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FCA publishes responses to key comments from Smaller Business Practitioner Panel and Financial Services Consumer Panel

Jan 21, 2021 | FCA

Link(s): https://www.fca.org.uk/publication/correspondence/fca-response-smaller-business-practitioner-panel.pdf
https://www.fca.org.uk/publication/correspondence/fca-response-consumer-panel.pdf

Context

The FCA has published its response to key comments from the 2019/20 annual reports from the Smaller Business Practitioner Panel and the Financial Services Consumer Panel.

Key points to note

  • Key comments from the response to the Smaller Business Practitioner Panel:
    • Cost of Regulation – The FCA recognises both the increases in the Financial Services Compensation Scheme (FSCS) levy affecting many firms at present and the difficulties in getting adequate Professional Indemnity Insurance (PII) cover.
    • General Insurance Distribution Chains – The FCA confirmed the approach taken prior to the publication of the Finalised Guidance (FG19/05 – General Insurance Distribution Chain) further explaining that the guidance did not introduce new obligations for firms, that it clarified the expectations of firms under the existing requirement for the manufacture and distribution of non-investment insurance products.
  • Key comments from the response to the Financial Services Consumer Panel:
    • Impact of Coronavirus – With specific reference to insurers and insurance intermediaries the FCA confirmed it had asked firms to carefully consider where coronavirus affected how consumers could use and benefit from their products and asked firms to help customers in financial difficulty to maintain their insurance cover.
    • Loyalty Penalties – The FCA responded with reference to the proposed pricing remedy under which home and motor insurance should cost a consumer no more at renewal than if they were a new customer buying through the same sales channel.
    • The Directory – The FCA confirmed that the Directory Persons data launched on the Financial Services Register in November 2020 for dual-regulated firms and December 2020 for solo-regulated firms.
    • Motor Finance – From 28th January 2021 the FCA is banning discretionary commission models that lead to conflicts of interest, giving motor finance brokers and dealers an incentive to raise customers’ finance costs. The FCA estimates this will result in consumers paying £165m less in interest costs every year.
  • Solo-regulated firms which have not yet submitted information on their Directory Persons will need to do so by end March 2021. Firms which do not make changes to their Directory Persons data over any rolling 12-month period will be required to attest to the ongoing accuracy of their data.
  • Key observation across both letters:
    • Vulnerable Customers – firms should respond to the needs of all consumers showing vulnerable characteristics but take particular care to ensure they meet the needs of those at the greatest risk of harm.