FSA – CONSULTS ON REMUNERATION DISCLOSURE REQUIREMENTS

The Financial Services Authority (FSA) has published a consultation on the implementation of remuneration disclosure requirements based on those set out in the Capital Requirements Directive (CRD3).   CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important elements of these requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.

The FSA is consulting on the following:

• Items to be disclosed - in brief, these are:
• information on the remuneration decision-making process;
• the link between pay and performance;
• the most important design characteristics of the remuneration system;
• performance criteria for assessment of remuneration;
• the main parameters and rationale for variable compensation; and
• aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration, and sign-on and severance payments, in respect of senior management and staff with a material impact on the firm’s risk profile.
• Frequency of disclosure - Firms will need to disclose details of their remuneration policies at least on an annual basis. The FSA will require firms to make their first disclosure in respect of 2010 remuneration as soon as practicable, and no later than 31 December 2011.
• Form of disclosure - Disclosure may take the form of a stand-alone report or may be included in a firm’s annual report and accounts.
• Proportionality - CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure as follows:
• Tier 1 firms - Full disclosure of all items under CRD3– This will include around 26 very significant groups. The FSA expects firms of this size and complexity to observe the highest standards of disclosure.
• Tier 2 firms - Disclosure of most qualitative items (including design characteristics of remuneration) and selected quantitative items- The FSA expects this category to include some 200 major firms which will be expected to provide a high degree of disclosure, although some finer details need not be disclosed.
• Tier 3 firms - Disclosure of most qualitative items (excluding design characteristics of remuneration systems) and selected quantitative items- The FSA expects this category to include around 300 firms, which will be expected to provide a high degree of disclosure, although details such as the design characteristics of remuneration need not be disclosed.
• Tier 4 firms - Disclosure of basic qualitative and quantitative items only- The FSA expects this category to comprise over 2,000 firms with limited regulatory licences or permissions. These firms will be expected to disclose only basic qualitative and quantitative information on remuneration.

In addition, the FSA is seeking feedback on whether there would be any meaningful disadvantages in extending the scope of disclosure requirements to include non-EEA firms operating as branches in the UK.

The consultation period closes on 8 December 2010 and the FSA intends to publish a policy statement on remuneration disclosure in mid-December.

Separately, the FSA will publish a policy statement in response to wider changes to its Remuneration Code in December, following the finalisation of the CEBS guidelines on the implementation of the Code. The revised Remuneration Code will come into force on 1 January 2011. It will apply to awards paid out in respect of the 2010 remuneration round. Firms coming into the scope of the Code for the first time will be able to make use of transitional provisions to implement certain provisions of the Code over a period of six months.

Source: Financial Services Authority

FSA Website

FSA – PENSION REFORM: CONDUCT OF BUSINESS CHANGES

The Financial Services Authority (FSA) has published a consultation paper outlining changes to the FSA Handbook following the Government’s confirmation of the workplace pension reforms.  These reforms will significantly change the pension landscape so the FSA must ensure consumers remain adequately protected and that interactions between FSA and Department of Work and Pensions (DWP) rules do not create unnecessary barriers within the workplace pension market.

The policy proposals broadly fall into two categories: the use of group personal pensions (GPPs) for automatic enrolment; and protecting consumers in the changing pension landscape.

Group personal pension schemes

The consultation paper proposes to make a number of additions and changes to Handbook text relating to GPPs, including:

• making it clear that automatic enrolment does not fall within the scope of the Distance Marketing Directive (DMD)*; and
• clarifying that FSA and DWP rules for cancelling and opting out are interchangeable and that only one process needs to be followed - in essence providing a single solution rather than two different, potentially confusing and costly procedures to follow.

Protecting consumers in the changing pension landscape

The FSA already has rules in place to mitigate the risk of poor advice being given in relation to occupational pension opt-outs, but these do not currently apply to GPPs.

To ensure those automatically enrolled into a GPP receive the same protections as those who are part of an occupational pension, the FSA propose to extend the scope of its rules to cover all workplace schemes - including GPPs.

Similarly, the FSA proposes to extend rules around additional contributions to encompass all workplace schemes. Currently the Handbook stipulates that advisers must consider arrangements within an existing workplace scheme before recommending alternatives, but this does not include GPPs.

The consultation period will close on 9th February 2011. 

