The discussion paper (DP) seeks views on 3 areas where changes could be made to address harm to consumers from investing in inappropriate high-risk investments. The 3 areas of focus are the classification of high-risk investments, the segmentation of the high-risk investment market and the responsibilities of firms which approve financial promotions.
The feedback to this DP will help shape the rules the FCA plans to consult on later in the year, ensure they are feasible for firms to implement and that they have the intended impact.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA said:
‘We have been clear that we want to deliver a consumer investment market that works well for the millions of people who stand to benefit from it. We are concerned that too often consumers are investing in high-risk investments they don’t understand and can lead to significant and unexpected losses.
‘We have already taken action by banning the mass-marketing of speculative mini-bonds. We continue to address harm in this market through our ongoing supervisory and enforcement action but recognise more needs to be done. Our latest proposals would further reduce the risk of people taking on inappropriate, high-risk investments that don’t meet their needs.’
Preventing harm in the consumer investment market is a priority for the FCA. Recent research it commissioned on self-directed investors identified a growing trend of retail investors choosing to invest in inappropriate high-risk investments that do not meet their savings goals and investment needs. This can lead to significant and unexpected investment losses. The research found that over 4 in 10 (45%) did not view ‘losing some money’ as a potential risk of investing.
The discussion paper focuses on 3 main areas where the FCA intends to strengthen its financial promotion rules to help investors make more effective decisions that meet their savings and investment needs:

The classification of high-risk investments: The FCA’s classification of investments determines the level of marketing restrictions that applies to that investment. The FCA is seeking views on whether more types of investments should be subject to marketing restrictions and what marketing restrictions should apply, for example for equity shares and Peer-to-Peer agreements.
Further segmenting the high-risk investments market: The FCA is concerned that despite its existing marketing restrictions, too many consumers are still investing in inappropriate high-risk investments which do not meet their needs. Therefore, the FCA plans to strengthen its rules to further segment high-risk investments from other investments and is seeking views on how best to achieve this. The FCA is considering what improvements could be made to risk warnings, which are often perceived as white noise to many investors and often do not convey the genuine possibility of an investment loss. Other suggestions in the paper include requiring consumers to watch educational videos or to pass an online test to demonstrate sufficient knowledge about financial products. This could help prevent consumers from simply clicking through and accessing high-risk investments that they do not understand.
The approval of financial promotions: Firms which approve financial promotions for unauthorised persons play a key role in ensuring those promotions meet the standards we expect. The FCA is seeking views on whether there should be more requirements for these firms to monitor a financial promotion on an ongoing basis, after approval, to ensure it remains clear, fair and not misleading.

The FCA is inviting feedback on its discussion paper by 1 July 2021. It will consider the feedback received alongside further analysis and testing, and intends to consult on rule changes later this year. The feedback received is important to help it understand what is feasible for firms to implement, how to strike the right balance between protecting consumers and consumers taking responsibility for their own actions, and identifying any unintended consequences of these changes.
The FCA will publish a full response to its CFI on consumer investments, alongside the next steps on its wider consumer investments strategy, later in the year.
Notes to Editors

For the purpose of this paper, the FCA considers any products subject to a marketing restriction under its rules to be a ‘high-risk investment’
Discussion Paper 21/1: Strengthening our financial promotion rules for high-risk investments and firms approving financial promotions
Call for Input: Consumer Investments
The FCA has already taken action to improve the market by permanently banning the mass-marketing of speculative illiquid assets (including speculative mini-bonds) to retail investors. The FCA recently launched a digital disruption campaign to prevent investment harm. The campaign uses online advertising to disrupt investors’ journeys and drive them to the high return investments webpage – which covers key questions consumers should ask before investing. The FCA is also designing a new campaign to address the harm caused from consumers investing in high-risk, high-return, illiquid investments that may not be suitable for their needs.
The FCA carries out extensive work to ensure compliance with its rules, including checks at the gateway, ongoing supervision and enforcement action.

