They discuss recent FCA rule changes – from buy now pay later regulation to the reversal of the ban on crypto exchange-traded notes (ETNs) – and reflect on thematic reviews covering digital journeys, premium finance, and insurance claims.
The conversation also brings up enforcement actions against major firms, offering insights into regulatory accountability and the skilled person panel. Plus, a look at trends in FCA Handbook usage reveals where firms are focusing their compliance efforts.
David Morrey 0:11 Hi and welcome to the Grant Thornon’s Risk and Regulation Unravelled podcast. This is our monthly ramble through the emerging world of Financial services regulation. I am David Morrey and I'm joined as ever by my colleague Ben Farmer. Say hello Ben.
Ben G Farmer 0:23 Hello.
David Morrey 0:24 And it's, oh, I think this is like a summer holiday Special edition, isn't it? Summer holiday significance to that being that the regulator likes to drop a few things on the unsuspecting public just before they disappear on their holly bobs. And his year is no different. So we're going to. Do a round up of what's what's been happening, what's been produced, although I guess I guess first thing to start with maybe is something that was entirely in the control of the FCA, which is the motor Finance, Supreme Court case and the what's happening next after that, Ben, you've been keeping track of that.
Ben G Farmer 0:57 Yes. So the much awaited Supreme Court judgement on motor finance and commissions and whether they were fair or legal has finally landed. So there were three test cases and only one of those has been ruled in the claimants favour. So in practical terms, what does that mean? It means that your car dealer did not owe you a fiduciary duty, IE they were not legally required to set aside their own commercial interests and act as your agent to find you the best deal they were entitled to find a car finance deal that worked for them commercially as well. And there was an attempt to claim that commissions in this context would be bribes, and that was also struck down by the court. However, in one case the court did rule that the distress discretionary Commission arrangement was unfair.
David Morrey 1:42 Mm-hmm. Yeah.
Ben G Farmer 1:50 That means it was unfair as to finding the Consumer Credit Act, so it was an unfair contract and they ruled that for three reasons, which were the amount of Commission. So the Commission in that case made-up 55% of the total charge for credit.
David Morrey 1:54 Why? See. Yep.
Ben G Farmer 2:05 They were on the basis of the disclosures made to the customer because the car dealer in this case had sent paperwork implying that they would be searching the market to find the customer the best rate and that wasn't what they're done. They had, in fact they had one finance provider they worked with, who gave them quite a head of the Commission and they just went straight there.
David Morrey 2:08 Mm-hmm. Yeah. Yeah, yeah.
Ben G Farmer 2:25 And the fact that all of this was done to what the Court decided was an unsophisticated customer didn't help, and I don't think when the court said Unsophistic customer, they were being rude about the claim. And there I think they meant just as in it was average person on the street who's not going to wait through all of this small print.
David Morrey 2:37 Yeah, yeah, yeah. OK.
Ben G Farmer 2:41 So the FCA is now preparing to consult on a redress scheme off the back of this, it has confirmed that there will be a consultation about a redress scheme. There will be a consultation paper by October is all we really know from the FCA so far. Challenging to guesstimate what that redress scheme will look like really, because clearly there are. It will have to be a redress based on where the terms unfair using the standards the courts established. But there's a lot of subjective judgement there. This isn't a sort of. Simple black and white judgement of all discretionary Commission was bad and therefore you must be redressing everyone. Whoever had one. So there's there's going to be it'll be interesting to see what standards the FCA sets down for firms in terms of when they should redress when they're allowed to not redress.
David Morrey 3:17 No. Yeah.
Ben G Farmer 3:28 So what's this space really? And starting to see some impacts from this from predating the court decision, in fairness in the false complaints data?
David Morrey 3:38 Oh yes. Oh, yeah. That's been published. Updated. That's right.
Ben G Farmer 3:40 Yes, yes, they published their data for April to June this year. They had 68,000 new complaints in total and over 24,000 of those were on motor finance. And that the next most complaint about products only had about 7000 complaints, so. A lot of these coming to the force, I think we will probably suspect there are CMC is helping drive that and actually some slightly older FOS data. The data for the second-half of 2024, they did say that 46% of the complaints that had came from professional representatives rather than directing the customers themselves so.
