February 1, 2022

FCA issues proposed guidance on how it will approach compromises proposed by regulated firms

The UK Financial Conduct Authority is consulting on guidance to address how the FCA will approach compromises proposed by regulated firms as well as the factors to be considered during assessments and the FCA’s role once a compromise is proposed.  The guidance consultation, which was first published on January 25, 2022, was issued in response to the increase in the number of firms that were proposing compromises to settle significant liabilities to consumers such as redress liabilities. In an effort to reduce the number of proposed compromises that the FCA considers to be unacceptable, the Authority published the guidance in order to help regulated firms, and those that are dual regulated by the FCA and PRA, understand the information that the FCA needs when assessing a proposed compromise and the approach it should take in order to reach compromises that are in line statutory objectives designed to protect consumers and the integrity of the market. 

The guidance proposed by the FCA addresses three types of compromises, including schemes of arrangement, restructuring plans and voluntary arrangements, and only relates to compromises made in relation to liabilities.  The FCA is also interested in receiving feedback on the proposed guidance and welcomes public comments on its website or via email until March 1, 2022.

FCA news release | FCA Guidance Consultation