Source: Fiancial Services Authority

FSA Website

FSA – KNOW YOUR RIGHTS BOOKLET PUBLISHED

The Financial Services Authority (FSA) has launched a Know Your Rights booklet for bank and building society customers, to clarify the service standards customers can expect, and to mark the first anniversary of the regulation of banking conduct.     FSA has pointed out that millions of banking transactions are successfully executed every day, but in a banking system of this size, it is inevitable that some issues will arise. However, customers sometimes feel they don’t know enough about their rights to help themselves, or to challenge what their bank is telling them.

The booklet is split into sections, for example: opening accounts, moving accounts and solving problems.  The Know Your Rights booklet offers straightforward material that a customer can use when dealing with their bank.

In the last year, banking customers have benefited from tougher regulation in the form of the FSA’s banking conduct regime. The booklet reminds customers of their protections, including:

• Advance notification of interest rate changes
• Refund of unauthorised transactions
• Confirmation of acceptable time limits on cash transfers

The new booklet covers many of the typical scenarios that might affect customers, but is intended to be a key source of information that will grow over time as new, emerging issues are included.  

Source: Financial Services Authority

FSA Website

FSA – PROPOSED GUIDANCE ON INDIVIDUAL LIQUIDITY SYSTEMS ASSESSMENT SUBMISSION INFORMATION DOCUMENT

This proposed guidance relates to the rules on liquidity in Chapter 12 of the Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU 12), in particular BIPRU 12.6.21R.     This guidance is likely to be of most relevance to Firms that have been granted a simplified ILAS waiver under the liquidity regime.

Under BIPRU 12.6.21R, simplified ILAS BIPRU firms are required to regularly assess how they comply with the standards set out in BIPRU 12.3 and BIPRU 12.4, including the results of the stress tests required by the rules in BIPRU 12.4. BIPRU 12.6.21R (2) requires a firm to document their assessment of compliance in their Individual Liquidity Systems Assessment (ILSA).    

FSA experience from introducing similar requirements on the capital side, i.e. the Internal Capital Adequacy Assessment Process (ICAAP), suggests that firms would benefit from the provision of additional information on how to prepare and present their ILSA. Feedback from firms also suggests there is demand for the provision of such materials. The production of the ILSA Submission Information document is consistent with FSA’s approach for capital.

Feedback received from industry on an earlier version of the ILSA Submission Information document has resulted in further revisions to the document (led by Supervision). This revised version is now being proposed for consultation. Comments must be received by 23 November 2010.   

Source: Financial Services Authority

FSA Website

FSA – SPEECHES

The following speeches have been made (please click on the link for the full article):

Fighting Financial Crime in the new regulatory world, by Margaret Cole at the British Bankers Association conference.

Regulating the Motor Market, by Derek Smee at the Seventh Annual Motor Finance Convention.

The Insurance Intermediary Market – the Regulator’s Point of View, by Jeremy Heales at the BIBA Scotland regional Conference. 

FSA Mortgage Market Review, by Sheila Nicholl at the Mortgage Business Expo. 

Source: Financial Services Authority

CML – LITTLE MOVEMENT IN MORTGAGE MARKET

Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders. 

There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.

Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months.

Source: Council of Mortgage Lenders

CML Website

FOS – OMBUDSMAN NEWS EDITION 90 PUBLISHED

This edition covers the following topics:

• recent vehicle-related case studies;
• banking disputes involving powers of attorney;
• a snapshot of our complaint figures for July to September this year; and 
• Natalie Ceeney, chief executive and chief ombudsman, on why customer complaints can be good news for businesses.

Source: Financial Ombudsman Service

FOS Website

FSA – CONSULTS ON REMUNERATION DISCLOSURE REQUIREMENTS

The Financial Services Authority (FSA) has published a consultation on the implementation of remuneration disclosure requirements based on those set out in the Capital Requirements Directive (CRD3).   CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important elements of these requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.