David Morrey 4:02 Yeah. Yeah, that's a lot. That's a big proportion. Yeah. OK, that's interesting. OK. So, yeah, the story moves on. Not not quite. Armageddon. Like, as the original Court of Appeal decision might imply, but still messy by the sounds of it. Sounds like some interesting moving parts. And the FCA will need to consider.
Ben G Farmer 4:14 Yes. Hmm.
David Morrey 4:31 We will be we will be covering, I'm sure the proposed redress game both on this podcast and I think we'll also plan to do a special a special edition and deep diving into whatever the details of that redress scheme are. So what watched this space for later this year.
Ben G Farmer 4:44 Yes, I would think so.
David Morrey 4:48 Thank you. Well, as I mentioned, they've been in the number of about half a dozen or so bits of output that come from the FCA, specifically in the last few weeks, which I thought we should cover. Half of those are relating new or changing roles. Half of them relate to various other markets. Thematic works ongoing. I was going to cover up some of the some of the rule changes or the proposal changes and I'll start by talking about buying out pay later. As we know legislation's gone through bringing that into the regulatory regime and the domain of the Financial Conduct Authority. And we've just had consultation paper 2523, which sets out in detail what rules will apply to that sector. Interestingly, interestingly, it doesn't doesn't mention being buy now pay later on the cover, it's it talks about deferred payment credit. So we might have to start using a different three letter acronym for that for that sector anyway.
Ben G Farmer 5:41 Thank you.
David Morrey 5:43 It's buy now pay later. I guess key points which were some of which we already knew the IT only it's only addressing regulation on the lender. So any retailer or merchant that is offering is the intermediary these buy now pay later schemes is not going to be captured in the regulation, it's purely on the lender that lender will be. What will need to be fully regulated by the FCA? There's going to be a temporary permissions regime where you can continue whilst you submit your application. These applications will be some timeline next July 2026. But, but you will, you're all those by now. Pay letter organisations will have to go through the full authorizations process will be subject to SMCR such as consumer duty, the thrust of the consultation paper is actually a sense that. Because of the consumer duty, we can go relatively not touch, you know, because consumer duty will apply in full to these products. It's it. We don't need a lot of new rules, additional rules to get on them. So. So I think I think I think that's consumer duty compliance is going to be the key point of emphasis for this.
Ben G Farmer 6:51 Yeah, that could be an interesting, interesting first large scale test case of that approach, couldn't it?
David Morrey 6:53 Yeah. Yeah. No, totally, totally. I mean, there are there are he does call out a few points within the conchs of the Consumer Credit handbook that will also apply. So there will need to be a credit worthiness test, proportional credit worthiness proportionately and the full.
Ben G Farmer 7:04 Back up. Yeah.
David Morrey 7:13 Full text of the conch requirements in that respect will apply. Same for buyers in financial difficulty that will all apply. So I think I think that the challenge the challenge will be applying those concepts to you know, products that are short lived have paid no interest.
Ben G Farmer 7:32 Yeah.
David Morrey 7:32 Quite, very often are quite small, so it's kind of a it's a how do you apply those provisions and the consumer duty to in a proportionate way to this to this product. So yeah, July 2026, this will be become live. Those rules will apply or work for those organisations between now and then. I think one of the most interesting things for me, looking at the consultation paper was the cost benefit analysis, which we occasionally talk about. We're going to talk about this one briefly because it's 75 pages long.
Ben G Farmer 8:04 Oh, good Lord.
David Morrey 8:05 It's more than hung off the length of the entire consultation paper. If you, if you exclude the draught falls, more than half is the CBA. It's epic. It even includes a subsection on the CBA panel that the SCA Institute a couple of years back and the feedback the panel provided and their responses to that, to the panel, etcetera. It's it's epic, it's. Believable. And I will be honest, I have not read it. It's.
Ben G Farmer 8:28 I was. I was gonna say cynically. Is it 75 pages of dear Chancellor? Leave us alone and don't panic at all these new rules.
