Keeping pace with the latest news from the Financial Conduct Authority (FCA) is not just about maintaining compliance; it’s about protecting your most valuable asset: client trust. Understanding these updates and their implications helps you build stronger client relationships and position your firm for continued success.
Here’s a breakdown of the three critical FCA policy statements!
3 Key FCA Policy Statements Your Firm Should Know About
These are three key FCA policy statements released in 2023 that have a significant impact on FCA-regulated firms:
Introduced in July 2022, the Consumer Duty mandates a new Consumer Principle, requiring firms to prioritize delivering good outcomes for retail customers. This translates to a focus on four key areas throughout the customer journey:
- Products and services: Ensuring suitability and meeting customer needs.
- Price and value: Offering fair pricing and delivering value.
- Consumer understanding: Providing clear and accessible information.
- Consumer support: Offering effective and timely assistance.
Implementation Date: While the rules came into effect for new and existing products in July 2023, they will apply to closed products and services on July 31, 2024.
What you can do:
- Review your internal processes and ensure they align with the Consumer Duty principles.
- Train your staff on the new requirements and empower them to prioritize customer needs.
- Regularly assess and monitor customer outcomes to identify areas for improvement.
2. Sustainability Disclosure Requirements (SDR) and Investment Labels
The FCA is committed to promoting transparency and consumer protection in the sustainable investment market. To achieve this, they have introduced a package of measures, including:
- An anti-greenwashing rule: This prohibits misleading sustainability claims and promotes fair, clear, and accurate communication.
- Naming and marketing rules: These ensure the accurate use of sustainability-related terms in product descriptions and marketing materials.
- Four consumer-oriented labels: These labels aim to simplify product categorization and empower informed decision-making.
- Enhanced disclosure requirements: Firms must provide detailed information, both pre-contractually and on an ongoing basis, to both consumers and institutional investors.
Policy Statement: November 28, 2023
What you can do:
- Familiarize yourself with the new rules and ensure your product labeling and marketing materials comply.
- Develop robust systems for gathering and disclosing sustainability-related information.
- Train your staff to effectively communicate product features and address client inquiries regarding sustainable investments.
3. Financial Promotion Rules for Cryptoassets
The FCA recognizes the inherent risks associated with cryptoassets and the potential for consumer harm. To mitigate these risks, they have issued guidance on promoting cryptoassets as “restricted mass market investments.” This guidance emphasizes:
- Clear and prominent risk warnings: Disclosures must clearly convey the inherent risks involved in cryptoasset investments.
- Ban on financial incentives: Offering any form of incentive to invest in cryptoassets is strictly prohibited.
- Client categorization and appropriateness assessments: Firms must appropriately categorize clients and assess their suitability for cryptoasset investments.
Policy Statement: June 8, 2023
What you can do:
- Carefully review the FCA’s finalized guidance (FG23/3) on cryptoasset financial promotions.
- Ensure all marketing and promotional materials for cryptoassets comply with the new regulations.
- Implement robust client assessment procedures to determine suitability for cryptoasset investments.
By staying informed about these key FCA policy statements and taking proactive steps towards compliance, FCA-regulated firms can build trust with their clients, navigate the ever-evolving regulatory landscape, and mitigate the risks associated with non-compliance.
FCA Compliance with COMPLY
Whether your firm needs a consulting or technology solution or some combination of both, COMPLY offers tailored services to meet your firm’s specific needs.
COMPLY’s UK Compliance Consulting Services offer a comprehensive suite of solutions designed to help FCA-regulated firms seamlessly meet the requirements outlined in these key policy statements. Our services encompass a complete compliance management lifecycle, from initial policy review and annual updates to the development and implementation of robust monitoring programs. We provide annual compliance training for all staff, ensuring everyone within your organization is equipped with the knowledge to uphold the highest ethical standards. Additionally, our ongoing consulting support empowers you to confidently navigate any inquiries or requests from the FCA.
COMPLY’s innovative technology solutions seamlessly integrate with your existing systems, allowing you to build customized workflows, gain valuable data insights, and effectively track potential conflicts of interest. With our software, you can demonstrate a commitment to transparency and efficient compliance practices, fostering trust with clients, regulators, and other stakeholders.
Furthermore, COMPLY’s 2024 FCA Regulation Rundown provides a valuable resource, summarizing critical regulatory updates and offering clear guidance on implementation.
By partnering with COMPLY, you gain the expertise, resources, and technology needed to comply with confidence and maintain a culture of compliance within your organization.
Ready to explore how COMPLY can help your firm? Let’s talk!