Highlights from this year include us:

responding rapidly to the economic impacts of the pandemic
issuing guidance to firms ensuring 4.5 million payment deferrals for mortgage and credit customers during the pandemic
introducing new rules on home and motor insurance pricing which will save consumers an estimated £4.2 billion over 10 years
continuing to focus on helping to educate and inform consumers on scam prevention
imposing financial penalties totalling £189.8m
ensuring £21.7m in consumer redress for unauthorised investment business and freezing nearly £7m of funds following our enforcement work
working with Government on a range of issues during EU Withdrawal to ensure continuity for consumers, for firms operating in the UK and to protect the integrity of UK markets as far as possible

Charles Randell, Chair of the FCA said:
‘2020/21 was a challenging year for everyone – the people we serve, the industry we regulate, and all of us at the Financial Conduct Authority. We prioritised protecting vulnerable people. We helped millions of people and hundreds of thousands of businesses, large and small, through the Covid-19 pandemic.
‘Our targeted litigation achieved fairer and faster outcomes for business interruption policyholders. We continued our work to reduce the harm from unsustainable credit and unfair pricing. We also made sure that essential financial services weren’t disrupted when the UK left the EU transition period.
‘At the same time, we continued to transform the FCA to better support consumers and markets in a fast-changing digital age. Our new leadership team – led by Chief Executive Nikhil Rathi – is driving forward our programme to become more efficient and effective. Our transformation plans reflect our need to prepare for the future, as well as to learn from the past.
‘Despite the many challenges of the last year, I am confident that, through our transformation plans, we will realise our ambition to be a more agile, preventative and data-driven regulator and reinforce our commitment to demonstrating the public value we create.’
Our Annual Public Meeting will take place on 28 September 2021. It will be a virtual meeting.

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On 30 April 2021, the FCA consulted on proposals to remove the presumption of suspension for SPACs that meet certain criteria which are intended to strengthen the protections for investors, while maintaining the smooth operation of the market. The proposed changes were designed to provide an alternative approach for SPACs that must otherwise provide detailed information about a proposed target to the market to avoid being suspended.
The additional investor safeguards that the FCA will require SPACs to provide in order to benefit from the alternative approach include: 

a ‘redemption’ option allowing investors to exit a SPAC prior to any acquisition being completed
ensuring money raised from public shareholders is ring-fenced
requiring shareholder approval for any proposed acquisition
a time limit on a SPAC’s operating period if no acquisition is completed

SPAC issuers unable to meet the conditions, or those choosing not to, will continue to be subject to a presumption of suspension.
In response to feedback received, the main changes the FCA has made to its original proposals are to: 

Lower the minimum amount a SPAC would need to raise at initial listing from £200 million to £100 million.
Introduce an option to extend the proposed 2-year time-limited operating period (or 3-year period if shareholders have approved a 12-month extension) by 6 months, without the need to get shareholder approval. The additional 6 months will only be available in limited circumstances. This is intended to provide more time for a SPAC to conclude a deal where a transaction is well advanced.
Modify its supervisory approach to provide more comfort prior to admission to listing that an issuer is within the guidance which disapplies the presumption of suspension.

The final rules aim to provide more flexibility to larger SPACs, provided they embed certain features that promote investor protection and the smooth operation of our markets. Private companies listing in the UK via a SPAC will also still be subject to the full rigour of the FCA’s listing rules and transparency and disclosure obligations.
SPACs continue to have risks and remain a more complex investment, which investors should ensure they can adequately assess and understand before investing. This includes understanding their capital structure, such as the risk of conflicts of interest, dilution from shares allocated to sponsors, and assessing the potential value and return prospects of any proposed acquisition target. Investors, particularly individual investors, should carefully consider all available information and risks before deciding whether to invest in a SPAC, regardless of whether a SPAC has structured itself to comply with our new rules and guidance.
The new rules and guidance come into force on 10 August 2021.

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Read the Dear chair letter (PDF)
We have therefore developed a set of guiding principles, informed by broad stakeholder liaison and consumer research, to help firms apply our existing rules. The guiding principles are there to ensure that any ESG-related claims are clear and not misleading, both at the time of application and on an ongoing basis, so that consumers can make informed choices.
We will continue to scrutinise and challenge firms on their fund strategies and disclosures and to ensure that documentation submitted to us for authorisation meets our regulatory requirements.
The guiding principles are relevant where an FCA authorised investment fund pursues a responsible or sustainable investment strategy and claims to pursue sustainability characteristics, themes or outcomes. These principles are targeted at funds that make specific ESG-related claims, not those that integrate ESG considerations into mainstream investment processes.
The guiding principles complement our recent proposals to implement climate-related disclosure rules for asset managers, life insurers and FCA-regulated pension schemes.

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We and the Prudential Regulation Authority (PRA) have sent a Dear Chief Risk Officer letter to firms which shares our observations on good practices related to monitoring and mitigating counterparty credit risks in relation to Delivery versus Payment clients that we encourage firms to incorporate within their control framework. The letter can be found here.

