The FCA Continues To Crack Down On Binary Options Fraud

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Contents

The FCA Continues To Crack Down On Binary Options Fraud

Regulators Crack Down, But Who Are They Really Hurting?

The British FCA has put two more binary options brokers under provisional liquidation following reports of fraud. This comes only weeks after the regulator shut down Magnum Options for the same complaints. The brokers are accused of operating without a license, using misleading information, making false claims of success and low risk to lure in unsuspecting victims. The operators are Right Corp Limited and Curve Point Limited, both now listed as dissolved on the business registry. Since both were operating out of virtual offices as front companies for businesses headquartered in off shore financial havens I wonder who or what it was they actually busted.

Along with this comes a warning of another scam emerging in the binary options world, the recovery room. Recovery room scams claims to be able to help recover funds lost to binary options scams, even funds lost in trading. They guarantee success, but for a fee, and have now begun to target traders involved with Right Corp and Curve Point. The FCA points out that there are legitimate recovery services but they make no claims of success and do not charge up front fees.

Dragon Options Loses Its License

Traders with Dragon Options and Tao Trade will be interested to hear that the operator of those brands, Dragon Options LTD, has renounced its CySEC license. This move comes in the wake of massive crackdown across the industry and a suspension for the operator earlier this year. In March CySEC suspended their license and gave the broker 10 days to fix issues with banking services and client funds that has yet to be resolved. We can only assume that the voluntary loss of licensing is in result of an agreement between Dragon Options and CySEC. CySEC has advised anyone waiting for a withdrawal to contact them with their complaint.

Regulation round-up November 2020

Regulation round-up is our monthly email to all regulated firms, updating you on the latest news that affects your sector.

Introduction: Jo Hill, Director of Market Intelligence, Data and Analysis

Following a commitment in our Mission earlier in the year, we have published the first of our Approach documents – Our Future Approach to Consumers. This paper explores our approach to regulating for retail consumers. It sets out our initial views on what good looks like for all retail consumers, and aims to clearly explain how we will work to diagnose and remedy actual and potential harm, giving more certainty about our framework.

Our Mission also makes clear that we have finite resources, and in some cases we need to collaborate with others to address issues like vulnerability and how we prioritise it in our work, financial exclusion and the limits of consumer responsibility. Addressing these complex and overlapping issues requires a nuanced approach. Our stakeholders should rightly be able to support and challenge these decisions, and understand our rationale for making them.

We are seeking views from stakeholders on a number of key issues including consumer responsibility, identifying vulnerability, and the line between the FCA’s remit and broader social policy issues. We are also consulting on how far our stakeholders agree with some of the statements and positions taken by the FCA, as outlined in this document. The consultation period is open until 5 February 2020.

We are hosting Our Future Approach to Consumers conference in London on 30 November, where we will explore some of the key themes and questions raised in the document. We have a limited amount of places available.

Hot topics

Wholesale Insurance Broker market study

We have published the terms of reference for our wholesale insurance broker market study, which will consider how competition is working in the sector.

The London insurance market is one of the world’s leading centres for large scale, complex commercial and specialist risks, controlling more than £68bn in gross written premium. There have been significant changes in the sector in recent years which has seen brokers developing new services and business practices.

We want to ensure that the sector is working well and fosters innovation and competition in the interests of its diverse range of clients. We believe that effective competition contributes to ensuring London remains an international centre for insurance.

In the study we will:

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  • look at how brokers compete in practice and whether they use their bargaining power to get clients a good deal
  • assess what conflicts of interest exist; how they are managed and how they affect competition and client outcomes
  • examine how broker conduct impacts on competition in the sector

We welcome views on the terms of reference by 19 January 2020.

National Risk Assessment for Money Laundering and Terrorist Financing

On 26 October 2020, the Treasury published an update to the National Risk Assessment (NRA) of money laundering and terrorist financing.

The NRA is the Government’s assessment of the key money Laundering (ML) and terrorist financing threats facing the UK including the susceptibility of the sectors to money laundering and terrorist financing.

Key findings from the report include:

• the criminal exploitation of banks, professional and financial services and cash remain the greatest areas of money laundering risk to the UK

• cash remains the preferred method for terrorists to move funds through and out of the country

• a wide-ranging set of reforms by government, like introducing the ability to investigate suspicious asset trails and to crack down on illicit finance over recent years are starting to take effect

Chapter four of the document specifically relates to financial services. It highlights the strategic importance of the UK financial services sector and recognises that its size and openness make it attractive to criminals. It also identifies steps the FCA, law enforcement and the industry have taken to address the threats, for example, strengthening accountability and improving information sharing through the Joint Money Laundering Intelligence Taskforce.

