Finalised Guidance 17/9 (FG17/9) sets out how firms should calculate redress for unsuitable defined benefit (DB) pension transfers. When we published FG17/9 in 2017, we committed in the accompanying Feedback Statement to review the guidance at least every 4 years.
The purpose of this statement is to:

Confirm that we intend to start a periodic review of the redress guidance by the end of 2021.
Set out our expectations of firms while the review is ongoing, including clarifying how firms should be applying or interpreting the guidance in certain areas.

The guidance is used by firms to put consumers back in the position they would have been if they had remained in their DB scheme. It is done by calculating appropriate redress where:

Consumers received advice from the firm which was negligent or contravened relevant requirements.
If the advice had not been negligent or had complied with the relevant requirements, the consumer would not have transferred all or part of the cash value of accrued benefits from the DB pension scheme into the personal pension scheme.

The guidance is based on the approach for the Pensions Review of the 1990s, with the assumptions updated periodically since. The assumptions were last updated when we published FG17/9 in 2017, to take account of changes in the pensions environment.
If we decide to make further changes to the guidance following this review we will consult on these.
Our expectations of firms
While the periodic review is ongoing, firms should continue to:

assess complaints about unsuitable advice fairly, consistently and promptly
calculate any redress due in line with the current approach
comply promptly with any offer of redress accepted by the consumer

As part of the process of preparing for the review, we have identified some areas where firms may also benefit from clarification on how we currently expect redress to be calculated when following the guidance.
Firms should ensure that they, or any actuarial specialist they have outsourced a redress calculation to, take the following actions when determining the amount of redress to offer. Firms not meeting these expectations should make appropriate changes to their processes before issuing any new redress offers.
Where firms have already carried out calculations that do not meet the expectations in our guidance, it may be appropriate to review those calculations and contact consumers where they determine that additional redress may be due.
Allowing for adviser and product charges
Redress should enable consumers to cover the cost of ongoing product charges and regular adviser charges up to normal retirement age, both on the transferred pension and the amount of redress.
For prospective loss cases:

The redress amount should allow for personal pension charges, where known, up to a maximum of 0.75% per year and allow for regular adviser charges on top of this.
The pre-retirement discount rate should be netted down to allow for ongoing product charges and regular adviser charges in percentage terms up to normal retirement age.
Regular adviser charges should be assumed to continue in full, at the current level.
Where firms use any other method to take account of future product and ongoing adviser charges, eg for non-percentage-based charges, they should satisfy themselves that the result achieves the same intent.

For actual loss cases, the personal pension value used for the redress calculation should take account of any adviser charges that were incurred when the pension moved into decumulation at retirement.
Firms should allow for ongoing adviser charges in redress calculations. In line with Principle 6 and the requirement to handle complaints fairly under DISP, firms should not withdraw or change the cost of ongoing advice services without good reason. For example, if a consumer is paying for ongoing advice services prior to a complaint or past business review, it may not be appropriate for the firm to withdraw services or change their cost unless requested by the consumer, and with a clear disclosure of the effect that would have on the consumer’s redress calculation.
Where another firm is giving ongoing advice, firms should allow for ongoing adviser charges. This is to compensate the consumer for charges that they would not have incurred if they had not been advised to leave their DB scheme. 
See FG17/9 paragraph 25 and FG17/9 Feedback Statement page 5.
Impact on consumer’s tax position and/or benefits entitlement
Where redress is paid in the form of a lump sum, it should be adjusted to take account of the consumer’s individual tax position and wider circumstances.
For tax, firms should:

check if the consumer is a non-taxpayer
check if any payment would change the consumer’s marginal tax rate
adjust the redress payment accordingly so that the consumer is not disadvantaged by the payment

For wider circumstances, firms should:

check if the consumer receives means tested benefits
check if any payment would change the consumer’s eligibility for means tested benefits
adjust the redress payment accordingly so that the consumer is not disadvantaged by the payment

See FG17/9 paragraph 5.

