The Financial Conduct Authority (FCA) has recently released its Quarterly Consultation Paper No. 46 (CP24-26), The consultation opened on 6th December 2024, focusing on several key changes aimed at enhancing transparency, consumer protection and sustainability in financial services. This consultation is now closed for feedback and the key proposals are set out below.
Key Proposals in CP24-26
Anti-Greenwashing and Sustainability Disclosure Requirements (SDR): The FCA proposes minor amendments to the anti-greenwashing rules and the SDR to ensure that firms provide clear and accurate information about their sustainability practices. The proposal aims to clarify that where distributors are using the terms set out in ESG 4.3.2R(2) (i.e. ‘ESG’, ‘Green’ etc.) in either the name of a recognised scheme or a financial promotion relating to the scheme, they need to comply with both ESG 4.1.19R(2)(a) and ESG 4.1.19R(2)(b).
Consumer Credit Product Sales Data Reporting: These changes are not intended to impact the policy scope, however amendments to SUP 16.11, SUP 16 Annex 20G, and SUP 16 Annex 21R aim to clarify and improve the wording related to consumer credit product sales data reporting.
Medical Condition Premium Trigger Point: The FCA proposes increasing the medical condition premium trigger point for firms to signpost customers with pre-existing medical conditions (PEMCs) to a directory of specialist providers. The proposal is to increase this trigger from £100 to £175. This change is designed to futureproof the threshold in line with rises in inflation and the increase in medical costs and claims.
Directory Limitations for Medical Cover Firms: The Prudential Regulation Authority (PRA) recently published a consultation paper setting out its proposal to reduce the number of mandatory senior manager functions (SMFs) for UK authorised insurance special purpose vehicles (ISPVs). To support the PRA’s objective work to encourage the growth of the UK ISPV market, the FCA are now consulting on disapplying the SMF16 function to ISPVs. If they go ahead, the only FCA function that will still apply to ISPVs would be the executive director function (SMF3), should the firm have executive directors that do not meet the PRA’s proposed expanded definition of Chief Executive Officer function (SMF1).
Debt Management Firms: Amendments to SUP 3.1.2R (5B) aim to address a gap in the rules that currently allows debt management firms (DFMs) to avoid submitting a Client Assets Sourcebook (CASS) audit. The FCA wish for all DFM firms that deal with client money to submit a CASS audit in order to support its statutory objectives and uphold the trust that consumers place in firms to ensure a well-functioning and robust market. The proposed rules should offer DFMs greater clarity around their auditor obligations.
Why This Matters
The proposed changes in CP24-26 are designed to enhance the clarity and effectiveness of financial regulations, ensuring that consumers receive accurate and relevant information. By addressing issues such as greenwashing and improving data reporting standards, the FCA aims to foster a more transparent and sustainable financial market. The proposals are far reaching and will impact firms who have not been previously caught by these rules. Firms should consider the proposals at Board level ahead of time and prepare to implement any changes as necessary.
How can Complyport help?
Complyport can help your firm understand the FCA’s proposals, as well as the impact of these amendments to your firm, upon finalisation. We can support your firm by providing:
- Regulatory Guidance: helping your firm understand the FCA’s expectations and providing expert advice on the relevant regulatory requirements;
- Compliance Documentation: policy and procedure reviews and updates, including drafting new policies where required;
- Ongoing Support: providing ongoing support to ensure that your firm remains compliant as regulations evolve;
- SDR and Anti Greenwashing: helping your firm interpret and implement changes based on the new ESG regulations, including ESG compliance reviews assessments and reporting assistance;
- Financial Promotion reviews: reviewing financial promotions to ensure they are compliant;
- CASS review: providing guidance in complying with the CASS rules for Debt Management firms;
- Consumer Duty: implementation and assessment guidance, including reviews and gap-analysis for improvement;
- SM&CR: providing guidance on changes to the Senior Mangers regime;
- Training: providing training on the practical requirements and best practices for compliance.
