Greetings. Mike here with another Wednesday Update. Slightly different this time round not only because I’ve been handed the baton, but assuming you are reading this on Wednesday lunchtime we’ll be well into our annual Edinburgh event. Check your social media channel of choice for some highlights, and if you are in the audience don’t forget to come and say hello.
Last Friday it was the turn of Platform CEOs to have their weekend ruined, with the now traditional Friday afternoon publication of a Dear CEO letter. Picking three quotes at random shows the breadth of topics and stark language. “We expect you to implement and adhere to the new rules to make transfers simpler”. “We also expect platforms to continue to make progress in making it easier for consumers to compare the costs of different options”, and finally “We expect accountable individuals under the SM&CR to be responsible for operational resilience, prioritising plans and investment choices based on their wider potential impact”. Lots for everyone to ponder.
If you are thinking you’ve heard all of this before, you’d be right. The above quotes are all in fact taken from the February 2020 Dear platform CEO letter, not the 2023 one. Three years later we get an interesting new remix, a couple of emerging harms and a dash of Consumer Duty throughout, but for several topics, transfers and cost and charges disclosures most notably, it really is the same old.
Or is it? Without the dash of Consumer Duty it really would feel like a cut and paste from previous letters, but with CD now two months old (they grow up so fast) this gives the regulator a whole new set of sticks to beat the industry with. Transfers taking ages? Pow…you are not enabling retail customers to pursue their financial objectives. Costs not properly disclosed? Consumer Understanding outcome stick whack. And platform fees too high? Fair value stick whack thwack whack.
The emerging harms both carry on with this theme. However your favourite platforms are handling cash interest they must consider their approach as part of their fair value assessments, and they also need to disclose the impact to the customer in line with the requirements of the consumer understanding outcome. For the second emerging trend, trading apps that can encourage risky short-term trading, clear target markets, monitoring of customer outcomes and again, hitting the consumer understanding outcome are required. Considering the dreadful consequences these apps have been seen to have in the States, this regulatory safety net is long overdue.
Repeating what I’ve already said, Consumer Duty is the key here. The 2023 letter states “we will be undertaking proactive work on fair value and transparency of costs and charges, with an immediate focus on retention of accrued interest payments on customers’ cash balances.” With CD now live they expect “this to manifest into positive changes in firms’ fees and charges, including clear disclosures to ensure fair value and transparency, and to promote and support customer understanding.” If that happens, and if the speed of transfers improve, then it really will have been a positive step forward. If not, and in particular if the new sticks are not used in anger, then I fear the 2024 letter will be more of the same.
IF ONLY I COULD KEEP TRACK OF ALL THIS REGULATORY CHANGE
If you think this a lot of regulatory detail to be wading through, you’d be right. Keeping up with policy stuff from the FCA, government and others can sometimes feel like a full-time job. Fortunately, at the lang cat our recently formed regulatory and public affairs team, comprising of Tom McPhail, Alison Gay and some bloke called Mike Barrett do exactly that. And our new service, Tracker, will show you exactly what we get up to.
Tracker helps you monitor and stay on top of policy and regulatory change. It includes things like the latest consultations, policy papers, proposals and generally the developments that those working in financial services need to keep an eye on. We will do all the research and collating of what you need to know and when and provide analysis along the way about what any proposed changes might mean for you. We’ve got you covered.
Advisers who subscribe to Analyser get this new service for no additional charge. If you are a provider subscriber, please contact us for more information.
750 WORDS MIKE. DO SOME LINKS AND GET OUT OF HERE….
Links below and finally, music. I heard this over the weekend for the first time in ages and it made me smile. One of the greatest remixes ever.
Boss man will be back next week (I expect) with highlights from Home Game 3. Until then, be nice.