David Morrey 8:35 No, I think I think part of the reason it's that long is because along the way between the government and the regulators, they've accumulated a huge amount of data on this sector. There is and so they've decided to reproduce most of it in the conversation. But but. But you know on the place of it looks like it's a, it's an exceptionally detailed like the most detailed CBA I've ever seen.
Ben G Farmer 8:44 Yeah.
David Morrey 8:55 My life interesting to see. I should be my should be monitoring from this point I'm going to. I'm going to introduce the Moi index which is the number of pages of CBA forms within any consultation. So 75 is the is the current high point.
Ben G Farmer 8:55 Mm-hmm.
David Morrey 9:10 We'll see where we go from here. The other the a couple of other rule changes. I guess the biggest one, but we're not going to talk about it in detail is the payment service E money rules in relation to safeguarding. So this is Cass, 15 and we'll be enforced from the 7th of.
Ben G Farmer 9:22 OK.
David Morrey 9:28 May yeah. The 7th of May. Next year, 2026 and it basically takes the legacy regime as it gives you some simplest way to look at this is it takes the legacy regime that has applied to investment firms and wealth managers and the like for you and brokers for years and years and drops it more or less lock, stock and barrel onto the paying services firms. The cut, the pain. The PSI was as they do talks a lot about, you know, with the feedback received on this and that point and this and that proposal and pretty much all the feedback amounts to this seems like a lot of work and it's do we really have to do all this? And the FCA position on pretty much all FCA of that feedback was that, yeah, you do have to do it and I'm not. I'm not surprised I have any mess from a firm background. So you know the these requirements are so well embedded and understood as necessary for, you know, that sector. It was never going to be the case that the FCA could dial back those protections significantly.
Ben G Farmer 10:23 9.
David Morrey 10:23 On this, on this other sector, they were, you know, there's only going to be 1 answer there. So. So yeah, there was not much, there was not much given that in the given the in the in the final rules based on that feedback which is fine there was some to make 2026 a live the 3rd and final. Rule change. As such, I was going to mention was the SCA have reversed a ban they put in place in 2021, which stops retail investors from accessing exchange trading notes. That link to crypto so expensively crypto derivative products that are a bit on a regulator.
Ben G Farmer 10:59 Yeah.
David Morrey 11:00 Based investment exchange, so you know it might be sitting on the London Stock Exchange, but a retail investor was barred from investing in them and they're basically reversed that. I mean, the basically the argument is that they're now more mainstream and well understood question Mark, who understood by who, I don't know, but.
Ben G Farmer 11:17 Give me.
David Morrey 11:17 But but the big the big pitch of me for there is, and they do reference it in the announcement for the rule changes that they've got a road map focused on crypto and making the UK, you know, the centre of crypto activity. And and this is part of that I think it's just you know making it easier to list crypto related products onto on, on our exchanges. So it's just part of the bigger picture of being crypto friendly.
Ben G Farmer 11:43 Yeah. Mm-hmm.
David Morrey 11:50 So there's a rule changes. Ben, I think you've been looking at some things which are don't amount to room rule changes, but are kind of still significant direction of travel.
Ben G Farmer 11:57 Yeah, yeah, a few things that are going to be of interest to people in particular sectors. First one is we've got one of the FCA's good and poor practise articles. This one's on digital customer journeys and how they can support consumer duty objectives. So the FCA has done its review in the consumer credit sector.
David Morrey 12:04 Yeah.
Ben G Farmer 12:17 But very likely to have read across for any firms who are using digital channels, which these days is most firms, I would anticipate. So the key thrust of the findings is that designer digital journeys can and I quote, encourage customers in a specific direction and can influence their understanding.
David Morrey 12:24 MMM.
Ben G Farmer 12:36 Products and features, and clearly that can sort of be either a good or a bad thing depending on what you end up influencing customers to do. SCA has got a concern that some customers can be driven towards making quick decisions which may not be in their best interests.
David Morrey 12:52 Mm-hmm.
