FCA’s Quarterly Consultation proposes minor changes to various parts of its rules, including providing clarification on the Consumer Duty. The paper proposes:
- amendment to TC to include The London Institute of Banking and Finance Limited and update qualifications as LIBF is transferring its activties to LIBF Limited;
- removing USD LIBOR derivative products from the trading obligation to reflect USD interest rate benchmark reform;
- moving FCA’s FG on its approach to Co-operative and Community Benefit Societies into a new distinct Guide;
- amending a range of prudential sourcebooks, SYSC, COND and SUP to provide clarifications and remedy errors;
- changes to EG to reflect FCA’s power to impose a direction on an Annex 1 Financial Institutions for the purposes of the MLR;
- amending PROD in respect of application to manufacture and distribution of non-investment insurance products distributed to customers outside the UK; and
- in relation to the Consumer Duty:
- to clarify that where firms approve financial promotions for unauthorised third parties, the Consumer Duty will apply in terms of Principle 12, the cross-cutting rules, the consumer understanding outcome, rules on monitoring and guidance and supporting rules;
- to clarify that retail customers include any person who is, or would be, a beneficiary of an occupational pension scheme – FCA comments that it does not expect there would be many instances where firms would have a material influence on retail customer outcomes in relation to DB OPS, but it is possible it may provide services for trustees that have a material influence on consumer understanding or support;
- to remove the term “distribute” in relation to “closed products”, because of the potential breadth of the definition which would mean that no product or service in which there is still any ongoing relationship could be considered “closed”;
- to clarify that firms designing and distributing investment funds for retail customers are covered by the Duty – FCA says the current wording could, wrongly, be interpreted to exclude firms selling to retail customers where there is a high minimum investment level; and
- to clarify that just because the Duty will not apply to matters explicitly excluded in relevant conduct sourcebooks, this does not mean it only applies to things expressly covered.
FCA asks for comments on all proposals by 9 January 2023.