Welcome to the UKGI weekly regulation update service for Aviva ABC brokers

Context

In stating that bullying and harassment in financial firms qualify as misconduct, the FCA has clarified its expectations in relation to bullying, harassment and violence in financial services firms by publishing a Consultation Paper on tackling non-financial misconduct in financial services.  There is significant new guidance proposed for inclusion in the COCON Sourcebook (in a new COCON 1.3 and in COCON 4.1), and in the FIT Sourcebook in FIT 1.3.

The Paper includes:

• consultation on significant additional guidance in the Code of Conduct (COCON) and the Fit and Proper Test for Employees and Senior Personnel (FIT) sourcebooks; and
• a Policy Statement, in Chapter 2, on amendments to the Code of Conduct rules (COCON), which were consulted on in Consultation Paper CP23/20 (“Diversity and inclusion in the financial sector – working together to drive change”).  A new rule amending the scope of COCON in non-banks and applies from 1^st September 2026 (and not retrospectively), to line up with the conduct rule breach reporting period for most firms.  By aligning the conduct rules in banks and non-banks for cases of serious non-financial misconduct, the FCA wants to give firms the ability and a structure within which to take robust action against serious misconduct, drive consistency across the financial sector, and make it clearer when non-financial misconduct can be a breach of the FCA’s rules.

This Consultation applies to all authorised firms with a Part 4A Permissions and to staff in those firms who are subject to the FCA’s Codes of Conduct (COCON). 

Key points to note and next actions

• Previously, it was often unclear when these types of behaviours would amount to a conduct rules breach in a firm other than a bank.  On 1^st September 2026, the same rules will be extended to around 37,000 other regulated firms, increasing consistency across financial services.
• There is a useful diagram in paragraph 2.18 of the Paper outlining general considerations for identifying and reporting a conduct rule breach, and another diagram at paragraph 2.19 outlining additional factors for identifying whether non-financial misconduct falls within the new rule at COCON 1.1.7FR.
• Serious, substantiated cases of poor personal behaviour will need to be shared through regulatory references, in the same way financial misconduct currently is, making it harder for individuals to avoid consequences by moving from firm to firm.
• The draft guidance covers how firms should consider non-financial misconduct when assessing whether an individual is fit and proper to work in financial services. This includes how firms should consider use of social media and the relevance of behaviour in private and personal life.
• dWhile there is overlap, the proposed regime addresses wider forms of misconduct and is not limited to protected characteristics. It aims to make sure that firms address serious misconduct robustly and consistently and prevent perpetrators from causing further harm.
• The FCA is also asking whether further guidance would be helpful and proportionate for firms as they implement the rule change. It has taken on board feedback on its previous draft guidance.  It is impossible to give an exhaustive list of the circumstances in which misconduct will breach the FCA’s rules, so firms will still need to exercise judgement.
• The FCA is making a clear distinction between COCON breaches and appropriate considerations in relation to fitness and propriety.  Just because something might not fall within the reach of COCON does not mean that it should not be considered from a ‘fit and proper’ perspective.
• The guidance is open for consultation until 10^th September 2025. The FCA will only proceed with the guidance if there is clear support for it.

Context

The FCA has confirmed in Handbook Notice 131 and in Policy Statement PS25/7 that it has formally removed the requirement to complete Section F (Controllers and Close Links) of the Retail Mediation Activities Return (RMAR).   The FCA has also confirmed that invoice and credit tasks are to be added to MyFCA, and that that firms will receive emails to let them know when an Online Invoicing System (OIS) task is due.

Key points to note and next actions

• Section F will be removed from the RMAR.
• The FCA acknowledges (following responses to the Consultation) concerns about the potential failure of firms to report changes to their close links and controllers, but will consider what the options are to remind firms of their obligations.
• There will be no change to the timing of annual fee invoices, which will be issued to firms between July and September.

