Corterum newsletter February 2024 - v2

Corterum newsletter: February 2024

Welcome to the February edition of the Corterum newsletter, where we bring you updates from the world of SM&CR compliance and Consumer Duty.

FCA requests information from firms about delivery of their ongoing advice services and the Consumer Duty

The FCA has written to approximately 20 firms requesting information on the delivery of ongoing services, in which their clients continue to be charged once advice has been provided.  It has also asked for data on the ongoing suitability of this advice as part of the offered service, as well as how many have received that review, and how many paid, but were later refunded, as the suitability review did not happen.

The FCA is collecting this information to assess what, if any, further regulatory work it may undertake in this area.  From here, we can expect a further update from the FCA on any action which may be implemented.

Further reading can be found here.

GAP insurance Paused Sales due to inability to show fairness to buyers

The FCA has been voicing concerns recently about the fairness of the sales of Guaranteed Asset Protection (GAP) insurance.  From this announcement, many insurance firms (approximately 80% of the GAP market) have now agreed to suspend sales pending a further investigation.

The FCA have advised that they believe the product is failing to provide fair value to some consumers, and asked for firms manufacturing GAP insurance products, to take immediate action to prove customers are getting a fair deal.  The FCA have been unsatisfied by the responses they have received, and pending a further investigation, have asked for a pause in the sale of these products.

This represents the first wide scale action after the implementation of the Consumer Duty.

Further reading can be found here.

Definition of Honesty Vs Integrity within the SM&CR

Many firms try to dovetail fit and proper testing with the annual appraisal round.  “Honesty, Integrity and Reputation” is one of the three pillars by which the fitness and propriety of all staff must be assessed.  Many firms are not clear on the distinction between “Honesty” and “Integrity”, so we thought that a short explainer might be helpful.

“Honesty” is a basic moral quality which is expected of all members of society. Honesty involves being truthful about important matters and respecting the property rights of others. Telling lies about things that matter or committing fraud or stealing are generally regarded as dishonest conduct.

Integrity relates to a person’s “ethical compass”, specifically whether it ‘points in the right or the wrong direction’.  It can be regarded as the requirement ‘not to take unfair advantage of others’.  It is a broader, more nebulous, concept than honesty.

A person who is dishonest will always lack integrity and reputation.  However, this does not necessarily apply in reverse.  A person who lacks Integrity may remain honest.

Want to know more?  Take a look at our blog post Here.