7R, 10.1.8R
- Conduct of Business: Inducements (COBS) 2.3, 11.2, Best Execution COBS 11.2.1R
This guidance is likely to be of most relevance to
- Brokers executing client orders; and
- market makers
This guidance is about payments between market intermediaries. It is not intended to affect the ability of a trading venue to operate particular forms of fee structure (such as a maker/taker fee structure) and incentive schemes which are designed to reward certain types of behaviour by market participants.
The FSA have requested responses to this proposed guidance by 9 November 2011
Source: Financial Services Authority
FSA website
WHY PRUDENTIAL REGULATION MATTERS
In his 11 October 2011 speech at the APCIMS Conference Andrew Bailey, Director of UK Banks & Building Societies stated
“For prudential supervision and the role of the PRA, there is a clearly stated new objective, which is to pursue our role in relation to the safety and soundness of firms in order to achieve the stability of the financial system.”
Please use the link below to read the speech in full.
Source: Financial Services Authority
FSA website
RDR IMPLEMENTATION CONSIDERATIONS
In her speech to the PFS Conference Linda Woodall, Head of Investments Department, FSA addressed some of the issues in RDR implementation.
Please use the link below to read the speech in full.
Source: Financial Services Authority
FSA website
In a recent issue of CML’s news & views Sue Anderson, the CML’s Head of External Affairs, reflects on what may appear in the next version of mortgage market review, expected soon from the FSA, and on relationships between lenders, borrowers and intermediaries.
Source: Council of Mortgage Lenders
CML website
ICO REQUESTS COMPULSORY DPA AUDIT POWERS
Whilst the health sector was identified as having poor DPA compliance, businesses remain the sector generating the most data protection complaints. Despite this, as the ICO reported in July, just 19% of companies contacted by the ICO accepted the offer of undergoing an audit. The ICO has written to 29 banks and building societies and so far only six (20%) have agreed to undergo an audit. The insurance sector has also shown reluctance in this area. Of the 19 companies contacted this year by the ICO, only two agreed to an audit.
Source: Information Commissioners Office
ICO website
13 October 2011: Financial Services Authority (FSA) chief executive Hector Sants met with US Securities and Exchange Commission (SEC) chairman Mary L Schapiro as part of the SEC-FSA Strategic Dialogue sessions established in 2006.
The purpose of the Dialogue is for the two agencies to engage at senior levels on current matters affecting the UK and US capital markets and areas of future collaboration.
Some of the areas of mutual interest discussed during today's meeting included: regulatory reform, oversight of over-the-counter derivatives trading and clearing, market structure issues including high frequency trading, market surveillance and short selling.
Today’s Dialogue also provided the opportunity for the SEC and the FSA to restate their commitment to working together and to continue discussions in the areas of common regulatory interest including cross-border enforcement cases and the global regulatory agenda.
FSA chief executive Hector Sants said:
"Close cooperation between the FSA and the SEC is important as we seek to meet the G20 commitment to enhance transparency, mitigate systemic risk and protect against market abuse. The strategic dialogue is key to this and gives the two agencies the opportunity to find common ground, build on areas of mutual interest, and identify potential regulatory gaps."
SEC chairman Schapiro said:
"The ongoing dialogue between the SEC and the UK FSA demonstrates both agencies’ commitment to aligning interests with the goal of achieving regulatory consistency. As Europe and the US continue to enhance regulation in the wake of the financial crisis, working with all of our counterparts is essential to help prevent regulatory arbitrage, especially in the areas involving over-the-counter derivatives and market structure."
Source: Financial Services Authority
FSA website
FSA ISSUES GENERAL INSURANCE NEWSLETTER
The FSA has published Issue 6 of the General Insurance Newsletter which includes a summary of assumptions around Solvency II.
Source: Financial Services Authority
FSA website
Issue 6 of the Life Insurance newsletter can be found here