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Firms should be aware of the possible impact these events may have on patterns of financial activity when they assess risks related to particular customers and flows of funds.
We expect firms to establish and maintain systems and controls to counter the risk they might be used to further financial crime. Firms must also comply with their legal obligations under the Proceeds of Crime Act 2002 and the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs’ as amended).
In the MLRs provisions related to firm risk assessments (Regulations 18), customer due diligence (Regulation 27-32), enhanced due diligence (Regulation 33) and transaction monitoring (Regulations 28(11)) are particularly relevant in this context. While Afghanistan is not currently listed as a high-risk jurisdiction in Schedule 3ZA of the MLRs, firms are required by Regulation 33(1)(a) to apply risk sensitive enhanced due diligence measures where there is a high risk of money laundering or terrorist financing, Regulation 33(6) sets out factors that firms may use in their assessment including, but not limited to, country risks.
We 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. Specifically, firms should:

ensure that they appropriately monitor and assess transactions to Afghanistan to mitigate the risks if their firm being exploited to launder money or finance terrorism
continue to ensure that suspicious activity is reported to the UK Financial Intelligence Unit (UKFIU) at the National Crime Agency (NCA) and that they meet their obligations under Money Laundering Regulations and terrorist financing legislation

Sanctions are already in place in respect of Afghanistan. Firms should continue to screen against the UK Sanctions List and in particular the regime specific list for Afghanistan. Our expectations of firms systems and controls in relation to compliance with financial sanctions are set out in FCG 6 of our Financial Crime Guide.

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If you have an unresolved complaint:

with PPC where PPC acknowledged receipt of your complaint; or 
with FOS 

then you will not need to resubmit details. Your claim will automatically be included in the scheme. However, if you are unsure you can re-submit your claim. If PPC or the FOS previously rejected your complaint, but you think it should be reassessed, then you will need to make a claim through the scheme.

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In the report on Assessing the resilience of market-based finance published today, the Bank of England has set out the conclusion to the joint review by the Financial Conduct Authority (FCA) and the Bank of England on open-ended investment funds and the risks posed by their liquidity mismatch.
In concluding the review, the Bank and FCA have now put forward a suggested possible framework for how a liquidity classification framework for funds could be designed, as well as considerations around the calculation and use of swing pricing. Recognising the global nature of asset management and of key markets, the purpose of this framework is to guide FCA and Bank of England’s engagement with ongoing international work on open-ended funds.