The FCA has contributed significantly to the updated NRA and agrees with its findings in relation to the financial services sector. We encourage firms to review the document alongside other guidance such as the FC Guide for Firms and JMLSG with a view to understanding how the risks identified could have an impact on them.

Important changes to Legislation

Over the next two years, a number of changes are coming into effect that will collectively enhance the integrity of UK financial services to make markets work well.

The aims of the legislation include improving the functioning of financial markets, strengthening security, facilitating innovation and reducing harm to consumers.

Several changes will take effect in early 2020. These are:

  • EU Benchmarks Regulation
  • Revised Markets in Financial Instruments Directive (MiFID II)
  • Revised Payment Services Directive (PSD2)
  • Insurance Distribution Directive (IDD)

The implementation date of the Senior Managers and Certification Regime (SM&CR) is to be confirmed and we will keep firms updated.
It is essential that your firm continues preparations for these upcoming changes, ahead of the implementation dates. There is currently information available on our website which your firm can use to identify and implement any necessary changes. Preparing now will help to ensure that you are compliant with the legislation when it takes effect.
A large number of firms will be affected by multiple changes. We appreciate that this will have an impact on regulated firms and we have resources to help you through the processes. Visit our dedicated webpage to see links to each piece of legislation and find assistance on what might affect you and when you need to act by. You can also find contact information and sign up for email updates.

News and publications

CP17/36: Reviewing the funding of the Financial Services Compensation Scheme (FSCS): feedback from CP16/42, final rules, and new proposals for consultation

We are consulting on proposals to change how the FSCS is funded and to increase the protection it provides to consumers. This consultation paper follows CP16/42 (PDF) published in December 2020 which sought views on how FSCS funding could be reformed. Our ongoing review seeks to ensure the FSCS continues to provide the right protections, works effectively and is funded fairly.

Digital Comparison Tools

The CMA published its final report on its digital comparison tools market study on 26 September 2020. The FCA published a response to the CMA’s findings and recommendations. We welcome the CMA’s findings and worked with the CMA throughout its study, which looked at car and home insurance, and credit cards, to provide expert input on financial services. The CMA made recommendations to several organisations, including suppliers and digital comparison tools. Firms should be aware of the recommendations made by the CMA.

Product Sales Data Statistics

We published our annual Product Sales Data (PSD) statistics. The publication covers the latest PSD for mortgage lending, retail investments and pure protection contract sales.

The data is used to assist us in the regulation of firms and to spot trends in the products sold in the UK market. We publish the aggregated PSD each year so that consumers and market participants can see what firms are selling and understand the trends. The data covers sales made during the period from 1 April 2005 to 30 June 2020.

Complaints Data

We published our six-monthly firm complaints data covering data up to the end of June 2020. We publish to increase transparency and provide information to firms and consumers.

3.32m complaints were recorded by firms in the first half of 2020 compared with 3.04m in the second half of 2020. Since June 2020, firms have been required to report to us in a new way, increasing the number of complaints reported. All firms are now reporting under our new rules. PPI and current accounts were the most complained about products and advising, selling and arranging were the most complained about causes.

CP17/35: Recovering the costs of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS): fees proposals

We are consulting on proposals for recovering the costs of establishing and running the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).

EU Benchmarks Regulation – Early opening period

Most of the provisions under EU Benchmark Regulations (BMR) will apply from 1 January 2020 and firms will only be able to make formal applications to us under the BMR from this date. We want to ensure firms can become authorised or registered in a straightforward and efficient manner. To achieve this, UK benchmark administrators can now complete and submit draft application forms on our online system Connect, until 31 December 2020.

The ‘Firms that need authorisation’ page on our website has specific information for Benchmark administrators on this “early opening period”, including details about BMR application timeframes. Benchmark users are not required to apply for authorisation or registration, unless they also administer benchmarks.

Considerations for Principals who have Appointed Representatives or Introducer Appointed Representatives

We have published an alert to all Principals, regardless of sector, who have one or more Appointed Representatives or Introducer Appointed Representatives (‘ARs’). Principals are responsible for the regulated activities of their ARs. Our alert sets out the risks we expect firms to consider and act upon, where relevant.

