Welcome to our monthly newsletter, Regulation Round-Up. In this edition, Hannah Keane covers the key stories from HMRC and the FCA, as well as other important developments in financial services regulations.
While April was bustling with activity due to the tax year-end and the accompanying changes, the past month has been relatively quiet on the regulatory front. However, there are still some noteworthy updates that you should be aware of.
Financial Promotions on Social Media – ‘Finfluencers’ Charged for Promoting Unauthorised Trading Scheme
In last month’s Regulation Round Up, I mentioned the FCA’s finalised guidance on financial promotions on social media (FG24/1). A key part of this finalised guidance is that influencers need to make sure that they have approval from an FCA-authorised person before they promote a financial product, or they could be criminally charged.
Since then, various social media influencers, including Lauren Goodger of TOWIE fame, have been charged in relation to promoting unauthorised investments via their Instagram accounts. The influencers have been charged with unauthorised communications of financial promotions, and will appear before Westminster Magistrates’ Court in June.
It will be interesting to see how this plays out, and whether this discourages other influencers from promoting financial products without proper approval.
Consultation – Raising Standards in the Tax Advice Market
HMRC are consulting on raising standards in the tax advice market through a strengthened regulatory framework. This could be achieved by:
- Introducing compulsory membership of a recognised professional body
- Joint HMRC and industry enforcement
- Regulation by a separate statutory government body
The Society of Pension Professionals (SPP) has responded to this consultation and raised some concerns. While the SPP welcome proposals to enforce minimum standards for tax practitioners, they are concerned that any regulation could have “unintended consequences for pension professionals” and could impact pension professionals like advisers when dealing with areas like lump sum allowances and death benefits.
The SPP recommends that HMRC consider giving an exemption to pensions professionals for any work relating to a registered pension scheme.
Consumer Duty Deadline for Closed Products
While Consumer Duty has been in force for most providers since last July, closed products and services will be subject to the Duty from 31st July 2024.
In a Dear CEO letter, the FCA has encouraged firms to look at five particular areas to help prepare for the implementation of Consumer Duty:
- Gaps in firms’ customer data
- Fair value
- Treatment of consumers with characteristics of vulnerability
- Gone-away or disengaged customers
- Vested contractual rights
The FCA said that “these issues are not unique to closed products and services” but “are likely to be more widespread or acute.”
We deal with a lot of old products here at We Complement (and I’m sure many paraplanners, administrators and financial planners can say the same). It’s not unusual for the providers to fall short of our expectations, and gathering the information you need to help your client can be longwinded and painful. If it’s that tricky for us, it must be even more difficult for clients to understand some of these old legacy products. It will be interesting to see whether Consumer Duty makes any difference to this.
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