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A key milestone recommended by the Working Group on Sterling Risk-Free Reference Rates (‘the Working Group’) is to cease initiation of new cross-currency derivatives with a LIBOR-linked sterling leg expiring after 2021, during Q2/Q3 2021, other than for risk management of existing positions. The PRA and FCA expect firms to meet the Working Group’s milestones as set out in the recent ‘Dear CEO’ letter sent to regulated firms.
The Dear CEO letter also noted the PRA and FCA’s expectation that firms further the adoption of RFRs in non-sterling LIBOR currencies, including to cease new use of USD LIBOR as soon as practicable and no later than the end of 2021, in line with the supervisory guidance issued by the US authorities.
On 13 July, the US CFTC’s Market Risk Advisory Committee (MRAC) formally recommended a series of ‘SOFR First’ initiatives in US dollar markets, beginning with interdealer swap markets on 26 July. The MRAC recommendation also includes a subsequent step to replace use of LIBOR with RFRs in cross-currency swaps, identifying a potential date of 21 September.
In order to support markets in building the necessary liquidity to meet these milestones, the FCA and the Bank of England have encouraged UK market participants to support the US-led ‘SOFR First’ initiative on 26 July and have also been engaged with authorities across LIBOR jurisdictions to build the necessary consensus around the subsequent initiative for cross-currency swaps in September. Support for this has also been expressed publicly by the US Alternative Reference Rates Committee and National Working Group on Swiss Franc Reference Rates.
In light of the above, the FCA has engaged with UK market participants, including liquidity providers and interdealer brokers (IDBs), to determine support for a change in the quoting conventions of LIBOR cross-currency swaps in the interdealer market on the proposed date of 21 September.
An FCA survey of UK market participants identified strong support for a change in the interdealer quoting convention, which would see RFRs rather than LIBOR become the default price from 21 September 2021.
The FCA and the Bank of England therefore support and encourage all participants in the LIBOR cross-currency swaps market to take the steps necessary to prepare for and implement these changes to market conventions on 21 September and shift liquidity away from LIBOR to RFRs. In the period leading up to 21 September, the FCA and the Bank of England will continue to engage with market participants and relevant international authorities to determine whether market conditions allow the switch to proceed smoothly.
Background & technical notes
This is an extension of the successful similar changes to the interdealer quoting conventions for linear sterling swaps during Q4 2020, and non-linear sterling derivatives in May 2021, and the upcoming SOFR First initiative on 26 July 2021. Extending this to cross-currency derivatives is intended to increase alignment in RFR markets and help to accelerate a reduction in new LIBOR exposures.
The proposed change will involve IDBs moving the primary basis of their pricing screens and curve construction for cross-currency swaps from LIBOR to RFRs.
Specifically, the quoting conventions in the interdealer market for the GBP, CHF and JPY legs of cross-currency swaps would switch from LIBOR to SONIA, SARON and TONA respectively from 21 September.
Cross-currency swaps with a USD leg would switch from USD LIBOR to SOFR from 21 September when paired with another LIBOR currency i.e. GBP/USD would switch to SONIA/SOFR, CHF/USD to SARON/SOFR and USD/JPY to SOFR/TONA.
If the USD leg is paired with a non-LIBOR currency, or IBOR, then in line with the US authorities’ guidance on the timing for ceasing new use of USD LIBOR, the USD leg would switch to SOFR as soon as is practicable from 21 September and no later than the end of 2021.
FCA survey results
Total respondents: 19
Q1. Do you support a ‘RFR-First’ Convention Switch for the LIBOR cross-currency swaps market? Yes / No.
100% of respondents selected ‘Yes’ to this question.
Q2. If you answered Q1 with Yes: Do you think a switch on 21 September 2021 would be an appropriate date for the interdealer LIBOR cross-currency swaps market?
95% of respondents who selected ‘Yes’ to the first question supported the 21 September date. One market participant was supportive for all LIBOR currencies except one. There was also one abstention.

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A key milestone recommended by the Working Group on Sterling Risk-Free Reference Rates (‘the Working Group’) is to cease initiation of new cross-currency derivatives with a LIBOR-linked sterling leg expiring after 2021, during Q2/Q3 2021, other than for risk management of existing positions. The PRA and FCA expect firms to meet the Working Group’s milestones as set out in the recent ‘Dear CEO’ letter sent to regulated firms.
The Dear CEO letter also noted the PRA and FCA’s expectation that firms further the adoption of RFRs in non-sterling LIBOR currencies, including to cease new use of USD LIBOR as soon as practicable and no later than the end of 2021, in line with the supervisory guidance issued by the US authorities.
On 13 July, the US CFTC’s Market Risk Advisory Committee (MRAC) formally recommended a series of ‘SOFR First’ initiatives in US dollar markets, beginning with interdealer swap markets on 26 July. The MRAC recommendation also includes a subsequent step to replace use of LIBOR with RFRs in cross-currency swaps, identifying a potential date of 21 September.
In order to support markets in building the necessary liquidity to meet these milestones, the FCA and the Bank of England have encouraged UK market participants to support the US-led ‘SOFR First’ initiative on 26 July and have also been engaged with authorities across LIBOR jurisdictions to build the necessary consensus around the subsequent initiative for cross-currency swaps in September. Support for this has also been expressed publicly by the US Alternative Reference Rates Committee and National Working Group on Swiss Franc Reference Rates.
In light of the above, the FCA has engaged with UK market participants, including liquidity providers and interdealer brokers (IDBs), to determine support for a change in the quoting conventions of LIBOR cross-currency swaps in the interdealer market on the proposed date of 21 September.
An FCA survey of UK market participants identified strong support for a change in the interdealer quoting convention, which would see RFRs rather than LIBOR become the default price from 21 September 2021.
The FCA and the Bank of England therefore support and encourage all participants in the LIBOR cross-currency swaps market to take the steps necessary to prepare for and implement these changes to market conventions on 21 September and shift liquidity away from LIBOR to RFRs. In the period leading up to 21 September, the FCA and the Bank of England will continue to engage with market participants and relevant international authorities to determine whether market conditions allow the switch to proceed smoothly.
Background & technical notes
This is an extension of the successful similar changes to the interdealer quoting conventions for linear sterling swaps during Q4 2020, and non-linear sterling derivatives in May 2021, and the upcoming SOFR First initiative on 26 July 2021. Extending this to cross-currency derivatives is intended to increase alignment in RFR markets and help to accelerate a reduction in new LIBOR exposures.
The proposed change will involve IDBs moving the primary basis of their pricing screens and curve construction for cross-currency swaps from LIBOR to RFRs.
Specifically, the quoting conventions in the interdealer market for the GBP, CHF and JPY legs of cross-currency swaps would switch from LIBOR to SONIA, SARON and TONA respectively from 21 September.
Cross-currency swaps with a USD leg would switch from USD LIBOR to SOFR from 21 September when paired with another LIBOR currency i.e. GBP/USD would switch to SONIA/SOFR, CHF/USD to SARON/SOFR and USD/JPY to SOFR/TONA.
If the USD leg is paired with a non-LIBOR currency, or IBOR, then in line with the US authorities’ guidance on the timing for ceasing new use of USD LIBOR, the USD leg would switch to SOFR as soon as is practicable from 21 September and no later than the end of 2021.
FCA survey results
Total respondents: 19
Q1. Do you support a ‘RFR-First’ Convention Switch for the LIBOR cross-currency swaps market? Yes / No.
100% of respondents selected ‘Yes’ to this question.
Q2. If you answered Q1 with Yes: Do you think a switch on 21 September 2021 would be an appropriate date for the interdealer LIBOR cross-currency swaps market?
95% of respondents who selected ‘Yes’ to the first question supported the 21 September date. One market participant was supportive for all LIBOR currencies except one. There was also one abstention.