Banks and Building Societies

Regulatory sandbox lessons learned report

We have published a report outlining how the regulatory sandbox has met its objectives over the first year of operation. The sandbox enables firms to test innovative products, services or business models in a live user environment, while ensuring that appropriate protections are in place.

The report sets out the sandbox’s overall impact on the market including the adoption of new technologies, increasing access and improving experiences for vulnerable consumers, as well as lessons learnt from individual tests that have been, or are being, conducted as part of the sandbox.

MiFID II – Update

FCA statement on MiFID II inducements and research

The FCA has welcomed announcements by the European Commission and the US Securities and Exchange Commission which help provide clarity for firms on accessing US research. Read our statement.

Commodity derivative position limits

The FCA has published position limits on certain commodity derivative contracts which are traded on UK trading venues. View the commodity derivative contracts.

The position limits exemption application is also now available for completion on the FCA’s Connect webpage.

Legal Entity Identifiers (LEIs)

From 3 January 2020, firms subject to MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who is eligible for a Legal Entity Identifier (LEI) and does not have one. For further information on LEIs, we have produced a leaflet which trading firms can use in their communications with clients

Notifications update

MiFID II, which is now less than two months away, introduces new processes for authorising investment firms and will require investment firms and others to make a range of notifications.

Since publishing our applications and notifications user guide in January 2020, we have provided further updates regarding notifications, which we want to remind you of:

  • Ancillary activity exemption
  • General clearing members
  • Systematic Internalisers
  • DEA Providers & Algorithmic Trading

At the same time we are also advising you of the notification requirements for:

  • Trading venues (RMs, MTFs, OTFs)
  • Financial instrument trading suspensions, removals and restorations (Art 32/52 of MiFID II)

Financial Advisers

MiFID II – Update

Are you ready for MiFID II on 3 January 2020?

The key MiFID II impact areas for retail firms are product governance and costs disclosure. These are consistently the two areas about which industry continues to raise concerns with us. There are several other areas where MiFID II brings changes, including advising, suitability, taping and inducements. Advisers will need to consider the impacts of these changes. As we said in May, we will assess firms’ compliance with MiFID II when we repeat the Assessing Suitability Review in 2020.

The European Securities and Markets Authority (ESMA) provides Q&A on various retail MiFID II topics. We are also speaking at Personal Finance Society events during November and December on upcoming changes to the regulatory landscape including MiFID II. See the PFS website for further information.

FCA statement on MiFID II inducements and research

The FCA has welcomed announcements by the European Commission and the US Securities and Exchange Commission which help provide clarity for firms on accessing US research. Read our statement.

Commodity derivative position limits

The FCA has published position limits on certain commodity derivative contracts which are traded on UK trading venues. View the commodity derivative contracts.

The position limits exemption application is also now available for completion on the FCA’s Connect webpage.

Legal Entity Identifiers (LEIs)

From 3 January 2020, firms subject to MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who is eligible for a Legal Entity Identifier (LEI) and does not have one. For further information on LEIs, we have produced a leaflet which trading firms can use in their communications with clients

Notifications update

MiFID II, which is now less than two months away, introduces new processes for authorising investment firms and will require investment firms and others to make a range of notifications.

Since publishing our applications and notifications user guide in January 2020, we have provided further updates regarding notifications, which we want to remind you of:

  • Ancillary activity exemption
  • General clearing members
  • Systematic Internalisers
  • DEA Providers & Algorithmic Trading

At the same time we are also advising you of the notification requirements for:

  • Trading venues (RMs, MTFs, OTFs)
  • Financial instrument trading suspensions, removals and restorations (Art 32/52 of MiFID II)

Please read the update to MiFID II notifications.

FG17/9: Guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers

We have published our finalised guidance for firms on how to calculate redress for unsuitable defined benefit pension transfers. The summary of feedback outlines the response to our consultation.

FCA Live & Local regional programme continues

Our series of regional events for retail investment firms continues in November, December and into January, with workshops on assessing suitability, Q&A roundtables with FCA and industry panel, and one-to-one surgery sessions. Dates and locations can be found on the Live & Local webpage.