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The FCA also found that Mr Varley failed to act with integrity as a Director (CF1) and Compliance Oversight (CF10) controlled function (CF) holder and is therefore not a fit and proper person.
Mark Steward, Executive Director of Enforcement and Market Oversight said: ‘Mr Varley deliberately lied about his position and his misconduct continued for a number of years, potentially creating a risk of loss to customers. He continued to abuse his position of trust as a Director, proving that he lacks both honesty and integrity and poses a serious risk to consumers and to confidence in the financial system. Today’s ban should act as a deterrent to other senior individuals who abuse a position of trust.’
Mr Varley worked at Dickinsons Financial Management Limited (Dickinsons), a small financial advisory firm where he held a customer adviser function (CF30) until January 2013. Following the Retail Distribution Review, the FCA introduced rules requiring that advisers hold a minimum level of qualification to be approved for a CF30 function. Although his CF30 approval was removed in January 2013 by the FCA at his request, Mr Varley still continued to advise retail customers between January 2013 and September 2017.
Mr Varley repeatedly misled his fellow directors by providing false information in board meetings about sitting and passing the relevant exams required for him to continue advising, and falsely claiming that he had applied to the FCA for approval as a CF30 but that the FCA had not updated the Financial Services Register. In fact, no application was ever made. Mr Varley also knowingly facilitated the provision of false information to Dickinsons’ PII (professional indemnity insurance) providers about the qualifications he held, in order to be insured to advise retail investors after 2013.
As part of his CF10 function, Mr Varley was required to provide regulatory information to the FCA in Dickinsons’ Retail Mediation Activities Returns. In discharging this responsibility, Mr Varley knowingly misled the FCA into believing that only 1 person at Dickinsons was providing retail investment advice to customers instead of 2. He also provided explanations to the FCA that were untrue to conceal his own misconduct.
The false information provided to Dickinsons’ PII providers and to the FCA created the potential risk of loss to consumers, as Mr Varley was not qualified to provide the advice and, subsequently, his advice was deemed to be uninsured. Mr Varley’s actions led to Dickinsons going into voluntary liquidation and being dissolved.
Notes to editors 

Final Notice 2021: Simon John Varley
On 31 December 2012, the FCA introduced new requirements for firms giving personal recommendations. These requirements meant many firms had to change the way they charged customers for advice and change the way they described and delivered their services.

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As part of the campaign, the FCA has published materials for firms to share with employees, as well as using its events to highlight the campaign.
It has also produced a digital toolkit for industry bodies, consumer groups and whistleblowing groups to encourage individuals to have confidence to step forward. 
Whistleblowers that report to the FCA will have a dedicated case manager. They can meet with the FCA to discuss their concerns and can receive optional regular updates throughout the investigation. Every report the FCA receives is reviewed and the FCA will protect individual whistleblowers’ identities. 
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA said: ‘We want all whistleblowers to feel welcomed by us and to feel safe because of us.
‘We listen to all whistleblowers and, if they shine a light on serious misconduct, we want to make sure we act responsibly. When whistleblowing works well it helps consumers, markets and firms and keeps everyone safe and that is our aim.’
Speaking to the FCA 
The FCA has been investing in increased resourcing to support whistleblower interaction, including increasing the headcount on its whistleblowing team. This specialist team are trained to debrief and interact directly with whistleblowers, as well as liaising with various departments across the organisation.  
As part of the FCA’s aim to provide a smoother internal process, it has introduced a mandatory e-learning module for all staff, to help identify potential whistleblowers and make sure any intelligence received by the FCA is dealt with correctly and that identities are protected. 
The FCA’s website has been updated to provide more comprehensive information for potential whistleblowers and the Whistleblowing team are developing a confidential web form, increasing the ways in which whistleblowers can make disclosures to them. 
Individuals can choose to remain anonymous, and many people do. If they do share any information about themselves, then the FCA will keep this safe. This includes not confirming the existence of a whistleblower when making enquiries, unless legally obliged to do so. 
FCA whistleblowing rules
The FCA would like to remind firms that culture and governance remain a key priority for the FCA. Its whistleblowing rules require firms to have effective arrangements in place for employees to raise concerns, and to guarantee these concerns are handled appropriately and confidentially. 
The FCA introduced a requirement for firms to appoint a whistleblowers’ champion to make sure there is senior management oversight over the integrity, independence and effectiveness of the firm’s arrangements. These include those arrangements designed to protect whistleblowers from victimisation, as well as overseeing the preparation of an annual report to the firm’s governing body.