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A key milestone recommended by the Working Group on Sterling Risk-Free Reference Rates (‘the Working Group’) is to cease initiation of new cross-currency derivatives with a LIBOR-linked sterling leg expiring after 2021, during Q2/Q3 2021, other than for risk management of existing positions. The PRA and FCA expect firms to meet the Working Group’s milestones as set out in the recent ‘Dear CEO’ letter sent to regulated firms.
The Dear CEO letter also noted the PRA and FCA’s expectation that firms further the adoption of RFRs in non-sterling LIBOR currencies, including to cease new use of USD LIBOR as soon as practicable and no later than the end of 2021, in line with the supervisory guidance issued by the US authorities.
On 13 July, the US CFTC’s Market Risk Advisory Committee (MRAC) formally recommended a series of ‘SOFR First’ initiatives in US dollar markets, beginning with interdealer swap markets on 26 July. The MRAC recommendation also includes a subsequent step to replace use of LIBOR with RFRs in cross-currency swaps, identifying a potential date of 21 September.
In order to support markets in building the necessary liquidity to meet these milestones, the FCA and the Bank of England have encouraged UK market participants to support the US-led ‘SOFR First’ initiative on 26 July and have also been engaged with authorities across LIBOR jurisdictions to build the necessary consensus around the subsequent initiative for cross-currency swaps in September. Support for this has also been expressed publicly by the US Alternative Reference Rates Committee and National Working Group on Swiss Franc Reference Rates.
In light of the above, the FCA has engaged with UK market participants, including liquidity providers and interdealer brokers (IDBs), to determine support for a change in the quoting conventions of LIBOR cross-currency swaps in the interdealer market on the proposed date of 21 September.
An FCA survey of UK market participants identified strong support for a change in the interdealer quoting convention, which would see RFRs rather than LIBOR become the default price from 21 September 2021.
The FCA and the Bank of England therefore support and encourage all participants in the LIBOR cross-currency swaps market to take the steps necessary to prepare for and implement these changes to market conventions on 21 September and shift liquidity away from LIBOR to RFRs. In the period leading up to 21 September, the FCA and the Bank of England will continue to engage with market participants and relevant international authorities to determine whether market conditions allow the switch to proceed smoothly.
Background & technical notes
This is an extension of the successful similar changes to the interdealer quoting conventions for linear sterling swaps during Q4 2020, and non-linear sterling derivatives in May 2021, and the upcoming SOFR First initiative on 26 July 2021. Extending this to cross-currency derivatives is intended to increase alignment in RFR markets and help to accelerate a reduction in new LIBOR exposures.
The proposed change will involve IDBs moving the primary basis of their pricing screens and curve construction for cross-currency swaps from LIBOR to RFRs.
Specifically, the quoting conventions in the interdealer market for the GBP, CHF and JPY legs of cross-currency swaps would switch from LIBOR to SONIA, SARON and TONA respectively from 21 September.
Cross-currency swaps with a USD leg would switch from USD LIBOR to SOFR from 21 September when paired with another LIBOR currency i.e. GBP/USD would switch to SONIA/SOFR, CHF/USD to SARON/SOFR and USD/JPY to SOFR/TONA.
If the USD leg is paired with a non-LIBOR currency, or IBOR, then in line with the US authorities’ guidance on the timing for ceasing new use of USD LIBOR, the USD leg would switch to SOFR as soon as is practicable from 21 September and no later than the end of 2021.
FCA survey results
Total respondents: 19
Q1. Do you support a ‘RFR-First’ Convention Switch for the LIBOR cross-currency swaps market? Yes / No.
100% of respondents selected ‘Yes’ to this question.
Q2. If you answered Q1 with Yes: Do you think a switch on 21 September 2021 would be an appropriate date for the interdealer LIBOR cross-currency swaps market?
95% of respondents who selected ‘Yes’ to the first question supported the 21 September date. One market participant was supportive for all LIBOR currencies except one. There was also one abstention.