FCA Live & Local regional programme events in 2020

The first set of events in 2020 aimed at regulated mortgage firms are now available for registration. We are holding monthly Q&A roundtable sessions where attendees can pose questions and provide feedback directly to our senior management plus an industry expert. Details are available on the Live & local webpage. To ensure you are notified of future Live & Local regional events in 2020, sign up to email alerts using our Live & Local updates web form.

Mortgage Advisers & Lenders

FCA Live & Local regional programme events in 2020

The first set of events in 2020 aimed at regulated mortgage firms are now available for registration. We are holding monthly Q&A roundtable sessions where attendees can pose questions and provide feedback directly to our senior management plus an industry expert. Details are available on the Live & local webpage. To ensure you are notified of future Live & Local regional events in 2020, sign up to email alerts using our Live & Local updates web form.

General Insurance Intermediaries & Insurers

CP17/33: Insurance Distribution Directive implementation (IDD) – Consultation Paper 3

The deadline for responses to our third consultation is 25 November 2020. This consultation follows on from CP17/7 and CP17/23 with further proposals on how we plan to implement the IDD in the UK. It aims to enhance consumer protection when buying insurance (including general insurance, life insurance and insurance-based investment products) and to support competition between insurance distributors by creating a level playing field.

Review of Lifetime Pet Insurance

Following an increase in complaints and adverse media coverage, we have carried out a review of how lifetime pet insurance is sold and promoted by a sample of general insurance intermediaries and insurers. We focused on information available to consumers at and before the point of sale. This included reviewing financial promotions and policy documents.

We communicated our findings to the pet insurance market, setting out our concerns and the actions we expected firms to take to comply with existing rules.

We found that consumers:

• are often unsighted as to long term costs and limitations, with available information limited to features and benefits

• are receiving very limited information on the long term nature of the product, so are unable to effectively compare options

• are often hampered in switching insurers by any pre-existing condition(s), making unexpected long term costs and limitations more significant to consumers

We would like to remind firms that they are obliged, under ICOBS, to ensure that consumers are given sufficient information to make an informed decision when buying. Firms should review their sales and marketing material to make sure that customers understand what to expect over the duration of their policy.

We will continue to monitor the market, and will consider further work and testing in 2020.

PS17/24: Handbook changes to reflect the new regulatory framework for Insurance-Linked Securities

We have published our policy statement which sets out near-final handbook changes to reflect the new regulatory framework for Insurance-Linked Securities (ILS), as well as our near-final ‘FCA Statement – authorising and supervising insurance special purpose vehicles’.

Client Assets: notification of breaches/adverse audit opinions to FCA

Firms are reminded under Principle 11 and SUP 15 to notify the FCA of any significant failure in the firm’s systems and controls, including those reported to the firm by its auditor. This may include where the firm has received an adverse opinion within its Client Assets Audit report, as well any significant breach of a CASS rule. A firm must make any significant rule breach notification immediately it becomes aware of it.

FCA Live & Local regional programme – 2020 events added

The last of our 2020 regional events for general insurance firms continue in November and December – event details can be found on the Live & Local webpage.

We have now added the first set of events in 2020 with a continuation of our interactive workshops on how firms can identify and prevent harm, and bi-monthly Q&A roundtables with FCA and industry panel. Dates, locations, and registration details are on the Live & Local webpage.

More events will be added in the coming months. To ensure you are notified of future Live & Local regional events, sign up to email alerts using our Live & Local updates web form.

Life Insurance & Pension Providers

CP17/33: Insurance Distribution Directive implementation (IDD) – Consultation Paper 3

The deadline for responses to our third consultation is 25 November 2020. This consultation follows on from CP17/7 and CP17/23 with further proposals on how we plan to implement the IDD in the UK. It aims to enhance consumer protection when buying insurance (including general insurance, life insurance and insurance-based investment products) and to support competition between insurance distributors by creating a level playing field.

Wealth Managers & Private Banks

EBA recommends new prudential regime for MiFID investment firms

At the end of September 2020, the European Banking Authority (EBA) published its final report and recommendations for an appropriate prudential regime for all MiFID investment firms. This is in response to a call for advice from the Commission who will now consider the recommendations and are expected to publish a legislative proposal before the end of 2020.

MiFID II – Update

FCA statement on MiFID II inducements and research

The FCA has welcomed announcements by the European Commission and the US Securities and Exchange Commission which help provide clarity for firms on accessing US research. Read our statement.

Commodity derivative position limits

The FCA has published position limits on certain commodity derivative contracts which are traded on UK trading venues. View the commodity derivative contracts.

