Recommendations & Conclusions
38 items
1
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
It is not immediately clear that Mr Bailey’s concerns about the distinction between “responsibility” and “culpability” in Dame Elizabeth’s draft report would have “compelled” him to make his “free-standing” objection. However we accept that it is likely that his strong concerns over the “responsibility” vs “culpability” point may have led …
Read more
It is not immediately clear that Mr Bailey’s concerns about the distinction between “responsibility” and “culpability” in Dame Elizabeth’s draft report would have “compelled” him to make his “free-standing” objection. However we accept that it is likely that his strong concerns over the “responsibility” vs “culpability” point may have led him to make his “free-standing” objection to the inclusion of named responsible individuals, and that in the absence of his concerns about the distinction between “responsibility” and “culpability” he might not have put forward his “free- standing” objection. We cannot of course be certain about this and if we were satisfied that there was strong and clear evidence that Mr Bailey had misled the Committee on this point, it would be a serious matter. But the evidence does not support that particular conclusion, and we do not believe that Mr Bailey misled the Committee. We note that the revisions made by Dame Elizabeth to the draft report, clarifying that an identification of responsibility was not an attribution of culpability, met the essence of Mr Bailey’s request, and we believe that it is in the wider interest to regard this issue as closed.
Show less
Government response AI summary
The government response describes the FCA's holistic recruitment approach for senior leadership roles, including internal succession planning and global searches, but does not address the committee's conclusion regarding Mr. Bailey's objections or the 'responsibility' versus 'culpability' distinction.
Read full response →
HM Treasury
2
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
We welcome the FCA’s approach to recruitment for some senior executive roles, which involved global searches, but we believe that the FCA was wrong not to have engaged in a fuller recruitment programme for the Executive Director for Transformation role, including the consideration of potential recruits from outside the FCA. …
Read more
We welcome the FCA’s approach to recruitment for some senior executive roles, which involved global searches, but we believe that the FCA was wrong not to have engaged in a fuller recruitment programme for the Executive Director for Transformation role, including the consideration of potential recruits from outside the FCA. It appears that there was a missed opportunity to consider fresh leadership for the Transformation programme. We also question whether there would have been a significant slowdown in the progress of the Transformation programme had Megan Butler not been recruited to oversee it. Another recruit might have been supported by Megan Butler for at least a period to help assist with this role, or Megan Butler might have taken on that role on a temporary basis whilst the recruitment process was conducted.
Show less
Government response AI summary
The government response discusses the application of Senior Managers Regime principles to FCA senior managers and its impact on accountability and variable remuneration for control failings, but does not address the committee's specific criticism regarding the recruitment process for the Executive Director for Transformation role.
Read full response →
HM Treasury
3
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
Given that Dame Elizabeth’s report cited Megan Butler as bearing responsibility for important areas of failure and that her recruitment was conducted internally with just one alternative candidate, we understand why many will feel that “a buck that does not stop with an individual stops nowhere” when it comes to …
Read more
Given that Dame Elizabeth’s report cited Megan Butler as bearing responsibility for important areas of failure and that her recruitment was conducted internally with just one alternative candidate, we understand why many will feel that “a buck that does not stop with an individual stops nowhere” when it comes to the personal consequences for those involved with the failings at the FCA in relation to LCF.
Show less
Government response AI summary
The government's response explains that while the FCA is not formally under the Senior Managers Regime, it applies its principles to senior managers, resulting in bonus removals for those involved in LCF failings, although not necessarily termination of employment without personal culpability.
Read full response →
HM Treasury
4
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
We recommend that the default position should be that the FCA take a holistic approach when recruiting for critical roles, rather than engaging in a restricted recruitment process. For time-critical appointments, the FCA should consider appointing on an interim basis until a wider search, considering where appropriate both internal and …
Read more
We recommend that the default position should be that the FCA take a holistic approach when recruiting for critical roles, rather than engaging in a restricted recruitment process. For time-critical appointments, the FCA should consider appointing on an interim basis until a wider search, considering where appropriate both internal and external candidates, has been completed.
Show less
Government response AI summary
The government's response provides a general update on the FCA's transformation and business plan, but it does not specifically address the recommended changes to recruitment processes for critical roles or the use of interim appointments.