Context

The FCA has published its final Fees and Levies rates and information for 2025/26 in Policy Statement PS25/8, following the earlier Consultation.   The Consultation proposals included the proposed levels of fees and levies, amending the FEES manual to align with the Money Laundering Regulations, and some minor amendments to certain sections to improve readability, remove obsolete definitions and update references.  The FCA is also seeking industry views on whether it should change its draft rates modelling approach.

Key points to note and next actions

The confirmed Annual Funding Requirement (the AFR – what the FCA expects that it will cost to run itself during the financial year) is £783.5m, comprising the baseline ‘ongoing regulatory activities’ (ORA) costs and exceptional projects.

Fees are increasing almost across the board (which need to be considered in the context of the number of firms in each fee block reducing in almost every case), with increases being:

• General insurance mediation – £0.8m (2.2%) from £38m to £38.8m
• Principal firms – £0.2m (3%) from £7.1m to £7.3m
• Consumer credit firms – 2.3%
• Claims management firms – 3.1%
• Funeral plan intermediaries and providers – 0.9%

In line with the ongoing phased increase in minimum fees for consumer credit firms, the minimum fees payable will range (dependent on consumer credit-related income) from £800 to £1,100 for Limited Permission firms, and from £1,500 to £2,000 for ‘full’ permission firms.

The FCA is proposing to raise application fees in line with the 2.5% increase in the ORA budget and round them to the nearest £10.

In relation to its  motor finance exceptional project cost recovery proposals (how to recover the £6.9m costs of its review of the historical use of discretionary commission arrangements (DCAs) in the motor finance sector), the FCA will recover the costs from variable fee-paying lenders that sold a motor finance credit agreement between 2007 and 2021 which included a DCA, under a new fee block, CC4.  The FCA will, however, keep this position under review, including whether to charge its costs to relevant motor finance brokers (e.g., motor dealerships).  This position will be informed by the upcoming Supreme Court decision. Within 6 weeks of that decision, the FCA will confirm whether a redress scheme will be proposed and, if so, how it will be implemented.  The FCA will also consult on any scheme, including whether a scheme would apply to motor finance lenders and/or brokers.

Firms can use the online fees calculator to calculate their individual fees based on the final rates in this Policy Statement. This includes FCA periodic fees and the Financial Ombudsman, and Money and Pensions Advice Service final rates. The fees calculator will also cover the Financial Services Compensation Scheme levy. The FCA will invoice fee-payers from July 2025 onwards for their 2025/26 periodic fees and levies

Context

FOS has announced (including in its latest Ombudsman News e-mail) the publication of its 2024/25 complaints data, along with its Q4 2024/25 data and its annual complaints data and insights commentary.

Key points to note and next actions

• The most complained about product types in the 2024/25 financial year were mirrored by the data for Q4 2024/25 – with hire purchase (motor), credit cards, current accounts, car or motorcycle insurance and conditional sale (motor) being the top five.
• Just under 305.000 new complaints were received by FOS in 2024/25, a 54% increase on 2023/24 when just under 199,000 complaints were received.
• The average uphold rate in the year was 34%, a drop from 37% in the previous year.  The uphold rate for complaints from professional representatives was 27%.
• In relation to insurance, there were 45, 600 new complaints in the year, with an overall uphold rate of 38%.  The most complained-about product was car or motorcycle insurance (14, 082 complaints).
• Full data sets can be downloaded in the form of spreadsheets.

FOS and HM Treasury have published the FOS Annual Report and Accounts for 2024/25. 

Key points to note and next actions

• In addition to some of the information contained in the annual complaints data reporting and insights, the Report and Accounts confirms that just under 227.500 complaints were closed in the 2024/25 business year, compared to 192,000 in the previous year (an increase of around 18.5%).
• 50% of all cases brought to FOS in 2024/25 were from professional representatives.
• The Report sets out key information in relation to the FOS desired strategic outcomes, explores the areas that impacted FOS in 2024/25, and its operational performance.