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Following an investigation, the FCA found that Mr Horn, an experienced trader, engaged in market abuse by executing trades with himself in the share McKay Securities Plc (‘McKay’).
This practice known as ‘wash trading’ involved Mr Horn intentionally placing buy orders in McKay shares that traded with his existing sell orders (and vice versa). In total, Mr Horn executed 129 wash trades during the period 18 July 2018 to 22 May 2019. Mr Horn entered orders into the market in such a way as to try and avoid anyone detecting that he was wash trading.
Mark Steward, Executive Director of Enforcement and Market Oversight, said:
‘Mr Horn’s manipulative trading was serious. Wash trading is a form of manipulation which undermines market efficiency and integrity.
‘The FCA has also developed ways to detect this type of manipulation as well as other forms of market abuse and, as this case demonstrates, we will take robust action against such abuse.’
McKay was a corporate client of Stifel. Mr Horn’s motive for executing the wash trades was to ensure that a minimum number of shares were traded in McKay each day, which he believed was a requirement to ensure that McKay remained in the FTSE All Share Index. Mr Horn thought that by assisting McKay to remain in the FTSE All Share Index he would benefit the relationship between Stifel and its client.
Through his wash trading Mr Horn gave false and misleading signals to the market as to demand for and supply of McKay shares. His actions resulted in other market participants seeing what they believed to be legitimate trades in McKay occurring. In addition, the wash trades artificially inflated end of day trading volumes reported to the market. Mr Horn was aware of the risk that his actions might constitute market manipulation but recklessly went ahead with those actions anyway.
Mr Horn demonstrated a high level of cooperation during the investigation. In particular, he made significant admissions during an early interview with the FCA. As a result, Mr Horn’s financial penalty was reduced by 25%. In addition, Mr Horn received a further 30% settlement discount.
The FCA considers that the fine and the prohibition imposed reflect the serious nature of the breach set out in the Final Notice and should act as a deterrent to other market participants.
Notes to editors
Final Notice for Adrian Geoffrey Horn
‘Wash trading’ involves trading where there is no change in ownership or risk and can create a false or misleading impression to other market participants as to the price, demand or supply of a security.

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Premier FX was authorised by the FCA under the Payments Services Regulations to perform the regulated payment service of money remittance. Money remittance is the transfer of money without any payment account being created in the name of the customer, and where the funds are solely received to transfer a corresponding amount to a third party.
In reality however, Premier FX seriously misled its customers by informing them that it was able to hold their funds indefinitely, that their funds would be held in secure, segregated client accounts and that their funds would be protected by the Financial Services Compensation Scheme.
None of these claims were true. Because of these misrepresentations, many customers paid their funds to Premier FX (some customers paid hundreds of thousands of pounds sterling, euros or US dollars) to hold without an onward transfer instruction on the basis that the funds would be repayable on demand.
Premier FX failed to comply with requirements relating to the safeguarding of funds and the use of payment accounts imposed on it under the Payment Services Regulations 2009 and the Payment Services Regulations 2017 between 2013 and 2018. An authorised payment institution like Premier FX should not hold a customer’s funds unless accompanied by a payment order for onward transfer, either to be executed immediately or on a future date.
Premier FX was not permitted to hold its customers’ funds indefinitely as this may have amounted to accepting deposits which is separately regulated under the Financial Services and Markets Act 2000.
The FCA would have imposed a substantial financial penalty on Premier FX because of the serious failings in this case. However, the FCA has considered that a public censure is a more appropriate sanction given that Premier FX is in liquidation and that there is a significant liability to its creditors, most of whom are consumers.
Peter Rexstrew, the sole shareholder and director of Premier FX, controlled all aspects of its operations. He restricted access to Premier FX’s bank accounts and, save for brief periods when he was incapacitated through illness, dealt with nearly all of the transactions out of, and between, the accounts. The FCA has not found evidence that any employees were involved in this deception.
Mark Steward, Executive Director of Enforcement and Market Oversight, commented:
‘This has been a complex investigation involving the analysis of hundreds of thousands of transactions across Premier FX’s bank accounts over the course of several years, in a range of currencies and through a number of overseas bank accounts. The investigation was complicated further by a lack of proper records.
‘We may never understand Peter Rexstrew’s motivation for operating Premier FX in this way, using new customers’ funds to pay existing customers or business expenses. Whatever the reasons for his deception, his scheme completely unravelled within a few weeks of his death, leaving a mess for others and losses for customers. Our notice sets out our findings on what happened as a matter of record.’
Peter Rexstrew died on 16 June 2018. His children, Katy Grogan and Charlie Rexstrew, were appointed as directors on 18 June 2018. They, and other Premier FX staff, attempted to continue the business and continued to make payments until it was evident the firm did not hold sufficient moneys to pay or satisfy all customers’ instructions. When an increasing number of customers came forward, they realised that the firm held insufficient funds to repay all customer claims and so they ceased trading and reported the matter to the FCA.
The FCA is acutely aware of the distress to customers following by the firm’s failure and the subsequent losses they incurred.
The FCA is continuing to investigate whether there were breaches of its rules by any other parties and, if so, will take action, including action to recover redress for any breaches that may have caused or contributed to losses to customers.

