Policy Statement    Ref: PS 12/01

13^th January 2012   52 pages

This Policy Statement reports on the main issues arising from Consultation Paper CP 11/14 (Auctioning of greenhouse gas emission allowances) and publishes final rules

Consultation Paper    Ref: CP 11/31

16^th December 2011   585 pages

A comprehensive set of plans to prevent a return of the risky mortgage lending seen in boom times.

At the core of the proposals are the following principles:

• Mortgages and loans should only be advanced where there is a reasonable expectation of the customer’s ability to repay.  Lenders should assess affordability;
• This assessment should allow for the possibility of rising interest rates;
• Except in special circumstances, interest-only mortgages should generally be assessed on a repayment basis.
• Income must be verified in every mortgage application;
• Lenders do not have to consider in detail what borrowers spend but cannot ignore  unavoidable bills, such as heating and council tax;
• The FSA is also calling for feedback on developing a specific approach for entrepreneurs who borrow against their home to fund their business

Consultation period ends on 30th March 2012.

Consultation Paper    Ref: CP 11/30

14^th December 2011   13 pages

Of interest to UK banks and  BIPRU 730k firms..

The consultation calls for greater harmonisation of firms’ accounting approaches to the fair valuation of assets, which vary substantially at present. At present companies are required to present quarterly reports on differences in approach; the proposed new regime, however, will require a consistent format allowing greater comparability.

Consultation period ends on 14th February 2012.

Consultation Paper    Ref: CP 11/29

14^th December 2011   4 pages

At the beginning of 2011 two key changes were made to strengthen compensation arrangements for deposits protected by the FSCS. First, the compensation limit for deposits increased to £85,000, and secondly faster payout mechanisms were introduced.

The proposal envisages requiring deposit takers to prominently display stickers and posters in branches and on websites (in electronic form), explaining their compensation arrangements. The aim of these proposals is to raise consumer awareness of deposit protection and its limits. In this Consultation Paper (CP) we are asking for feedback on these proposals..

Consultation period ends on 9th March 2012.

Consultation Paper    Ref: CP 11/28

13^th December 2011   84 pages

Of interest to interest to issuers and their professional advisers and to investors. Also to clients.

On 31 December 2010, the Amending Directive 2010/73/EU came into force amending the Prospectus Directive (2003/71/EC) and Transparency Directive (2004/109/EC). The proposal envisages changes to the FSA’s Prospectus Rules, Listing Rules and Disclosure and Transparency Rules.

Consultation period ends on 13th March 2012.

Policy Statement    Ref: PS 11/18

9^th December 2011   162 pages

This Policy Statement reports on the main issues arising from Consultation Paper 11/17 (FSA Regulation of credit unions in Northern Ireland) and publishes near-final rules

Policy Statement    Ref: PS 11/17

9^th December 2012   7 pages

This Policy Statement reports on the main issues arising from Consultation Paper 11/13 (Authorised professional firms and legal services reform) and publishes final rules

Policy Statement    Ref: PS 11/16

9^th December 2011   96 pages

This Policy Statement reports on the main issues arising from the Consultation Paper on proposals for the Review of the UK’s regulatory framework for covered bonds and publishes final Sourcebook Instrument

Policy Statement    Ref: PS 11/15

9^th December 2012   168 pages

This Policy Statement reports on the main issues arising from Consultation Paper 11/12 (Financial crime: a guide for firms) and publishes the final guide.

Guidance Consultation    Ref: GC 11/31

16^th December  2011   4 pages

The key areas the guidance will cover are the scope and depth of engagement that the signatory of the annual confirmation of compliance (RCB 3 Annex 1D) has with the programme, the content of Management Information and the appropriateness of systems and controls.

Consultation period ended 27^th  January 2012

Guidance Consultation    Ref: GC 11/30

9th^t December  2011   11 pages

The guidance is to help NEDs understand better how to deliver against their regulatory responsibilities under the FSA Rules and Principles, from a retail conduct risk perspective, and what this looks like in practice.

In summary it recommends NEDs challenge whether:

• Business proposals are aligned with the firm’s conduct risk strategy;
• The firm’s culture is such that it delivers good behaviours and outcomes for customers;
• They have the right information to enable them to make robust decisions
• Risks to customers have been identified;
• Appropriate actions are in place to mitigate and monitor such risks;
• The Board supports the identification and escalation of issues when they go wrong and ensures appropriate resolution;
• The business learns from identified issues and draws out the wider implications

Consultation period ends 3^rd February 2012

Guidance Consultation    Ref: GC 11/29

5th December  2011   8 pages

Of interest to distributors with their own range of distributor-influenced funds, or firms that run or help to run distributor-influenced funds for distributors, and product providers and platforms that include fund links to distributor-influenced funds.

The document aims to achieve a system whereby firms marketing these products put into place robust systems and controls to ensure that the use of these products is in the best interests of each client and does not simply increase complexity and costs without providing new services and good value for money.

Consultation period ended 30th January 2012

Consultation Paper    Ref: CP 11/26

16^th November 2011   28 pages

Follows on from Consultation Paper CP 11/25, which dealt with Solvency II issues.

Consultation period ended on 16th January 2012.

Enhancing Frameworks in the Standardised Approach to Operational Risk – Policies and Documentation

Finalised Guidance   Ref: FG 11/21

November 2011  20 pages

The latest in a series of papers intended to assist firms and supervisors in understanding, assessing and enhancing the adequacy and effectiveness of operational risk (OR) frameworks used by firms to implement the standardised approach (TSA) to OR.

