FIG Bulletin, 6 September 2019

Author:Hogan Lovells
Profession:Hogan Lovells


Fair treatment of vulnerable customers: FCA delays response to GC19/3

The Financial Conduct Authority (FCA) has updated its webpage on guidance consultation 19/3 (GC19/3), which seeks views on proposed guidance for firms on the fair treatment of vulnerable customers. The consultation closes on 4 October 2019 and the FCA was due to issue a response in autumn 2019. However, an update to the GC19/3 webpage indicates that this response will be postponed until 2020.

Financial promotions: FCA warns claims management companies

The FCA has published a press release stating that claims management companies (CMCs) must do more to ensure that their financial promotions do not mislead potential customers. Since the FCA took over regulation of CMCs on 1 April 2019 it has reviewed over 200 CMC adverts in various media and found widespread poor practice.

The FCA reminds firms of key requirements in relation to financial promotions and gives some examples of the poor practice it has found.

The FCA lists the action it has been taking in response to these findings, including:

issuing a Dear CEO letter on 4 June 2019 to remind CMCs of the FCA's financial promotions rules, among other matters; using its power to ban financial promotions where a CMC appeared to be using a celebrity endorsement without the individual's permission; highlighting the FCA's concerns to CMCs, resulting in many firms amending or withdrawing their adverts; and visiting CMCs where the FCA considers that their financial promotions are particularly poor. 2019/20 remuneration round: FCA letter to level 1 firms

The FCA has published a letter, dated 19 August 2019, sent by the FCA to the Remuneration Committee Chairs of level 1 firms. In the letter, the FCA sets out its findings and observations from the 2018/19 remuneration round, and explains how it plans to assess firms throughout 2019/20. In particular, the FCA comments on ex-post risk adjustments, diversity and inclusion, the annual review of remuneration policy statements, and its expectations of Remuneration Committee Chairs.

The FCA notes that it is currently looking at non-financial incentives as well as financial incentives. In particular, the FCA invites views on the following issues it is focussing on:

what motivates individuals in the financial services sector including the role of nonfinancial incentives and recognition; the role of financial incentives in developing a successful business model; and how the...

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