Eva Dauberton
News Editor
FCA publishes PS24/2 on strengthening protections for borrowers facing financial difficulties
The Financial Conduct Authority (FCA) has published a policy statement (PS) 24/2 on strengthening protections for borrowers facing financial difficulties in the consumer credit and mortgage sectors. In addition, the FCA has published final guidance (FG) 24/2, replacing FG23/2, to align with the new rules.
Some context
During the pandemic, the FCA introduced the Coronavirus Tailored Support Guidance (TSG) for consumer credit, mortgages, and overdrafts. This guidance aimed to provide clarity to firms on how they could support customers who were experiencing financial difficulties considering their individual circumstances. However, post pandemic, consumers still struggle considering the rising cost of living. The FCA published a consultation paper (CP) 23/13 in May 2023 to address this ongoing issue.
Key takeaways
Most of the proposals outlined in the CP, which aimed to incorporate elements of the TSG into the FCA Handbook, have been transposed in the PS. This includes:
- Broadening the scope of relevant consumer credit and mortgage chapters to make clear to firms that appropriate support should be provided to customers in or at risk of payment difficulty.
- Enhancing FCA expectations around customer engagement and providing information, including money guidance and debt advice.
- Expecting firms to consider a range of forbearance options and take reasonable steps to ensure arrangements remain appropriate.
- For consumer credit, expecting firms to take into account the customer’s circumstances when providing forbearance (which is already expected for mortgage firms).
Specific changes separate from the TSG were also included, such as:
- For consumer credit, introducing guidance to help determine necessary and reasonable costs in setting fees and charges.
- For mortgages, changing the existing guidance to allow firms more scope to capitalise payment shortfalls where appropriate, improve disclosure for all customers in payment shortfall, and clarify requirements on recording calls with customers in payment shortfall.
Next steps
The rules and guidance come into force on 4 November 2024, at which point the FCA will withdraw the TSG.
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FCA issues CP24/6 on 2024/25 regulatory fees and levies
The Financial Conduct Authority (FCA) has issued a consultation paper (CP) 24/6 regarding regulated fees and levies for 2024/25. The CP is relevant to all FCA fee-payers, as well as businesses considering applying for FCA authorisation or registration.
Key takeaways
The CP covers the FCA regulatory fees, the Financial Ombudsman Service general levy, and certain government departments' levies, such as the money and pensions advice service levy, devolved authorities debt advice levy, and illegal money-lending levy. It also includes consequential amendments to the FEES manual.
It is worth noting that in 2023/24, the FCA froze the usual fee uplift to help smaller firms facing cost pressures. The FCA also suspended the staged increases to the A-block and consumer credit minimum fees. However, in this consultation, the FCA proposes to return to minimum and flat rate fees increases in line with the increase of the FCA ongoing regulatory activities (ORA) budget (8.75%). The FCA will also resume staged increases for A-block and consumer credit minimum fees.
To estimate their fees for 2024/25, firms can use the FCA's online fees calculator.
Next steps
The deadline for comments is 14 May 2024, and the FCA plans to publish the final rules in a policy statement in July 2024.
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PSR issues annual plan for 2024/25
The Payment Systems Regulator (PSR) has released its annual plan for 2024/25, outlining its strategic priorities as well as upcoming and ongoing initiatives. The report also details the budget costs for the upcoming year, which amount to £28.0 million. This reflects a modest increase due to higher operating costs and workforce expansion.
Strategic priorities
The PSR has identified four main strategy priorities for 2024/25. These include protection, competition, unlocking account-to-account payments, and access and choice.
- Protection: The PSR plans to focus on implementing reimbursement requirements for authorised push payment (APP) fraud. The PSR will also work on making fraud data more visible for payment service providers (PSPs) and oversee the expanded confirmation of Payee (CoP) coverage.
- Competition: The PSR is currently conducting market reviews on card fees and examining the competition faced by Mastercard and Visa in card payments. The PSR intend to publish the final report on the cross-border interchange fees market review, as well as the interim and final reports on the card scheme and processing fees market review.
- Unlocking account-to-account payments: The PSR will continue working on the future regulation of open banking. The aim is to ensure that the next generation of payments infrastructure improves fraud detection, access, and competition.
- Access and choice: The PSR will collaborate with the Financial Conduct Authority (FCA) to address the barriers people encounter when using digital payments. This includes reviewing the effectiveness of Specific Direction 12 (SD12) and conducting research on the obstacles consumers face in adopting digital payments.
Strengthening role in supervision and compliance monitoring
To strengthen its role in supervision and compliance monitoring, the PSR plans to expand its effectiveness by developing and implementing new regulatory frameworks, including measures required by the Financial Services and Markets Act 2023.
