Regulation Including PROD
4 min read 12 Aug 21
Better late than never, the FCA finally published its latest business plan in July, setting out its priorities for the remainder of the 2021/22 financial year. Usually published around Easter, this year’s edition had been delayed not only due to covid pressures but also to give time to incorporate a longer-term view of the FCA’s role. As we (hopefully) transition to a post-pandemic world, there are short term priorities that need to be addressed but the long-term picture also needs to evolve.
Over recent years it has become increasingly clear that the FCA as an organisation has more pressing matters to deal with than the advice sector. The 2021/22 business plan is a good proof point – if you search the full 48-page document for the word “advisers” it returns precisely zero results.
However, that’s not to say there are no activities for advisers to be aware of in the FCA’s to-do list. No one needs reminding what a hot topic pension transfers have been over recent years, so it is no surprise to see the regulator continuing its activities in this space. Over the coming months the FCA has said it will:
In parallel, it has also announced a review of the scope and coverage of FSCS compensation payouts, which will, “…ensure the compensation policy framework is appropriate and takes into account changes in the market.” No detail yet as to what this will mean, but undoubtedly an area where most advisers believe reform is long overdue.
Elsewhere in the business plan the regulator is planning on:
The FCA will also decide on whether to proceed with requirements for notice periods for open-ended property funds – potentially a disruptive change for asset managers, platforms and advisers which have clients invested in these funds. The good news is that, if these changes do become policy they will “allow ample time to implement this change to avoid the potential risks from rapidly changing the rules.”
And in terms of the impact for advisers, that’s really it. Not a huge amount to write home about, and with the Assessing Suitability 2 review formally ended a few days after the business plan was released, again it’s pretty obvious that the regulator’s attention is focused elsewhere than the advice sector.
However, just before you get the champagne & cigars out it’s worth remembering that, post-PROD, the rules for suitability have already set a reasonably high bar, while PROD has given the regulator the ability to identify rule breaches more clearly, and enforce these. And as we highlighted a couple of months ago, the proposed Consumer Duty work from the FCA will raise this bar even further. So, overall I’d say the message to advisers is keep on doing what you are doing (outside of DB transfers) but watch this space for the Consumer Duty consultation…
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