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28 May 2021
Letter to the Treasury Select Committee with an update on the FCA’s investigation
Nikhil Rathi, Chief Executive of the FCA wrote to Rt Hon. Mel Stride MP, Chair of the Treasury Select Committee updating on the progress of our investigation.
16 February 2021
Statement by Mark Steward, Executive Director of Enforcement and Market Oversight, on Woodford Investment Management Ltd and WCM Partners Ltd
This statement sets out our position on specific points we were asked for information on. It followed comments by Neil Woodford on his future business plans.
21 August 2020
Capital distribution and accounting update on LF Equity Income Fund (formerly LF Woodford Equity Income Fund) 
On 18 January 2020, Link Fund Solutions Ltd (LFS), the Authorised Corporate Director of the LF Equity Income Fund (LFEIF), started winding up the fund. LFS considered the winding-up of the LFEIF to be in the best interests of all investors and enabled the return of cash to investors at the earliest opportunity.
15 October 2019
Update on the LF Woodford Equity Income Fund
On 15 October 2019, Link Fund Solutions Ltd (LFS), the Authorised Corporate Director of the LF Woodford Equity Income Fund (WEIF) announced that it would not seek to re-open the WEIF and instead, it looked to wind-up the fund as soon as practicable. LFS considered the winding-up of the WEIF to be in the best interests of all investors and would enable the return of cash to investors at the earliest opportunity. LFS expected the winding-up to begin in mid-January, subject to regulatory approvals. LFS would now request formal approval from the FCA to wind-up the fund.
18 June 2019
Letter to the Treasury Select Committee on LF Woodford Equity Income Fund
Andrew Bailey, Chief Executive of the Financial Conduct Authority wrote to Rt Hon. Nicky Morgan MP, Chair of the Treasury Select Committee. This was in response to Nicky Morgan’s letter on the 10 June 2019 asking for information relating to the suspension of the LF Woodford Equity Income Fund.
5 June 2019
Update on LF Woodford Equity Income Fund
We provided an update following the announcement on 3 June that dealing in the units of the LF Woodford Equity Income Fund had been suspended. This statement provided additional information about the purpose of suspension, our role and to address the decision to list some of the Fund’s assets in Guernsey.

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The defendants (Lee Skinner, Tyrone Miller, Clive Mongelard and Karen Ferreira) failed to satisfy this order. Subsequently, the FCA made applications to the court to petition for the bankruptcy of 3 of the defendants and bankruptcy orders were made against:

Lee Skinner on 4 February 2021
Tyrone Miller on 23 March 2021
Clive Mongelard (aka Clive Harris) on 6 April 2021

The Official Receiver (or a Trustee in Bankruptcy) will investigate the financial affairs of the bankrupts and administer their estates.
The fourth defendant, Karen Ferreira, has made an application to appeal the Judgment against her. Enforcement of this Judgment has been suspended pending the Court of Appeals’ decision.

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The IFPR introduces a new prudential regime for MiFID investment firms regulated by the FCA. It will create a single, proportionate regime that reflects firms’ size and business.
The regime focuses prudential requirements on the potential harm to consumers, clients, and the market. It includes the amount of liquid assets and capital levels a firm should hold to enable it to wind down in an orderly way if required.
The regime should provide for better competition between firms and simplify requirements for new market entrants.
In the second of our 3 consultations we are asking for views on:

remaining aspects on own funds requirements (such as the Fixed Overheads Requirement)
the basic liquid assets requirement
remuneration requirements
risk management – the Internal Capital and Risk Assessment (ICARA) process

See more on our proposed new rules in CP21/7.
We’re asking for feedback on this consultation by 28 May 2021.
About this consultation process
The UK IFPR rules aim to streamline and simplify prudential requirements for solo-regulated UK firms, authorised under the Markets in Financial Instruments Directive (MiFID). 
The first consultation introduced the UK IFPR and focused on the categorisation of investment firms, prudential consolidation, own funds and own funds requirements, and new reporting requirements. We received constructive feedback from across the industry. We will publish the Policy Statement and near-final rules on the first consultation in Q2 2021.
Following this second consultation, we will issue a third consultation in Q3 2021. Policy Statements and rules for our second and third consultations will be published over the course of this year.
We are consulting earlier on more complex issues where possible to allow firms to prepare for the regime, which will be introduced in January 2022.

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We want to remind HCLs and CMCs that we expect them to work together to resolve disputes and disagreements in the interest of their customers and we encourage CMCs and HCLs to agree streamlined claims handling processes with each other, where possible. 
Examples of some of the issues causing tension between CMCs and HCLs are as follows: 

Some HCLs have identified instances of a CMC having presented a claim, but the HCL insists that the customer had never taken out a loan with them. 
HCLs may suspend lending to clients who bring complaints while the claim is being investigated, potentially denying those customers an important source of credit. Faced with this, some customers may withdraw the complaint, possibly resulting in the CMC charging the customer a cancellation fee. 
Some HCLs have expressed concern that CMCs may be using ‘catch all’ letters of authority (LoAs) to pursue claims against more than one HCL rather than ensuring that a customer agrees a separate LoA for each HCL against which a claim is being made. We expect LoAs to provide sufficient information to HCLs to allow them to confirm the CMC has the customer’s consent to act on their behalf. 
Some CMCs have expressed concerns that HCLs’ checking of LoAs may be excessive and deliberately being used to hinder a customer’s ability to progress their complaint using a CMC.
Some HCLs appear to be unwilling to share information efficiently – for example by agreeing streamlined claims processes – with CMCs who are exploring potential claims. This has resulted in some CMCs using full Data Subject Access Requests (DSARs) to get this information from HCLs. 

