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Dear CEO | Release Date: 29th November 2023

To read a longer summary of this Dear CEO letter, click here.

To access the original FCA document, click here.

Short Summary

The Financial Conduct Authority (FCA) has issued a “Dear CEO” letter to Personal Investment Firms (PIFs), emphasising the importance of maintaining their current responsibilities amidst an ongoing consultation on changes to the prudential regime (IPRU-INV 13). The FCA highlights that while the consultation is in progress, firms must not attempt to modify their corporate structures or engage in practices aimed at evading potential redress liabilities or complaints responsibilities. Firms are reminded of their duty to act in good faith when customers have suffered foreseeable harm and to assess complaints fairly and promptly.

Additionally, PIFs are expected to maintain sufficient financial resources to cover potential liabilities and to avoid practices like overpaying dividends or becoming insolvent to protect assets. Immediate notification to the FCA is required if firms anticipate issues with adequate resources, intend to sell or transfer client banks, or if they plan to offer less redress than due.

During the consultation period, the FCA will intensify monitoring of firms applying for new authorisations or seeking to cancel existing ones, ensuring that firms manage liabilities and prevent adverse effects on customers. The FCA will scrutinise authorisation and cancellation applications closely, demanding evidence of resolved complaints and managed liabilities. The letter warns that failure to comply with these expectations could lead to enforcement actions.

Key takeaways for affected readers:

Maintain transparency and compliance with existing regulations, ensure adequate financial resources for potential liabilities, and provide timely notifications to the FCA regarding significant changes. Firms should also prepare for increased scrutiny during the consultation period and avoid any practices that might be interpreted as avoiding responsibilities. Sharing this letter with the governing body of your firm and participating in the consultation process are strongly encouraged.

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