Read full response →
HM Treasury
5
Recommendation
Fourth Report - The Financial Conduct A…
Acknowledged
We accept that a degree of shared responsibility is desirable and necessary in an organisation such as the Financial Conduct Authority. However, it is not readily justifiable for the FCA to require the firms that it regulates to adhere to the principles of the Senior Managers Regime but seemingly not …
Read more
We accept that a degree of shared responsibility is desirable and necessary in an organisation such as the Financial Conduct Authority. However, it is not readily justifiable for the FCA to require the firms that it regulates to adhere to the principles of the Senior Managers Regime but seemingly not to apply similar principles The Financial Conduct Authority’s Regulation of London Capital & Finance plc 49 internally when there are failings of practice and culture in the organisation. The FCA Board should reflect on whether it has, in this case, met the standards which it seeks to impose upon others. We believe that there are doubts as to whether it has.
Show less
Government response AI summary
The government described internal reviews of Supervision Hub processes and training programmes to ensure they are up-to-date and aligned with the organisation's position on unregulated activities, but did not directly address the recommendation for the FCA Board to reflect on applying Senior Managers Regime principles …
Read full response →
HM Treasury
6
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
We recognise that the demands of some of these senior executive positions at the Financial Conduct Authority are heavy, and that individual accountability for organisational failings may deter strong candidates from applying for them. But an over-reliance on collective responsibility may deny visible accountability and could lessen confidence in the …
Read more
We recognise that the demands of some of these senior executive positions at the Financial Conduct Authority are heavy, and that individual accountability for organisational failings may deter strong candidates from applying for them. But an over-reliance on collective responsibility may deny visible accountability and could lessen confidence in the organisation as a result. We are not wholly persuaded that the balance struck by the FCA on this occasion has strengthened its standing in the eyes of those it regulates or the wider public. (Paragraph 49) Culture at the FCA
Show less
Government response AI summary
The government response focuses on ensuring consumer awareness of risks in unregulated activities, preventing misleading impressions of regulation, and the 'Use it or Lose it' exercise to remove unused firm permissions, but does not address the committee's concerns regarding senior executive accountability within the FCA.
Read full response →
HM Treasury
7
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
The FCA plays a vital role as the UK’s financial conduct regulator and prudential regulator for most financial services firms. Its work affects millions of financial services customers and it is important that it has the right culture to facilitate its objectives. We support the views of the current FCA …
Read more
The FCA plays a vital role as the UK’s financial conduct regulator and prudential regulator for most financial services firms. Its work affects millions of financial services customers and it is important that it has the right culture to facilitate its objectives. We support the views of the current FCA senior leadership team that the organisation needs to become a more “proactive”, “agile”, “decisive” and joined- up regulator that is willing to act, including in the face of uncertainty, to protect consumers and financial markets.
Show less
Government response AI summary
The government response outlines its annual perimeter report and engagement with the Treasury on perimeter issues, without addressing the committee's conclusion regarding the FCA's culture and the need for it to be more proactive, agile, and decisive.
Read full response →
HM Treasury
8
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
We welcome the FCA’s ongoing transformation programme which has cultural change as one of its priorities. We however note that the FCA has undergone numerous structural and operational changes since its inception, with more changes expected as part of the ongoing transformation. We recognise that culture change takes time but …
Read more
We welcome the FCA’s ongoing transformation programme which has cultural change as one of its priorities. We however note that the FCA has undergone numerous structural and operational changes since its inception, with more changes expected as part of the ongoing transformation. We recognise that culture change takes time but recommend that the FCA Board sets itself an end date for the transformation programme and that it creates milestones at which improvements and evidence of changes in culture can be reviewed. These milestones and reviews should be put into the public domain. At the completion of the transformation programme, the FCA should ensure it has in place measures that will ensure that its improved culture is maintained and embedded.
Show less
Government response AI summary
The government's response focuses on the regulatory perimeter and interaction with HM Treasury, providing no specific commitment or discussion regarding the FCA setting an end date, public milestones, or cultural maintenance for its transformation programme.