Reviews of the Regulated Covered

Bond programmes

Finalised Guidance   Ref: FG 11/20

November 2011  2 pages

Notes on good conduct. Sets out the following objectives:

• Clearly defined and documented mandate and terms of reference related to the programme and regularformalised interaction with the programme.
• Ongoing monitoring of the programme (e.g. checks accuracy of regulatory and investor reporting, aware of and monitoring breaches).
• · Clear understanding of RCB requirements, and the role of the compliance function in relation to the programme. Appraised of relevant regulatory developments, and able to provide advice internally as
• appropriate.
• · Adequate and skilled resource, with appropriate depth of expertise in covered bonds, evidence of ability to challenge management.
• · Clearly defined escalation process i) from first line to compliance and ii) from compliance to independent risk oversight committees.

Consultation Paper    Ref: CP 11/25

10^th November 2011   45 pages

Of interest to firms advising on retail investment products and product providers, as well as consumers and consumer bodies. Chapter 4 will be of interest primarily to insurers.

The consultation deals with three matters of interest to IFAs: two of them relating to the FSA’s Adviser Charging rules (published in March 2010), and the third concerning the implementation of Solvency II disclosure requirements.

Consultation period ends on 10th January 2012.

Consultation Paper    Ref: CP 11/24

10^th November 2011   20 pages

A consultation on the proposal to confer FSA accredited body status on two applicants – the Institute of Chartered Accountants in England and Wales, and the Pensions Management Institute.

The proposal will enable advisers to decide which body they wish to approach to validate their qualification gap-fill (if required), and to issue their Statement of Professional Standing.

Consultation period ends on 9th December 2012.

Consultation Paper    Ref: CP 11/23

9^th November 2011   42 pages

Of relevance to consumers with linked long-term insurance policies, their advisers, and consumer groups.

The consultation paper presents proposals for changes to FSA rules and guidance relating to the operation of unit-linked and index-linked insurance business, primarily in the Conduct of Business Sourcebook (COBS) 21, Permitted Links. The proposed changes are intended to reform the current rules, so that they are consistent with the requirements of Solvency II.

Consultation period ends on 15th February 2012.

Consultation Paper    Ref: CP 11/22

6^th November 2011   208 pages

Of primary interest to all insurance firms captured within the scope of Solvency II. It will also be of indirect interest to non-Directive firms, representative trade bodies, business advisers and consultants, and other financial advisers serving in or linked to the insurance industry.

This is the first of two consultation documents relating to the proposed changes involved in the Solvency II regime.  Although primarily a European Union issue, involving the European Commission, the European Insurance and Occupational Pensions Authority and the FSA, it is also important in the context of the domestic regulatory reform to move to a twin peaks regime, split by prudential and conduct issues.

The FSA recommends that this document should be read in conjunction with the FSA’s Conduct CP11/23 which includes proposals on some of the limited requirements relating to conduct issues in Solvency II (specifically Chapter 10).

Consultation period ends on 15th February 2012.

Policy Statement    Ref: PS 11/14

8^th November 2011   45 pages

Recommended changes to some aspects of the FSA rules on product disclosure, as part of the Retail Distribution Review (RDR). The FSA notes that retail products are often considered complex and opaque in terms of the way they work, and that customers will typically have little or no experience of the products, as they do not buy them regularly. Hence the need for tighter regulation.

For further details of this document, please see The Compliance Doctor article in this month’s IFA Magazine (Page XX)

Policy Statement    Ref: PS 11/13

8^th November 2011   75 pages

Proposed changes to the Retail Mediation Activities Return (RMAR) and complaints data, which will be of interest to both advisers and providers active in the retail investment and corporate pensions markets.

Consumers and consumer bodies are also expected to be interested in finding out how the FSA will use data to help it supervise and enforce the new Retail Distribution Review (RDR) regime and ensure that the new rules are properly implemented

Policy Statement    Ref: PS 11/12

3^rd November 2011   118 pages

Relevant to banks, building societies and certain investment firms caught by the Capital Requirements Directive (CRD) from the European Commission’s CRD3 package of amendments. It will also be of particular interest to those firms and their advisers.

Essentially, the statement concerns itself with the responses to questions in CP11/9. But it also contains finalised guidance on the Supervisory Formula Method (SFM) and Significant Risk Transfer (SRT) following the Guidance Consultation in May 2011.

The general background concerns the Basel Committee’s finding that the financial crisis had exposed gaps in the European CRD capital requirements for re-securitisations, and that risks arising from credit risk and illiquidity in the trading book had been underestimated. It aims, therefore, to correct the capital requirement levels for such positions in both the trading and non-trading book.

Guidance Consultation    Ref: GC 11/27

2^nd November  2011   50 pages

Of interest to firms involved in the manufacture of structured products. Much of the guidance may also be relevant to a wider population of firms, involved in the manufacture of other retail products.

The FSA feels that, although structured products are rising in popularity, the growing number of structured product sales, as well as increasing product complexity, is placing a strain on firms’ systems and controls. A lack of robustness in a firm’s product development and marketing processes can increase the risk of poorly designed products and lead to mis-selling or mis-buying by consumers, the regulator says.