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The FCA has launched a consultation on how it plans to regulate the pre-paid funeral plans sector. 
In January, the Treasury made legislation bringing the sale and administration of funeral plans within the FCA’s remit, following concerns raised in the media and by consumer groups about the conduct and financial soundness of some pre-paid funeral plan providers. This will happen from July 2022.
The consultation lays out how the FCA will improve standards in the sector. 
The FCA’s proposals intend to ensure that:
products meet the individual needs of consumers – we will ban the sale of products which do not provide for funeral services in almost all circumstances on the individual’s death
plans are sold fairly, including a ban on cold-calling to prevent consumers being pushed into taking out plans which may not be right for them
the price of plans are fairly valued, with firms stopped from using additional fees to drive profits and a ban on commission payments to intermediaries
consumers have access to the Financial Services Compensation Scheme and Financial Ombudsman Service from day one, should things go wrong
Sheldon Mills, Executive Director of Consumers and Competition said: ‘Pre-paid funeral plans can help people and their families to manage the costs of a funeral. It is vital that consumers have confidence that their plan will deliver the funeral they expect at a fair value.  
‘The measures proposed today will help ensure that the industry serves consumers well.  
‘It’s imperative the industry prepares now, ahead of its upcoming entry into financial services regulation.’
What firms must do to prepare
All firms in this sector now need to consider how FCA regulation impacts their business and begin to make the necessary preparations.
Over the coming months, the FCA will be providing a range of help and guidance to assist firms in preparing applications and getting ready to be regulated by the FCA.  
They will need to:
apply directly to the FCA for authorisation from September 2021 or, if appropriate, submit notification to become an Appointed Representative
apply as soon as possible after the application gateway opens in September 2021 – applications made after 1 November 2021 may incur a higher application fee
ensure they meet our standards to be authorised and, once authorised, follow our rules
pay an application fee and then annual fees, based on turnover
Those funeral plan providers that cannot meet the FCA’s standards, set out in this paper, or those which are not authorised before July 2022, are expected to cease trading in relation to funeral plans in an orderly way. This should take place before FCA regulation takes effect. Carrying on regulated business without authorisation after rules take effect is a criminal offence.
The FCA anticipates that the Funeral Planning Authority will continue to regulate providers of prepaid funeral plans registered with them, until FCA regulation begins in July 2022.  
The FCA is asking for feedback on the draft rules and is asking for responses by 13 April 2021.
Notes to editors
Find out more about Funeral Plans and alternative products, including over-50s plans, on the Money Advice Service website.
Funeral plans are products under which a consumer pre-arranges and pre-pays for their funeral with a provider, generally for a fixed cost. The main benefit of the product to consumers is to allow them to arrange the details of, and pay for, their funerals in advance, ensuring that any specific requirements are met and that their families are saved unexpected cost and inconvenience at the time of bereavement.