Context

The ASA has stated that it “…will put people first and prioritise protecting vulnerable people…” in announcing its commitment to protecting vulnerable customers.  The first strand of its latest strategy,  AI-Assisted Collective Ad Regulation, sets a clear commitment to increasing the ASA’s efforts to protect vulnerable people and to support those who need its help the most.

Key points to note and next actions

• The statement indicates that the ASA is aware of ‘situational vulnerability’ (e.g., someone experiencing a temporary crisis) as well as ‘inherent vulnerability’, such as a person with a long-term disability.
• This year the ASA has used its Active Ad monitoring system to drive its proactive work and published rulings, and has undertaken research to enforce its Code rules.
• The ASA has:
  • published a report into the depiction of older people in advertising;
  • issued six rulings against ads for liquid BBLs (Brazilian Butt Lifts) after they irresponsibly pressured people into booking a cosmetic procedure and exploited women’s insecurities around body image; and
  • conducted research into understanding how young people connect with media, sport and celebrities which will help inform what holds strong appeal to those under-18s. This is especially important when considering ads for age-restricted products, such as gambling and alcohol.  
• Its 2024 Annual Report also outlined other areas where the ASA is using technology to help target its work on protecting vulnerable consumers.

Context

New Financial are working with HM Treasury to conduct an annual review of the HMT Women in Finance Charter to monitor the progress of charter signatories.  This latest report is titled “Focus on Acceleration”.

Key points to note and next actions

• Charter signatories increased female representation in senior management to 36% in 2024 on average, in line with the one percentage point year-on-year rise since the Charter launched.
• The report asks how firms can accelerate annual progress beyond one percentage point.
• The report explores why acceleration is needed, what the ‘accelerators’ could be, and some key takeaways and calls to action.

Context

The CII has stated that it has found significant opposition to the FCA’s proposal to remove the requirement for those working in the insurance profession to undertake a minimum of 15 hours training and development per annum.  The FCA’s Consultation into simplifying insurance rules (CP25/12) closed on 2^nd July.  The CII’s full consultation response is available here.

Key points to note and next actions

• The CII asked its members for their views, finding that 80% of (582) respondents believed the ‘public perception of the insurance profession will suffer’ if the FCA removes its 15-hour requirement. A similar proportion [83%] agreed or strongly agreed that ‘Undertaking Continuing Professional Development is essential for me to be viewed as a professional by my clients or customers.’
• The CII had encouraged its members to respond to the FCA’s consultation in a letter distributed to all its insurance members on Friday 27th June.
• The CII has previously stated that its own CPD requirement will remain irrespective of the outcome of the FCA’s consultation.
• This snapshot of member views shows that CII members strongly support maintenance of higher standards

Context

The has published a refreshed model wording for UK Consumer Personal Accident lines, and a new clause to strengthen sanctions compliance in (re)insurance contracts.

Key points to note and next actions

• In an update to the UK Consumer Personal Accident Group Policy wording (“KA Form”), this newly released model wording adheres to the LMA’s UK Consumer Wordings Guidance.
• Presented in a visually appealing format, the refreshed wording uses plain language, with no sentence exceeding 25 words. It is structured to promote comprehension, providing tips and signposts for customers throughout the document.
• The new model clause, LMA5670 – General Sanctions Financial Crime Documentation Clause, is designed to enhance the ability of (re)insurers and brokers to comply with evolving sanctions and financial crime regulations.
• In response to the increasing complexity of sanctions legislation and the speed with which it is introduced, the new clause introduces a contractual obligation for (re)insureds to provide documentation upon reasonable request, particularly to deal with situations where such obligations arise mid-contract. 
• The clause is intended to provide insurers and brokers with an added layer of protection and to “future-proof” their contracts by:
  • Giving contractual rights to access documentation from their insureds as necessary to confirm no exposure to sanctions or financial crime regulations;
  • Minimising the burden on (re)insureds by limiting such requests to information that is reasonably required, accessible through best efforts and not outside their control; and
  • Automatically discharging the contract in cases where the insured has not cooperated appropriately – aligning with recent requirements from the UK authorities