Read full response →
HM Treasury
9
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
The FCA accepts that there were failings in the contact centre during the Relevant Period as identified in Dame Elizabeth’s report, and has begun taking steps to address these. We welcome the operational improvements that have been made since the publication of Dame Elizabeth’s report, including the training of call-handlers …
Read more
The FCA accepts that there were failings in the contact centre during the Relevant Period as identified in Dame Elizabeth’s report, and has begun taking steps to address these. We welcome the operational improvements that have been made since the publication of Dame Elizabeth’s report, including the training of call-handlers and changes to contact centre policies.
Show less
Government response AI summary
The government response discusses the FCA's resource allocation, regulatory perimeter changes, business plan, and fees consultation, but does not address the committee's conclusion about contact centre failings or welcomed operational improvements.
Read full response →
HM Treasury
10
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
The FCA should ensure that it keeps its contact centre policies and training up to date to ensure clarity and consistency, not just in relation to firms such as LCF but to the wider organisation. (Paragraph 76) The regulatory perimeter and the scope of the FCA’s remit
Read more
The FCA should ensure that it keeps its contact centre policies and training up to date to ensure clarity and consistency, not just in relation to firms such as LCF but to the wider organisation. (Paragraph 76) The regulatory perimeter and the scope of the FCA’s remit
Show less
Government response AI summary
The government's response discusses the FCA's surveillance work, partnerships with law enforcement, and a forthcoming perimeter report, completely failing to address the recommendation regarding contact centre policies and training.
Read full response →
HM Treasury
11
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
The case of LCF illustrates how important it is that the FCA looks at a regulated firm’s activities both within and outside the perimeter of regulation. The FCA’s failure to consider issues raised in LCF’s unregulated bond business led to red flags being missed. (Paragraph 92) 50 The Financial Conduct …
Read more
The case of LCF illustrates how important it is that the FCA looks at a regulated firm’s activities both within and outside the perimeter of regulation. The FCA’s failure to consider issues raised in LCF’s unregulated bond business led to red flags being missed. (Paragraph 92) 50 The Financial Conduct Authority’s Regulation of London Capital & Finance plc
Show less
Government response AI summary
The government's response discusses the complexities of reconfiguring the FCA to prosecute fraud and its limitations in this area, rather than addressing how the FCA will improve its oversight of firms' activities both within and outside the regulatory perimeter to avoid missing red flags.
Read full response →
HM Treasury
12
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
The “halo effect” appears to be inevitable as long as authorised firms also carry out unregulated activities. We reiterate the recommendation made by our predecessors that the FCA should ensure that it requires authorised firms to make clear explicitly the risks to customers associated with their unregulated activities.
Read more
The “halo effect” appears to be inevitable as long as authorised firms also carry out unregulated activities. We reiterate the recommendation made by our predecessors that the FCA should ensure that it requires authorised firms to make clear explicitly the risks to customers associated with their unregulated activities.
Show less
Government response AI summary
The government's response detailed the permanent ban on mass marketing of Speculative Illiquid Securities and ongoing consultations on the Prospectus Regulation, but did not address the recommendation for the FCA to require authorised firms to explicitly state risks associated with their unregulated activities.
Read full response →
HM Treasury
13
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
In future, the FCA should set out in its annual perimeter report how its supervisory strategies and policies reflect the activities of authorised firms both within and outside the perimeter.
Government response AI summary
The government response discusses improving consumer support and guiding consumers towards better investment decisions through ongoing work, but does not address the recommendation for the FCA to detail its supervisory strategies in its annual perimeter report.
Read full response →
HM Treasury
14
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
The perimeter is complex, and while the FCA has some limited powers to act beyond the perimeter, it does not have the remit to actively monitor or intervene outside the perimeter. We recognise the need for the FCA to make prioritisation decisions as its resources are finite.
Read more
The perimeter is complex, and while the FCA has some limited powers to act beyond the perimeter, it does not have the remit to actively monitor or intervene outside the perimeter. We recognise the need for the FCA to make prioritisation decisions as its resources are finite.
Show less
Government response AI summary
The government's response focuses entirely on the LCF compensation scheme and complaints, without addressing the conclusion regarding the complexity of the regulatory perimeter or the FCA's limited powers and resources beyond it.