The proposed guidance says that firms should:

• Identify the target audience and then design products that meet that audience’s needs
• Stress-test new products to ensure they are capable of delivering fair outcomes for the target audience
• Ensure a robust product approval process for new products
• Monitor the progress of a product throughout its life cycle

Consultation period ends 11^th January 2012

Guidance Consultation    Ref: GC 11/26

1^st November  2011   32 pages

The proposal seeks to limit  the proliferation of products with properties similar to Payment Protection Insurance (PPI), which has been curtailed during the last year after many abuses.  The FSA is aware that some firms are developing new forms of protection that aim to meet similar consumer needs, which it feels may pose similar risks to PPIs.

The document sets out risks which may arise in the design of payment protection products. In particular, the risks around:

• Identifying the target market for the protection
• Ensuring that the cover offered meets the needs of that target market
• Ensuring that the product does not create barriers to comparing, exiting or switching cover

It discusses ways of managing these risks, both through firms’ distribution and marketing strategies and through their governance arrangements.

Consultation period ends 13^h January 2012

Finalised Guidance   Ref: FG 11/17

October 2011  10 pages

The guidance results from an FSA study of how firms which sell regulated insurance products and services online have developed their business models, and how they are designing these models to ensure the fair treatment of consumers.

Issues considered included the provision of ‘white labelled’ comparison websites where the host firm uses in its own business a price comparison tool provided by a third party. These considerations raised concerns in three particular areas:

• Failures in respect of sections19 and 21 of the Financial Services and Markets Act 2000 (FSMA) respectively, and failures to obtain appropriate permissions in breach of section 20 FSMA;
• Non-compliance with the requirements in the Insurance: Conduct of Business sourcebook (ICOBS); and
• Non-compliance with the Senior Management Arrangements, Systems and Controls sourcebook (SYSC).

Finalised Guidance   Ref: FG 11/16

October 2011  30 pages

These letters set out how the FSA intends to assess firms’ implementation of the Remuneration Code for the coming year.

The letters also contain guidance on:

• Defining Code Staff;
• Using long-term incentive plans; and
• Using non-share instruments in variable remuneration

Different letters and templates are provided for firms in proportionality tiers 1 to 4

Consultation Paper    Ref: CP 11/21

28^th October 2011   86 pages

Annual consultation on fees and levies for 2012/2013. The final consolidated Policy Statement is due in May 2012.

Consultation period ends on 6th January 2012.(Chapter 2, 6^th February 2012)

Consultation Paper    Ref: CP 11/20

27^th October 2011   38 pages

f

Of interest to firms selling insurance as part of a packaged bank account, insurers, and  retail intermediary firms selling general insurance products. The consultation concerns a proposal for tightening up the regulations for firms selling insurance as part of packaged accounts.

• In particular, the proposed rules require sellers to check that a customer is eligible to claim the benefits under each policy, and to tell the customer if he would be ineligible to claim.
• There should be an annual eligibility statement, and a recommendation to the customer that he should review his eligibility regularly.
• All records of the sale and eligibility assessment should be retained for at least three years.
• The FSA is also seeking suggestions on how to achieve price transparency for packaged bank accounts

Consultation period ends on 27th January 2012.

Finalised Guidance   Ref: FG 11/15

October 2011  41 pages

Of interest to residential mortgage lenders or mortgage administrators, and to

managements responsible for any aspect of forbearance activities, credit-risk reporting, finance, audit and the compliance functions of firms.

The guidance provided in this document covers:

• the provision of forbearance support for customers undergoing financial stress;
• the recognition of impairment within the book through management committees and board reporting; and
• the disclosure of impairment and its recognition through loss provisions in external reporting.

Consultation Paper    Ref: CP 11/19

5^th October 2011   61 pages

Proposals for revised principles to be taken into account by the FSA when determining whether the Recognition Requirement has been satisfied.

The changes to the FSA’s Recognised Investment Exchange and Clearing House Sourcebook (REC, section 2.3)  take account of the changing shape of various financial instruments during the last nine years, and aim to bring them all satisfactorily within the regulatory terms of the Markets in Financial Instruments Directive (MiFID) and similar measures.

Consultation period ends on 6th January 2012.

Policy Statement    Ref: PS 11/11

26^th September 2011   25 pages

Relevant to banks, building societies and BIPRU investment firms that are part of UK consolidation groups which may have subsidiaries in jurisdictions outside the European Economic Area (EEA).

The Policy Statement reports on the main issues arising from Consultation Paper 11/6 (Use of non-EEA rules in calculating group capital requirements, March 2011), and it publishes final rules.

The revisions follow on from an internal FSA review of the equivalence rules, with regard to the continuing validity of the equivalence approach as a whole in the context of group capital requirements. The review led to a proposal in CP11/6, to revoke the equivalence rules by deleting BIPRU 8.7.35R, 8.7.36G and 8.7.38R from the FSA Handbook.

This will mean that, for the purpose of calculating the consolidated capital requirements of a UK consolidation group, firms will use the FSA rules rather than local (i.e. non-EEA) rules in calculating the capital requirements of the non-EEA subsidiary.

Guidance Consultation    Ref: GC 11/23

12^th October  2011   10 pages

Of interest to brokers executing client orders, and also market makers.

The proposal seeks to regulate the use of ‘payment for order flow’ (PFOF) – meaning an arrangement whereby a broker receives payment from market makers, in exchange for directing order flow to them. The FSA takes the view that PFOF arrangements create a clear conflict of interest between the firms’ clients and the firm itself, so that it is unlikely to be compatible with the FSA’s inducement rules and risks compromising compliance with best execution rules.