The FSA is consulting on the following:

• Items to be disclosed - in brief, these are:
• information on the remuneration decision-making process;
• the link between pay and performance;
• the most important design characteristics of the remuneration system;
• performance criteria for assessment of remuneration;
• the main parameters and rationale for variable compensation; and
• aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration, and sign-on and severance payments, in respect of senior management and staff with a material impact on the firm’s risk profile.
• Frequency of disclosure - Firms will need to disclose details of their remuneration policies at least on an annual basis. The FSA will require firms to make their first disclosure in respect of 2010 remuneration as soon as practicable, and no later than 31 December 2011.
• Form of disclosure - Disclosure may take the form of a stand-alone report or may be included in a firm’s annual report and accounts.
• Proportionality - CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure as follows:
• Tier 1 firms - Full disclosure of all items under CRD3– This will include around 26 very significant groups. The FSA expects firms of this size and complexity to observe the highest standards of disclosure.
• Tier 2 firms - Disclosure of most qualitative items (including design characteristics of remuneration) and selected quantitative items- The FSA expects this category to include some 200 major firms which will be expected to provide a high degree of disclosure, although some finer details need not be disclosed.
• Tier 3 firms - Disclosure of most qualitative items (excluding design characteristics of remuneration systems) and selected quantitative items- The FSA expects this category to include around 300 firms, which will be expected to provide a high degree of disclosure, although details such as the design characteristics of remuneration need not be disclosed.
• Tier 4 firms - Disclosure of basic qualitative and quantitative items only- The FSA expects this category to comprise over 2,000 firms with limited regulatory licences or permissions. These firms will be expected to disclose only basic qualitative and quantitative information on remuneration.

In addition, the FSA is seeking feedback on whether there would be any meaningful disadvantages in extending the scope of disclosure requirements to include non-EEA firms operating as branches in the UK.

The consultation period closes on 8 December 2010 and the FSA intends to publish a policy statement on remuneration disclosure in mid-December.

Separately, the FSA will publish a policy statement in response to wider changes to its Remuneration Code in December, following the finalisation of the CEBS guidelines on the implementation of the Code. The revised Remuneration Code will come into force on 1 January 2011. It will apply to awards paid out in respect of the 2010 remuneration round. Firms coming into the scope of the Code for the first time will be able to make use of transitional provisions to implement certain provisions of the Code over a period of six months.

Source: Financial Services Authority

FSA Website

FSA – PENSION REFORM: CONDUCT OF BUSINESS CHANGES

The Financial Services Authority (FSA) has published a consultation paper outlining changes to the FSA Handbook following the Government’s confirmation of the workplace pension reforms.  These reforms will significantly change the pension landscape so the FSA must ensure consumers remain adequately protected and that interactions between FSA and Department of Work and Pensions (DWP) rules do not create unnecessary barriers within the workplace pension market.

The policy proposals broadly fall into two categories: the use of group personal pensions (GPPs) for automatic enrolment; and protecting consumers in the changing pension landscape.

Group personal pension schemes

The consultation paper proposes to make a number of additions and changes to Handbook text relating to GPPs, including:

• making it clear that automatic enrolment does not fall within the scope of the Distance Marketing Directive (DMD)*; and
• clarifying that FSA and DWP rules for cancelling and opting out are interchangeable and that only one process needs to be followed - in essence providing a single solution rather than two different, potentially confusing and costly procedures to follow.

Protecting consumers in the changing pension landscape

The FSA already has rules in place to mitigate the risk of poor advice being given in relation to occupational pension opt-outs, but these do not currently apply to GPPs.

To ensure those automatically enrolled into a GPP receive the same protections as those who are part of an occupational pension, the FSA propose to extend the scope of its rules to cover all workplace schemes - including GPPs.

Similarly, the FSA proposes to extend rules around additional contributions to encompass all workplace schemes. Currently the Handbook stipulates that advisers must consider arrangements within an existing workplace scheme before recommending alternatives, but this does not include GPPs.

The consultation period will close on 9th February 2011. 

Source: Fiancial Services Authority

FSA Website

FSA – KNOW YOUR RIGHTS BOOKLET PUBLISHED

The Financial Services Authority (FSA) has launched a Know Your Rights booklet for bank and building society customers, to clarify the service standards customers can expect, and to mark the first anniversary of the regulation of banking conduct.     FSA has pointed out that millions of banking transactions are successfully executed every day, but in a banking system of this size, it is inevitable that some issues will arise. However, customers sometimes feel they don’t know enough about their rights to help themselves, or to challenge what their bank is telling them.

