Financial Services Risk and Regulation Unravelled Podcast

David Morrey and Ben Farmer discuss the regulatory issues that they expect will have a significant impact on the financial services sector in 2025, including motor finance remediation and the future of the FCA Handbook.

 

They also ask what the growth agenda (and the Chancellor’s Christmas challenge to each regulator) will mean in practice.

In our final episode of the year, David Morrey and Ben Farmer discuss the latest updates on the motor finance saga, where the Supreme Court has expedited an appeal involving Close Brothers, and the FCA's involvement in urging a swift resolution.

The conversation also covers other topics related to this regulator:

• Consumer Duty feedback, and review of it in annual reports
• Insight on complaints and root cause analysis
• Consultation on the 'name and shame' rules
• Changes around MiFID in the FCA handbook

Other topics include reporting requirements for life insurers, advice guidance boundary review, and the Barclays fine settlement related to the Qatari investment disclosure case. 

Read more about these updates 

Leave to appeal motor finance to Supreme Court, FCA open letter Letter to Supreme Court: support for application for expedition - Enforcement update https://www.fca.org.uk/news/press-releases/fca-seeks-further-views-enforcement-transparency-proposals

2024-2025 priorities for Consumer Duty https://www.fca.org.uk/publications/corporate-documents/our-consumer-duty-focus-areas 

The FCA on the Consumer Duty in board reports

https://www.fca.org.uk/publications/good-and-poor-practice/consumer-duty-board-reports-good-practice-and-areas-improvementComplaints root cause analysis and areas for improvement

https://www.fca.org.uk/publications/good-and-poor-practice/complaints-and-root-cause-analysis-good-practice-and-areas-improvementCP24/24 MIFID Ord Regulation

https://www.fca.org.uk/publications/consultation-papers/cp24-24-mifid-organisational-regulation PRA CP on liquidity reporting for insurance

https://www.bankofengland.co.uk/news/2024/december/the-pra-consults-on-liquidity-reporting-reforms-for-insurersCP 24/27 advice guidance boundary https://www.fca.org.uk/publications/consultation-papers/cp24-27-advice-guidance-boundary-review-targeted-support-reforms-pensions

In the latest episode David Morrey and Ben Farmer discuss a bumper list of current regulatory issues as previewed in Rachel Reeves's Mansion House speech, aimed at unlocking innovation and growth:

Modernising the Financial Ombudsman Service

The Government's desire to modernise the Financial Ombudsman Service framework, including the previously issued call for inputs. 

Certification regime consultation

An upcoming consultation on replacing the certification regime with a more proportionate system to reduce costs.

National payments

The Government's plan to publish a national payments vision and launch a pilot to deliver a digital gilt instrument using distributed-ledger technology.

ESG and green finance

The ongoing focus on ESG and green finance, with several upcoming consultations on various related items.

Financial services growth and competitiveness strategy

The Government's plans to publish a financial services growth and competitiveness strategy in spring 2025, alongside a call for evidence to gather industry input on the direction it should take.

FCA consultation on financial decision making

An upcoming FCA consultation aimed at helping households make better-informed financial decisions as part of the advice guidance boundary review.

Captive-insurance companies framework

The Government's consultation on a new framework for UK-based captive-insurance companies to make the country a more attractive hub for them.

Pension system reforms

The Chancellor's plans to reform the pension system to allow for greater investment.

Modernising the redress system

A call for input on modernising the redress system, focusing on improving the process for handling mass redress-events and addressing perceived misalignments between the FCA and the Financial Ombudsman Service.

 

Other recent developments discussed include:

FCA market study on premium finance

New FCA market study on premium finance in home and motor insurance. The study aims to understand the reasons behind rising premiums and assess whether premium finance arrangements represent fair value for customers.

Court of Appeal decision on motor finance

The recent Court of Appeal decision related to motor finance claims, which could potentially open the door for challenges to finance-related contracts with undisclosed commissions.

 

In this episode, we delve into the key aspects of motor insurance total loss claims.

Blandine Arzur-Kean, Managing Director, Grant Thornton is joined by colleague Philip Tregurtha, Director, Grant Thornton and Kate Pender, CEO, Fair4All Finance, to discuss:

• best practices for vehicle valuation and settlement processes
• fair and standardised processes for settling claims
• supporting vulnerable customers
• building trust with policy holders
• valuation challenges and claim frequencies associated with electric vehicles.

David Morrey, Head of Financial Services Regulatory Advisory, and Paul Garbutt, Head of Banking, discuss the recent Court of Appeal decision regarding motor finance complaints, which requires greater disclosure of commissions paid to brokers and explicit consent from borrowers.