Ben G Farmer 12:53 So some of the good practise FCA saw was firms we could evidence that through the design of the web journey that made sure it would serve different groups of customers, including customers with characteristics of vulnerability, have done things like make sure there was additional support and explanation where needed, EG where customers have come in. Or a third party referral so they might not have seen all the firm's own disclosures upfront. Make sure there's sufficient explanation of product features and that firms have got if sufficient MI testing activity and customer insights to review the effectiveness of their support channels, use of images and videos to supplement text to aid customer understanding. I mean, that's one of the big advantages of a web page. Over a printed document, isn't it? And if she also likes this idea of what it calls positive friction, which is, I like to think of a sort of sludge practises, but for good. So you sort of deliberately slow customers down just a little bit in the journey to help them take time to make a fully informed decision.
David Morrey 13:40 Yeah, yeah. Hmm.
Ben G Farmer 13:57 Particularly before applying for credit, because the 11 of the big pieces of bad practise that they called out is sort of almost the opposite of that. So it's stuff that is advertised as being quick or taking a specific amount of time, which then influences customers to just rush straight into it, leads them to not take long enough to think.
David Morrey 14:00 Yeah. Yeah, yeah. Yeah.
Ben G Farmer 14:16 Make sure that they're in interest and then also a lot of the things that are frankly fairly basic and we've heard before, so not putting enough product information on there, not making it sufficiently clear or presenting at the right time, things like fees and charges.
David Morrey 14:18 Yeah.
Ben G Farmer 14:32 And also bias in layouts. So this is things like pre selected defaults incentives, the way certain choices are laid out and promoted on the page that again can make customers more likely to pick a particular option which then becomes of concern if that option isn't necessarily the right one for that customer.
David Morrey 14:40 OK.
Ben G Farmer 14:49 Yeah.
David Morrey 14:51 Yeah, yes, yes. So the sludge practise is bad, except when they're good. Oh, yeah. We've seen that on the investment and the investment stuff as well. OK, yeah, there's that. What else have we seen?
Ben G Farmer 14:57 Yes, umm. So we had a bit of a brace of general insurance sector publications, which clearly for me is always my happy place, probably 20% of our audience have just switched off. But but for those of you who are left, the one that everyone thought was going to be the big one.
David Morrey 15:07 Yeah. MMM. Yeah.
Ben G Farmer 15:23 Is the interim or the update paper on the premium finance market study that's going on. So this is looking at how clearly if you pay your insurance monthly, you're actually normally getting a loan, which means you're paying interest on it and whoever sold you the loan is probably getting paid Commission and all that sort of stuff.
David Morrey 15:29 Yeah. Yeah, yeah, yeah, yeah.
Ben G Farmer 15:41 So we all thought it was going to be the big one, but it sort of isn't really. There are some slightly eyebrow raising findings in it. So when interest is charged, FCA and APR is typically range from 20 to 30%, but almost 20% of customers pay over 30%.
David Morrey 15:46 Mm-hmm.
Ben G Farmer 15:59 APR some interesting differentials between the home and motor insurance markets as well, because more than 1/3 of home insurance customers are paying naughty percent APR as opposed to less than 3% of motor insurance customers getting it interest free.
David Morrey 16:03 OK.
Ben G Farmer 16:16 So that's a big difference and the profit margins that could be attributed to premium finance sales that the FCA found were ranging from 14% up to 62%, which is it's clearly.
David Morrey 16:17 Mm-hmm. Yeah, because it's probably part of the mechanics. Here are the, you know, you pay monthly and you're obviously in some cases obviously getting charged a lot of interest on that. But I mean if you stop paying, you lose, you lose, you lose the insurance. So for most, it's not really a bad debt kind of risk thing, is it you just.
Ben G Farmer 16:42 Yeah. No, no, there was. There was some country in there about the amount of bad debt relative to other consumer credit sectors and it was certainly quite a bit lower for that reason. And the FCA is also highlighting something that some of the industry have called double dipping which is the fact that there are some insurers who.
David Morrey 16:45 You don't. You don't pay, you don't get the insurance. Hmm.
Ben G Farmer 17:04 You use your decision to pay monthly as a risk criteria. So if you say I want to pay monthly, you're sure goes well. We think you're a higher insurance risk, so you're paying a be a premium and then obviously you're paying interest that's being calculated as a percentage of that premium. So it's you're sort of being double charged for the same thing that.