Read full response →
HM Treasury
15
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
We welcome the ongoing dialogue between the Treasury, the FCA, and other financial regulators on the perimeter, but the failings in the FCA’s regulation of LCF and constant movement of the perimeter are signs that further action is required.
Government response AI summary
The government response provides an update on the individual consideration and resolution of LCF complaints, promising a further update to the Committee by 30 September 2021. It does not address the committee's broader points about ongoing dialogue on the perimeter or the need for further …
Read full response →
HM Treasury
16
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
We therefore reiterate a recommendation made by a previous Treasury Committee, that the FCA be given the formal power and remit to be able to recommend formally to the Treasury changes to the perimeter of regulation, where that would enhance its ability to meet its objectives, in particular to prevent …
Read more
We therefore reiterate a recommendation made by a previous Treasury Committee, that the FCA be given the formal power and remit to be able to recommend formally to the Treasury changes to the perimeter of regulation, where that would enhance its ability to meet its objectives, in particular to prevent consumer harm. The FCA should set out any costs, both to firms and consumers. It would then be for the Treasury to consider such a recommendation promptly. All such recommendations and Treasury responses should be publicly disclosed.
Show less
Government response AI summary
The government details the FCA's existing powers and actions to tackle non-compliant financial promotions and prevent consumer harm, but it does not address the specific recommendation to give the FCA formal power to recommend changes to the perimeter of regulation.
Read full response →
HM Treasury
17
Conclusion
Fourth Report - The Financial Conduct A…
Not Addressed
Both the FCA and the Treasury accept that the scope of the FCA’s remit is broad and continues to increase. The breadth of the scope has had some operational impacts on the FCA’s ability to carry out its work. We note that the Treasury’s intention is to consider the scope …
Read more
Both the FCA and the Treasury accept that the scope of the FCA’s remit is broad and continues to increase. The breadth of the scope has had some operational impacts on the FCA’s ability to carry out its work. We note that the Treasury’s intention is to consider the scope when the ongoing FCA transformation programme has been delivered; but the timescales for delivery of the transformation programme are unclear.
Show less
Government response AI summary
The government response discusses concerns about Financial Promotion Order exemptions for high-net-worth and sophisticated investors, highlighting them as a vulnerability requiring legislative changes. It does not address the committee's conclusion regarding the FCA's broad remit or the timescales for its transformation programme.
Read full response →
HM Treasury
18
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
If the FCA Board were to set itself an end date for the transformation programme, as we recommend in Chapter 2, the Treasury would have a clear indication of when to begin its consideration of the scope of the FCA’s remit.
Government response AI summary
The government's response discusses online financial scams and Google's recent policy changes, and the need for legislation, completely failing to address the recommendation regarding the Treasury's consideration of the FCA's remit linked to the FCA's transformation programme.
Read full response →
HM Treasury
19
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
Any changes to the perimeter must be matched with appropriate changes in the FCA’s resources, and the FCA should republish its priorities. The Treasury should publish a policy statement on how it will analyse changes to the FCA’s perimeter and what factors it will take into account.
Read more
Any changes to the perimeter must be matched with appropriate changes in the FCA’s resources, and the FCA should republish its priorities. The Treasury should publish a policy statement on how it will analyse changes to the FCA’s perimeter and what factors it will take into account.
Show less
Government response AI summary
The government's response focuses on ongoing work with online platforms to combat financial scams and the Online Safety Bill, rather than addressing the committee's specific recommendation regarding FCA resources and the Treasury's perimeter policy statement.
Read full response →
HM Treasury
20
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA recognises that it has a statutory duty to protect customers from fraud. In the case of LCF, the regulator fell short, due to a culture that saw fraud as principally a matter for the police, and its lack of enthusiasm to look beyond the perimeter. Dame Elizabeth recommended …
Read more
The FCA recognises that it has a statutory duty to protect customers from fraud. In the case of LCF, the regulator fell short, due to a culture that saw fraud as principally a matter for the police, and its lack of enthusiasm to look beyond the perimeter. Dame Elizabeth recommended that “the FCA should ensure that its training and culture reflect the importance of the FCA’s role in combatting fraud by authorised firms.” We note the steps the FCA has taken to address the culture of dealing with fraud, including training staff and launching another phase of its Scamsmart campaign. (Paragraph 122) The Financial Conduct Authority’s Regulation of London Capital & Finance plc 51
Show less
Government response AI summary
The government welcomes the report, repeats its apology for LCF failures, and states it has accepted and is implementing Dame Elizabeth Gloster's recommendations, including staff training and strengthening processes, with an update already published to the Committee.