Where we have investigated complaints from HCL firms about CMCs, we have found that, in most cases, the customer has legitimate grounds to complain and is being represented by a CMC with a valid LoA. However, we remind CMCs that:

They must not make or pursue a claim if they have reasonable grounds to suspect the claim does not have a good arguable base or is fraudulent, frivolous or vexatious. 
They should take all reasonable steps to investigate the existence and merits of each element of a potential claim before making or pursuing a claim.
Their investigations should enable them to make representations when presenting a claim which: substantiate the basis of the claim; relate to the nature of the claim and are specific to the claim; and are not false, misleading or an exaggeration. 

All firms are also reminded of the need to have regard to previous FOS decisions when they are dealing with complaints.
All firms should consider the points in this publication to ensure customers’ interests are not compromised, and to ensure they can demonstrate they comply with our rules as set out in the FCA Handbook.
Last October, we sent a letter to the CEOs of CMCs setting out our supervision strategy for CMCs. We also sent a letter to the CEOs of HCLs in 2019 which set out our view of the key risks that those firms posed, and noted that we had seen increasing numbers of complaints against these firms.

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In our 2019/20 business plan we committed to leading the debate on open finance. We published the Call for Input in December 2019. Following the coronavirus pandemic, we gave stakeholders until October 2020 to respond and we received 169 responses.
Responses show that open finance could potentially offer significant benefits to consumers, including increased competition, improved advice and improved access to a wider and more innovative range of financial products and services.
It would also create or increase risks and raise new questions of data ethics. Appropriate regulation will be essential to managing those risks and giving consumers the confidence to use open finance services.
Reponses also showed that:

Open finance could be a significant undertaking for firms. This is particularly important given the change in operating environment as a result of Covid-19 and its ongoing impact. 
The implementation of open finance should be proportionate, phased and driven by consideration of how consumers will use and interact with it. 
There is a degree of consensus around the key building blocks needed for open finance to develop in the interests of consumers. These include a legislative and regulatory framework, common standards and an implementation entity. 

We will continue to work with the Government to support the design of future Smart Data legislation and support industry-led efforts to develop common standards and roadmaps to open finance. We will also continue to encourage open finance and digital identity propositions to apply for our sandbox and direct support.
The feedback statement includes more detail on respondents’ views and next steps.

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The Finalised Guidance on advising on DB transfers, confirms Draft Guidance published in June 2020. There are some amendments and additions to the Draft Guidance, however we are proceeding with the Guidance largely as consulted. 
It remains our view that it is in the best interest of most consumers to stay in their DB pension. Where an individual seeks advice to transfer, we expect firms to give advice that is suitable and appropriate for their needs and situation. The Finalised Guidance will help firms to identify any weaknesses in their existing processes so that they can put into place an appropriate framework for managing and delivering suitable advice.
The FCA and The Pensions Regulator (TPR) have also published a Guide for Employers and Trustees. This sets out what employers and trustees can do to help members with financial matters, without needing to be authorised by the FCA, including examples to illustrate what they can and can’t do.
The publications are part of our ongoing focus on Defined Benefit pension transfer advice. We are also taking significant supervisory and enforcement action where firms have not met the standards of advice and behaviour expected when giving DB transfer advice.
This is a key part of our work to reduce harm in the consumer investments market, which we identified as a priority over the next 3 years in the 2020/21 Business Plan.

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We have engaged with the firm on several occasions regarding regulatory issues. Based on a range of new information, which heightened our concerns about the financial viability and structure of the business, we took assertive action to protect consumers and ensure that the firm ceased all regulated activities.
We continue to caution potential investors seeking to invest in unregulated entities that offer products with high advertised returns. These investments are often too good to be true. Potential investors should always undertake their own due diligence.
We are unable to comment further at this time.

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This page contains information about enforcement fines published during the calendar year ending 2021. The total amount of fines so far is £52,500.

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The FCA has identified a number of serious concerns around the way that Dolfin operates its business, including the firm’s Tier 1 investor visa business activities and financial crime controls.
The FCA has been working with Dolfin while it took steps to try and address these concerns, including imposing voluntary restrictions on its regulated activities on 24 December 2019, and commissioning a Skilled Persons Review.
However, following the conclusion of the Skilled Persons Review and developments that have taken place since, the FCA has determined that it is appropriate in the interests of protecting the integrity of the UK financial system to stop the firm from carrying out regulated activities and has imposed these restrictions.

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