The key element of the reforms is a requirement that brokers receiving these payments must declare them to clients, and that they must be able to prove that they are (a) cost-effective and (b) consistent with the client’s best interests.

Consultation period ends 9^th November

Guidance Consultation    Ref: GC 11/22

15^th September 2011   27 pages

Of interest to Firms who wish to offer a simplified advice service, and trade associations who are working with their members in this area.

The paper provides additional guidance on simplified advice processes which are now being piloted by various firms, aims to address the issues they have faced.  It also provides guidance on certain aspects of the regulatory regime suitability, adviser charging and service disclosure.

Furthermore, it contains general guidance on professional standards, designing and delivering a simplified advice process, and choosing an appropriate product suite.

Consultation period ends 15^th November

Guidance Consultation    Ref: GC 11/21

8^th September 2011   2 pages

Of interest to authorised firms with transaction reporting responsibilities, particularly those trading in derivatives.

The document contains proposed guidance on transaction reporting for transactions on Turquoise Derivatives and derivative transactions conducted through clearing platforms of derivative markets where the reference data for these transactions is not made available to the FSA and ARMs.

Consultation period ended 22nd September

Consultation Paper    Ref: CP 11/18

7^th September 2011   102 pages

Various proposed changes, including amendments to the SYSC Sourcebook, the Training and Competence Sourcebook, liquidity rules in the Prudential sourcebook for BIPRU firms,  the Collective Investment Schemes sourcebook, Perimeter Guidance manual, and Disclosure and Transparency Rules.

Consultation period ends on 6th October for Chapters 3 and 9; 20^th October for Chapter 2; 6^th November for other Chapters.

Policy Statement    Ref: PS 11/10

2^nd September 2011   295 pages

This Policy Statement reports on the main issues arising from the joint HM Treasury/FSA paper (Transposition of UCITS IV: consultation document) of December 2010 and publishes final rules. The driving issues, the FSA says, are that:

• Key investor information will be shorter and clearer than the documents currently given to consumers before they make an investment decision. It should enable investors to compare funds more easily and make better-informed choices that meet their needs.

• Changes to the scope of the Financial Ombudsman Service and the Financial Services Compensation Scheme will mean that investors in UK-authorised funds will be able to benefit from the increased competition generated by the UCITS management company passport, without any decrease in their rights of redress if something goes wrong.

Finalised Guidance   Ref: FG 11/12

September 2011  10 pages

Guidance applies only to transactions in derivatives conducted through

clearing platforms of ISIN derivative markets or of Aii derivative markets. This guidance will be effective from 31 March 2012. However, firms wishing to comply with guidance before this date may do so.

All the remaining transactions in derivatives executed on an ISIN derivative market (eg transactions in derivatives executed on the order book) continue to be reportable under SUP 17.1.4 (1) as currently.

All transactions in derivative instruments executed on the order book of an Aii derivative market are required to be reported from 13 November 2011.

Consultation Paper    Ref: CP 11/17

31st August 2011   229 pages

Primarily intended for members, advisers and volunteers associated with credit unions in Northern Ireland.

An updated version of the dedicated section of the FSA Handbook of rules and guidance CRED, to be called CREDS, is due to apply by the time the transfer of regulation of credit unions in Northern Ireland takes place on 31 March 2012.

This Consultation Paper proposes a single regulatory regime which will apply, as far as is possible, the new CREDS rules to credit unions in Northern Ireland. However, it will not be possible to apply CREDS in its entirety and the FSA proposes tailoring the rules to reflect remaining legislative differences between Northern Ireland and Great Britain.

Consultation period ended on 31^st October

Guidance Consultation    Ref: GC 11/20

25^th August 2011   3 pages

A list of FAQs that arose during the FSA’s recent RDR roadshows, relating to questions about the changes and about what firms are required to do.

Consultation period ended 26^th September

Consultation Paper    Ref: CP 11/16

9^th August 2011   78 pages

Primarily intended for banks, building societies and insurers.

This Paper covers the proposed requirement for certain financial services firms to prepare and maintain Recovery and Resolution Plans (RRPs) and separately, for some of these firms, and others, to make additional preparations in relation to their investment client money and custody assets (CMA) holdings.

Recovery Plans require firms to identify options to recover financial strength and viability should a firm come under severe stress. Resolution planning requires firms to submit detailed information about their business and operational structure in the form of a Resolution Pack.

Consultation period ends on 9^th November

Finalised Guidance

August 2011

Contains self-assessment templates for Tier 2, 3 and 4 firms, and also various information sheets on frequently asked questions

Guidance Consultation    Ref: GC 11/19

5^th August 2011   10 pages

Of interest to FSA-authorised banks, building societies and Capital Adequacy Directive (CAD) investment firms. (This generally corresponds to firms subject to MiFID, although exempt CAD firms are not included.)

The revised Remuneration Code came into force on 1 January 2011, implementing the rules on remuneration contained in the EU Capital Requirements Directive (CRD3). These proposed ‘Dear CEO’ letters set out our plans for monitoring implementation of the Code during the coming remuneration round. An annexe alsocontains  proposed guidance for consultation on certain policy issues.

Policy Statement    Ref: PS 11/09

1^st August 2011   73 pages

This Policy Statement reports on the main issues arising from Consultation Paper 10/29 (Delivering the RDR and other issues for platforms and nominee-related services) and publishes final rules.