Read full response →
HM Treasury
21
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
The FCA should develop a strategy for how it will approach fraud risks that are outside the perimeter of regulation but involve authorised firms. That strategy should be set out in the next perimeter report.
Government response AI summary
The government commits to developing a strategy for tackling fraud risks outside the regulatory perimeter but involving authorised firms, improving partnerships, and publishing details of this work in the next perimeter report.
Read full response →
HM Treasury
22
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA’s work to prevent fraud is done in partnership with other bodies such as the National Crime Agency and Serious Fraud Office. But the police have limited resources and personnel devoted to tackling fraud, and the FCA currently does not have the full powers of a law enforcement body.
Read more
The FCA’s work to prevent fraud is done in partnership with other bodies such as the National Crime Agency and Serious Fraud Office. But the police have limited resources and personnel devoted to tackling fraud, and the FCA currently does not have the full powers of a law enforcement body.
Show less
Government response AI summary
The government acknowledges the seriousness of fraud and is developing an ambitious Fraud Action Plan through the Home Office, which will consider potential legislative or regulatory changes after the 2021 Spending Review.
Read full response →
HM Treasury
23
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
There may be scope for the Government to consider whether the FCA should be given more powers to enable it to investigate fraud and financial crime. We will continue to consider this as part of our Economic Crime inquiry.
Government response AI summary
The government states its serious commitment to tackling fraud through cross-government work and the Home Office's upcoming Fraud Action Plan, which will consider potential legislative or regulatory changes.
Read full response →
HM Treasury
24
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The unusual way in which LCF used mini-bonds and the high level of risk associated with any such investments highlight the need for the Treasury’s intervention. We welcome the Treasury’s ongoing consultation on the regulation of non-transferable debt securities but note the delay in its launch.
Read more
The unusual way in which LCF used mini-bonds and the high level of risk associated with any such investments highlight the need for the Treasury’s intervention. We welcome the Treasury’s ongoing consultation on the regulation of non-transferable debt securities but note the delay in its launch.
Show less
Government response AI summary
The Treasury confirmed that its consultation on non-transferable debt securities (NTDS) has closed and it aims to publish its response and introduce legislation in the autumn.
Read full response →
HM Treasury
25
Recommendation
Fourth Report - The Financial Conduct A…
Deferred
In light of the recent failings of several mini-bond issuers and the nature of the existing regulatory arrangements, the Treasury should proceed with its analysis as soon as the consultation on the regulation of non-transferable debt securities closes, and it should aim to publish the outcome by the end of …
Read more
In light of the recent failings of several mini-bond issuers and the nature of the existing regulatory arrangements, the Treasury should proceed with its analysis as soon as the consultation on the regulation of non-transferable debt securities closes, and it should aim to publish the outcome by the end of September 2021. In publishing its response, it should also publish a way forward that can be implemented rapidly. (Paragraph 139) Consumer responsibility and compensation
Show less
Government response AI summary
The Treasury aims to publish its response to the consultation on non-transferable debt securities and bring forward plans for legislation in the autumn, following the consultation's closure in July 2021.
Read full response →
HM Treasury
26
Recommendation
Fourth Report - The Financial Conduct A…
Acknowledged
The FCA should consider how it can improve its customer information so as to help equip customers with the ability to deal with the important financial decisions that they will have to take, and the risks that are attached to those decisions.
Government response AI summary
The government acknowledges the need to improve consumer support for financial decisions, stating it is engaged in ongoing work with stakeholders to address regulatory barriers and develop varied services, including engagement with MaPS.