The booklet is split into sections, for example: opening accounts, moving accounts and solving problems.  The Know Your Rights booklet offers straightforward material that a customer can use when dealing with their bank.

In the last year, banking customers have benefited from tougher regulation in the form of the FSA’s banking conduct regime. The booklet reminds customers of their protections, including:

• Advance notification of interest rate changes
• Refund of unauthorised transactions
• Confirmation of acceptable time limits on cash transfers

The new booklet covers many of the typical scenarios that might affect customers, but is intended to be a key source of information that will grow over time as new, emerging issues are included.  

Source: Financial Services Authority

FSA Website

FSA – PROPOSED GUIDANCE ON INDIVIDUAL LIQUIDITY SYSTEMS ASSESSMENT SUBMISSION INFORMATION DOCUMENT

This proposed guidance relates to the rules on liquidity in Chapter 12 of the Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU 12), in particular BIPRU 12.6.21R.     This guidance is likely to be of most relevance to Firms that have been granted a simplified ILAS waiver under the liquidity regime.

Under BIPRU 12.6.21R, simplified ILAS BIPRU firms are required to regularly assess how they comply with the standards set out in BIPRU 12.3 and BIPRU 12.4, including the results of the stress tests required by the rules in BIPRU 12.4. BIPRU 12.6.21R (2) requires a firm to document their assessment of compliance in their Individual Liquidity Systems Assessment (ILSA).    

FSA experience from introducing similar requirements on the capital side, i.e. the Internal Capital Adequacy Assessment Process (ICAAP), suggests that firms would benefit from the provision of additional information on how to prepare and present their ILSA. Feedback from firms also suggests there is demand for the provision of such materials. The production of the ILSA Submission Information document is consistent with FSA’s approach for capital.

Feedback received from industry on an earlier version of the ILSA Submission Information document has resulted in further revisions to the document (led by Supervision). This revised version is now being proposed for consultation. Comments must be received by 23 November 2010.   

Source: Financial Services Authority

FSA Website

FSA – SPEECHES

The following speeches have been made (please click on the link for the full article):

Fighting Financial Crime in the new regulatory world, by Margaret Cole at the British Bankers Association conference.

Regulating the Motor Market, by Derek Smee at the Seventh Annual Motor Finance Convention.

The Insurance Intermediary Market – the Regulator’s Point of View, by Jeremy Heales at the BIBA Scotland regional Conference. 

FSA Mortgage Market Review, by Sheila Nicholl at the Mortgage Business Expo. 

Source: Financial Services Authority

CML – LITTLE MOVEMENT IN MORTGAGE MARKET

Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders. 

There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.

Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months.

Source: Council of Mortgage Lenders

CML Website

FOS – OMBUDSMAN NEWS EDITION 90 PUBLISHED

This edition covers the following topics:

• recent vehicle-related case studies;
• banking disputes involving powers of attorney;
• a snapshot of our complaint figures for July to September this year; and 
• Natalie Ceeney, chief executive and chief ombudsman, on why customer complaints can be good news for businesses.

Source: Financial Ombudsman Service

FOS Website

FSA – CONSULTS ON REMUNERATION DISCLOSURE REQUIREMENTS

The Financial Services Authority (FSA) has published a consultation on the implementation of remuneration disclosure requirements based on those set out in the Capital Requirements Directive (CRD3).   CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important elements of these requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.

The FSA is consulting on the following:

• Items to be disclosed - in brief, these are:
• information on the remuneration decision-making process;
• the link between pay and performance;
• the most important design characteristics of the remuneration system;
• performance criteria for assessment of remuneration;
• the main parameters and rationale for variable compensation; and
• aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration, and sign-on and severance payments, in respect of senior management and staff with a material impact on the firm’s risk profile.
• Frequency of disclosure - Firms will need to disclose details of their remuneration policies at least on an annual basis. The FSA will require firms to make their first disclosure in respect of 2010 remuneration as soon as practicable, and no later than 31 December 2011.
• Form of disclosure - Disclosure may take the form of a stand-alone report or may be included in a firm’s annual report and accounts.
• Proportionality - CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure as follows:
• Tier 1 firms - Full disclosure of all items under CRD3– This will include around 26 very significant groups. The FSA expects firms of this size and complexity to observe the highest standards of disclosure.
• Tier 2 firms - Disclosure of most qualitative items (including design characteristics of remuneration) and selected quantitative items- The FSA expects this category to include some 200 major firms which will be expected to provide a high degree of disclosure, although some finer details need not be disclosed.
• Tier 3 firms - Disclosure of most qualitative items (excluding design characteristics of remuneration systems) and selected quantitative items- The FSA expects this category to include around 300 firms, which will be expected to provide a high degree of disclosure, although details such as the design characteristics of remuneration need not be disclosed.
• Tier 4 firms - Disclosure of basic qualitative and quantitative items only- The FSA expects this category to comprise over 2,000 firms with limited regulatory licences or permissions. These firms will be expected to disclose only basic qualitative and quantitative information on remuneration.