Consultation Paper    Ref: CP 11/15

29^th July 2011   42 pages

The document aims to seek views on the FSA’s proposals to amend

the Client Assets Sourcebook (CASS). It covers two main topics:

Custody liens policy is being revised in the light of the 2008 banking crisis. Proposals have already been consulted upon in CP10/9, and rules were subsequently published in PS10/16. But one of the proposals included in CP10/9 involved prohibiting firms from granting inappropriate general liens over their clients’ assets and client money derived from those assets. A transitional period is due to expire on 1^st October 2011, and interim arrangements need to be tidied up.

Title transfer collateral arrangements (TTCA) are also being amended, in line with the Consultation Paper (CP10/15) issued in July 2010.

Consultation period ended on 28^th October

Consultation Paper    Ref: CP 11/14

25^th July 2011   68 pages

The document proposes changes to the Handbook which complement the Treasury’s implementation of a new regulatory regime for platforms that will conduct auctions in emission allowances. The new regime is being put in place ahead of the start of EU procurement processes to select both a common EU auction platform and one or more national auction platforms.

Consultation period ended on 25^th September

Guidance Consultation    Ref: GC 11/18

21st July 2011   23 pages

Market conditions have prompted banks to seek to diversify sources of liquidity. In particular, the FSA says it has observed an increasing trend of banks seeking to access liquidity embedded within asset portfolios held by insurers by entering into various transactions which we collectively refer to as “liquidity swaps”. This guidance consultation has arisen as a response to these developments.

Key issues include:

• Wrong-way risk – use of own-issued or own-originated securities as collateral
• Limit structures – interdependencies between micro-prudential and macro-prudential risks
• Intra-group transactions – conflicts of interest
• Pillar 2 considerations and capital

Consultation period ended 21^st September

Discussion Paper    Ref: FS 11/4

14th July 2011   40 pages

Reports on Feedback to Discussion Paper DP 10/4 (The prudential regime for trading activities – a fundamental review) from August 2010.

The review focuses on the prudential requirements for banks and investment firms that engage in trading activities, with particular regard to the Fundamental Review of the trading book regime which the Basel Committee on Banking Supervision (BCBS) is developing.

The BCBS study centres on a range of amendments to the Basel II market risk framework, targeting specific weaknesses that were highlighted by the financial crisis of 2008. On average, these changes will increase the capital held against trading activities in large banks to between two and three times current levels.

Guidance Consultation    Ref: GC 11/17

13^th July 2011   18 pages

The paper recommends that firms meet the requirement of a ‘use test’ for documentation, i.e. ensure that it works thanks to its quality, the fact it is regularly reviewed, communicated, well-understood and actually used by relevant staff.

Although the paper is not prescriptive, it insists that documentation needs should evolve with the firm’s business and reflect any changes in the firm’s environment.

Consultation period closed 10^th August

Guidance Consultation    Ref: GC 11/16

11^th July 2011   10 pages

The purpose of this consultation paper is to seek views on the process and scope of review the FSA undertakes when assessing the adequacy of the counterparty credit risk management framework within a central counterparty.

Consultation period closed 10^th August

Guidance Consultation    Ref: GC 11/15

8th July 2011   8 pages

Clarification for firms on the manner in which the features of financial promotions may be presented, so as to achieve an adequate balance of the features as perceived by the client. Interest rates, fees, charges, relevant risk statements and other key product information are all covered by this clarification.

Guidance Consultation    Ref: GC 11/14

7th July 2011   2 pages

Relevant to:

• All FSA-authorised banks, building societies and CAD investment firms (this generally corresponds to firms subject to MiFID, although exempt CAD firms are not caught).
• Trade associations representing the above

The proposed guidance clarifies the provision of the FSA’s Remuneration Code on the question of when firms may offer ‘buy out’ awards to new staff (i.e. awards to compensate a new hire for the outstanding deferred remuneration that he/she has forfeited by joining the firm).

Consultation Paper    Ref: CP 11/13

1^st July 2011   45 pages

Of interest to IFAs, consumers and consumer rights groups

From October 2011, the Legal Services Act 2007 establishes ‘alternative business structures’ in England and Wales which leave some uncertainty as to how the financial services activities of FSA-authorised alternative business structures will be regulated.

The proposed measure extends a modified form of regulation to these services, thus closing a potential gap.

Consultation period ended on 12^th August

Consultation Paper    Ref: CP 11/12

22^nd June 2011   137 pages

Of interest to IFAs but not, primarily, consumers

The document contains guidance, in the form of self-assessment questions and examples of good and poor practice, which firms can use to assess and improve their existing approaches to meeting their legal and regulatory obligations in relation to financial crime.

Consultation period closes on 21^st September

Discussion Paper    Ref: FS 11/3

14th June 2011   65 pages

Reports on the Product Intervention discussion paper (DP), published on 25 January. The original paper proposed a new direction for retail financial services regulation, moving away from an approach largely focused on point-of-sale, to one that actively regulates all aspects of the product life cycle, including the design, development and management of products.

