UK to release new regulations for BNPL firms
UK will release new regulations for BNPL firms aiming to protect customers and deliver certainty for the sector. The reason behind new regulations is a lack of standardization when it comes to charging interest and fees as well as growing debt among younger consumers.
Why is it relevant?
For the BNPL sector, these regulations will bring greater clarity and legal certainty. Standardized rules can help firms operate more consistently and boost innovation while mitigating risks of regulatory crackdowns. Regulating this sector is essential for adapting to new credit trends while ensuring economic stability.
Read more about the UK’s plans for BNPL
BaFin threatens with fines
Solaris, a German BaaS provider, has been threatened with fines for AML control shortfalls if it doesn't meet deadlines to make improvements. BaFin, the German bank regulator, also extended the mandate of a special monitor who has been overseeing the bank's progress since 2022.
Why is it relevant?
The German regulator is looking closely at the banking sector, especially when it comes to AML compliance. Earlier this year, BaFin fined both N26 and Commerzbank for similar AML issues. This emphasizes the importance of robust risk management and AML measures for all financial institutions, especially those involved in facilitating third-party banking services.
Major UK banks fail to provide customers with clear information
HSBC, Lloyds, TSB, and AIB have been rebuked by the UK's Competition and Markets Authority for failing to provide correct information. Customers were provided out-of-date information about open branches, business loans, annual rates for loans, or addresses of ATMs.
Why is it relevant?
Regulators need to put in place formal enforcement measures to ensure customers are provided with correct and up-to-date information when making important financial decisions. It’s especially disappointing to see the biggest banks on the market breaching the rules.
FCA aims to streamline regulations for FinServ firms
FCA has started a review aiming to streamline regulations for financial services firms. The goal of this review is to remove or simplify rules that may overlap with the newly introduced Consumer Duty which aims to enhance consumer protection. By reducing the regulatory complexity FCA intends to lower the operational costs for businesses and support innovation. The main objective is to enhance international competitiveness and contribute to economic development.
Why is it relevant?
With regulations getting more complex, it’s difficult for businesses to balance compliance and growth. Simplifying regulations may significantly enhance business operations. It also presents an opportunity to further streamline the FCA’s rulebook leading to more business cost reduction.
OTC Link fined $1.19m for failing to file SAR
SEC charged a broker-dealer OTC Link LLC for failing to file Suspicious Activity Reports (SARs) over a 3-year period. From March 2020 to May 2023, OTC Link failed to implement proper AML policies and procedures. The company agreed to pay $1.19 million to settle the charges. It must continue engaging a compliance consultant to review and improve its AML policies and procedures.
Why is it relevant?
Broker-dealers are required to file SARs to help detect potential securities law and money laundering violations. These businesses are critical gatekeepers to the securities markets and must diligently monitor for suspicious transactions.
FCA issues over 1k warnings to crypto firms
FCA has issued over 1,000 warnings to unregistered crypto firms illegally promoting to the UK market since new financial promotion rules took effect in October. These rules mandate that crypto companies must be registered with the FCA to reach UK clients. The FCA's actions have led to the removal of 48 apps from app stores, and they continue to work with third parties to remove illegal websites. Recent guidance from the FCA highlights the need for firms to properly categorize consumers before communicating financial promotions, noting both good and poor practices in compliance.
Why is it relevant?
FCA requires companies to categorize customers. To tick off the box, some businesses give customers guidelines on how to proceed. Complying with the regulations should be a natural approach and businesses need to be reminded of that.
The regulators ain’t resting. A lot has been going on in the UK market, from major banks failing to provide their clients with up-to-date information, through regulatory updates for the BNPL sector, to FCA making attempts to streamline regulations for financial services providers.
We’re curious to see how this landscape is about to evolve. Stay tuned to get more updates soon or Book a demo to chat about your compliance needs.