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As part of its transformation programme to build a data-led regulator able to make fast and effective decisions, the FCA announced a restructure in December. This brought together two supervision divisions with the FCA’s policy and competition functions. Following rigorous and wide-ranging recruitment processes, Nikhil Rathi, Chief Executive of the FCA since October, has now made four further appointments to the FCA’s executive team:
– Stephanie Cohen will be the FCA’s Chief Operating Officer (COO). – Jessica Rusu will join the FCA’s as its first Chief Data, Information and Intelligence Officer (CDIIO). – Sarah Pritchard will become Executive Director, Markets.- Emily Shepperd will take up the newly created role of Executive Director, Authorisations.
Nikhil Rathi, Chief Executive of the FCA, said:
‘I am delighted to be welcoming Stephanie, Jessica, Sarah and Emily into the FCA to be part of our executive leadership team. They bring with them a deep understanding of the consumers we seek to protect, the markets we oversee, and all have track records for operational excellence. As we continue transforming the FCA – building a data-led regulator – their global experience and leadership, drawn from a variety of backgrounds, will be vital in ensuring we can act more quickly to reduce harm to consumers and ensure market integrity.  
‘I also congratulate Clare on her appointment as Director of Market Oversight, a role she takes on at an important time for UK markets as the FCA takes forward the work of Lord Hill’s Listings Review.’
Stephanie, Jessica, Sarah and Emily will sit on the FCA’s Executive Committee, its most senior executive decision-making body. They will join Nikhil Rathi, Chief Executive; Mark Steward, Executive Director of Enforcement and Market Oversight; Megan Butler, Executive Director of Transformation; Nausicaa Delfas, Executive Director of International; Sheldon Mills, Executive Director, Consumer and Competition; Sheree Howard, Executive Director, Risk and Compliance Oversight; and Sean Martin, General Counsel.
The new executive directors and director 
Stephanie will be responsible for the FCA’s operations and business performance, systems and infrastructure, and finances. As COO, Stephanie will play a central part in the FCA’s transformation, taking the lead on operational changes to make the FCA more efficient, dynamic, and technologically driven. Stephanie grew up in Scotland, has an MA from Edinburgh University and is also a qualified accountant.
She brings over two decades of experience in large financial services firms, including 14 years at BlackRock where she was the Global COO for the active equity businesses and the Alpha Strategies division, comprising Active Equities and Fixed Income.   
Stephanie Cohen said:
‘I am truly delighted to be joining the FCA at this pivotal moment. Now more than ever, the FCA has a vital role to play in protecting the interests of consumers, and I can’t wait to get started.’
As CDIIO, Jessica will lead the transformation of the FCA’s use of data, intelligence and information to effectively oversee the 60,000 firms it regulates. Jessica will evolve the FCA’s relationship with big tech companies, fintechs and the wider data science community and champion the FCA’s global Innovate agenda.
Before taking up her current role as Chief Data Officer at Chetwood Financial, a digital challenger bank, Jessica was Senior Director of Finance & Analytics at eBay in Europe where she built out their advanced analytics and customer insight function. She has also worked in credit analytics at Ford Motor Company and in stress testing at GE Capital.   
Jessica Rusu said:
‘I am excited to join the FCA at this time of great transformation to leverage technology and data science to deliver innovation and excellence in regulation, to protect UK customers and help build a robust financial system. I look forward to the FCA continuing to lead in global regulatory innovation.’
Both Stephanie and Jessica will join in June. Given their interlocking remits, they and their teams will be working closely to deliver operational excellence and build the FCA’s data and intelligence analytics capabilities, and the technology and infrastructure that underpin them.
Sarah will be responsible for the delivery of the FCA’s statutory market integrity objective in the combined Supervision, Policy and Competition division. Sarah joins from the National Economic Crime Centre, where she is Director. Before joining the NECC, Sarah’s career involved stints in a range of government departments in legal and operational roles and in risk and compliance at HSBC. She trained as a commercial litigator with Decherts LLP. Sarah will join in June and will work alongside Sheldon Mills, who was appointed Executive Director, Consumers and Competition in December, in leading the Supervision, Policy and Competition division. 
Sarah Pritchard said:
‘I look forward to working with Sheldon and all FCA colleagues to shape the future of financial markets regulation, ensuring that the FCA protects and enhances the integrity of the UK and global financial system.’
Emily will join the FCA in March to oversee Authorisations, which is the gateway for firms and individuals applying to undertake regulated financial services activity. Emily was most recently Director of Customer Services and Change at Aegon UK and before that EMEA COO for Bank of New York Mellon. During her time at BNY Mellon, Emily chaired AFME’s technology and operations group.  
Emily Shepperd said:
‘I am excited to be joining the FCA at such a crucial time for financial services in the UK. I look forward to helping ensure both UK markets and consumers are protected.’
As Director of Market Oversight, Clare is responsible for team overseeing the conduct of participants in the primary and secondary markets through the listing, prospectus and market abuse regimes. Clare has been acting director since December and has worked at the FCA since 2003.

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The Claimants issued a judicial review to challenge a decision by the FCA’s Regulatory Decisions Committee not to stay the regulatory proceedings against the first Claimant.
The Claimants wanted to stay the RDC proceedings pending the outcome of civil proceedings in the Commercial Court brought by the Danish Customs and Tax Administration, Skatteforvaltningen (SKAT), against various Defendants including the second Claimant in the judicial review.
The FCA notes today’s judgment, which orders that the FCA’s regulatory proceedings be stayed pending a judgment by the Commercial Court on certain preliminary issues.
The FCA’s request for permission to appeal was refused by the judge who heard this case. The FCA will be seeking permission to appeal from the Court of Appeal.
Notes to editors
The judgment is available from the BAILII website.
The FCA is progressing enforcement cases relating to international dividend arbitrage trading schemes. The first of the two Claimants in the judicial review is subject to such enforcement proceedings by the FCA.
The hearing on the relevant preliminary issues in the Commercial Court is scheduled for October – December 2021.   
The SKAT Proceedings are comprised of five civil claims in the Commercial Court. SKAT contends that the Defendants engaged in an unlawful trading strategy, resulting in SKAT wrongfully paying out approximately £1.5bn by way of tax refunds. The main trial in these proceedings is scheduled for 2023.
The FCA’s enforcement information guide.

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The schemes were run by Samuel and Shantelle Golding and their companies Digital Wealth Limited also known as Digital Wealth Society (DWS) and Outsourcing Express Limited (OEL) also known as Kerchiing.
Between 2015 and 2017, the schemes alleged to involve the online purchase of wholesale goods from China for onward sale and promised unrealistically high returns, in some cases up to 100% of the amount invested. No significant trading was conducted and the schemes relied on a continuous flow of new investors to fund existing investors’ returns. Samuel and Shantelle Golding admitted to the Court they were personally involved in these contraventions.
The schemes raised just over £15m from over 1,000 individual accounts. The FCA took immediate enforcement action on learning about the schemes and prevented the disposal of the remaining funds. Despite this action, a shortfall of £3,285,413 was identified in the DWS deposit taking scheme and £834,402 in the OEL collective investment scheme.
The FCA has recovered £3,428,612.42, from various bank accounts containing the proceeds of the schemes, which will now be returned to 356 qualifying investors in the DWS scheme and 250 qualifying investors in the OEL scheme.
Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘The FCA took action as soon as it became aware of these illegal schemes, preventing further losses to future investors who would be unable to exit the scheme before it inevitably collapsed. In this case, we managed to save some money for investors: too often it is too late. These firms were not authorised by the FCA and as we always say to consumers, if a scheme looks too good to be true, do not invest.
‘We have worked very hard to identify people eligible to receive compensation from these schemes and are pleased to have been able to recover and return some of their money.

