Welcome to our weekly round-up for UK financial services regulation. Paul Staples summarises the key announcements and developments. Be sure to subscribe to receive our updates in your inbox every week.

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

Following in the footsteps of the Financial Conduct Authority (FCA), the Prudential Regulation Authority’s (PRA) business plan for the year ahead is our leading item this week. Reforms and simplification are central themes here under the new post-Brexit regulatory framework, with added emphasis around UK competitiveness and growth.

Conduct and prudential tensions come head-to-head in our second item covering the current thematic focus on motor finance.  

We then pivot back to regulators’ plans and budgets in our third item covering the PSR. 

Rounding off, and published on the same day as the FCA’s latest research on personal finances, we pick up further measures to protect borrowers in financial difficulty, as well as vulnerability in the travel insurance industry – both being underpinned by predictable references to the Consumer Duty. 

PRA Business Plan for 2024/25 

The PRA has published its Business Plan for 2024/25. The business plan includes a range of continuing and new initiatives aimed at promoting the UK’s competitiveness and growth, including:  

  • the PRA’s ‘Strong and Simple’ project, which aims to simplify regulatory requirements for smaller banks, thus reducing compliance burdens without compromising on strong standards
  • the ‘Solvency UK’ reforms of insurance capital standards
  • the Banking Data Review, which aims to reduce burdens on firms by focusing data collection on the most useful and relevant information
  • improvements to the PRA’s authorisation processes, focusing on improving the speed and efficiency of authorisations without sacrificing the robustness of controls,
  • and reforms to ring-fencing, following the independent review led by Sir Keith Skeoch. 

The PRA has reinforced its commitment to maintaining and building on the safety and soundness of the banking and insurance sectors, remaining at the forefront of identifying new and emerging risks and running an inclusive, efficient, and modern regulator within the central bank.  

Read more on the PRA Business Plan 2024/25  

FCA Dear CEO letter and update on review of motor finance complaints  

The FCA is currently reviewing the historical use of motor finance discretionary commission arrangements (DCA). The regulator has issued an update on its review, alongside a Dear CEO to firms about maintaining adequate financial resources at all times. The FCA has commented that firms involved in its review have engaged with the FCA constructively. However, many firms are struggling to promptly provide the data required.  

While the review continues, firms are urged to plan for additional operational costs from increased complaints and to notify the FCA if they are involved in litigation. The FCA expects firms to continue investigating complaints involving a DCA, despite pausing the complaint handling process. The review has generated uncertainty for consumers and firms, and the FCA aims to provide clarity by 24 September 2024, with the possibility of extending the review and the complaint pause. 

In addition, the FCA has issued a ‘Dear CEO’ letter to motor finance firms after observing different approaches in accounting for the potential impact on their financial resources of the previous use of DCA that may have breached regulations in force at the time. Firms are urged to assess the adequacy of their financial resources, ensure the accuracy of financial statements and regulatory reporting, make adequate disclosures to the FCA and deal with DCA complaints and subject access requests appropriately. The FCA will monitor financial resources held by firms and intervene if necessary. 

Read more on the FCA statement regarding motor finance firms’ financial resources 

Read the FCA Dear CEO letter: Maintaining adequate financial resources 

PSR annual plan and budget for 2024/25 

The Payment Systems Regulator (PSR) has released its Annual Plan and Budget for 2024/25. The PSR aims to foster competition and innovation within payment systems, leveraging open banking to enhance flexibility and cost-efficiency for businesses while intensifying market reviews to ensure fair competition.  

The PSR continues its efforts in consumer protection, implementing reimbursement rules to tackle Authorised Push Payments (APP) fraud and expanding Confirmation of Payee requirements to prevent fraud and erroneous payments. The PSR will collaborate with stakeholders to review progress and refine priorities, ensuring alignment with the evolving landscape of UK payment systems.  

Chris Hemsley, Managing Director of the PSR, underscores the commitment to making payment systems function optimally for all, highlighting strides in combatting APP fraud, and advancing open banking as crucial steps towards a transformative future. 

Read more on the PSR Annual Plan for 2024/25

FCA policy statement on strengthening protections for consumer credit and mortgage borrowers in financial difficulty  

The FCA has published a policy statement on strengthening protections for consumer credit and mortgage borrowers in financial difficulties.  

In 2020, the FCA introduced its Tailored Support Guidance (TSG) which set out how consumer credit and mortgage firms could support customers in financial difficulty during the pandemic. The TSG was then extended by the FCA so that firms could continue to provide tailored support to customers during the cost-of-living crisis.  

The FCA is now permanently incorporating relevant aspects of the TSG into its handbook as well as introducing some further targeted changes. This includes, for example, broadening the scope of relevant consumer credit and mortgage chapters to make clear to firms that appropriate support should be provided to customers in or at risk of payment difficulty, and expecting firms to consider a range of forbearance options and take reasonable steps to ensure arrangements remain appropriate. 

The rules come into force on 4 November 2024.  

Read more about the FCA's policy statement on protections for consumer credit and mortgage borrowers in financial difficulty

FCA post-implementation review of travel insurance signposting rules 

The FCA has released a comprehensive post-implementation review of the travel insurance signposting rules for consumers with pre-existing medical conditions (PEMCs). These rules, introduced in April 2021 as part of Policy Statement (PS20/3), mandated that insurance firms direct certain consumers with PEMCs to a directory of specialist providers. The review evaluates the effectiveness of these rules in improving access to travel insurance for consumers with PEMCs. 

The FCA’s review found that the signposting rules had a positive impact on the market, albeit less than anticipated. An estimated 21,000 additional policy sales were attributed to the intervention. The review also highlighted areas for improvement, including updating the £100 medical condition premium trigger point for signposting and enhancing the content and consumer journey in the directories.  

The FCA intends to consult on these updates later in the year. Additionally, the review identified instances of non-compliance among firms, which the FCA plans to address. The ultimate objectives of the FCA’s intervention are to reduce the number of uninsured consumers, lower the overpayment for travel insurance by consumers with PEMCs, and increase consumer confidence and trust in the travel insurance market.  

Read more on the FCA post-implementation review of travel insurance signposting rules  

Financial services

UK Regulatory Handbook 2023/24

An essential guide to the regulatory landscape for financial services


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