REG Reviews
REG Reviews- October 2021
1st October 2021
REG Reviews
1st October 2021
This month we look at FCA fines and the insurance market reaction to new money laundering regulation, along with our usual update around REG and the REG Tech sector…
In the past month The Financial Conduct Authority (FCA) have released their annual report for 2020/21. The report outlined the work they had undertaken in response to the pandemic and key priorities within specific sectors.
One of their key priorities to review is the action the FCA are taking against firms, as the FCA revealed that they imposed financial penalties totalling over £189.8m between 2020/21. Despite the FCA acting against firms, the total number of fines has fallen dramatically for the first time since 2017/18 due to fewer financial penalties being imposed by the FCA. The total has decreased from £224.4 in 2019/20 by 15%, which when compared to 2018/19 the total only decreased slightly by 1% from £227.3 million.
Since the 225% increase in financial penalties in 2018/19, the total number of fines remains in the hundreds of millions. As fewer financial penalties are being imposed could £190m in fines be a potential indicator that financial penalties will return to their 2017/18 state in the coming years.
As Google ad spoofing becomes more prominent fraud threat for the insurance industry, it is “absolutely vital” that the technology sector steps up and “put turn in place interim room medial measures to protect online users” while the governments online safety bill (OSB) progresses, according to Mark Allen, chief fraud and financial crime officer at the ABI.
London-based SME insurtech Superscript has partnered with Amazon Business to launch new tailored online insurance products to Amazon Business Prime members.
According to reports, Amazon chose to collaborate with Superscript, which was founded in 2015, because of the insurtech’s combination of proprietary technology and underwriting expertise. Business Prime members will be able to log in to Superscript using their Amazon account and start the quote journey. The user-friendly solution will reportedly provide them with customised insurance in under ten minutes. Superscript stated that the partnership is a response to the changing needs of UK SMEs following the pandemic.
As soon as the government advice to work from home was lifted the REG team was keen to put in place our ‘way of working for the future’.
As a software business we’ve always understood the benefits and capabilities of communication technology, but what lockdown really showed us was all the positive benefits that flexible location working can bring.
During the lockdown periods we have grown our team and customer base and it seemed fitting for us to base our City ‘hub’ in Lime Street, the home of insurance. Everyone was so pleased to get together we even had them building the furniture!
During May 2021, the FCA published PS21/5 which set out their final rules to address the harm found in the GI Pricing Practices Market Study. On August 18th PS21/11 was published which made small changes to these rules in order to ban dual pricing.
The alterations to the regulations aim to improve the way insurance markets function – the rules ensure that renewing home and motor insurance consumers are quoted prices that are no more than they would be quoted as a new customer through the same channel.
It will also be easier for customers to pause automatic renewals if they please.
Examples of the types of changes made include:
The policy statement will predominantly be of significance to general insurers and intermediaries, life assurers and intermediaries selling pure protection business, trade bodies representing these firms, consumers, and consumer organisations.
Looking to the future, the rules will come in force on 1st October 2021 for the systems and controls, product governance and related glossary changes. On the 1st of January 2022 for the pricing and auto-renewal remedies, premium finance disclosure rules and reporting requirements, and relevant glossary and administrative changes. The 17th of January 2022 marks the date of which the implementation of pricing and auto renewal disclosure are expected.
After 1st January 2022, they must pay redress or provide repayments to those who have experienced delays or negative impacts due to the implementation.
The European Union proposed changing the bloc’s capital rules for insurers by releasing €120 billion to help repair covid-hit economies and to meet climate goals without eroding policyholder protection. Britain has also begun reviewing the capital rules known as Solvency II. It will scrutinise how changes by Brussels could affect London’s competitiveness.The EU said Solvency II would remain the “gold standard”.
The current conflict in Afghanistan has caused the FCA to remind financial firms to guard against money-laundering amid fears of a rise in terrorist activity.
The FCA expect firms to consider the impact of these developments on their anti-money laundering policies and procedures in a risk-based manner, and to take the steps necessary to ensure they continue to meet their legal and regulatory anti-money laundering and reporting obligations.
The 2020 “The Way We Work Now” provided a rational of working that was essential due to the pandemic. REG Technologies along with thousands of other businesses had no other choice but to work from home where they could for a timespan of 18 months.
Upon gathering the responses of employees on their attitudes towards a flexible work arrangement, it was found that though all employees agreed there are benefits in working face to face, 61% of colleagues preferred to work in a hybrid environment with nobody wanting to work in the office all the time.
Earlier this year on the 25th of March 2021, after an application for summary judgment by the Financial Conduct Authority, the high court’s verdict charged Mohammed Fuaath Haja Maideen Maricar (Mr Maricar) – owner of the 24-hour Trading Academy Ltd, to pay the FCA £530,000. This sum will be collected with the aim of issuing a form of compensation to victims of the illegitimate Forex trading business.
Mr. Maricar who runs the 24-hour trading academy Ltd was involved in illegitimate advertising and organising Forex trading Contracts For Difference (CFDs).
Mr Maricar ran a forex ‘trading academy’ on WhatsApp judged by the court to be providing unauthorised investment advice/signals to consumers for a fee. These trading signals were communicated to consumers via the messaging application containing recommendations about contracts for difference (CFDs) relating to currencies and commodities.
The court agreed that Maricar had intentionally disregarded the Financial Services and Markets Act 2000 (FSMA).
Thus far, Mr. Maricar has failed to pay any of the amount charged against him issued by the High Court’s restitution order.
Mr. Maricar’s financial affairs will be evaluated by Official Receiver / bankruptcy trustee for the purpose of attaining any recovered funds being dispensed to his creditors.
Individuals offering Investment advice via WhatsApp and social are believed to amount more than just Mr. Maricar. These services are known to provide ‘trading signals’ which advise clients when they should buy and sell.
Executive Director of Enforcement and Market Oversight at the FCA – Mark Steward, urged: ‘Neither 24HR Trading nor Mr Maricar were permitted to give investment advice which, in this case, included sending trading signals via social media and their conduct risked substantial losses for customers. We urge consumers to make sure they are dealing with FCA authorised firms when seeking investment advice, including offers to provide tips or signals via social media apps, and to stay clear of unauthorised operators like 24HR Trading and Mr Maricar.’
Following on from their first market-wide Culture Dashboard last year, which benchmarked Lloyds starting point and created a marker for their collective progress towards a more inclusive environment. Lloyd’s states that it is “committed to creating an inclusive and diverse culture that attracts, develops and retains the very best talent, so that together we can deliver our purpose of sharing risk to create a braver world”.