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The guidance aims to drive improvements in the way firms treat vulnerable consumers so that they are consistently able to achieve outcomes that are as good as everybody else. 
People can find themselves in vulnerable circumstances at any time. The FCA’s recent Financial Lives research shows that 27.7 million adults in the UK now have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability. Not all people with these characteristics will suffer harm, but they may limit people’s ability to make reasonable decisions or put them at greater risk of mis-selling. 
Firms should understand what harms their customers are likely to be vulnerable to and ensure that customers in vulnerable circumstances can receive the same fair treatment and outcomes as other customers. This needs to happen through the whole customer journey from product design through to customer engagement and communications.
Nisha Arora, Director of Consumer & Retail Policy said:
‘Protecting vulnerable consumers remains a key focus for us and given the impact of the Coronavirus pandemic, it is more important than ever that firms get this right. The guidance being announced today will help ensure vulnerable consumers are treated fairly and achieve outcomes as good as other consumers.
‘While some firms have made significant progress, we want to see all firms across sectors taking steps to understand and respond to the needs of their customers, particularly those who are most vulnerable to harm.
‘We also remind customers to tell your providers if you have specific needs – whether that’s due to ill health making it difficult to access a service, or a recent emotional or financial shock that is impacting your finances. Doing this will help firms support you.’
Using the guidance the FCA will continue to hold firms to account for their treatment of vulnerable customers. Firms can expect to be asked to demonstrate how their business model, the actions they have taken and their culture ensure the fair treatment of all customers, including vulnerable customers.
Firms are reminded that in treating customers fairly, they should also be aware of their obligations under the Equality Act 2010. It is likely that a breach of the Equality Act, for example failure to provide reasonable adjustments for disabled people, will also be a breach of the FCA’s rules.
The FCA has also published a Memorandum of Understanding (MoU) with the Equality and Human Rights Commission (EHRC). This MoU sets out how the FCA will co-operate and work with the EHRC on equalities issues, to help protect people in financial services markets. Sharing information and expertise will help the EHRC and the FCA to act on equalities issues that arise. 
This MOU will also support the FCA’s efforts as it seeks to eliminate discrimination and advance equality of opportunity in line with its obligations under the Public Sector Equality duty.
Notes to editors:
Read the Finalised Guidance (PDF)
Read the Feedback Statement (PDF)
Read the MOU (PDF)
Financial Lives 2020 survey: the impact of coronavirus
The FCA defines a vulnerable customer is someone who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.
The EHRC is the regulator responsible for enforcing the Equality Act 2010. It safeguards and enforces the laws that protect people’s rights to fairness, dignity and respect. It uses unique powers to challenge discrimination, promote equality of opportunity and protect human rights across Great Britain.

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The proceedings relate to 6 offences of insider dealing, contrary to section 52(1) of the Criminal Justice Act 1993, and 3 offences of fraud by false representation, contrary to section 1 of the Fraud Act 2006.
Mohammed Zina was employed by Goldman Sachs International as an analyst in the Conflicts Resolution Group in their London office. Suhail Zina was a solicitor at Clifford Chance, also in London.
The alleged offending took place between 15 July 2016 and 4 December 2017 and involved trading in the following stocks:
ARM Holdings plc
Alternative Networks plc
Punch Taverns plc
Shawbrook plc
HSN Inc
Snyder’s Lance Inc
The total profit from the alleged insider dealing was approximately £142,000. 
The fraud charges relate to 3 personal loans obtained from Tesco Bank, totalling £95,000. The loans were stated to be for funding home improvements. Instead, the loans funded the alleged insider dealing.
Mohammed Zina and Suhail Zina appeared at Westminster Magistrates’ Court on 16 February 2021. The case was sent to Southwark Crown Court for a Plea and Trial Preparation Hearing on 16 March 2021.
Fraud is punishable by a fine and/or up to 10 years’ imprisonment. Insider dealing is punishable by a fine and/or up to 7 years’ imprisonment.
Notes to editors
Mohammed Zina’s date of birth is 17 June 1988.
Suhail Zina’s date of birth is 10 July 1987.