In addition, the FSA is seeking feedback on whether there would be any meaningful disadvantages in extending the scope of disclosure requirements to include non-EEA firms operating as branches in the UK.

The consultation period closes on 8 December 2010 and the FSA intends to publish a policy statement on remuneration disclosure in mid-December.

Separately, the FSA will publish a policy statement in response to wider changes to its Remuneration Code in December, following the finalisation of the CEBS guidelines on the implementation of the Code. The revised Remuneration Code will come into force on 1 January 2011. It will apply to awards paid out in respect of the 2010 remuneration round. Firms coming into the scope of the Code for the first time will be able to make use of transitional provisions to implement certain provisions of the Code over a period of six months.

Source: Financial Services Authority

FSA Website

FSA – PENSION REFORM: CONDUCT OF BUSINESS CHANGES

The Financial Services Authority (FSA) has published a consultation paper outlining changes to the FSA Handbook following the Government’s confirmation of the workplace pension reforms.  These reforms will significantly change the pension landscape so the FSA must ensure consumers remain adequately protected and that interactions between FSA and Department of Work and Pensions (DWP) rules do not create unnecessary barriers within the workplace pension market.

The policy proposals broadly fall into two categories: the use of group personal pensions (GPPs) for automatic enrolment; and protecting consumers in the changing pension landscape.

Group personal pension schemes

The consultation paper proposes to make a number of additions and changes to Handbook text relating to GPPs, including:

• making it clear that automatic enrolment does not fall within the scope of the Distance Marketing Directive (DMD)*; and
• clarifying that FSA and DWP rules for cancelling and opting out are interchangeable and that only one process needs to be followed - in essence providing a single solution rather than two different, potentially confusing and costly procedures to follow.

Protecting consumers in the changing pension landscape

The FSA already has rules in place to mitigate the risk of poor advice being given in relation to occupational pension opt-outs, but these do not currently apply to GPPs.

To ensure those automatically enrolled into a GPP receive the same protections as those who are part of an occupational pension, the FSA propose to extend the scope of its rules to cover all workplace schemes - including GPPs.

Similarly, the FSA proposes to extend rules around additional contributions to encompass all workplace schemes. Currently the Handbook stipulates that advisers must consider arrangements within an existing workplace scheme before recommending alternatives, but this does not include GPPs.

The consultation period will close on 9th February 2011. 

Source: Fiancial Services Authority

FSA Website

FSA – KNOW YOUR RIGHTS BOOKLET PUBLISHED

The Financial Services Authority (FSA) has launched a Know Your Rights booklet for bank and building society customers, to clarify the service standards customers can expect, and to mark the first anniversary of the regulation of banking conduct.     FSA has pointed out that millions of banking transactions are successfully executed every day, but in a banking system of this size, it is inevitable that some issues will arise. However, customers sometimes feel they don’t know enough about their rights to help themselves, or to challenge what their bank is telling them.

The booklet is split into sections, for example: opening accounts, moving accounts and solving problems.  The Know Your Rights booklet offers straightforward material that a customer can use when dealing with their bank.

In the last year, banking customers have benefited from tougher regulation in the form of the FSA’s banking conduct regime. The booklet reminds customers of their protections, including:

• Advance notification of interest rate changes
• Refund of unauthorised transactions
• Confirmation of acceptable time limits on cash transfers

The new booklet covers many of the typical scenarios that might affect customers, but is intended to be a key source of information that will grow over time as new, emerging issues are included.  