Guidance Consultation    Ref: GC 11/13

8th June 2011   11 pages

Clarification for firms on the relevant need to:

• Review their regulated activities, ensure they are appropriately authorised;
• Ensure they only enter into contracts with firms holding the appropriate authorisation and permissions.
• Withdraw their assistance from third parties if the party is in breach of the general prohibition.
• Review their disclosure documentation, sales procedures and terms and conditions

Finalised Guidance    Ref: FG 11/09

May 2011   6 pages

The Code sets out principles that establish, in the context of a particular regulated firm:

• the nature of the relationship between the supervisor and auditor.
• the form and frequency that communication between the two parties should take.
• the responsibilities and scope for sharing information between the two parties.

The aim and focus of the Code is to enhance the regulatory process and contribute to high-quality external auditing by promoting an effective relationship between the auditor and supervisor in the context of a particular regulated firm.

Policy Statement    Ref: PS 11/08

28th May 2011   33 pages

This Policy Statement reports on the main issues arising from Consultation Paper 10/26 (Pension reform – Conduct of business changes) and publishes final rules

Relevant to pension providers, advisers, consumer groups and professional bodies. The proposals in this paper will affect consumers who have a pension now, expect to make contributions to a pension in the future, or who will be automatically enrolled into workplace personal pensions from 2012.

This Policy Statement discusses the responses received to CP10/26 and includes final rules.

New provisions and guidance come into effect on 1^st October 2012

Policy Statement    Ref: PS 11/07

27th May 2011   236 pages

This Consolidated Policy Statement (PS) summarises the FSA’s policy with regard to its fee-raising powers under the Financial Services and Markets Act 2000

Policy Statement    Ref: PS 11/06

27th May 2011   38 pages

This Policy Statement reports on the main issues arising from our proposals on implementing CMAR on GABRIEL for CASS medium and large firms in Consultation Paper 11/4 (The Client Money and Asset Return (CMAR): Operational Implementation) and publishes final rules.

Of interest to:

• all CASS firms;

• consumers; and

• individuals who may have senior management responsibilities in relation to a regulated firm’s client money and assets.

Note: the CMAR regime will come into effect from 1 October, rather than 1 June, as previously indicated

Consultation Paper    Ref: CP 11/10

28th May 2011   68 pages

Of interest to consumers and consumer representatives, and to all firms involved in retail financial services markets, where their customers are eligible to complain to the ombudsman service. Some applications to non-regulated firms and organisations.

This paper contains final policy, rules and guidance, and consults on a proposed change to the definition of ‘eligible complainant’ in response to feedback received to CP10/21.

It also contains guidance and rulings on remuneration to the ombudsman, and on tighter complaints handling procedures generally.

Consultation period closes on 31^st August

Guidance Consultation    Ref: GC 11/12

25th May 2011   4 pages

Mainly for BIPRU firms who undertake securitisation as an originator or sponsor:

Guidance aims to set out the FSA’s expectations on firms using the Supervisory Formula Method (SFM) to calculate risk-weighted exposure amounts (RWEA) for unrated securitisation positions. This arises from ‘significant concern’ that firms’ use of the SFM undermines the significant risk transfer requirement with the reduction in RWEAs, due to the use of the SFM being disproportionate to the credit risk transferred.

Consultation period closed 21^st June

Guidance Consultation    Ref: GC 11/11

25th May 2011   3 pages

Mainly for Firms that deal in on-exchange derivatives

Guidance aims to:

• provide clearer and simpler guidance that removes the need to distinguish between transactions for fungible and non-fungible derivative instruments conducted through exchange platforms.
• provide guidance that reflects more accurately the status of the transactions and is easier for firms to integrate into their transaction reporting systems.
• extend the guidance from just Alternative Instrument Identifier (Aii) derivative transactions to all derivative transactions (ISIN and Aii) conducted through EEA derivative exchange platforms.

Consultation period closed 2nd June

Consultation Paper    Ref: CP 11/09

11th May 2011   164 pages

Intended mainly for banks, building societies and certain investment firms caught by the Capital Requirements Directive. The CRD charges do not, on the whole, apply to smaller businesses.

The paper discusses the implications of the Basel Committee on Banking Supervision’s decision to increase the risk capture and level of capital requirements in the trading book, and also credit risk and illiquidity in the trading book. The CRD changes implement these requirements in Europe and will result in higher market risk capital under both the internal models methods and standardised rules.

The ongoing CRD4 discussions will implement Basel III amendments, and will include  liquidity standards;  definition of capital; leverage ratios;  capital buffers; counterparty credit risk; and a single rule book for banking.

Most of the proposed changes will come into effect on 31 December 2011 and firms within the scope of the CRD will need to be compliant at that date. Firms falling under the scope of the CRD it will need to ensure that their systems and finances are ready in advance of the changes.

Consultation period ends 11^th June

Consultation Paper    Ref: CP 11/08

10th May 2011   69 pages

Relevant to both advisers and providers active in the retail investment and corporate pensions markets, and relating to the proposed changes to the Retail Mediation Activities Return (RMAR) and complaints data.

The paper explores the data storage and usage implications of RDR, which will require IFAs to conduct much more intensive data collection in the context of mitigating the risk of poor consumer outcomes.

Consultation period ends 8^th July

Guidance Consultation    Ref: GC 11/10

3rd May 2011   38 pages

Mainly for residential mortgage lenders or mortgage administrators. Issues include:

• provision of forbearance support for customers undergoing financial stress
• recognition of impairment within the book through management committees and Board reporting
• disclosure of impairment, and its recognition through loss provisions in external reporting

Guidance Consultation    Ref: GC 11/09

20th April 2011

Mainly for banks, building societies, capital adequacy directive investment firms

The Remuneration Code (the Code) was revised to implement the requirements of the third Capital Requirements Directive (CRD3) and came into force on 1 January 2011. The revised Code covers a wide variety of firms, including investment banks, retail banks, building societies, asset management firms, stockbrokers, corporate finance firms and multi-lateral trading facilities.

