Regulation Round Up – September 2024

Welcome to our monthly newsletter, Regulation Round Up. Once a month Hannah Keane covers some of the main stories to come out of HMRC and the FCA, as well as anything else related to rules and regulation in financial services.

FCA to Launch Pure Protection Market Study

Last month, the FCA announced that they are planning to launch a study later in 2024/25 into how pure protection insurance products are sold.

The FCA stated that this comes after some concerns that competition is not working well in the market. In particular, they have concerns about commission arrangements and how these might prevent good outcomes being delivered to clients, as well as concerns about some products providing poor value (for example, if the total premiums paid over the lifetime of the product exceed the maximum payout).

The study will focus on term assurance, critical illness cover, income protection insurance and whole of life insurance.

FCA Call for Input – Review of FCA Requirements

The FCA have launched a Call for Input which asks for opinions on refining their retail conduct rules, with a view to simplifying their guidance. They stated that they want to “address potential areas of complexity, duplication, confusion, or over-prescription, which create regulatory costs with limited or no consumer benefit.”

If you’re interested in taking part, responses need to be sent to the FCA by 31st October 2024.

Pensions Review Terms of Reference published

The Chancellor has launched a landmark pensions review, and The Terms of Reference for Phase One of this review were published in the middle of August.

The pensions review aims “to boost investment, increase saver returns and tackle waste in the pensions system.” It will be led by the Minster for Pensions and will focus on defined contribution workplace schemes and the Local Government Pension Scheme.

The first phase of the review is focussed on investment. In particular, it will focus on four areas:

Scaling and consolidating defined contribution workplace schemes;

Tackling inefficiency in the Local Government Pension Scheme;

The “pensions ecosystem” and how we can achieve a greater focus on value, rather than cost, to deliver better outcomes;

Encouraging pension investment into UK assets to boost growth.

Initial findings from the first stage of this review will be reported later this year, ahead of the introduction of the Pension Schemes Bill. The second phase of the review will begin later this year and will consider further steps to improve pension outcomes, including assessing retirement adequacy.

Plans to Scrap ‘British ISA’

According to the Financial Times, “two people close to the process” told FT that Labour has scrapped the idea of the British ISA, which would have allowed an extra £5,000 for UK-listed equities only, on top of the existing £20,000 yearly allowance.

The Treasury have said that no final decision has been made. At the moment, plans for the British ISA haven’t been officially scrapped, so only time will tell.

Payment Services Regulator Reduces Compensation Limits

The Payment Services Regulator is introducing new protections for victims of APP (authorised push payment) scams, while incentivising the industry to implement enhanced fraud prevention tools. The rules are due to come into effect on 7th October 2024.

Initially, the PSR stated that these rules would require banks to reimburse their clients up to £415,000 if they lost money due to an APP scam. After looking into this further, the PSR is consulting on reducing this to £85,000, in line with the FSCS limit.

That concludes this month’s Regulation Round Up. As always, we encourage you to stay informed and keep an eye on upcoming consultations, reviews, and regulatory changes that may impact your business and clients. With several important developments on the horizon, such as the FCA’s ongoing reviews and the upcoming pensions and payment services changes, it’s crucial to remain proactive and engaged. We’ll be back next month with more updates and insights on the latest in financial regulation. Stay tuned!