FCA

FCA Consultation on Changes to FSCS Scheme Compensation

The Financial Services Compensation Scheme (FSCS) pays out if you have lost money as a result of an authorised financial services firm going bust or otherwise being unable to pay compensation for various failings - for example a bank or stockbroker. The scheme is funded by a levy on services firms. The Financial Conduct Authority (FCA) is currently undertaking a public consultation on changes to the scheme. At present there are limits to the protection FSCS provides which vary by financial product. ...

FCA Proposes to Clamp Down on CFDs

The Financial Conduct Authority (FCA) is proposing to clamp down on CFDs (contracts for difference) and similar financial products such as binary bets. CFDs are complex financial products that have historically been used by sophisticated traders. But they have been growing rapidly in usage by small retail "investors" and the FCA reports that 82% of them lose money based on a review of such accounts. CFDs are a way of acquiring an interest in a listed company without paying stamp duty. It ...

RBS Settlement Announced – But Why Has the FCA Done Nothing?

The Royal Bank of Scotland (RBS) have announced a settlement of the litigation over the rights issue in 2008 with three out of the five investor groups who were pursuing the company. They have reserved £800 million to settle all the claims and are continuing to negotiate with the remaining litigants. But private investors may be reluctant to settle because of the high legal costs that will erode any settlement, the low value of the settlement (the claims were originally estimated ...

FCA Study of Asset Management – Interesting Interim Results

The Financial Conduct Authority (FCA) has published an interim report on its Asset Management Market Study. Some of the results are not that surprising, but others are. For example, it reports that around half of retail investors were not aware that they were paying fund charges. Needless to point out perhaps that can be linked to another conclusion. Namely that there is weak price competition. How can investors be expected to compare prices when they are not even aware of the charges? Indeed ...

Inquiry into FCA’s Future Mission

The new head of the Financial Conduct Authority, Andrew Bailey, has announced a consultation into the "Future Mission" of the organisation. The FCA does of course regulate financial markets and should be protecting retail investors (or "consumers" as the consultation prefers to call them). However it has been repeatedly criticised in the past for the following failings: - Weak and ineffective regulation. - Not stopping new abuses soon enough. - Failing to look after the interests of retail investors but rather protecting those of ...

Where Bonds are Concerned, Trust No-One

The news that the holders of Lloyds bonds (ECNs) have lost their legal battle in the Supreme Court reinforces the message that when it comes to investing in bonds, you should trust nobody - not the issuer of the bonds, your friendly stockbrokers and wealth managers who advise you, or the FCA to protect your interests. The bondholders won their case initially in the lower courts, that Lloyds should not be able to force redemption of these bonds at par. But after ...

Pension Reforms – FCA Rule Changes to Protect Fools

The Financial Conduct Authority (FCA) is concerned that many people are taking cash out of their pension pots and investing it in risky propositions or blowing it without taking suitable advice. They have launched a new public consultation therefore on rule book changes under the title "Pension reforms - proposed changes to our rules and guidance". They must consider it urgent as we only have to the end of October to respond. One particular change that might affect our readers is that ...

FCA Criticised in Parliament

The Financial Conduct Authority (FCA) has been severely criticised today (27/3/2015) in a report issued by the Treasury Select Committee. Here are a few things they say in their overall conclusions about the events surrounding the press briefing on the Government's planned review of the life insurance market, which caused share prices in some companies to drop sharply. "The events of 27 and 28 March.....revealed multiple flaws in the FCA's processes and practices. These failings went right to the top of the ...

FCA launches campaign on investment scams

The Financial Conduct Authority (FCA) have launched a campaign to warn people about investment scams. They get about 5,000 calls a year from investors about suspected scams and the average investor loses £20,000. The FCA have launched a new web site called Scansmart (see www.fca.org.uk/scamsmart ) which enables you to learn about the warning signs and even provides a menu on which you can check the investment you are considering. The FCA gives the key signs that the investment may be a ...