FCA has published its second report on the regulatory perimeter. The report looks at:
- consumer confusion about the perimeter – and when FCA has the power to act. It also notes that customers may be confused as to which activities of a firm are regulated, and SMEs in particular may think thy have protections that in fact do not exist because activities are outside the perimeter even when carried on by authorised firms;
- why FCA redesigned the Register, in a way it believes is helpful;
- how FCA engages with consumer warnings and redress schemes;
- measures taken by FCA during the past year – specifically discussing the temporary (probably to become permanent) ban on mass-marketing of speculative mini-bonds and similar products;
- activities that are set to come within the perimeter – notably pre-paid funeral plans (Treasury plans to remove the current exemption that all providers currently operate under), unregulated mortgage book purchasers (FCA notes that almost always these unregulated purchasers comply, or super-comply with the requirement to involve an authorised person, but a change to the perimeter could help the few borrowers whose book purchasers are not compliant), and unregulated introducers (who FCA believes are hiding behind financial promotion exemptions which may not be appropriate, or are breaching the restriction – but are often overseas and therefore hard to trace and take again against);
- the proposals for the financial promotions gateway, and the challenges of discouraging investors from allowing themselves to be shoehorned into inappropriate exemptions;
- how unregulated firms can help to protect consumers on the edge of the perimeter – FCA wants online platform operators better to understand that they have clear legal liability for financial promotions they pass on,in the same way as traditional publishers do;
- FCA’s wish to include fraud within the Online Harms legislation so it can require more material to be removed from online;
- the SME lending perimters – which FCA is concerned about, given the number of BBLS borrowers who had never previously borrowed;
- the contraction of HCSTC products but the growth of credit-like products outside the perimeter – and the increasing use of deferred payment options, and strategies which appear to try to circumvent regulation;
- unregulated lead generators;
- areas of progress, including in consumer understanding of the risks of crypto assets and FCA’s upcoming policy statement on crypto-derivatives (due in January); and
- current concerns, including the risks resulting from the pandemic., and the risks of the appointed representative model, third party service providers, premium finance resource agreements and investment consultants.