FSA - CP 12/24 – Regulatory Reform: PRA and FCA regimes relating to aspects of authorisation and supervision
Q1. Do you have any comments on the proposed new text for GEN 2 to explain the interpretation of joint Handbook provisions?
We are broadly in support of the proposals here in terms of expediency. However, there is a potential for confusion were the responsibility for these “identical rules” to change over time. In the longer term a
better approach may be to provide clarity in the respective rulebooks by including only those powers which are available to each regulator.
Clear explanation will be of great value to our member credit unions, many of which do not employ paid staff. We would therefore welcome thought to be given to guidance for credit unions to ensure that the division of responsibilities is clear.
Q2. Do you have any comments on the proposed new Handbook definitions in Appendix 19?
It would be preferable if firms were not required to cross-refer references to the ‘appropriate regulator’. Our members would welcome the use of the name of the relevant regulator in each case.
Q3. Do you have any comments on any of the proposed updated status disclosure wording?
Q4. Do you have any comments on our proposal to remove the option to use either the logo of the FCA or the PRA?
We do not have a strong view here but think that consideration should be given to allowing firms to use the regulator’s logo in their regulatory disclosure. It would seem to us that this would benefit the credibility and public recognition of the new regulators’ brands which will not be widely known of among the public. It would also increase the ease of recognition for the public in judging the veracity of a firm through its literature.
Q5. Do you agree with our proposal for a six month transitional period from legal cutover?
We strongly support the provision of a transitional period. We would urge the consideration of a 12 month transition to enable small firms – such as credit unions – to spread the burden of transition. For a small credit union the cost of renewing literature can be a significant expense.
Q6. Do you have any comments on our proposals to amend SUP 5?
Q7. Do you have any comments on our proposed approach to amending SUP 6?
We are again broadly content with the provisions proposed in order to reflect the division of responsibilities between the two regulators. Again, we would welcome supplementary guidance for small, dual-regulated firms in order to assist them in understanding which regulator is the “relevant regulator” for which application to vary permissions.
Q8. Do you have any comments on our proposed approach to amending SUP 8?
While we are broadly satisfied with the approach to the division of regulatory responsibilities we would welcome consideration being given to the needs of credit unions as small dual-regulated firms. Guidance for credit unions which makes it clear which regulator should be approached for which issue would be valuable for our members, especially those which employ few or no paid staff.
Q9. Are there any additional aspects of the changes introduced by the Bill that you feel should be covered by SUP 8?
Q10. Do you have any comments on our proposed approach to amending SUP 11?
While we are happy with the approach to the division of regulatory responsibilities we would welcome consideration being given to the needs of credit unions as small dual-regulated firms. Guidance for credit unions which makes it clear which regulator should be approached for which issue would be valuable for our members, especially those which employ few or no paid staff.
Q11 – Q16
Q17. Do you have any comments on our proposed approach to amending SUP 15?
We have not specific comment but would suggest that the useful reference table and similar materials be made available to assist, particularly smaller firms, understand which regulatory body they should make their notifications to in which instances.
Q18. Do you have any comments on our proposed approach to amending SUP 16?
We appreciate that the communication channels for regulatory notifications will be reviewed by the respective regulators following legal cutover and therefore the present consultation does not expressly deal with this. However, we would urge sensitivity when such reviews do take place since there remain a certain minority of the smallest of our member credit unions that do not use email and still operate paper based systems. It might be difficult for some of these credit unions to make the move to electronic reporting at this point in time.
Once more, we urge consideration of how extra guidance material and support can be provided to smaller, dual-regulated firms to assist them in dealing with the transition to dual-regulation. The table provided on pages 47 and 48 of the consultation paper, for example, is a useful reference tool and could be helpfully made available elsewhere to assist firms in compliance.
Q19. Do you have any comments on our proposed approach to updating SUP 18?
Q20. Do you have any comments on other changes being made to the FCA and PRA rulebook?
We have no particular view on these proposals and support the general position taken.
Q21. Do you have any comments on the proposed deletion of SUP TP 1.3 and 1.4 in particular?
We are not aware of any pre-FSA concessions of this kind that apply to credit unions and therefore we have no objection to the removal of these provisions.
Q22. Do you have any comments on the proposed changes to actions for damages in the PRA rulebook?
We are in support of the proposal to remove the actionable status of those rules contained in CREDS which are not already. Credit union members have a range of legal rights which they are able to draw upon.
Q23. Do you have any comments on any part of this cost benefit analysis?
We broadly agree that the proposals set out in the consultation will not, of themselves, imply a major cost since they arise from legislation and must therefore be implemented. However, we do feel that what cost that does arise can be minimised by providing support and guidance for smaller firms in transition. Though these costs might be difficult to quantify, support and guidance is likely to reduce the time burden on firms and regulators alike. If credit unions have a clear understanding of the changes, and lines of reporting, this will reduce both the time burden on credit unions and enquiries to regulators.
Q24. In the case of GEN 4 and GEN 5, do you have any comments about the costs and benefits of a longer transitional period?
We feel that the cost to the smallest credit unions of updating disclosure statements in literature could well be significant if it requires their wasting unused literature. Extending the transitional period from 6 months to 12 months would have the benefit of accommodating the smallest credit unions which might update their literature only once each year with almost no direct cost at all whilst not materially affecting the experience of the customer to any great degree.
You can download the full response on the right hand side.