Read full response →
HM Treasury
27
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
The collapse of LCF brought about a huge degree of uncertainty for bondholders, some of whom were faced with an anxious wait for the publication of Dame Elizabeth’s report and further details of the Government’s compensation scheme. We welcome the approach that the Treasury has taken to compensate LCF bondholders, …
Read more
The collapse of LCF brought about a huge degree of uncertainty for bondholders, some of whom were faced with an anxious wait for the publication of Dame Elizabeth’s report and further details of the Government’s compensation scheme. We welcome the approach that the Treasury has taken to compensate LCF bondholders, a scheme that we believe will provide substantial assistance to a very large proportion of those who have lost out and who have not qualified under other forms of compensation available. The Government has taken a reasonable approach in striking the balance between consumer responsibility for their investment decisions and recognising the FCA’s failure to discharge its functions in respect of LCF such that it fulfilled its statutory objectives. We support the principle of the Bill to provide compensation to LCF bondholders.
Show less
Government response AI summary
The government acknowledged the Committee's support for the LCF compensation scheme, detailing that the Treasury is progressing work with the FSCS, who aims to pay eligible bondholders within 6 months of Royal Assent.
Read full response →
HM Treasury
28
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
The Government has taken a positive step by introducing the primary legislation necessary to establish the LCF compensation scheme. If the Bill has a successful passage through Parliament, the Treasury should ensure a smooth running of the compensation scheme, without any further delays, making sure that eligible LCF bondholders are …
Read more
The Government has taken a positive step by introducing the primary legislation necessary to establish the LCF compensation scheme. If the Bill has a successful passage through Parliament, the Treasury should ensure a smooth running of the compensation scheme, without any further delays, making sure that eligible LCF bondholders are clear about the process, and can receive payment as soon as practicable.
Show less
Government response AI summary
The Treasury is progressing work on LCF compensation scheme rules with the FSCS, which is committed to ensuring payments to eligible bondholders within six months of the Bill's Royal Assent.
Read full response →
HM Treasury
29
Recommendation
Fourth Report - The Financial Conduct A…
Accepted in Part
We note that there are other ongoing discussions and channels by which LCF bondholders can seek compensation, such as through the FCA complaints scheme 52 The Financial Conduct Authority’s Regulation of London Capital & Finance plc and through LCF administrators. The Treasury and the FCA should ensure that these discussions …
Read more
We note that there are other ongoing discussions and channels by which LCF bondholders can seek compensation, such as through the FCA complaints scheme 52 The Financial Conduct Authority’s Regulation of London Capital & Finance plc and through LCF administrators. The Treasury and the FCA should ensure that these discussions and channels are coordinated to the best extent possible, in order to prevent any detriment to customers. The Government should ensure that it is satisfied that the FCA’s complaint scheme is working appropriately. In our work scrutinising the FCA, we will consider the results of the ongoing consultation on the regulators’ complaints scheme.
Show less
Government response AI summary
The Treasury is ensuring the LCF compensation scheme is coordinated with the administration process and the FCA complaints scheme. While acknowledging issues with the FCA's complaints handling, the government notes the FCA's improvement plans and commits to monitoring their delivery, stating the scheme's design is …
Read full response →
HM Treasury
30
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
The FCA should provide us with an update on its resolution of LCF complaints by 30 September 2021. (Paragraph 160) Financial promotions
Government response AI summary
The government commits to providing an update to the Committee on the FCA’s resolution of LCF complaints by 30 September 2021, noting that 98% of complainants had already received a response by 23 August 2021.
Read full response →
HM Treasury
31
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
We welcome the Treasury’s ongoing consultation on approving financial promotions. We trust that the results of the consultation will be published swiftly and the conclusions implemented as soon as possible.
Government response AI summary
The government confirmed it published the response to its consultation on 22 June 2021 and intends to bring forward legislation to establish a regulatory gateway for financial promotion approval when parliamentary time allows.
Read full response →
HM Treasury
32
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
We welcome the steps taken by the FCA to change its approach to financial promotions, as well as introducing the “use it or lose it” programme. In future, the FCA should be more interventionist and should make more frequent use of its powers rather than maintaining a culture of risk …
Read more
We welcome the steps taken by the FCA to change its approach to financial promotions, as well as introducing the “use it or lose it” programme. In future, the FCA should be more interventionist and should make more frequent use of its powers rather than maintaining a culture of risk aversion.