David Morrey 17:08 Ah. Interesting.
Ben G Farmer 17:23 Which which some people don't like. So in spite of all of this and the reason I say this hasn't been the big one, the FCA has already not quite 100% ruled out, but said it's sort of not minded to pursue the more or I think it's we are not currently considering or worse than that effects.
David Morrey 17:27 Yeah, yeah.
Ben G Farmer 17:40 A couple of the most intrusive remedies that might have been open to it, so a ban on Commission when selling this. So they said that's not something they're looking at, a cap on APR or a requirement to always do it at 0% APR. They're not looking at either of those either.
David Morrey 17:46 Mm-hmm. No.
Ben G Farmer 17:56 Best it says it will be exploring the level of value provided by the higher priced products that's seen. It's going to look further at that difference between home and motor insurance approaches and keep examining some of the market specific features like Commission structures, claw back arrangements.
David Morrey 18:01 Oh.
Ben G Farmer 18:13 So it very much looks like the leavers they'll be reaching for will probably be using existing prod and consumer duty rules to take action against specific firms. It's he's doing things it doesn't like rather than rather than coming in with a whole brace of new rules off the back of this.
David Morrey 18:20 Does isn't it? Specific firms that, that's yeah. Yeah, yeah. Which kind of fits the it's the new growth. The approach doesn't it in terms of trying to avoid new rules. But yeah, it's interesting. But but also would suggest in order to do to do what they're suggesting, that they're going to have to do a lot of individuals firm supervisory.
Ben G Farmer 18:33 Yeah.
David Morrey 18:45 Action. So there's going to be, you know, sort of boots on the ground for the regulator will need to be quite significant even if the rules aren't changing. Interesting, interesting play now.
Ben G Farmer 18:50 Yes. Yeah, I think so. And we had on the same day as that. We had a couple of other insurance sector publications too.
David Morrey 19:00 Good grief. It was your birthday. You must have been.
Ben G Farmer 19:02 It was. It was brilliant, kind of so the SDA, one of the other things that's been investigating is why is motor insurance getting so expensive? So it's published the results of the findings of that work, which is basically it's.
David Morrey 19:06 Ha.
Ben G Farmer 19:19 So the surprise of fairly few people in the industry, but probably a few outside, it's not just down to insurers have been turning the margin up and taking loads more profit. It's insurers costs have genuinely risen and the biggest one of these by far is claims inflation.
David Morrey 19:34 Thanks.
Ben G Farmer 19:36 Because basically cars are getting a lot more complicated. Therefore fixing cars is getting an awful lot more expensive that will insurers spend a lot more on claims. Therefore your premiums gone up because insurers have got to pay for that. Is this kind of simple version 65% of the overall increase in claims costs between 2019 and 2020?
David Morrey 19:42 Yeah. Yeah, yeah. Yeah. Hmm. Yeah, yeah, yeah.
Ben G Farmer 20:08 Says there's normally a radar in there somewhere that needs recalibrating, etcetera. Very related. We also had the evaluation paper on the general insurance pricing practises, rules from.
David Morrey 20:11 Yeah, yeah, yeah, absolutely. Yeah, this is this is an annual thing, isn't it? More or less the an annual.
Ben G Farmer 20:22 2018 I think. Yes, not 20/18/2021.
David Morrey 20:30 OK.
Ben G Farmer 20:31 Some years ago, some years ago, there were, there was, there was a set of rules came in to ban this practise of so-called price walking. So you get really cheap business and new business stick 10% on a renewal. If you don't complain stick another 10% on next year and so on and so on. And suddenly you're paying loads more.
David Morrey 20:40 Yes. Yeah, I'll remember. Yeah. Umm.