The position limits exemption application is also now available for completion on the FCA’s Connect webpage.

Legal Entity Identifiers (LEIs)

From 3 January 2020, firms subject to MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who is eligible for a Legal Entity Identifier (LEI) and does not have one. For further information on LEIs, we have produced a leaflet which trading firms can use in their communications with clients

Notifications update

MiFID II, which is now less than two months away, introduces new processes for authorising investment firms and will require investment firms and others to make a range of notifications.

Since publishing our applications and notifications user guide in January 2020, we have provided further updates regarding notifications, which we want to remind you of:

  • Ancillary activity exemption
  • General clearing members
  • Systematic Internalisers
  • DEA Providers & Algorithmic Trading

At the same time we are also advising you of the notification requirements for:

  • Trading venues (RMs, MTFs, OTFs)
  • Financial instrument trading suspensions, removals and restorations (Art 32/52 of MiFID II)

Please read the update to MiFID II notifications.

CP17/37: Consultation Paper on Industry Codes of Conduct and Discussion Paper on FCA principle 5

We have published a consultation on our approach to the supervision and enforcement of authorised firms’ adherence to industry-written codes of conduct, designed to set standards in unregulated financial markets.

Please send us your comments by 5 February 2020.

Investment Managers & Stockbrokers

EBA recommends new prudential regime for MiFID investment firms

At the end of September 2020, the European Banking Authority (EBA) published its final report and recommendations for an appropriate prudential regime for all MiFID investment firms. This is in response to a call for advice from the Commission who will now consider the recommendations and are expected to publish a legislative proposal before the end of 2020.

MiFID II – Update

FCA statement on MiFID II inducements and research

The FCA has welcomed announcements by the European Commission and the US Securities and Exchange Commission which help provide clarity for firms on accessing US research. Read our statement.

Commodity derivative position limits

The FCA has published position limits on certain commodity derivative contracts which are traded on UK trading venues. View the commodity derivative contracts.

The position limits exemption application is also now available for completion on the FCA’s Connect webpage.

Legal Entity Identifiers (LEIs)

From 3 January 2020, firms subject to MiFID II transaction reporting obligations will not be able to execute a trade on behalf of a client who is eligible for a Legal Entity Identifier (LEI) and does not have one. For further information on LEIs, we have produced a leaflet which trading firms can use in their communications with clients

Notifications update

MiFID II, which is now less than two months away, introduces new processes for authorising investment firms and will require investment firms and others to make a range of notifications.

Since publishing our applications and notifications user guide in January 2020, we have provided further updates regarding notifications, which we want to remind you of:

  • Ancillary activity exemption
  • General clearing members
  • Systematic Internalisers
  • DEA Providers & Algorithmic Trading

At the same time we are also advising you of the notification requirements for:

  • Trading venues (RMs, MTFs, OTFs)
  • Financial instrument trading suspensions, removals and restorations (Art 32/52 of MiFID II)

Please read the update to MiFID II notifications.

Reforms to enhance the effectiveness of UK primary markets

In 2020 we committed to reviewing the effectiveness of the UK’s primary capital markets, and the regulatory framework governing them, to ensure they continue effectively to serve issuers and investors.

Following consultation we have set out final rules to reform the availability of information during the UK equity initial public offering (IPO) process and to clarify and enhance some elements of the Listing Rules. We have also published a Feedback Statement as part of our ongoing review of the effectiveness of primary markets. This identifies a number of areas that merit further exploration including the relative positioning of standard versus premium listing, the provision of patient capital to companies that require long-term investment and retail access to debt markets.

CP17/37: Consultation Paper on Industry Codes of Conduct and Discussion Paper on FCA principle 5

We have published a consultation on our approach to the supervision and enforcement of authorised firms’ adherence to industry-written codes of conduct, designed to set standards in unregulated financial markets.

Please send us your comments by 5 February 2020.

Fintech & Innovative Businesses

Regulatory sandbox lessons learned report

We have published a report outlining how the regulatory sandbox has met its objectives over the first year of operation. The sandbox enables firms to test innovative products, services or business models in a live user environment, while ensuring that appropriate protections are in place.

The report sets out the sandbox’s overall impact on the market including the adoption of new technologies, increasing access and improving experiences for vulnerable consumers, as well as lessons learnt from individual tests that have been, or are being, conducted as part of the sandbox.