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The FCA concluded its FLS research in February, and ran an extra survey in October in order to understand the impact of the Covid-19 pandemic on the financial situation of consumers.
According to the October survey, there are now 27.7 million adults in the UK with characteristics of vulnerability such as poor health, low financial resilience or recent negative life events. Having one of these characteristics means that these consumers are at greater risk of harm. This figure is up 15% since the FCA completed its FLS in February, when 24.0 million displayed characteristics of vulnerability.
Commenting on the findings, Nisha Arora, Director of Consumer and Retail Policy at the FCA said:
‘The Financial Lives survey is fundamental to the work we do as a regulator, enabling us to hear directly from consumers across the UK.
‘While there are some positives in the data, many of the findings are worrying. Since the start of the pandemic, the number of people experiencing low financial resilience or negative life events has grown. The pain is not being shared equally with a higher than average proportion of younger and BAME adults becoming vulnerable since March. It is likely the picture will have got worse since we conducted the survey.
‘Vulnerability remains a key focus for the FCA, and has been brought into sharp relief by the pandemic. We continue to work with the wider financial services sector, including businesses, regulators and government to support and protect consumers. We expect to finalise our guidance on how firms should treat vulnerable customers shortly.’
The FCA found that the number of consumers with low financial resilience – meaning over-indebtedness or with low levels of savings or low or erratic earnings – has grown. Over the course of 2020, the number of UK adults with low financial resilience increased from 10.7 million to 14.2 million.
Highlighting the threat to people’s incomes from the pandemic, in October one in three (30% or 15.9m) adults said they expect their household income to fall during the next six months, while 25% (13.2m) expected to struggle to make ends meet.
To cope with the hardships they expected to face, many adults reported that they were likely to cut back on essentials (33% or 17.5m) or to use a food bank (11% or 5.6m); 8.1 million (16%) expected to take on more debt. However, 48% of adults have not been affected financially by Covid-19, and 14% have actually seen an improvement in their financial situation.
Over the course of the pandemic, the FCA has worked with the financial sector and consumer bodies to help protect consumers with measures such as mortgage and credit payment deferrals. The report reveals the impact these measures have had with one in six (17% or 3.2m) mortgage holders having taken up a mortgage payment deferral and four in ten (40%) of them reporting they would have struggled a lot without such measures.
The Financial Lives survey provides insight into the financial lives of consumers, which the FCA and others use to understand the experiences of consumers, including those who are most vulnerable to harm and ensure that the right protections are in place. This is something which has been especially important as the economic toll of coronavirus (Covid-19) has continued to mount.
The FCA surveyed more than 16,000 people between August 2019 and February 2020. This was followed by a subsequent survey, with over 22,000 respondents, focused on the impact of the pandemic on consumers, conducted in October.
Notes to editors
Read the Financial Lives 2020 survey.
The FCA defines a vulnerable customer as somebody who, due to their personal circumstances, is especially susceptible to harm, particularly when a firm is not acting with appropriate levels of care.
Find out more information about the FCA.

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As part of those proceedings, an interim injunction has been secured which freezes the assets of Mr Steel and his partner, Ms Foster, up to the value of £7 million, pending a further hearing.  
The FCA alleges that:
Estate Matters Financial Limited (in liquidation) (EMF) has contravened various requirements under the Financial Services and Markets Act 2000 by providing unsuitable defined benefit pension transfer advice, leading consumers to exit defined benefit pension schemes when it was not in their best interests to do so;
Mr Steel, who was EMF’s director and co-owner, was knowingly concerned in those contraventions. 
It will also be alleged that Mr Steel breached FCA requirements by undertaking a course of conduct which resulted in the removal of EMF’s assets, leaving it unable to meet potential liabilities for unsuitable advice, whilst enabling Mr Steel to retain the significant profits that accrued from the provision of that advice, and from ongoing fees.
An injunction was obtained against Ms Foster on the basis that she may be holding or controlling assets owned by Mr Steel.
The FCA is asking the Court to make a restitution order requiring Mr Steel to compensate consumers who have suffered losses as a result of receiving unsuitable pension transfer advice. No trial date has been set.

