articles: Regulation

Regulatory intervention: what next for the CFD industry?

An article discussing the concerns raised over the risks posed to retail investors from the provision of speculative products such as CFDs. It has been widely publicised, that the regulators are considering intervention, including possible measures such as leverage limits, guaranteed limits on client losses or restrictions on the marketing and distribution of these products.

The future of regulation in the shadow of Brexit

With the Prime Minister Theresa May indicating that there is insufficient time to replace European bodies with a new British regulatory regime, the implications of Brexit look to have limited short term impact on Financial Services regulation. However, beyond March 2019, what would a hard or soft Brexit look like in terms of future regulation?

FCA raises market stability concerns over disorderly wind downs in the investment management sector

This year, for the first time, the FCA has published its Sector Views document alongside its Business Plan. The FCA’s view of the investment management sector identifies key areas of focus for the industry, including:
  • overpayment of some investment management services;
  • ability of custody banks to meet service standards;
  • products designed for ease of management rather than meeting investors’ needs;
  • disorderly failure or wind down of investment managers or their portfolios.
When winding down funds or investment managers, we have found that the first three issues listed above are often found together. Furthermore, typically, these issues are a result of an investment manager growing quickly while the back office processes fail to keep pace.
 

The FCA intends to carry out an exploratory study on the motor industry

The FCA has raised concerns around motor finance companies practices causing a lack of transparency, conflicts of interest, and irresponsible lending. 

The FCA will begin an exploratory study to identify assess the sales process and determine potential harm that may be caused to consumers. This latest study highlights how active the FCA currently are  in monitoring the motor finance industry.

The art of delegation: delegated authorities in the insurance sector

The regulators generally look at insurers and brokers who outsource via delegated authority with greater scrutiny, mainly because of the increased risk of weak oversight and control by the principal over the performance of products and delivery of services outsourced in this way. It is therefore crucial to have the right systems and controls in place, together with clear allocation of responsibilities.
 

Industry insight: improving the conduct of business of CFD firms

On 6 December 2016, the FCA published a Consultation Paper (CP16/40), which outlined concerns about the increasing evidence of poor conduct of firms providing CFD products to retail clients and the increased risks to investor protection. Many of the ideas raised by the FCA in this paper could have significant and wide-sweeping effect on the future size and shape of the CFD market and the way you do business.

Tackling poor value products in the general insurance sector

The FCA is taking action to incentivise firms to improve the value of general insurance (GI) products being sold to consumers and has introduced a value measures pilot scorecard to provide greater transparency around product value comparison. However, developing a meaningful way of measuring the value of GI products is far from straightforward.
 
Here we examine the steps that the regulator has been taking in an effort to find a remedy and put forward our thoughts on how firms might tackle this metric within their own organisations.

FCA increases focus on the FX and CFD market

With a rapidly increasing level of enforcement action and a concentration of thematic activity on Brokers in the FX and CFD arena, there is a clear statement of intent from the regulator: the sector is not meeting regulatory expectations and firms offering such products are now firmly under the FCA's microscope.

The regulated activity of ‘advising on P2P agreements’ and the impact this has for your firm’s permissions

With effect from 6 April 2016, the FCA has automatically varied the permissions of all firms who currently hold permissions of ‘advising on investments’ to add the new regulated activity of ‘advising on P2P agreements’. This change has also affected firms who give advice on non-investment insurance contract and those whose main business activity is not to provide investment advice, e.g. general insurance intermediaries.