Get ready for 13 January 2020

PSD2 introduces a number of new requirements around how firms must treat their customers, handle complaints and the data they report to us. The majority of the new regime will apply from 13 January 2020. You can read in full about our approach to regulating firms under PSD2 in our PSD2 Approach Document and Policy Statement.

To help you identify the key changes that are relevant to you resulting from PSD2 we have launched the PSD2 Navigator. The online decision tool directs you to relevant information and explains what you need to do to be PSD2 compliant.

FCA publishes update on high-cost credit work

The Financial Conduct Authority (FCA) has today published an update on its work in the high-cost credit sector.

The update follows a Feedback Statement the FCA published in July 2020 which identified key areas of concern with the sector including overdrafts, rent-to-own, home-collected credit and catalogue credit.

Work undertaken since July 2020 has demonstrated an emerging picture of the case for intervention in a number of markets but also some limitation on what can be achieved purely through traditional regulatory interventions.

As well as being prepared to propose new rules where it has the evidence that markets are not working well for consumers, the FCA is prepared to look at solutions designed to increase the choice and availability of alternatives to high-cost credit. It will look at the guidance given to social landlords and others about referring to cheaper sources of credit and is also proposing to work with government to highlight examples of best practice around alternative models.

The FCA considers that it is important to avoid negative unintended consequences from taking steps that might restrict the availability of credit to those consumers who are able to repay it affordably.

Christopher Woolard, Executive Director of Strategy and Competition said:

‘High-cost credit products remain a key focus for us. We have already taken significant steps to address the risk they pose to potentially vulnerable consumers by putting in place new rules for high-cost short-term credit firms and taking supervisory and enforcement action against non-compliance across all credit markets.

‘This review and the analysis we have conducted so far give an emerging picture of the need to intervene in some parts of the market. At the same time we can also see the social utility of these credit products. We need to address both the choice and range available and how this market can work better for consumers.’

Overdrafts

The FCA remains concerned about the high fees and charges for unarranged overdrafts, especially when compared to the relatively small amounts lent. The FCA has conducted detailed analysis of how consumers use their overdrafts, looking at the transaction history of 1.5 million personal current accounts. The data have shown that while arranged overdrafts are a larger source of revenue for firms than unarranged overdrafts, the proportion of revenues from unarranged overdrafts is significantly higher when compared to the amounts lent. Over half of the total charges paid on unarranged overdrafts were applied to just 2% of accounts.

We are taking this work forward alongside our Strategic Review of Retail Banking Business Models, and this analysis of overdrafts will feed into that Review (see Notes to Editors below).

Rent-to-own

FCA supervision and authorisation work on rent-to-own has already driven significant improvement in the sector and reduced the risk of consumer harm.

However, concerns remain about the cost of using such services particularly when add-on products are included, and the FCA continues to gather evidence in this area as part of its review of the market.

Home-collected credit

The FCA is focusing on home-collected credit consumers’ repeat borrowing and refinancing, particularly where people take out additional borrowing with the amount outstanding from the previous loan incorporated into the new loan. There are concerns that when consumers refinance their loans in this way, it may result in them paying significantly more interest on the amounts originally borrowed than they would had they maintained separate loans. The FCA has requested further data from firms on their lending patterns and the nature and extent of refinancing to examine ways in which other borrowing options could work better for consumers.

Catalogue credit

Catalogue credit also remains a concern for the FCA, particularly the complexity of charging structures and how people are offered choices to make repayments. These mean many consumers may not understand key features or may not be making informed choices. The FCA is gathering evidence on firms’ policies including information they provide to customers and doing consumer research to better understand consumer use of these products.

Alternatives to high-cost credit

The FCA has set out a series of commitments on initiatives to support greater consumer access to alternatives to high-cost credit. This includes working with government to clarify our expectations of social landlords and others so that they can feel confident in signposting their clients to alternatives to high-cost credit. The FCA will also highlight best practice that lowers the demand for high-cost credit, such as providing white goods when tenants move into a new property. The FCA is also inviting innovators in this space to bring forward ideas that are in the interest of consumers and test them if necessary as part of the FCA Sandbox.

Next steps

In most areas the FCA intends to publish conclusions and proposals for consultation in the Spring. Overdrafts will be addressed as part of the FCA’s Strategic Review of Retail Banking Business Models, which will be reporting later this year.

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