Lenders gain partial win in motor finance marathon

The legal battle over motor finance commissions has resulted in a partial victory for lenders: in two of three conjoined cases, the Supreme Court ruled that credit brokers owed no fiduciary duties to customers. Yet the Court’s finding of an unfair relationship in the other claim may still expose firms to substantial payouts. Adam Samuel examines the judgment and its loose ends.

Legal actions, disputes & redress, Legislation, Charges & commission, Retail intermediaries, Consumer credit

Shifts in FCA’s market abuse strategy

Though threats to market integrity are a perennial issue, advances in technology and acute risks from organised crime groups are among the factors shaping the evolving outlook. Tepo Din discusses updates from the regulator.

Enforcement, Financial crime, Market abuse & insider dealing, Rules, reviews & policy, Supervision, Systems & controls

Responsible mortgage lending and repossession under review

The UK’s mortgage affordability assessments and arrears rules are among the most effective in its regulatory regime. Current proposals seeking to broaden access to home ownership will not drastically alter the mortgage market; nor will they help customers currently trapped in high-rate subprime loans, comments Adam Samuel.

Government, Rules, reviews & policy, Supervision, Wider trends, Loans & mortgages

Tom Hayes wins long battle against LIBOR-rigging conviction

The Supreme Court has unanimously quashed the benchmark-manipulation convictions of Tom Hayes and Carlo Palombo because instructions to the trial juries meant that their defences could not be considered fairly.

Legal actions, disputes & redress, Wider trends, Trading activities, Securities & derivatives

Spreading the cost: changes to Buy-Now Pay-Later rules

Draft legislation before Parliament will remove third-party lenders from the exemption for BNPL regulation. Emma Radmore and Stephen Wilson examine what the changes mean, who they will affect and what happens next.

Government, Legislation, Regulatory structure, Consumer credit
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What makes a good fair value assessment?

As we approach the second anniversary of the Consumer Duty, there is one area where leadership and compliance teams continue to seek clarity: fair value.

FOS under threat from civil-servant-speak

It all started at the Mansion House. The Chancellor of the Exchequer’s November 2024 speech commented:

“I have also heard from many of you that our approach to redress can cause uncertainty and be a drag on investment...”

International

Navigating the crypto sanctions compliance minefield

A threat assessment from the Office of Financial Sanctions Implementation is a wake-up call concerning the geopolitical use of cryptoassets to bypass traditional financial systems and compliance mechanisms. It is “almost certain” that suspected sanctions breaches are underreported and “highly likely” that UK cryptoasset firms have been exposed to malignant Russian and North Korean entities, reports Fred Saugman.

The report serves as a critical resource for UK cryptoasset firms and stakeholders aiming to strengthen compliance and mitigate exposure to illicit activity.

Cross-border issues, Money laundering & sanctions, Systems & controls, Technology

Our survey says… a guide to cyber resilience in the financial sector

As one of the most targeted industries, cybersecurity remains a growing risk for financial services. How can we respond to the risks posed by cyber incidents?  Charlotte Witherington and Daniel Hirschfield explore the key lessons for central banks, regulators and policymakers from two cybersecurity surveys of the International Monetary Fund.

Annual financial firm loss from cyber incidents has risen from approximately $300 million in 2017 to approximately $2.2 billion in 2021.

International, International bodies, Government, Regulatory structure, Supervision, Wider trends, Risk management, Technology
High level standards

Taking aim with AI

Artificial intelligence is the business topic of the times, with one Big Four outfit urging firms to, “Get on board or get out of the way.” So, what are the risks, uses, sources of help, important steps and future issues? Neasa MacErlean reports.

About 75 per cent of firms responding to a survey were using AI last year, with a further ten per cent planning to adopt it within three years.

Wider trends, Governance & culture, Risk management, Systems & controls, Data security, Technology, Training & competence

Pay strategies to counter non-financial misconduct

A keen regulatory focus on how firms approach problem behaviours is driving careful attention to payment and accountability structures. Kate Pumfrey and Sarah Ward explore how the latest developments in NFM are impacting remuneration design and committee practices.

“Non-financial misconduct is misconduct, plain and simple,” said Christopher Woolard, then FCA executive director of Strategy and Competition, in 2018.

Governance & culture, Principles, conflicts & ethics, Senior management accountability, Systems & controls, Remuneration
Products & delivery

Revisiting MCOB, amid mortgage market shake-up

On the heels of last month’s Mortgage Rule Review consultation to simplify the current framework, the regulator will launch a “public discussion” on the future of the mortgage market. In the first of two articles, Adam Samuel reviews the Mortgage Conduct of Business sourcebook.

The Financial Conduct Authority grabbed the headlines in March by announcing a review of MCOB.

Rules, reviews & policy, Wider trends, Financial promotions & disclosure, Loans & mortgages

Investment firms to benefit from rule-stripping agenda

In the wake of President Donald Trump’s assault on “the regulatory onslaught”, HM Government is following his lead. Its efforts, though less drastic, are similarly built on a desire to boost national income by pruning red-tape burdens for businesses. Chris Hamblin reports on consultations in progress in the financial services space.

On 31 January the United States’ President Trump signed an executive order to “unleash prosperity through deregulation”.

United States, Government, Rules, reviews & policy, Wider trends, Prudential, Charges & commission, Asset management
Conduct of business

Firms’ processes for vulnerable customers lacking

Despite the Consumer Duty and the regulator’s regular publications on fair treatment of vulnerable customers, they continue to receive more detrimental outcomes in their dealings with financial services firms. Denis O’Connor discusses a recent FCA review that outlines good and poor practices.

The Financial Conduct Authority recently published their review of how 725 firms treated vulnerable customers.

Rules, reviews & policy, Systems & controls, Treating Customers Fairly

Consumer protection in view as cryptoasset activities brought into scope

As the Financial Conduct Authority progresses along its Crypto Roadmap, it has set out its approach to regulating cryptoasset trading platforms, intermediaries, cryptoasset lending and borrowing, staking and decentralised finance, along with the use of credit to purchase cryptoassets. Clear regulation and appropriate consumer protection will support long-term confidence in the sector, writes Ülkü Doğan.

The FCA has published a discussion paper describing how it proposes to regulate certain activities of cryptoasset trading platforms and intermediaries.

Cross-border issues, Government, Regulatory structure, Rules, reviews & policy, Technology, Loans & mortgages, Consumer credit
Sectors

Odey’s overreach tested accountability at own firm

When the executive committee of Odey Asset Management sought to conduct a disciplinary process against the founder and owner, he wasn’t having a bar of it. Denis O’Connor explores the events that led to a clash between a colourful industry figure and the regulator’s interpretation of its conduct rules.

 

Enforcement, Legal actions, disputes & redress, Approved persons, Principles, conflicts & ethics, Senior management accountability, Asset management

Practical steps for investment firms preparing for a CASS audit

The deadline for submitting CASS reports is four months after year-end and the audit process is often fast-paced, with little room to stop and reflect. Oliver Hawes sets out suggestions for firms both ahead of and following their audits to smooth the process.

The FCA states the importance of CASS 6 and 7 audit reports both in recent ‘Dear CEO’ letters as well as in correspondence received by firms following the submission of CASS reports.

Systems & controls, Client assets, Wholesale, Compliance role & skills