MARCH 2023 – ISSUE 23
REGULATORY UPDATE
ROBBIE CONSTANCE, PARTNER, AND CARYS THOMPSON, TRAINEE SOLICITOR, AT DWF OUTLINE KEY REGULATORY DEVELOPMENTS (UP TO NOVEMBER 2022).
ROBBIE.CONSTANCE@
DWF.LAW
CARYS.THOMPSON@
DWF.LAW
On the horizon, casting its shadow over all the regulatory updates we will discuss in this article, is the Financial Services and Markets Bill, introduced to parliament in 2022. The Bill seems poised to usher in significant regulatory initiatives, such as revoking retained EU law, establishing a framework for the designation of critical third parties, and providing the regulators with a secondary objective to advance long-term economic growth. The future of financial services
regulation looks to be focusing on substantive results and good outcomes rather than strict black letter law. The FCA is looking at ways to reduce harm down avenues other than enforcement, using data to head off risks of harm before they manifest. The most prominent manifestation of this is in the new Consumer Duty, which comes into force this year. Where enforcement does occur, redress schemes are often favoured over fines. Outside the FCA, the
common cause of substantive results and good outcomes.
// THE FCA IS CHANGING THE WAY IT APPROACHES ENFORCEMENT //
Treasury and Prudential Regulation Authority (PRA) have been discussing the desire to focus financial services regulation on medium-to-long- term growth rather than ‘quick fixes’. The chancellor announced new banking reforms in December 2022 aimed at enabling an agile and innovative approach to financial services. Finally, the Law Commission reports that it will be focusing on ‘failure to prevent’ offences, joining other regulators in the
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CONSUMER REFORM By now, we are hopefully all familiar with the Consumer Duty. The FCA’s new approach has started to take shape, with the first deadline requiring firms to agree implementation plans by 31 October 2022 and inform the FCA about them. Firms now have until 31 July 2023 to implement the new rules for all new and existing products and services, with closed book products business having until 31 July 2024. While the main focus of the Duty and its ‘outcomes’ is on fair value, timely consumer information, and customer service, we feel that the new duty to notify is deserving of close attention. The FCA has
introduced a new ‘duty to notify’ in the final Policy Statement (22/9) which requires firms to notify the FCA if
they become aware that another firm in the distribution chain is not complying with the Duty. We’re yet to see how this will play out, but it appears the FCA may be responding to criticism of its slow reaction and processing times, by ‘outsourcing’ an element of regulatory supervision and enforcement to all firms. The FCA is continuing to emphasise
the support needed for customers in vulnerable circumstances, and has
THE REVIEW MARCH 2023
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