Ben G Farmer 20:49 Umm. So basically, the FCA reckons it works. So in home insurance, the SACA there is still a price differential between a new customer and a renewing customer, but it's much smaller than it was before the rules. And the FCA has done lots of firm level investigation where there are signs of a price differential and that's all. Reassure that these are due to things like technical pricing or risk differences rather than price walking, and then in motor insurance where the SDA said it's pretty unlike in home in motor it's pretty clear that a renewal customer is lower risk than a new business customer. So we would be expecting new business customers to. Always pay more than renewing customers, and that gap has got bigger. So before these rules, normally a renewing customer would be paying about 20 lbs or so less than a new business customer.
David Morrey 21:45 Uh-huh.
Ben G Farmer 21:45 And it's now 110 lbs less, so you at face value. You think happy days, massive drop in renewal insurance premiums. But it's unfortunately because that claims inflation point, we're just talking about, it's actually renewal premiums have gone up a bit slower than new business premiums.
David Morrey 21:51 Yeah, yeah, yeah, totally, yeah. Yeah, yeah. Aye.
Ben G Farmer 22:01 So although the risk basing between the two is about right now that both loads more expensive than there were a few years ago.
David Morrey 22:07 Yeah. Well, yes, OK.
Ben G Farmer 22:10 And then the final thing and I promise we will move on from insurance corner is a multi firm review of home and travel insurance claims handling and those with long memories will remember the last one of these which was back in 2014.
David Morrey 22:19 Oh yeah. OK.
Ben G Farmer 22:26 And to be brutally honest, the findings are not very much different, and certainly not as much different as you'd hope they should be with 10 odd years of progress between them, so outsourced arrangements not being effectively overseen and controlled pretty much across the board, the FCA reckons if someone other than the insurer is handling the claim. Normally that means the customers getting a less good outcome or less good standard of service. Some firms don't have sufficiently detailed MI or not using it effectively enough to monitor customer outcomes, sort of it's reactive rather than proactive. It's limited in scope.
David Morrey 22:45 Yeah. Yeah, that's interesting. Yeah.
Ben G Farmer 23:03 Lots of firms where the FDA says it's too closely focused on sort of financials and operational measures rather than customer outcomes. Storm claims in home insurance and this is a long standing bug there. Basically if you try and claim for storm damage to your house, you're already typically covered. If the bad weather meets whatever the insurer's definition of a storm is, which will normally be tied to winds of a certain speed or something like that.
David Morrey 23:28 OK.
Ben G Farmer 23:29 Bit of a theme that customers only find out about that when they try and make a storm claim and have it declined. And that's the first time that they have that wording properly explained to them, only 32% of customers who tried to make storm claims during the review period received a settlement.
David Morrey 23:33 No.
Ben G Farmer 23:45 49% were rejected by insurers and the other 19%. The customer just gave up.
David Morrey 23:45 Yeah. Gave up. Yeah, yeah, yeah.
Ben G Farmer 23:52 Or walked away is the FC as term, but got bored of the process and just stopped answering the insurance questions and the final thing is cash settlement being pursued as a default option when it's maybe not the best outcome for the customer because it's it's nice and quick and easy for the firm, but clearly, particularly in home insurance.
David Morrey 23:54 Bye.
Ben G Farmer 24:11 There are times when just being told here's 20 grand in cash. Go find a builder is probably not what you want. You probably actually want the insurer to find the builder for you.
David Morrey 24:19 Yeah. With you then. Then what? Yeah, you know, wait half a year to get someone that should come out and. Yeah, OK. OK. Does that does it does it does it did that some interesting stuff there does it does it come up with the remedies or proposals? Is it is it saying it's gonna do anything?
Ben G Farmer 24:23 Yeah.
David Morrey 24:35 About these practises.
Ben G Farmer 24:37 I think there was the usual point about firm specific action where we need to. I think that the general industry expectation is probably some level of risk mitigation programme. Maybe if really skilled person type of stuff, but no, no, no, no talk of new rules etcetera and.
David Morrey 24:42 What? Bing. OK.
Ben G Farmer 24:56 And interestingly, because it's taking the SCA quite a while to pull this together and it is as ever backwards looking, so it this hasn't really captured any impact from the consumer duty, I don't think because of the because of the time period is over, it was a bit too early in the process for that to have started filtering through really.
David Morrey 25:06 Yeah, yeah. Interesting. OK.