The PSR will also engage strategically with other regulators. This includes working with the Treasury, the Bank of England, and Pay. UK to determine the next steps for the New Payments Architecture (NPA) in light of the government’s decision to consider its role in the National Payments Vision.
In the foreword, the Chair of the PSR, Aidene Walsh, noted that the PSR will conduct a mid-strategy review this financial year and consider if changes are needed.
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FCA issues Market Watch 78 newsletter
The Financial Conduct Authority (FCA) has released its latest newsletter on market conduct and transaction reporting issues, Market Watch 78.
In this edition, the FCA provides insights into recent supervisory observations, specifically regarding the completeness and accuracy of instrument reference data (IRD) under RTS 23.
In particular, the FCA has identified issues with data quality processes, invalid issuer legal entity identifiers (LEI), invalid instrument classification, cancelled instrument reference data, the use of dummy values, and breach notifications.
This information will be useful for Recognised Investment Exchanges (RIEs), Multilateral Trading Facilities (MTFs), Organised Trading Facilities (OTFs), as well as investment firms, credit institutions, approved publication arrangements (APAs), and approved reporting mechanisms (ARMs).
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EBA issues final guidelines on resubmission of historical data under EBA reporting framework
The European Banking Authority (EBA) has issued final guidelines on the resubmission of historical data under the EBA reporting framework. These guidelines provide a common approach to the resubmission of historical data by financial institutions to the competent and resolution authorities in case of errors, inaccuracies, or other changes in the data reported.
Some context
The issuance of these guidelines is in line with a recommendation made in the EBA report on the cost of compliance with supervisory reporting requirements, issued in 2021, which suggested the development of guidelines outlining the resubmission policy. The report suggested formalising the resubmission process while acknowledging the challenge of determining appropriate thresholds. The EBA sought feedback on this point in the consultation issued in May 2023.
Key takeaways
Under the general approach outlined in the guidelines, financial institutions are expected to resubmit the corrected data for the current reporting date and historical data for past reference dates, going back at least one calendar year (except for data with monthly reporting frequency). Additionally, the guidelines clarify the general circumstances under which the resubmission may not be required.
Instead of incorporating specific materiality thresholds for resubmission, the EBA has adjusted the precision requirement, already included in the reporting framework, from one thousand to ten thousand.
The new precision requirement will be applicable starting from 1 April 2025.
Next steps
The guidelines will be effective three months after publication on the EBA’s website in all official languages of the EU.
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FTC issues $1.2 million refunds to consumers in investment advice deception case
In a move aimed at rectifying deceptive practices in the financial services sector, the US Federal Trade Commission (FTC) is issuing refunds worth $1.2 million to almost 20,000 consumers who fell victim to misleading investment advice promises.
The action stems from a lawsuit filed by the FTC against Wealthpress and its owners, Roger Scott and Conor Lynch,in January 2023. The complaint alleged that Wealthpress engaged in deceptive practices by promising consumers substantial profits through investment advising services. These services were marketed with claims that recommendations were based on specific algorithms or strategies developed by purported experts.
Consumers were charged hundreds or even thousands of dollars for access to these services. However, the FTC found that Wealthpress failed to demonstrate that the services it offered were likely to result in substantial profits. Many consumers experienced significant financial losses as a result of following the advice provided.
As part of the settlement agreement, the defendants agreed to pay more than $1.2 million in monetary relief, in addition to $500,000 in civil penalties. The settlement also includes provisions prohibiting the defendants from making earnings claims without written evidence to support them.
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Australian government announces M&A reform
The Australian government has confirmed a new mergers and acquisitions (M&A) framework which will come into effect on 1 January 2026.
The M&A reforms are intended to promote competition, protect consumers and provide greater certainty by streamlining the approvals process and will make the existing merger approval system “faster, stronger, simpler, more targeted and more transparent.”
The reforms will simplify and speed up the process for mergers, consistent with the national interest, and give the Australian Competition and Consumer Commission’s (ACCC) stronger powers to identify and scrutinise transactions that pose a risk to competition, consumers and the economy.
From 1 January 2026, a single mandatory and suspensory administrative merger control system will replace sections 50 and 50A of the Competition and Consumer Act 2010 (CCA) and the current merger authorisation process in sections 88 and 90(7) of the CCA.
The government will review the new M&A approach three years after commencement.
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MAS and Mastercard join forces to strengthen cyber resilience
The Monetary Authority of Singapore (MAS) and Mastercard have entered into a Memorandum of Understanding (MoU) to enhance cooperation in cybersecurity and strengthen cyber resilience in Singapore’s financial services sector.
This strategic partnership aims to promote bilateral information sharing on cyber threat intelligence, conduct joint analysis of the most recent cyber threats impacting the financial services industry, and engage in competency-building activities such as collaborative cybersecurity exercises, staff training, and study visits.
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