Consultation period ended 18^th May

Consultation Paper    Ref: CP 11/056

31^st March  2011   29 pages

Sets out proposals for removing the rules permitting the use of non-EEA regulators’ rules in calculating the group capital requirements of a UK banking/investment firm group on a standardised approach.

The principle under discussion is that, now that all EEA competent authorities have implemented similar standards with regard to the Capital Requirements Directive (CRD), there is no longer a case for using non-EEA equivalence rules when calculating the standardised requirements of a non-EEA subsidiary. The proposal would involve revoking the equivalence rules in BIPRU 8, by deleting BIPRU 8.7.35R, 8.7.36G and 8.7.38R from the FSA Handbook.

Consultation period ends 30^th June

Discussion Paper    Ref: FS 11/02

28^th March 2011   24 pages

Summary of the feedback on DP10/1 (January 2010), relating to proposals for improving the handling of consumer complaints. With specific reference to the Treasury’s July 2009 White Paper, Reforming Financial Markets, following which the FSA proposed a new Coordination Committee of the FSA, OFT and the ombudsman service that would meet regularly and draw together members of their executive teams.

To be followed by a tightening of the liaison with the Claims Management

Regulator (CMR), including the enhanced sharing of intelligence.

Policy Statement   Ref: PS 11/05

25th March 2011   50 pages

Conclusion and final rules resulting from Consultation Paper 10/20: Tracing employers’ liability insurers. Primarily intended for auditors and their client companies. Primarily concerning the need for tighter controls on auditors’ reporting of client companies’ asset declarations, and the need to clarify accountability.

New rules come into force on 1st June 2011, although a transition period until 29^th September is allowed for.

Discussion Paper    Ref: FS 11/01

10th March 2011   55 pages

Summary of the feedback on DP10/3 (June 2010), relating to

the contribution that auditors make to prudential regulation.

Key areas of interest include:

• Promoting dialogue and information sharing between auditors and supervisors;
• The application of professional scepticism by auditors;
• The nature and extent of disclosures about management’s key judgements;
• FSA and FRC powers; and
• The scope of auditor reporting

Finalised Guidance Ref: FG 11/05

March 2011   31 pages

Consolidation of guidance following Guidance Consultation 11/01

(13th January 2011).  Intended for IFAs, discretionary management services (retail clients only),  providers of risk-profiling and asset-allocation tools.

Governance in Retail Firms – Feedback from Winter 2010 seminars

Finalised Guidance   Ref: FG 11/04

March 2011   3 pages

Topics include:

• Board effectiveness
• Non-executive directors
• Risk appetite
• Information sharing

Policy Statement   Ref: PS 11/04

25th February 2011   68 pages

Conclusion and final rules resulting from Consultation Paper 10/13: Tracing employers’ liability insurers. Primarily for insurance industry professionals.

New rules came into force on 6^th March 2011.

Policy Statement   Ref  PS11/03

25th February 2011   52 pages

Concluding the consideration of issues arising from Consultation Paper 10/23: Decision Procedure and Penalties manual and Enforcement Guide review 2010.

The Policy Statement includes final amendments to the Glossary, the General Provisions module, the Decision Procedure and Penalties manual and the Enforcement Guide

Discussion Paper    Ref: CP 11/05

24th February 2011   99 pages

Intended for all providers of with-profits policies, but also for consumers and their advisers.

The paper discusses issues including:

• Conflicts of interest
• Treatment of with-profits policyholders in

mutually-owned funds

• Terms on which new business is written
• Market value reductions
• Charges made to with-profits funds
• Excess surplus
• Corporate governance

• Consultation period ends 24^th May

Guidance Consultation    Ref: GC 11/06

14th February 2011

Primarily for banks and building societies, insurers and investment firms. Clarification and updates relating to Section 1.2 of the General Prudential Sourcebook.

Guidance Consultation    Ref: GC 11/06

14th February 2011

Mainly for BIPRU firms, insurers and investment firms. Topics covered include:

• Scope of application of the requirement
• Process – timings, definition of business model failure
• Scenarios – how many, time horizon, incorporation of management actions
• Governance

Consultation Paper Ref: CP 11/04

10th February 2011     74 pages

Proposals on how firms should report the new Client Money and Asset Return (CMAR). Principally for:

• • CASS investment firms
• • Consumers
• • Individuals who have senior management responsibilities in relation to a regulated firm’s client money and assets positions.

(Policy Statements to follow in May 2011; New rules will

enter into force on 1 June 2011.)

Comments period ended 10th April

Discussion Paper    Ref: DP 11/01

10th February 2011   75 pages

Consultation on ways in which the FSA can continue to tighten up its self-described ‘more interventionist approach’, aimed at anticipating consumer detriment and stopping it before it occurs.

Key themes include:

Reducing consumer detriment by dealing with problems earlier

• Scrutinising the whole of the product lifecycle from start to finish
• Moving away from scrutinising just at the point-of-sale.

The report discusses a range of future interventions that could be introduced in areas where the potential for customer harm is greatest.

• Banning products
• Prohibiting the sale of certain products to specific groups of customers. (Structured products, etc.)