Source: Financial Services Authority

FSA Website

FSA – PROPOSED GUIDANCE ON INDIVIDUAL LIQUIDITY SYSTEMS ASSESSMENT SUBMISSION INFORMATION DOCUMENT

This proposed guidance relates to the rules on liquidity in Chapter 12 of the Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU 12), in particular BIPRU 12.6.21R.     This guidance is likely to be of most relevance to Firms that have been granted a simplified ILAS waiver under the liquidity regime.

Under BIPRU 12.6.21R, simplified ILAS BIPRU firms are required to regularly assess how they comply with the standards set out in BIPRU 12.3 and BIPRU 12.4, including the results of the stress tests required by the rules in BIPRU 12.4. BIPRU 12.6.21R (2) requires a firm to document their assessment of compliance in their Individual Liquidity Systems Assessment (ILSA).    

FSA experience from introducing similar requirements on the capital side, i.e. the Internal Capital Adequacy Assessment Process (ICAAP), suggests that firms would benefit from the provision of additional information on how to prepare and present their ILSA. Feedback from firms also suggests there is demand for the provision of such materials. The production of the ILSA Submission Information document is consistent with FSA’s approach for capital.

Feedback received from industry on an earlier version of the ILSA Submission Information document has resulted in further revisions to the document (led by Supervision). This revised version is now being proposed for consultation. Comments must be received by 23 November 2010.   

Source: Financial Services Authority

FSA Website

FSA – SPEECHES

The following speeches have been made (please click on the link for the full article):

Fighting Financial Crime in the new regulatory world, by Margaret Cole at the British Bankers Association conference.

Regulating the Motor Market, by Derek Smee at the Seventh Annual Motor Finance Convention.

The Insurance Intermediary Market – the Regulator’s Point of View, by Jeremy Heales at the BIBA Scotland regional Conference. 

FSA Mortgage Market Review, by Sheila Nicholl at the Mortgage Business Expo. 

Source: Financial Services Authority

CML – LITTLE MOVEMENT IN MORTGAGE MARKET

Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders. 

There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.

Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months.

Source: Council of Mortgage Lenders

CML Website

FOS – OMBUDSMAN NEWS EDITION 90 PUBLISHED

This edition covers the following topics:

• recent vehicle-related case studies;
• banking disputes involving powers of attorney;
• a snapshot of our complaint figures for July to September this year; and 
• Natalie Ceeney, chief executive and chief ombudsman, on why customer complaints can be good news for businesses.

Source: Financial Ombudsman Service

FOS Website

FSA – CONSULTS ON REMUNERATION DISCLOSURE REQUIREMENTS

The Financial Services Authority (FSA) has published a consultation on the implementation of remuneration disclosure requirements based on those set out in the Capital Requirements Directive (CRD3).   CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important elements of these requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.

The FSA is consulting on the following:

• Items to be disclosed - in brief, these are:
• information on the remuneration decision-making process;
• the link between pay and performance;
• the most important design characteristics of the remuneration system;
• performance criteria for assessment of remuneration;
• the main parameters and rationale for variable compensation; and
• aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration, and sign-on and severance payments, in respect of senior management and staff with a material impact on the firm’s risk profile.
• Frequency of disclosure - Firms will need to disclose details of their remuneration policies at least on an annual basis. The FSA will require firms to make their first disclosure in respect of 2010 remuneration as soon as practicable, and no later than 31 December 2011.
• Form of disclosure - Disclosure may take the form of a stand-alone report or may be included in a firm’s annual report and accounts.
• Proportionality - CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure as follows:
• Tier 1 firms - Full disclosure of all items under CRD3– This will include around 26 very significant groups. The FSA expects firms of this size and complexity to observe the highest standards of disclosure.
• Tier 2 firms - Disclosure of most qualitative items (including design characteristics of remuneration) and selected quantitative items- The FSA expects this category to include some 200 major firms which will be expected to provide a high degree of disclosure, although some finer details need not be disclosed.
• Tier 3 firms - Disclosure of most qualitative items (excluding design characteristics of remuneration systems) and selected quantitative items- The FSA expects this category to include around 300 firms, which will be expected to provide a high degree of disclosure, although details such as the design characteristics of remuneration need not be disclosed.
• Tier 4 firms - Disclosure of basic qualitative and quantitative items only- The FSA expects this category to comprise over 2,000 firms with limited regulatory licences or permissions. These firms will be expected to disclose only basic qualitative and quantitative information on remuneration.

