On 5 March 2021, the FCA published Consultation Paper 21/5: Quarterly Consultation Paper No. 31 (CP21/5).
CP21/5 has two chapters comprising:
- Chapter 2: The FCA has become aware of a number of rules and points of guidance in the Compensation sourcebook (COMP) relating to the Financial Services Compensation Scheme (FSCS) which require amendment to ensure the intent of the provisions are clear to both firms and consumers, and to ensure consistent and efficient treatment of claims by the FSCS across different categories of claims. A summary of the FCA’s proposals is set out in paragraphs 2.5 to 2.12. Such proposals include changes to COMP 8.2.5R. This rule gives the FSCS the power to treat claims against dissolved companies as if such companies had not been dissolved to prevent the liability of these companies to the claimant being extinguished by operation of law. The rule applies to claims made in connection with protected investment business and protected non-investment insurance distribution. The FCA proposes that the rule is amended to extend the FSCS’s power to also treat claims against dissolved companies as if such companies had not been dissolved to claims made in connection with protected home finance mediation and protected debt management business. The proposed change would ensure that the FSCS can consider claims consistently across the four types of claim that the rule concerns. It would also avoid the risk that the FSCS is unable to consider an individual’s claim because the firm they dealt with is now dissolved.
- Chapter 3: The FCA proposes amendments to the Training and Competence sourcebook (TC) to extend the scope of the notification requirements, update the appropriate qualifications table, as well as to amend the relevant rules and guidance. A summary of the FCA’s proposals is set out in paragraphs 3.4 to 3.8. Such proposals include the FCA introducing a new rule (TC 2.1.31BR), which will require firms to notify the relevant accredited bodies when notifying the FCA of certain significant events concerning the failure to comply with the Statements of Principle and Code of Practice for Approved Persons (APER) or Code of Conduct (COCON) by firms’ retail investment advisers. The FCA believes that this new requirement will give the accredited bodies and firms better opportunity for collaboration and help to ensure that the relevant markets function well, and help secure an appropriate level of protection for consumers. The FCA expects the accredited bodies to utilize this information in their role by ensuring they have all relevant information when issuing a statement of professional standing in respect of retail financial advisers.
The deadline for comments on chapter 2 is 30 April 2021. The deadline for comments on chapter 3 is 2 April 2021.