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Financial Services Regulatory Updates in the United Kingdom

In this week’s edition of our regulatory round-up, we explore the latest developments in the UK financial services sector. From the Financial Conduct Authority’s (FCA) findings on outcomes monitoring under the Consumer Duty to the Bank of England’s assessment of the UK financial system, here are the key takeaways.

FCA Publishes Findings on Outcomes Monitoring Under the Consumer Duty

The FCA has released its review of outcomes monitoring within the insurance sector. The review aimed to assess how firms monitor and test customer outcomes to ensure alignment with the Consumer Duty regulations. The findings highlighted good practices, including:

  • Clearly defined customer outcomes
  • Comprehensive metrics for monitoring
  • Areas requiring improvement:
    • Insufficient data analysis
    • Inadequate threshold settings

The FCA has requested that all insurers, insurance intermediaries, and outsourced service providers in the insurance industry consider these findings and refine their approaches to monitoring outcomes by July 31st, 2024. The guidance is also expected to aid firms in preparing their first Consumer Duty annual report, due by the end of July.

FCA Updates Guidance on Consumer Duty Annual Board Reports

The FCA has updated its website with guidance for firms regarding their annual board reporting obligations under the Consumer Duty. While the guidance does not provide a specific template, it outlines the expected content, including:

  • Results of monitoring
  • Evidence of poor outcomes
  • Actions taken to remedy issues
  • An assessment of future business strategy

BoE Financial Stability Report and FPC Financial Summary

The Bank of England has published its June 2024 Financial Stability Report, alongside the Financial Policy Committee’s (FPC) latest financial summary and record. The report highlights stable risks in the UK financial system, despite concerns about sudden corrections due to rising asset prices. Globally, significant risks persist, including:

  • Differences in legal, accounting, regulatory requirements
  • Geographical distance
  • Cultural and language barriers

New FCA Webpage on Overseas Appointed Representatives

The FCA has published a webpage on overseas appointed representatives (OARs), following feedback from its consultation paper on the subject. The webpage outlines expectations for principal firms to ensure compliance, including:

  • Conducting an annual self-assessment to evaluate the effectiveness of controls for monitoring OARs

EBA AML and CTF Priorities for 2024/25

The European Banking Authority (EBA) has announced its Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CTF) priorities for the remainder of 2024 and 2025. The EBA will focus on:

  • Developing a methodology for selecting financial institutions for direct EU-level AML/CTF supervision
  • Creating a common risk assessment methodology
  • Compiling information necessary to carry out customer due diligence
  • Establishing criteria to determine the seriousness of breaches

Stay up-to-date with the latest developments in the UK financial services sector. For more information on regulatory changes and guidance, download our comprehensive guide, “UK Regulatory Handbook 2024”.