Compliance Matters: week ending 2nd August 2024
If you have picked up your emails while on holiday – don’t it will still be here on your return. I am away next week in rural Oxfordshire where you are lucky to get a phone signal. Does that mean you will not receive the weekly blog from Compliance Matters next week? Yes it does.
Here are some of the issues that affect our industry that have come to my attention this week.
Please share this blog with your colleagues and with your network.
· FCA regulator seeks to reduce burdens on firms and support growth
· Taking the leap on the Consumer Duty
· Regulation now makes crypto a viable asset class
FCA seeks to reduce burdens on firms and support growth
The FCA has issued a press release launching a call for input from the industry regarding streamlining the FCA handbook.
Launching the review, Nikhil Rathi, chief executive of the FCA said “We are firmly committed to playing our part in supporting economic growth. The Consumer Duty marked a major shift for firms and consumers by setting higher and clearer standards of consumer protection and requiring firms to put their customers’ needs first.”
The FCA wants to see where it can simplify its retail conduct rules and guidance. It particularly wants to address potential areas of complexity, duplication, confusion, or over-prescription, which create regulatory costs with limited or no consumer benefit. It also wants to include appropriate flexibility in its rules to be responsive to future changes and innovation.
While the FCA is primarily focused on the retail conduct rules and guidance, it also invites views on our wider rules and guidance.
The FCA invites comments on issues including:
which detailed rules or guidance could be simplified to rely on high-level rules, or have interactions with other rules which could be clarified
how any steps to simplify our rules and guidance affect our statutory objectives
the appropriate balance between high-level and more detailed rules
the potential benefits and costs from simplifying our rules
It wants to understand how different types of firms may be affected by changes to its approach.
The Call for Input asks for comments by 31st October
Taking the leap on the Consumer Duty
In a speech at the FCA’s Consumer Duty: 1 year on event, Sheldon Mills highlighted:
The FCA welcomes the improvements firms have made to deliver better consumer outcomes in the first year of the Consumer Duty.
The outcomes-based nature of the Consumer Duty will allow the FCA to streamline the rulebook to support competitiveness and growth, while ensuring good consumer outcomes.
Following today’s milestone, the regulator will continue to focus on how firms are embedding the Consumer Duty and acting to address harm.
Mills said the FCA introduced the Consumer Duty and its outcomes-based approach as it wanted to create an environment for healthy competition and innovation based on high standards. It is a core part of the FCA’s strategy and gives effect to the cross-party mandate we were given by Parliament through the Financial Services Act 2021. The regulator sees the Consumer Duty as good for consumers, good for firms, and good for growth in the economy.
Mills took the opportunity to celebrate how far we have come already to meet those goals. And, to talk about what comes next, including the Call for Input mentioned above.
Compliance Matters UK Limited is here to help you through the next phase of Consumer Duty implementation and taking the actions agreed in the recent Governing Body Report.
Regulation now makes crypto a viable asset class
A recent article in PA adviser highlights that with increased regulation, cryptoassets will become another asset class like equities, bonds, property or cash. Crypto and digital assets are the next innovation in a continually evolving investment management industry, a new asset class that has emerged from a new computing paradigm.
Regardless of what the naysayers claim and despite the bad actors that may have been and gone, digital assets provide investors with more investment choice and another way to diversify a portfolio.
As regulators are increasingly embracing the asset class, it is fostering investor appetite on the institutional or “instavidual” side, having already been widely accepted by a good proportion of retail investors.
The author of the article uses it to sell his firm’s software solution but the points he makes are valid. Family Offices and ultra-high net worth client are increasingly looking for exposure to cryptoassets either directly or through ETFs.
If you want Compliance Matters UK Limited to assess the risks surrounding offering cryptoassets, please contact us using the links below.
How can we help?
It is important that you have robust policies and procedures to ensure your firm delivers industry best practice and the four outcomes of the Consumer Duty. If you would like Compliance Matters UK Limited to review your compliance systems and controls, schedule a free, no-obligation consultancy call with us today.
To learn more about how Compliance Matters UK Limited can support your firm, click here.
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