Comments period ended 21st April

Consultation Paper  Ref: CP 11/03

2nd February 2011   74 pages

Mainly of interest to pension scheme or SIPP providers, pension advisers and other product providers.

Detailed implementation of RDR proposals. Specifically:

• Amending the key features illustrations (KFIs) that firms are required to give their clients
• Enhanced disclosures in relation to personal pension schemes marketed as SIPPs;
• Potentially replacing monetary projections by inflation-adjusted projections for personal and stakeholder pensions (both individual and group)

Comments period ends 3rd May

Consultation Paper Ref: CP 11/02

1st February 2011 182 pages

FSA Funding requirement for 2011/12 is up by 10.1% to £500.5 mn. But because of additional revenue from heavier fines, subscriptions and fees are to be 2% lower.

The FSA says it estimates that there will be substantial indirect costs as staff reschedule other work to create the capacity needed to implement the impending structural changes.  Smaller IFAs will be more affected than larger ones.

Comments period for various sections ended 1st April

Policy Statement  Ref: PS 11/01

20th January 2011  126 pages

Following on from Consultation Papers CP10/14, CP09/18 and CP09/31 and CP10. Includes final rules.

Themes include:

• Requirement that retail investment advisers must hold a Statement of Professional Standing (SPS) in order to give independent or restricted advice after January 2013.
• Requirement for investment advisers to complete at least 35 hours of Continuing Professional Development (CPD) each year, of which at least 21 hours must be structured. The FSA says that over 70% are already achieving this.

Qualifying conditions for IFAs stipulate that:

• They must act in the public interest and further the development of the profession.
• They must carry out effective verification services.
• They must have appropriate systems and controls in place and provide evidence of continuing effectiveness.
• They must cooperate with the FSA on an ongoing basis.

Some of the professionalism rules will come into force in July 2011, after which firms will be obliged to notify the FSA if any adviser falls below the required standards of competence or ethical behaviour.

Guidance Consultation   Ref: Guidance 11/02

13th January 2011   6 pages

Proposed guidelines on clarity, mainly for fund managers and advertisers

Themes include:

• Compliance with the’ fair, clear and not misleading’ rule.
• Issues of balance.
• ‘Image’ advertising and the presentation of past performance records.

Consultation period ended 25th February.

Guidance Consultation Ref: Guidance 10/07

6th December 2010 19 pages

Based on a survey which addressed inconsistencies in the ways that fund managers handle and evaluate derivative risks.

Guidance Consultation Ref: Guidance 11/01

13th January 2011 25 pages

Establishing the risk a customer is willing and able to take, and making a suitable investment selection

Intended for IFAs, discretionary management services (retail clients only),  providers of risk-profiling and asset-allocation tools.

Themes include:

• Checking retail customers’ appetite and suitability for investment risk.
• Potential causes of failures to fit the customer’s risk needs.
• The role of risk-profiling and asset-allocation tools.

Consultation Paper  Ref: CP 11/01

6th January 2011

10 topics, including:

• Removal of the requirement to annuitise pension savings by age 75.
• Child Trust Funds – Proposed amendments.
• Capital instruments: pre-issuance notification.
• Proposed minor amendments to the liquidity regime (BIPRU).

Comments period ended 17th February

Policy Statement  Ref: PS 10/21 and PS 10/21

17th December 2010  55 pages

Feedback on CP10/27 and final rules

Policy Statement  Ref: PS 10/19

17th December 2010  51 pages

Feedback and final rules arising from CP10/17 (chapters 11-13) and CP10/22 (chapter 3).

Consultation Paper Ref: CP 10/29

17th November 2010 87 pages

Themes include:

• Preventing product providers from making payments that could be used to disguise the IFA’s charges for advice, and that might induce advisers to recommend one product over another.
• Ensuring platforms allow their customers to transfer their investments elsewhere without having to cash them in first.

• Requiring platforms to be clear about the income they receive from fund managers or product providers.
• Ensuring that customers who invest in funds through platforms are provided with information about the fund from their fund managers, and that they maintain their voting rights.

Consultation period ended 17th February.

Consultation Paper   Ref: CP 10/28

16th November 2010

Developing the FSA’s existing themes on responsible mortgage lending, and placing the onus on the lender to assess the customer’s ability to can afford a mortgage.

Themes include:

• Replacing the existing obligation to issue an Initial Disclosure Document with a requirement to disclose key information about the intermediary’s payment and services.
• Amending the trigger points for providing the Key Facts Illustration.
• Requiring requirement all mortgage intermediaries to hold a relevant mortgage qualification.
• Aligning the labels used to describe a firm’s service with the Retail Distribution Review’s ‘independent’ and ‘restricted’ labels.
• Requiring firms to disclose to clients whether they will consider deals that can only be obtained directly from a lender.

Consultation period ended 25th February

Discussion Paper   Ref: DP 10/4

16th November 2010  126 pages

Response to the Turner Review’s findings after the 2008 crisis. The paper addresses perceived failings in the efficient market theory, and proposes regulatory changes for banks and traders.

Themes include:

• A sharper regulatory focus on the valuation of traded positions.
• Recommendations for changing the capital framework for both banks and the wider financial system, so as to produce greater coherence and reduce the opportunities for structural arbitrage.
• Improving firms’ risk management and modelling standards, and tightening regulatory objectives accordingly.

Response period ended 26th November.