Show less
Government response AI summary
The government detailed extensive ongoing efforts and specific measures taken since 2019, including establishing a Joint Supervision and Enforcement Team, using formal powers more assertively, and developing a new data-led strategy for financial promotions, to be more interventionist and proactively disrupt harm.
Read full response →
HM Treasury
33
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
The Financial Promotion Order would benefit from reform due to the increasing risks associated with the exemptions that allow customers to self-certify as high net worth or sophisticated.
Government response AI summary
The government stated it keeps the legislative framework for financial promotions under review, has commenced work with the FCA to review exemptions for high net worth and sophisticated investors, and intends to bring forward legislation to establish a regulatory gateway for promotion approval.
Read full response →
HM Treasury
34
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
The Treasury should—as a matter of priority—re-evaluate the Financial Promotion Order exemptions to determine their appropriateness and consider what changes need to be made to protect consumers.
Government response AI summary
The government states it is already reviewing Financial Promotion Order exemptions, specifically for high net worth and sophisticated investors, and plans to bring forward legislation to establish a regulatory gateway for approving financial promotions when parliamentary time allows.
Read full response →
HM Treasury
35
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
It is very disappointing to see that despite the numerous representations made to the Government, measures to address fraud via online advertising have not been included in the draft Online Safety Bill. This is a missed opportunity to act and potentially help prevent another LCF-type event. The increasing frequency of …
Read more
It is very disappointing to see that despite the numerous representations made to the Government, measures to address fraud via online advertising have not been included in the draft Online Safety Bill. This is a missed opportunity to act and potentially help prevent another LCF-type event. The increasing frequency of fraudulent activity online that leads to scams and financial harm is alarming, and the Government must intervene as a matter of urgency.
Show less
Government response AI summary
The government confirms that fraud will be included in the scope of the Online Safety Bill, directly addressing the committee's concern. It also outlines further actions including a DCMS consultation on online advertising, FCA investigations into platforms' compliance, and an upcoming Home Office Fraud Action …
Read full response →
HM Treasury
36
Conclusion
Fourth Report - The Financial Conduct A…
Acknowledged
We note the Government’s intention to consider additional legislative and non- legislative solutions to tackle fraud via advertising, emails or cloned websites, including the online advertising programme, but we believe quicker action is required to protect consumers and help the FCA address the issue adequately.
Read more
We note the Government’s intention to consider additional legislative and non- legislative solutions to tackle fraud via advertising, emails or cloned websites, including the online advertising programme, but we believe quicker action is required to protect consumers and help the FCA address the issue adequately.
Show less
Government response AI summary
The government response details multiple initiatives to tackle online fraud, including the inclusion of fraud in the Online Safety Bill, upcoming DCMS consultation on online advertising, FCA action on financial promotions, and the Home Office developing a Fraud Action Plan to be published after the …
Read full response →
HM Treasury
37
Recommendation
Fourth Report - The Financial Conduct A…
Accepted
We recommend that the Government should include measures to address fraud via online advertising in the Online Safety Bill, in the interests of preventing further harm to customers being offered fraudulent financial products.
Government response AI summary
The government confirms that fraud will be included within the scope of the Online Safety Bill to protect against scams on social media and dating sites. It also highlights further considerations for tougher online advertising regulation and ongoing work to combat fraud.
Read full response →
HM Treasury
38
Recommendation
Fourth Report - The Financial Conduct A…
Not Addressed
Pending any legislative changes, the FCA should continue to work with online platforms such as Google to remove misleading and fraudulent adverts as quickly as possible, to protect customers from scams. (Paragraph 193) The Financial Conduct Authority’s Regulation of London Capital & Finance plc 53
Read more
Pending any legislative changes, the FCA should continue to work with online platforms such as Google to remove misleading and fraudulent adverts as quickly as possible, to protect customers from scams. (Paragraph 193) The Financial Conduct Authority’s Regulation of London Capital & Finance plc 53
Show less
Government response AI summary
The government's response focuses on the inclusion of fraud in the Online Safety Bill, upcoming consultations on online advertising, and a wider Fraud Action Plan, but does not explicitly state that the FCA will continue working with platforms to remove misleading adverts quickly.
Read full response →
HM Treasury