CP23/25: Quarterly Consultation Paper No. 42

The FCA has posted miscellaneous improvement proposals to the FCA Handbook.
Chapter 2: Training and Competence (TC) qualifications table
Financial services qualifications table has been updated to recognise International Capital Market Association (ICMA) a sole qualifications provider, update to Operations Certificate Programme (OCP) and Chartered Institute for Securities and Investment (CISI) availability programmes.
Chapter 3: minor consequential amendments to CREDS as a result of legislative changes to the Credit Unions Act 1979
„Financial Services and Markets Act 2023, which came into force on 29 August 2023, sets out changes to the Credit Unions Act 1979 (CUA79).“ These changes can be summarised as following:
– expanding permitted services credit unions in Great Britain are allowed to offer, including hiring purchase and sale agreements, and insurance distribution activities
– requirement to these unions to submit annual accounts to FCA no later than 7 months after a fiscal-year end
– allowance to lend to and borrow from other credit unions.
Chapter 4: minor amendments, including clarifications and corrections to COLL –> important
The miscellaneous amendments cover the following topics:
– enabling virtual meetings of unitholders
– informing unitholders individually about FCA’s expectations
– Shariah-compliant funds will be able to donate part of the income to a relevant charity as income purification payment
– new sub-funds within an umbrella will have the possibility to extend the first annual accounting period if it is within 6 months from the first units’ issuance
– payments to a fund will be allowed to be done at a unit class level, which is now not allowed
– for FAIFs and QIS, the proposed rules from CP 21/12 (see eventid=10937) about no circularity of investment can cause a false breach because of the different usage of the term „second scheme“. This term should apply to the master scheme in the master-feeder structure only. The FCA therefore proposed a transitional period of 1 year for AFMs to align the portfolio accordingly.
– allow QIS to hold interests in loans and invest in CIS, the same way LTAF is allowed to perform these activities
– new guidance on how QIS should cover for derivatives and forward transactions, similarly to how UCITS and NURS, e.g. using the VaR methodology
– amendment of some terminology, such as „scheme“ or „IMA SORP“
Chapter 5: changes to clarify the scope and application of COBS 19.7 and to improve the clarity of requirements under COBS 19.9.
FCA proposes amendments to pensions nudge and retirement risk warnings, explaining the „pensions savings in scope of the stronger nudge rules are not limited to pension schemes which contain insurance and regulated fund elements“. Additionally, FCA has made minor changes to pension annuity comparison information requirements.
Chapter 6: corrections and clarifications to MIFIDPRU 1, 4, 7 and 8, and IPRU-INV 1
– An enhancement to the definition of a SNI firm as „one which does not have permission to deal on own account and cannot undertake the underwriting of financial instruments or place them on a firm commitment basis“ as a result of misunderstanding in the market
– Clarification that the underlying instrument needs to be used for calculating the notional amount for equity and commodity derivatives contracts and emissions allowances
– Clarification of any intra-group offsets within Internal Capital Adequacy and Risk Assessment (ICARA) process for an investment firm group.
Chapter 7: references to enactments in the Handbook ambulatory
The FCA proposes to enhance the readability and interreference between the FCA Handbook and the Financial Services and Markets Act 2000 so that items are not manually updated twice, but rather linked.