The Speed Read

  • FCA extends temporary permission regime deadline
  • Three firms investigated for breaching competition law
  • Further evidence of consumer choice of dominated mortgage products published
  • Industry-ready templates published by the Cost Transparency Initiative (CTI)
  • Individual banned for dishonesty

FCA extends temporary permission regime deadline

In light of recent decisions surrounding the UK’s exit from the EU, the FCA has extended the deadline for firms wishing to enter the temporary permissions regime to 30th October 2019. This will allow EEA-based investment funds to continue to passport into the UK to undertake new and existing business while they apply for full FCA authorisation. The application deadline for trade repositories and credit reference agencies has also been extended to the same date. The application window for EEA payment services and e-money firms has now closed, but will open again between 31st July – 30th October.


 Three firms investigated for breaching competition law The FCA has published the results of an investigation into three asset management firms for anti-competitive behaviour. This is the first enforcement case under the FCA’s competition powers. During a placing and initial public offering (IPO) in 2015 the three firms shared confidential bidding information, including the price and volume of shares they intended to purchase on a bilateral basis. Sharing insider information of this nature can have a detrimental impact on the market, including reducing the price a company receives for its shares, or potentially leading to the failure of the book-building process. One of the firms in question was given immunity from enforcement, under the competition leniency programme, as it was the first to come forward and notify the FCA of its anti-competitive behaviour. The two other firms involved were fined £306,300 and £108,600 respectively. The nature of the case also led the FCA to take action against a fund manager at one of the firms for failing to observe proper standards of market conduct. 


Further evidence of consumer choice of dominated mortgage products published Since the publication of the FCA’s occasional paper 33, in May 2018, the regulator has continued to research ‘dominated’ choices within the mortgage market. The original research highlighted that almost 30% of consumers chose products that were worse on all price dimensions than suitable alternatives, known as ‘dominated’ choices. This research examines the supply of dominated products and the available alternatives, as well as whether consumer choice could be attributed to preferences around non-product characteristics, e.g customer service rating. The findings show that the proportion of dominated mortgage transactions is largely dependent of lender size, with smaller lenders experiencing greater instances of domination. However, the top five lenders buck this trend as more than 30% of their transactions were dominated by other products. This suggests that consumers view a mortgage from one of the top five banks as having additional, non-product related benefits that are not captured by this research.


 Industry-ready templates published by the Cost Transparency Initiative (CTI) The CTI, established to improve cost transparency for institutional investors, has published a series of cost and charges disclosure templates. This will enable investors to critically assess cost and charges, facilitate comparison between providers and standardise disclosure across the industry. On this development, Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: “We are keen to see the positive momentum on greater transparency continue. We will be watching to see asset manager and service provider uptake which should ultimately lead to better investor outcomes.” The templates, and further information on the CTI, can be found on the Pensions and Lifetime Savings Association website. 


Individual banned for dishonesty The FCA has banned an individual from performing any function related to regulated financial services for arranging nine ‘wash trades’ between September 2008 and August 2009. These trades had no legitimate commercial purpose and served only to obtain unearned payments for his own benefit. The FCA investigation concluded that the individual lacked honesty and integrity, and was therefore not fit and proper to perform any role in the financial services industry.