In addition, the FSA is seeking feedback on whether there would be any meaningful disadvantages in extending the scope of disclosure requirements to include non-EEA firms operating as branches in the UK.

The consultation period closes on 8 December 2010 and the FSA intends to publish a policy statement on remuneration disclosure in mid-December.

Separately, the FSA will publish a policy statement in response to wider changes to its Remuneration Code in December, following the finalisation of the CEBS guidelines on the implementation of the Code. The revised Remuneration Code will come into force on 1 January 2011. It will apply to awards paid out in respect of the 2010 remuneration round. Firms coming into the scope of the Code for the first time will be able to make use of transitional provisions to implement certain provisions of the Code over a period of six months.

Source: Financial Services Authority

FSA Website

FSA – PENSION REFORM: CONDUCT OF BUSINESS CHANGES

The Financial Services Authority (FSA) has published a consultation paper outlining changes to the FSA Handbook following the Government’s confirmation of the workplace pension reforms.  These reforms will significantly change the pension landscape so the FSA must ensure consumers remain adequately protected and that interactions between FSA and Department of Work and Pensions (DWP) rules do not create unnecessary barriers within the workplace pension market.

The policy proposals broadly fall into two categories: the use of group personal pensions (GPPs) for automatic enrolment; and protecting consumers in the changing pension landscape.

Group personal pension schemes

The consultation paper proposes to make a number of additions and changes to Handbook text relating to GPPs, including:

• making it clear that automatic enrolment does not fall within the scope of the Distance Marketing Directive (DMD)*; and
• clarifying that FSA and DWP rules for cancelling and opting out are interchangeable and that only one process needs to be followed - in essence providing a single solution rather than two different, potentially confusing and costly procedures to follow.

Protecting consumers in the changing pension landscape

The FSA already has rules in place to mitigate the risk of poor advice being given in relation to occupational pension opt-outs, but these do not currently apply to GPPs.

To ensure those automatically enrolled into a GPP receive the same protections as those who are part of an occupational pension, the FSA propose to extend the scope of its rules to cover all workplace schemes - including GPPs.

Similarly, the FSA proposes to extend rules around additional contributions to encompass all workplace schemes. Currently the Handbook stipulates that advisers must consider arrangements within an existing workplace scheme before recommending alternatives, but this does not include GPPs.

The consultation period will close on 9th February 2011. 

Source: Fiancial Services Authority

FSA Website

FSA – KNOW YOUR RIGHTS BOOKLET PUBLISHED

The Financial Services Authority (FSA) has launched a Know Your Rights booklet for bank and building society customers, to clarify the service standards customers can expect, and to mark the first anniversary of the regulation of banking conduct.     FSA has pointed out that millions of banking transactions are successfully executed every day, but in a banking system of this size, it is inevitable that some issues will arise. However, customers sometimes feel they don’t know enough about their rights to help themselves, or to challenge what their bank is telling them.

The booklet is split into sections, for example: opening accounts, moving accounts and solving problems.  The Know Your Rights booklet offers straightforward material that a customer can use when dealing with their bank.

In the last year, banking customers have benefited from tougher regulation in the form of the FSA’s banking conduct regime. The booklet reminds customers of their protections, including:

• Advance notification of interest rate changes
• Refund of unauthorised transactions
• Confirmation of acceptable time limits on cash transfers

The new booklet covers many of the typical scenarios that might affect customers, but is intended to be a key source of information that will grow over time as new, emerging issues are included.  

Source: Financial Services Authority

FSA Website

FSA – PROPOSED GUIDANCE ON INDIVIDUAL LIQUIDITY SYSTEMS ASSESSMENT SUBMISSION INFORMATION DOCUMENT

This proposed guidance relates to the rules on liquidity in Chapter 12 of the Prudential sourcebook for Banks, Building Societies and Investment Firms (BIPRU 12), in particular BIPRU 12.6.21R.     This guidance is likely to be of most relevance to Firms that have been granted a simplified ILAS waiver under the liquidity regime.

Under BIPRU 12.6.21R, simplified ILAS BIPRU firms are required to regularly assess how they comply with the standards set out in BIPRU 12.3 and BIPRU 12.4, including the results of the stress tests required by the rules in BIPRU 12.4. BIPRU 12.6.21R (2) requires a firm to document their assessment of compliance in their Individual Liquidity Systems Assessment (ILSA).    

