Test Question

It's the New Year and you, at the age of 45 are thinking of using your annual tax free gift allowance for the first time ever. What’s the maximum you can give within the allowance?
a. £1000
b. £4000
c. £3000
d. £6000

answer is d. £6000. Your allowance is £3000 per annum, but you can carry forward the previous year’s allowance. You can only carry forward one year’s allowance.

WHAT TO EXPECT FROM FCA IN 2019 

FCA have a busy year ahead keeping us in line.

Ring-fencing regime for UK banks

The ring-fencing regime for UK banks entered into force on 1 January 2019. It required UK banking groups to separate critical banking services from their wholesale and investment banking services.

Extending FOS to more SMEs

Currently, only individual consumers, small charities and trusts, and micro-enterprises are eligible to complain to the Financial Ombudsman Service (FOS).

From 1st  April 2019 the definition of "eligible complainant" to extend access to the FOS to SMEs with an annual turnover below £6.5 million and fewer than 50 employees, or an annual balance sheet below £5 million, will be eligible to complain to the FOS.  This will include charities and trusts and personal guarantors of loans to businesses of a comparable size. 

FCA estimates that around 210,000 additional UK SMEs will be eligible to complain to the FOS as a result.  

Increasing FOS award limit

The FCA says there are around 2,000 complaints upheld by the FOS each year where the amount of compensation the FOS determines is due is above the current £150,000 award limit. 

With effect from 1 April 2019, the FCA plan to increase the award limit for the FOS' compulsory jurisdiction (CJ) to £350,000 for new complaints (that is, complaints about acts or omissions by firms on or after 1 April 2019) and £160,000 for all other complaints.

FOS taking responsibility for CMC complaints

Responsibility for claims management regulation will pass to the FCA from the Claims Management Regulator (CMR) (a unit of the Ministry of Justice (MoJ)) on 1 April 2019.

Alongside this, responsibility for considering complaints about claims management companies (CMCs) will transfer from the Legal Ombudsman Service to the FOS.

Conduct of business

PRIIPs Regulation:  It's no secret that implementation of the KID has not gone smoothly since its introduction in January 2018, and the FCA is expected to propose changes in the second half of 2019

Consumer credit

The FCA is required, by 1 April 2019, to complete a review of retained CCA requirements and develop rule-based alternatives where possible.

Consumer credit information market study

The FCA intends to launch a credit information market study in June 2019 (delayed from Q4 2018).  This affects firms like Equifax and Experian.

Financial advice

The government will launch the Single Financial Guidance Body (SFGB) this month which will replace the Pensions Advisory Service (TPAS), the Money Advice Service (MAS) and Pension Wise. For more information, https://www.gov.uk/government/organisations/single-financial-guidance-body 

Extension of SM&CR

The senior managers and certification regime (SM&CR) was rolled out to insurers in December 2018.  Lucky them!  On 9 December 2019, it will finally be extended to all FSMA-authorised firms, replacing the current approved persons regime.   Goodbye CF1 -30 regime and hello SMCR .  And hopefully goodbye to registering RIs with Form As and waiting for FCA approval.  More responsibility to individuals and bit more freedom is the general idea.  The thought of simplification at FCA is almost too much to bear without going light headed, but it is within our grasp.

Firms  and Registered individuals are feeling nostalgic about the register already!  The FCA plan to come up with an alternative for marketing / information purposes - a directory of financial services workers.

FCA asset management market study remedies

The FCA's asset management market study (AMMS) has been rumbling along since 2015, but 2019 will see some changes and new FCA rules on:

• Box profits.
• Governance  - independent director requirements.
• A prescribed responsibility for managers under the SM&CR.

FCA market study on competition in mortgage sector

The FCA is required, by 26 April 2019, to carry out a formal review of the impact of the implementation of changes to rules in its mortgages sourcebook (MCOB) following an earlier review of the mortgage market.

Pensions

Pension transfers remain in the spotlight in 2019. The FCA will be carrying out further work on the different charging structures in pension transfer advice and, if changes are needed, it will consult on further proposals in the first half of 2019.

Transfer of claims management regulation to FCA

Responsibility for claims management regulation will pass to the FCA from the CMR on 1 April 2019 under the Financial Guidance and Claims Act 2018. The Act also extends regulation to Scotland, where firms are currently unregulated.  

The transfer of regulation will bring a new business sector and a new group of firms, CMCs, within the scope of the FCA regime under FSMA on 1 April 2019.   IFAC believe that many IFAs should register as CMCs. 

MiFID II…. AND INTRODUCING MiFID III

Although MIFID II came into effect in January 2018, some aspects, in particular relating to trade transparency, will continue to rumble on into 2019. The prospect of MiFID III has already raised its head.  OMG - maybe Brexit is a good idea after all!