Ben G Farmer 25:12 So I suspect it's one of there's this good poor practise article the SCA will expect everyone to look at it and SCA supervisors will use that as a carrot slash stick as appropriate when dealing with individual firms.
David Morrey 25:16 Yeah, yeah. Yeah. Yeah. And that's that's a classic kind of your firms need to consider how they stack up against what's being said. And yeah, not an excuse to write some more rules or anything like that, which is a bit of a theme. Thank you. Well, that's that's a round up of the sort of various announcements and publications. The word the way I guess. They qualifies announcements, but they're enforcement related, so there was a kind of bumper crop of enforcement cases, which was some have some interesting features, I guess at least in so much as they what they tell us about the enforcement process. So probably headlining that group would be the fine and ban imposed on Neil Woodford. And the fine and imposed on Woodford investment management, both for their actions in relation to one of Woodford, the Woodford funds that blew up and turned out to be full of illiquid things that it shouldn't have held and.
Ben G Farmer 26:14 Yeah.
David Morrey 26:22 Big investors lost hundreds of million, so maybe certainly more than 250 million. As a result, the I guess the fine and the bands are for, for, for, for failing to act with do skilled care and diligence are not surprising.
Ben G Farmer 26:39 Nope.
David Morrey 26:39 I think the most of the headlines after the event of this, this, this result being announced focused on the fact that it's taken six years to get to this point and also that both Woodford near Woodford and Woodford investment management are appealing those. Decisions in the upper tribunal. So watch this space. I think we don't get no need to get into the details of what the underlying issues were. I think it's interesting in a way because the this is this is one of those. Slightly complicated situations where multiple different parties are involved in a product which is certainly not uncommon, and so you had an authorised fund manager which was link financial services. They've already been stung for like 200 and 1,000,000 lbs for their partners. Where we had a delegated portfolio manager working on their behalf called Woodford Investment Management. They've just been stung for 40 million I think. And then there was an individual portfolio manager or something to own and run the company called Woodford who's also been done for it and much of the defence of each of those passes was not my fault. It was the others.
Ben G Farmer 27:36 Yeah.
David Morrey 27:49 Involved in the chain and actually the end result was being the FC have gone after all of them. Basically you can't, you've all you've all take your part and none of you. None of you can wipe your hands at the regulatory requirements they were relevant.
Ben G Farmer 28:03 No. Yeah, I saw. I saw I had a very quick look at the final essays. There's a lot of talk about responsibility and understanding of responsibility and stuff like that. And there wasn't, I don't think, don't think the FDA was very keen on the whole. It's the other people's fault defence shockingly.
David Morrey 28:10 Yeah. No, no, no. Although that's exactly that's exactly from what I can tell. That's exactly the argument that's going to be run in front of the airport tribunal in these appeals. So, so watch this watch space in that wasn't the end by any by no stretch of the imagination was that the only enforcement decision Barclays got fined twice. Actually in the month it was more than press release but they got fined 3,000,000 for their role in wealth tech, which was a wealth manager. The the clients were defaulted loads of money. The Barclays role was basically they, they.
Ben G Farmer 28:36 OK.
David Morrey 28:50 With the Bank of a wealth tech, they set up a client money account to safeguard a client money which obviously didn't get wasn't really safe but and bill budgets were criticised for the fact that a simple search of the FSA register would have told them that wealth tech did not have permissions to hold or control client money. Therefore.
Ben G Farmer 29:10 Yeah.
David Morrey 29:10 We shouldn't have been open to client money account on their behalf. The big that was that was 3 million there. There's about 4 million or just undefined in relation to their banking that the fact they had a bank, a client called stunton coves and a go back, which is basically a front for money laundering. And the lots of transactions with a, you know, apparently a well known money laundering call for front. And even after even after concerns were raised to Barclays by the by the legal authorities, they didn't take any action or increase their controls over the over the account. So. So yeah, they're kind of two, two big individual failures, but well, notable that as the press release says, this is the third time Barclays and we find financial good for financial crime failings in 10 years. So they are. Drinking deep in the well, we had the deputy CEO of H2O, which is an investment management firm that has now departed the UK market after various significant issues with some of these funds he was he was he's banned. He's fined a million but banned for life and financial services. He's particular failing what apparently was in responding to queries from the FCA regarding some governance processes that the that he said had taken place. He he is to have created. Artificial sets of minutes to actually record meetings that never actually took place and then presented these to the FCA as sort of being genuine, genuine, which, yeah, would seem to be not the kind of thing you would sensibly do.