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The FCA has published a second letter of concerns explaining to Provident why it does not support its proposed scheme of arrangement (the scheme). We expect that Provident will bring our letter to the court’s attention at the sanction hearing, which is scheduled for 30 July 2021, when the Court will be asked to sanction the scheme.
The FCA’s key concern is that consumers are being offered significantly less than the full amount of redress they are owed.
Despite our concerns, the FCA does not plan to formally oppose the scheme in court. This is because in this case, the only likely alternative to a scheme is the insolvency of Provident Personal Credit Limited (PPC).
We understand that in an insolvency scenario, without a scheme, consumers are likely to receive no redress. We have also taken into account that Provident’s plan is for PPC to cease business and wind down.

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In the report on Assessing the resilience of market-based finance published today, the Bank of England has set out the conclusion to the joint review by the Financial Conduct Authority (FCA) and the Bank of England on open-ended investment funds and the risks posed by their liquidity mismatch.
In concluding the review, the Bank and FCA have now put forward a suggested possible framework for how a liquidity classification framework for funds could be designed, as well as considerations around the calculation and use of swing pricing. Recognising the global nature of asset management and of key markets, the purpose of this framework is to guide FCA and Bank of England’s engagement with ongoing international work on open-ended funds.

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Gefion Insurance A/S (Gefion) is an insurance firm authorised and regulated by the DFSA.
It operated in the UK on a freedom of services basis which means that some customers, both individual and small businesses, based in the UK have held policies with the firm.
Gefion sold a range of motor insurance products in the UK through a network of Managing General Agents (MGAs).
In June 2020, the DFSA withdrew Gefion’s licence to operate. This meant that Gefion was unable to underwrite any new policies from that date but claims arising under existing policies continued to be paid.
The DFSA’s press release has more information, including questions and answers for claimants.
The UK’s Financial Services Compensation Scheme (‘FSCS’) has declared Gefion to be in default and has more information for policyholders and claimants on its website.