FSA experience from introducing similar requirements on the capital side, i.e. the Internal Capital Adequacy Assessment Process (ICAAP), suggests that firms would benefit from the provision of additional information on how to prepare and present their ILSA. Feedback from firms also suggests there is demand for the provision of such materials. The production of the ILSA Submission Information document is consistent with FSA’s approach for capital.

Feedback received from industry on an earlier version of the ILSA Submission Information document has resulted in further revisions to the document (led by Supervision). This revised version is now being proposed for consultation. Comments must be received by 23 November 2010.   

Source: Financial Services Authority

FSA Website

FSA – SPEECHES

The following speeches have been made (please click on the link for the full article):

Fighting Financial Crime in the new regulatory world, by Margaret Cole at the British Bankers Association conference.

Regulating the Motor Market, by Derek Smee at the Seventh Annual Motor Finance Convention.

The Insurance Intermediary Market – the Regulator’s Point of View, by Jeremy Heales at the BIBA Scotland regional Conference. 

FSA Mortgage Market Review, by Sheila Nicholl at the Mortgage Business Expo. 

Source: Financial Services Authority

CML – LITTLE MOVEMENT IN MORTGAGE MARKET

Slight falls in lending to some groups of new borrowers were tempered by comparable rises to others leading to a flat mortgage market in September, according to new data from the Council of Mortgage Lenders. 

There were 50,000 loans for house purchase (worth £7.4 billion) advanced in September, unchanged by volume but down £0.2 billion in value from August. The number was down 1,000 from September 2009 but the value was up £0.3 billion.

Loans for remortgage increased from 25,000 (worth £3.2 billion) in August to 29,000 (worth £3.6 billion) in September. Remortgaging accounted for 29% of total lending in September, the first proportionate increase since May. Despite this rise, there is still little incentive for borrowers to move away from low reversion rates with interest rates remaining low. This, coupled with an inability for some borrowers to access new refinancing deals means there is little prospect of a significant rise in remortgaging in the coming months.

Source: Council of Mortgage Lenders

CML Website

FOS – OMBUDSMAN NEWS EDITION 90 PUBLISHED

This edition covers the following topics:

• recent vehicle-related case studies;
• banking disputes involving powers of attorney;
• a snapshot of our complaint figures for July to September this year; and 
• Natalie Ceeney, chief executive and chief ombudsman, on why customer complaints can be good news for businesses.

Source: Financial Ombudsman Service

FOS Website

FSA – CONSULTS ON REMUNERATION DISCLOSURE REQUIREMENTS

The Financial Services Authority (FSA) has published a consultation on the implementation of remuneration disclosure requirements based on those set out in the Capital Requirements Directive (CRD3).   CRD3 requires firms to disclose information on their remuneration policies and pay-outs on an annual basis. This is to be included in their disclosures under Basel Pillar 3. Many important elements of these requirements are derived from the Financial Stability Board’s principles and standards on remuneration disclosure.

The FSA is consulting on the following:

• Items to be disclosed - in brief, these are:
• information on the remuneration decision-making process;
• the link between pay and performance;
• the most important design characteristics of the remuneration system;
• performance criteria for assessment of remuneration;
• the main parameters and rationale for variable compensation; and
• aggregate quantitative information on total remuneration, variable remuneration, deferred remuneration, and sign-on and severance payments, in respect of senior management and staff with a material impact on the firm’s risk profile.
• Frequency of disclosure - Firms will need to disclose details of their remuneration policies at least on an annual basis. The FSA will require firms to make their first disclosure in respect of 2010 remuneration as soon as practicable, and no later than 31 December 2011.
• Form of disclosure - Disclosure may take the form of a stand-alone report or may be included in a firm’s annual report and accounts.
• Proportionality - CRD3 permits regulators to apply the rules on a proportionate basis, taking account of firms’ size and complexity. The FSA intends to divide firms into four tiers based primarily on their regulatory capital and type of regulatory licence or permission. Each group will be subject to a different degree of disclosure as follows:
• Tier 1 firms - Full disclosure of all items under CRD3– This will include around 26 very significant groups. The FSA expects firms of this size and complexity to observe the highest standards of disclosure.<

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