This decision has significant implications for the industry, extending beyond regulatory requirements to contract law. During the episode we cover judgement overview, disclosure requirements, industry impact, implications for lending contracts and industry reaction, and risk mitigation.

It’s been over a year since the financial services industry began embedding the Consumer Duty for existing products. The FCA’s relentless focus on good consumer outcomes is reshaping the landscape. 

In our latest podcast episode Blandine Arzur-Kean is joined by regulatory experts David Morrey, Peter Lovegrove, and Supriya Manchanda to discuss: 

• the impact of the Consumer Duty 
• challenges firms are facing around management information, data, outcomes testing, and ensuring good results for customers 
• product governance and fair value assessments 
• future of conduct regulation 
• opportunities with AI 

Do you need guidance on the Consumer Duty? You can get regular updates from our dedicated hub. Visit our Consumer Duty Hub here.

As the eighth edition of the FCA's Regulatory Initiatives Grid was delayed due to the General Election, an interim update to the November 2023 publication has been released for the period October 2024 to March 2025.

In this episode of the podcast, David Morrey and Ben Farmer pull out 10 key takeaways:

1. Diversity and inclusion
2. Basel 3.1 rules
3. Prudential framework
4. FCA's updated enforcement guide
5. Remuneration regime consultation
6. Multi-firm review of vulnerable customers advice
7. Guidance boundary review
8. External redress and remediation rules
9. Capital requirements for financial advice firms
10. Investment advice assessment tool

David Morrey and Ben Farmer dive into the latest key regulatory updates.

Consumer Duty

The FCA's thematic review 24/2 on product governance and its implications for the market, including the importance of firms adhering to product governance rules and the FCA's expectations around product reviews, fair value assessments, and the need for firms to provide evidence to support their conclusions. There is also similar feedback on Consumer Duty outcomes monitoring.

Audit firms' fines

Recent actions taken by the FCA against audit firms, specifically fines imposed on PwC and McIntyre Hudson for failings in their audits of Wealth Tech and London Capital and Finance plc, respectively. This conversation underscored the regulatory expectations and consequences for audit firms failing to detect or report fraudulent activities.

 

Financial Regulators Complaints Commissioner

A case reviewed by the Financial Regulators Complaints Commissioner involving a firm's complaint about the FCA's handling of a Voluntary Requirement (VREQ). The case highlighted issues with the FCA's communication and process around VREQs, leading to recommendations for the FCA to develop better guidance and processes.

 

Do you need guidance on the Consumer Duty? You can get regular updates from our dedicated hub. Visit our Consumer Duty Hub here. 

 

Get the latest insights and guidance for financial services professionals straight to your inbox, subscribe here. 

David Morrey and Ben Farmer dive into the latest key regulatory update topics, which include:

• Consumer Duty: discussion of the Consumer Duty one year after its establishment, focusing on the consequential changes and the FCA's call for input on updating the handbook to align with the Consumer Duty principles
• Handbook changes: insights into the Financial Conduct Authority’s (FCA) request for firms to identify areas in the handbook that create complexity or confusion, potentially leading to updates in the handbook
• Commercial insurance: examination of the definition of a consumer in the context of commercial insurance, with a discussion on potential changes to align with the Consumer Duty's scope
• Defined contributions pension schemes: a consultation on changing the rules for value for money assessments in defined contributions pension schemes to align with Consumer Duty standards
• Motor finance complaints: update on the FCA's review of motor finance complaints, including an extension of the pause on handling complaints and the likelihood of a consumer redress scheme
• Enforcement Case: a £250 million enforcement case involving H2O Asset Management, focusing on investment due diligence failures and misleading the FCA

Get the latest insights and guidance for financial services professionals straight to your inbox, subscribe here. 

Do you need guidance on the Consumer Duty? You can get regular updates from our dedicated hub. Visit our Consumer Duty Hub here. 

 

David Morrey and Ben Farmer discuss the impact of the general election on the financial services sector, such as the delays to the Regulatory Initiatives Grid, the Finance Act, the alternative investment fund designation bill, and the FCA's proposals on naming and shaming. Other topics discussed include: 

• The FCA's decision to allow four insurers to resume selling GAP insurance after withdrawing it from the market due to concerns over fair value and commission levels
• The speech by the chair of the FCA on the future regulatory framework for asset management, including the potential for simplifying the Alternative Investment Fund Managers Directive (AIFMD), diverging from EU standards, and supporting technology innovation
• The Treasury Select Committee's questioning of the FCA's enforcement proposals, diversity and inclusion proposals, de-banking issues, access to cash, and the motor finance investigation