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In February 2019, we consulted (in CP19/10) on requirements for workplace personal pension scheme providers to publish costs and charges data, and made final rules (in PS20/2) in February 2020. 
The first publication of data under these rules is expected to take place this summer, when Independent Governance Committees (IGCs) publish their annual reports.  
We’ve since received correspondence from firms and have held discussions with both firms and IGC members. These discussions have revealed different views among stakeholders as to whether the data should be published at the level of the arrangement with each individual employer, or whether it should be published at a higher level, with the data indicating the range of charges paid by members in different employer arrangements in one overarching scheme.  
Here, we outline these 2 views and our expectations of firms for the first publication of the data. 
Employer level disclosures
We’re aware that some firms think the disclosures should be done at employer level. This is due to our stated aims in CP19/10 and PS20/2, including our aim to ensure competition in workplace pensions and, in particular, our aim to align costs and charges disclosures for contract-based pensions with the existing regime for occupational, trust-based pensions schemes. 
For example, in CP19/10 we said that we were seeking ‘to ensure that scheme members can find the information about costs and charges they require to establish that they receive good value for money from their pension scheme, and their pension scheme will meet their needs for future retirement.’ 
In PS20/2 we linked our final rules to our statutory objectives:

competition – scheme members and others can access better information about costs and charges, promoting more effective competition between firms in the interests of consumers
consumer protection – better information about costs and charges should enable scheme members to decide if their scheme is giving them value for money and if it will meet their future needs
market integrity – workplace pension schemes should be better held to account by their members, which would improve the orderly operation of the financial markets

    The approach of publishing at employer level aligns more closely with our aim for the rules. Firms must interpret every provision of the Handbook in light of its purpose (see GEN 2.2.1R). 
In addition, we consulted in June 2020 (CP20/9) on rules that set out how we expect IGCs to assess the value for money of workplace personal pension schemes and investment pathway solutions. 
We said that we expect IGCs to ‘pick a small number of reasonably comparable schemes or investment pathways, including those that could potentially offer better value for money (against the factors set out in the rules), to conduct their assessment.’
When selecting these schemes, we also said we expect IGCs to ‘take into account the size and demographics of the membership. This comparison with other comparable options on the market applies to the extent that information about those options is publicly available.’  
We went on to say that, in relation to comparing to costs and charges data, ‘we are confident that IGCs will have access to such pension scheme data to conduct this comparison once scheme governance bodies begin publishing costs and charges information on their websites’.
HMRC registered scheme level disclosures
Some stakeholders think that costs and charges data should be published at the level of the overarching HMRC registered scheme, with the data indicating a range of charges paid by members in different employer arrangements within that overarching scheme.  
We don’t consider that aggregation of costs and charges at the level of an overarching scheme would promote meaningful comparisons, however. Instead, comparisons at the employer level could play a useful role in helping to improve value for money in workplace pensions. 
However, some firms have told us that they were unclear at what level disclosures were required and have been preparing disclosures at registered scheme level.
As our CP and PS didn’t specifically state that an employer level disclosure was expected, and considering the time remaining until the disclosures will be needed by IGCs, we don’t propose to take regulatory action against any firms that, for this reporting year:

disclose each set of costs and charges that they levy (and the number of employer schemes which have these costs and charges), or 
show the distribution of costs and charges by employer arrangement in some other way, for example by dividing the range of charges into deciles (ie without also disclosing the relevant employer or scheme details against the particular costs and charges)

Publishing the data
In relation to where the relevant data should be published, firms don’t need to publish the information in the same document as the IGC’s annual report. We recognise that this may result in a large document that isn’t user friendly. 
However, the information must be on a publicly accessible website, and a link to this website can be included in the annual report.
Future publications
In light of the approach taken by firms, we will consider if we need to consult on changes to our Handbook to provide clarity and ensure consistent good outcomes. 
We also plan to publish a policy statement in relation to CP20/9 in the summer, which will further clarify our expectations after we’ve considered the feedback. 
We generally support an approach to comparisons that aggregates charges at the level of cohorts of similar employer arrangements, to the extent that such an approach would allow a participating IGC to compare its own provider’s individual employer arrangements with comparable arrangements at a cohort level, as well as enabling cohort to cohort comparisons. 
It will be for individual IGCs or Governance Advisory Arrangements (GAAs) to determine which approach, or combination of approaches, is most appropriate, and it is for IGCs to determine where best to focus their attention. 
In order that IGCs and GAAs have the option of employer level comparison though, the data must be publicly available.

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