Ben G Farmer 30:41 Uh. Is that is that is that not? Is that not that not the dumb thing?
David Morrey 30:53 Yeah. No, Ben, no, it's not the one thing. No. Anyway, well, our listeners, it's not the done thing. Yes, it's it's not, it's not. It's not. It's not one of the most sort of a grey area type cases that you could you have a look at the final enforcement one I was going to mention though.
Ben G Farmer 30:58 Oh oops.
David Morrey 31:11 Because it kind of allows me to mention something else as well, Sigma broking find a million for transaction reporting failure. So this is where you're in a method investment firm and you are undertaking transactions in listed assets. You have to transaction report to the to the FCA. So the FCA can number crunch and look at markets. Abuse and get into all kinds of cheques and things on market stability anyway. The Sigma issue a bit like Barclays actually second fine in 10 years on this. So everyone on the old rules and one of the new rules have been in place since 2018. This is the new rule, but basically they you know failed to report any transactions pretty much it so. Pretty, pretty abject. I go in that regard and they've been fined a million. The the FCA did announce in that one that this enforcement actually only took sixteen months to complete, whereas the average at this point in time is 42 months. That's a little back to it there.
Ben G Farmer 32:04 Hmm.
David Morrey 32:09 But the reason I'm going to mention Sigma was because it's transactional reporting, which isn't very exciting, but there have been a number of finds now and we're we have some skilled person reviews and then the FCA are just in the process of reworking their skilled person lots. So these are the specialist panels that they create to do skilled person work. And they're actually creating a new one this year. So there's been a structure that's been around for a little while around the different specialist areas, but they're actually saying as a as a discrete specialist area where we will seek specialist to conduct reviews, transact training and transaction reporting is one of them, so. So it's a point of emphasis, enough to merit its own, its own panel on the skindle skilled person framework. So that's it for enforcement. It's quite a lot now. Now the FCA will on hold of you now and the banking union. So it may be that.
Ben G Farmer 32:49 OK.
David Morrey 33:00 When we record our podcast in the next month, it might be the quiet which you'll see. But one thing I wanted to do Ben can't finish the podcast without taking a quick look at what the most popular what the most popular parts of the FCA handbook are on the new style. Handbook interface.
Ben G Farmer 33:18 Yes, well, print one and print 1.1 are still at the top, so clearly lots of people just clicking on page one. If we ignore that, we then get the consumer duty print away. Probably all that surprising that would be high and the exciting world of Sisk 3.1 systems and controls.
David Morrey 33:25 No. Yeah. That's also pretty general though, isn't it? It's. Yeah, yeah. OK. And what's what's next? We got. We got any nice pretty bits of productive business or anything?
Ben G Farmer 33:38 Yeah. We get, we get, we get cops, cops for communicating with clients, including financial promotions. That's the that's not the most technical thing that's made its way out of there.
David Morrey 33:46 Oh. But that's it. That's that's what I'm going to go with the current most popular in the top of the box. And the FCA handbook is cobs for financial promotions. We will check back in a month's time to see who whether that's whether that's still.
Ben G Farmer 33:57 Mm-hmm.
David Morrey 34:08 Don't hit the top of the charts or not, or whether or not the FCM turned off this functionality. That allows us to see the most popular and most reference. Hey, once they listen to this podcast, I think it's a decent chance it will disappear. But anyway, we'll keep talking about it as long as they keep that functionality in place. All right, Ben, thank you very much. Let's let's let's go and see about some summer holidays.
Ben G Farmer 34:13 Yes.
David Morrey 34:27 Ourselves, perhaps. Thank you for listening in everybody. We'll be back in a few weeks. Time to update you on anything that's happened in the meantime. Bye. Bye.
