The Wider Implications Framework is a way that members of the regulatory family work with each other and other parties as appropriate on issues that could have a wider impact across the financial services industry.
The framework provides a process for structured collaboration between the organisations involved, as well as providing transparency for stakeholders through the publication of minutes of meetings, an annual review, and a central log of the issues identified.
Members of the financial services regulatory family and other organisations also meet regularly and work closely together in other ways, to share information about trends or common problems that could inform future work.
Group members
The organisations that work within the framework are:
- The Financial Ombudsman Service
- The Financial Conduct Authority (FCA)
- The Financial Services Compensation Service (FSCS)
- The Pensions Regulator (TPR)
- The Money and Pensions Service (MaPS)
Issues with potential wider implications
An issue with potential wider implications is one that could have a wider impact across the financial services industry, and there is a need to work together to determine the optimal way to deal with the issue. For example, it could be because a large number of consumers are potentially affected, or because of the amount of redress at stake, or because there is a risk of business failure. The issue might be identified, for example, through the Financial Ombudsman Service’s casework, or through FCA supervision.
Issues with potential wider implications that are identified by the members can be easily escalated through working-level, Executive or Chairs’ meetings, depending on their likely impact. The framework ultimately aims to achieve better outcomes for consumers, small businesses and the financial services industry, by building on the existing successful engagement that already takes place.
Though not all issues which have potential wider implications will be relevant to all the members of the regulatory family involved in the process, the framework ensures that all members can be involved where relevant, to maximise collaboration without compromising the ability to act quickly and robustly.
Case study examples
Examples of issues on which members of the regulatory family collaborate include:
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British Steel Pension Scheme: increasing consumer engagement
Issue
Many former British Steel Pension Scheme (BSPS) members received unsuitable advice to transfer their pension and could be due compensation.
Action
The Financial Ombudsman Service, the FCA and the FSCS have worked together to engage former BSPS members and help them understand whether and how to complain. The Financial Ombudsman Service, FCA, FSCS and TPR have also worked with The Pensions Ombudsman (TPO) on the handling of British Steel complaints, including attending a roundtable discussion for British Steel pension members.
Following our joint in-person events in South Wales and Scunthorpe in 2021, 86% of attendees surveyed said they found the events useful and 92% agreed that having attended the event they were clearer about their own next steps. The Financial Ombudsman Service, the FCA and the FSCS now have regular working level meetings to discuss issues involving strategy, approach and communication as well as to share information and insight. BSPS has also been one of the main issues discussed at senior level meetings and was also frequently on the agenda for Chairs' meetings.
Outcome
The members acknowledge that BSPS is still a live case and work in progress and are constantly sharing insight and adapting to new developments. Our consumer engagement strategy resulted in a number of former BSPS members becoming aware of the potential need to complain and who to complain to.
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A joint response to pension transfers
Issue
In Spring 2020 when the Covid-19 pandemic was causing market volatility, savers risked making hasty decisions on their pensions which could have crystallised losses.
Action
TPR, the FCA and MaPS worked together, in partnership with the Pension Protection Fund, against the risks associated with increased pension transfer requests caused by redundancies or market conditions.
Building on the established collaboration work, the regulators and MaPS quickly introduced a Covid-19 specific joint Cash Equivalent Transfer Value letter for savers looking to transfer from a defined benefit to a defined contribution pension and worked jointly with scheme trustees associated with companies deemed at risk.
Outcome
This resulted in savers being warned of the risk of transferring at this time and urged them to seek free impartial guidance.
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New Consumer Duty: working together to achieve a consistent and complementary approach, while staying independent
Issue
The FCA is introducing a New Consumer Duty that would set clearer and higher standards for firms. The new duty aims to tackle practices by firms that cause harm, including presenting information in a way that exploits consumers’ behavioural biases, selling products or services that are not fit for purpose, or providing poor customer support.
Action
On 14 May 2021, the FCA published a consultation paper setting out proposals for a New Consumer Duty, which would set clearer and higher expectations for the standard of care that firms provide to consumers. A second consultation was published on 7 December 2021 and included responses to the first consultation as well as a draft Consumer Duty Instrument. The second consultation ends in February 2022 with the new Consumer Duty coming into force in July 2022.
The Financial Ombudsman Service has already engaged with businesses, trade bodies and other stakeholders to hear views and concerns regarding the introduction of this new duty. The Financial Ombudsman Service cooperates and will continue to cooperate with all members of the Wider Implications Framework. This will be especially important in the case of the New Consumer Duty where outcome-based regulation inevitably requires judgement by firms, the FCA and the Financial Ombudsman Service.
Outcome
The FCA wants to see a higher level of consumer protection in retail financial markets and to drive a healthy and successful financial services system in which firms can thrive and consumers can make informed choices about financial products and services.
The members will work together as well as with their stakeholders throughout the implementation to ensure we have a shared understanding of the New Consumer Duty and that we identify examples that can help businesses understand and embed the duty as expected by the FCA. The Financial Ombudsman Service will share with the FCA and stakeholders any issues identified through their casework.
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Working together to prevent companies "phoenixing"
Issue
The regulatory family were aware of individuals who would try to escape their liabilities by "phoenixing". Phoenixing is where someone, usually a company director, escapes the liabilities of one company by setting up another. The director (or a group of directors) moves any assets from the previous company to the new one, but not its liabilities or debts. This had been seen, for example, where businesses "phoenixed" from an Independent Financial Advisor (IFA) into a Claims Management Company (CMC).
Action
The FSCS, the FCA, the Financial Ombudsman Service and MaPS worked together via the anti‑phoenixing working group to share data and insight into what "phoenixing" had been witnessed. From complaints to the Financial Ombudsman Service, enquiries into MaPS and compensation claims to the FSCS, the regulatory family worked together to flag businesses that appeared to be attempting to “phoenix” to the FCA. From this, the FCA consulted with industry to change the rules to stop "phoenixing" claims.
Outcome
The FCA announced proposals to stop the practice of “claims management phoenixing”, by banning CMCs from managing FSCS claims where they have a relevant connection to the claim.
Terms of reference
Read the members’ agreed Terms of Reference for the Wider Implications Framework.
Wider Implications Issues log
Minutes of Meetings
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Chair-level meetings
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Executive-level meetings