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Read the Woolard Review
The Woolard Review sets out how regulation can better support a healthy market for unsecured lending, taking into account the impact of the coronavirus (Covid-19) pandemic, changing business models and new developments in unregulated buy-now pay-later (BNPL) unsecured lending. The Review was commissioned by the FCA Board.
Christopher Woolard, Chair of the Review, said:
‘Most of us will use credit at some point in our lives. So, it’s vital that we have a fair market that works for everyone. New ways of borrowing and the impact of the pandemic are changing the market, with billions of pounds now in unregulated transactions and millions of consumers at greater risk of financial difficulty.
‘Changes are urgently needed: to bring BNPL into regulation to protect consumers; to ensure that there is secure provision of debt advice to help all those who may need it; and to maintain a sustained regulatory response to the pandemic.
‘Alongside these urgent issues the Review sets out a series of recommendations for how the FCA, working with partners, can build a better market in future.’
UK households have nearly £250 billion of outstanding consumer credit debt and more than 42.5 million people used consumer credit in 2019. The Review sets out 26 recommendations to the FCA, sometimes working with Government and other bodies, to make the unsecured credit market fit for the future, including:
The regulation of unregulated buy-now pay-later: BNPL products which are currently exempt from regulation should be brought within the regulatory perimeter as a matter of urgency. The use of BNPL products nearly quadrupled in 2020 and is now at £2.7 billion, with 5 million people using these products since the beginning of the coronavirus pandemic. The emergence and expansion of unregulated BNPL products gives consumers a significant alternative to more expensive credit, but this also comes with significant potential for consumer harm. For example, more than one in ten customers of a major bank using BNPL were already in arrears. Regulation would protect people who use BNPL products and make the market sustainable.
Debt advice: The provision of debt advice will be critical to a sustainable market in the long term, especially through the recovery from coronavirus. Free debt advice services need secure, long-term funding as demand increases to as many as 1.5 million additional cases, following the pandemic. Funding needs to be in place to help the poorest pay fees when applying for debt relief orders.
Forbearance: The FCA responded quickly and effectively in the emergency phase of the pandemic – it needs to sustain this response through the recovery, for example by looking at whether it should revise its rules and guidance to drive greater consistency in the type of support firms offer consumers struggling to pay.
Alternatives to high-cost credit: A sustainable credit market needs more alternatives to high-cost credit. The FCA should work with the Government and Bank of England to reform the regulation of credit unions and Community Development Finance Institutions. More should be done to encourage mainstream lenders into this space.
Outcomes focused: Regulation should be driven by the outcome being sought and how consumers use products in the real world. Regulation should deliver similar protections where consumers face similar harms. In addition to making sure products are affordable, there should be an increased focus on lenders meeting consumers needs’ for as long as they hold the product. The FCA should review repeat lending.
The FCA’s response to the Woolard Review 
The FCA welcomes the Woolard Review report into change and innovation in the unsecured credit market and supports the recommendations directed to the FCA.
The Board agrees that there is a strong and pressing case to bring buy-now pay-later business into regulation.
Charles Randell has written to the Economic Secretary to the Treasury setting out the Board’s view and proposing that the FCA works with the Government to design the appropriate regulation.
Ensuring consumer credit markets work well is one of the FCA’s five priorities. The Board has asked the FCA executive to build the Review’s recommendations into its business planning. The FCA will publish its 2021/22 Business Plan in April, and will give further details of the response to the Review.
Charles Randell, Chair at the FCA, said:
‘Unaffordable credit can damage the lives of people who are already struggling to manage everyday expenses. While we have made progress in reducing unaffordable debt in the years before coronavirus, the pandemic has had an unequal impact on households. Many people have been able to reduce their debts, but some of the poorest in our society have exhausted any savings or run up more debts. All the authorities which cover debt and debt advice must act together systematically to prevent problem debt and to help people get out of a spiral of debt through properly funded debt advice.
‘Regulation should be consistent and the Review shows how we can ensure high standards in consumer credit regardless of the form of credit.
‘The Review has powerful recommendations on debt advice and insolvency including on the IVA market. We are ready to work with other regulators to reduce the harm that IVAs can produce for people that use them, and to reduce the scope for unscrupulous operators to prey on vulnerable indebted people through for-profit debt packaging.
‘As the market innovates and changes, regulators and legislators need to respond quickly and decisively to protect consumers by facilitating credit where it is beneficial and clamping down on it when it does harm. The FCA agrees that there is a strong and pressing case to bring buy-now pay-later business into regulation.’
Notes to editors 
The Woolard Review report.
Letter from Christopher Woolard to HM Treasury on BNPL.
Letter from Charles Randell to HM Treasury on BNPL.
Letter from Economic Secretary to the Treasury to Christopher Woolard.
In September 2020, the FCA Board asked Christopher Woolard to review change and innovation in the unsecured credit market and to report to them in early 2021. The Review is not an evaluation of current FCA consumer credit rules, nor does it introduce any new rules. The work of the review was supported by an advisory panel. This group of individuals brought a variety of perspectives from firms and consumers to help shape the review. Find out more about the review.
Unsecured credit includes products such as credit cards and store cards, overdrafts, personal loans, high-cost-short-term credit, buy now pay later and home collected credit.
Find out more about the FCA’s interventions in the high-cost and consumer credit markets.
The current exclusion of BNPL from regulation is set out in the Financial Services and Markets Act 2000.
The FCA became responsible for the regulation of consumer credit in 2014.

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