Retail conduct

The FCA continues to issue more supervisory strategy letters to “portfolio” firms, those firms across a sector that are not directly supervised. The latest batch are a mix of new as well as a return to some portfolios to update them.

As with previous letters, the FCA’s focus is on the key conduct risks, and its expectations of firms to address them.  Six new letters have been published since April 2021, bringing the total number of portfolios with letters to 28. Whilst the letters outline the specific actions firms within the portfolio should take, the FCA’s overarching expectation is that each firm consider the degree to which they present the risks identified, and review their strategies for mitigating them.

The letters do not contain anything unexpected. Whilst portfolio specific, there are a number of cross cutting themes relating to governance and oversight, fair value, financial and operational resilience. These themes echo the FCA's expectations and comments in recent publications including Building operational resilience Policy Statement and General Insurance product value and coronavirus guidance. 

The FCA has not yet written to all portfolios/sectors, whilst some portfolios have received more than one letter. This may be reflective of the concern the FCA feels regarding the continuing or evolving harm it observes in certain portfolios.  The FCA’s tone in the letter to General Insurers speaks of its frustration that there are still examples of harm to consumers in spite of repeatedly making FCA expectations clear in numerous publications. 

However, other firms should be mindful that the absence of a letter to their portfolio/sector may not mean the FCA has no concerns regarding consumer harm in that sector. Due to the cross-cutting nature of the topics, firms may want to review letters for other portfolios that may be relevant to their business and act on the FCA’s expectations. 

Portfolio letters issued since April are:

• General Insurers (April 21)
• Loan-based Peer-to-Peer (P2P) crowdfunding platforms (May 2021)
• Mortgage Third Party Administrators (June 21)
• Outsourcing to Third Party Mortgage Administrators (June 2021)
• Investment-based crowdfunding  (July 21)
• Life Insurers (August 21)

Given the number and frequency of these portfolio letters, to help firms keep track, the FCA also published the list of all letters so firms can quickly locate one(s) relevant to them. The FCA’s full list of portfolios is here which, as mentioned above, will include some that are still yet to receive their initial portfolio letter.