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Link(s):FCA simplifies supervisory letters | FCA

Context

The FCA has published a webpage with an update that, from 30 April 2025, it will stop issuing and publishing portfolio letters. Instead, the FCA will publish a small number of market reports. The market reports will include communications relevant to different types of firms and insights from FCAs supervisory work.  In line with its Consumer Duty Requirements Review, the FCA is streamlining how it sets its supervisory priorities, and wants to make it easier for firms to find up-to-date supervisory communications on the FCA website by retiring historical portfolio letters and Dear CEO letters.  

Key points to note and next actions

  • Until market reports are published later this year, firms should continue to refer to relevant portfolio letters and Dear CEO letters for guidance.
  • The FCA will continue to review its approach to other historical communications and consider how they can routinely review outdated material. Dear CEO Letters will still be used to inform senior management at firms about significant issues that require action
Link(s):CII says institutions must be held accountable for AI outcomes

Context

In recommendations submitted to the Treasury Select Committee (TSC), the Chartered Insurance Institute (CII) says institutions and individuals must be held accountable for decisions made using AI, and advocates for a ‘skills strategy’ to support the use of AI within financial services.  Professionals should “always be prepared to take accountability for the outcomes created by AI, either through design or monitoring”, and “all professionals should be educated on the potential harm that can come from mis-managing AI”.

Key points to note and next actions

  • In its submission to the TSC, the CII recommends that institutions should be held responsible for decisions made by the algorithms that they use.
  • This accountability should be backed up with validation and testing, especially for discriminatory harm, and institutions should make the results of these tests public.
  • The CII says that a ‘proportionate, regulatory approach’ to the use of AI in financial services would include implementation of a sector wide skills strategy, in which all employees of firms receive education on the potential and risks of AI, in order to strike the right balance between optimising its use and protecting consumers.
  • The submission draws on CII consumer research carried out over several years as part of its Public Trust Index, and highlights the potential for AI to support key areas that consumers and SMEs are seen to value in insurance, including ‘cost’, ‘protection’, ‘ease of use’, and ‘confidence’. 
  • In advocating for a focus on governance of AI within firms, the CII points to its Digital Companion to the Code of Ethics and Addressing Gender Bias in Artificial Intelligence, which set out practical steps that individuals and firms can take to use AI in a responsible way.
Link(s):HMRC tax receipts and National Insurance contributions for the UK – GOV.UK
NS_Table_final.ods
HMRC tax receipts and National Insurance contributions for the UK (monthly bulletin) – GOV.UK
HMRC tax receipts and National Insurance contributions for the UK (annual bulletin) – GOV.UK

Context

HMRC has published updated details of its tax receipts and National Insurance contributions for the UK.  These are presented in a spreadsheet format, and are accompanied by monthly and annual commentary Bulletins

Key points to note and next actions

  • Although there is no commentary in either the monthly or annual Bulletins in relation to Insurance Premium Tax (IPT), the spreadsheet details the contribution to the HMRC purse from IPT over a number of years.
  • The total IPT receipts for the 2024/2025 tax year amounted to just under £8.9bn.  This exceeded the previous year’s total of £8.15bn by some £737m, or 9%.
  • Ten years earlier, in the 2014/15 tax year, IPT receipts were £2.97bn, so IPT receipts have almost trebled in ten years

Link(s):FIN074 returns – who needs to pay the Economic Crime Levy | FCA

Context

The FCA has updated its web page about the FIN074 Economic Crime Levy return to add sections on the Levy itself, and on how to submit and deal with issues.

Key points to note and next actions

  • The new information seeks to clarify (although there is no granular details) which firms need to pay the Levy, and information about charges for the Levy.
  • There is updated, if brief, information about what data to submit (i.e., the FIN074 return) and how to deal with issues related to FIN074.
  • There remains a section specific to insurance firms, confirming that the activities of insurance firms are not in scope of the MLRs (hence out of scope of the Levy and the need to complete the return) when carried out for contracts for general insurance.
  • The information reminds insurance firms, though, that there can be circumstances where insurance firms have additional permissions to provide regulated activities that may bring them within scope of the MLRs, for example if they carry out consumer lending.
Link(s):Statement from the CII on the FCA’s CPD consultation

Context

In a statement in response to the FCA announcement that it will consult on removing the regulatory requirement for people working in general insurance to complete fifteen hours of ongoing training every year, the CII has confirmed its view that being an insurance professional is a highly responsible and demanding role, which should be supported by high professional standards.  The CII has no plans to alter its CPD expectations for its members.

Key points to note and next actions

  • The FCA’s requirement for individuals working in insurance to ‘possess appropriate knowledge and ability in order to complete their tasks and perform their duties adequately’ has not been called into question. As such, while the idea of scrapping the 15-hour requirement may reduce the regulatory burden superficially, the high-level standard (which can be applied with hindsight when consumer harm is detected) is still very demanding – the regulator’s expectations of insurance professionals will remain the same.
  • The CII states that “education and training are vital aspect of these standards” and that “continuous professional development is a crucial element of professionalism because it allows individuals to adapt to a constantly changing technological, economic and social environment.
  • Relying on its ability to set its own standards for its members (whilst often aligning these with those of the regulator), the CII has responded to the FCA and set out that there will always be a balance to be struck between rules and regulations, and the responsibility on professionals to do the right thing.