Dear CEO Letter ensure customers understand how money is protected
What has happened?
In May 2021, the FCA issued a Dear CEO letter to the CEOs of e-money firms, asking them to write to their customers to make it clear how their money is protected.
What do you need to do?
This is not a new development, since the FCA published a Portfolio strategy letter and Finalised Guidance regarding safeguarding for payment services and e-money firms in July 2020, and it remains concerned that many e-money firms are not adequately disclosing the differences in protections between their services and those of traditional banking and in particular, the fact that FSCS protection does not apply to e-money.
In the letter, the FCA asked that e-money firms write to their customers within six weeks of the date of the letter (18th May 2021) to remind them of how their money is protected through safeguarding and that FSCS protection does not apply. It is suggested that firms may when writing include a link to the FCA website to help customers decide whether the available level of protection is appropriate for their circumstances. This communication will need to be kept separate from any other messaging or promotional activity.
The FCA expects firms to consider the appropriate method(s) of communication based on their business model and customer base, including any vulnerable customers.
It has also asked firms to review their financial promotions in the light of BCOBS 2.3.1AR and BCOBS 2.3.4G and in particular to ensure that:
- their promotions give customers enough information, and
- that where any promotion does name the FCA as regulator and refers to matters that it does not regulate, the firm makes it clear that those matters are not regulated by the FCA
The FCA also asks firms to draw the Dear CEO letter to the attention of their Boards and it expects the Board to have considered the issues raised and to have approved the firm’s action taken in response.
It has confirmed that it does intend to follow up the letter with a sample of firms, to assess the action taken.
General FCA information on safeguarding issues is available here.
How can we help you?
If you’d like to know more about how we can help you with your e-money safeguarding arrangements, or any other regulatory compliance issues, our expert team is here to help.
Contact us today on 0207 436 0630 or email info@thistleinitiatives.co.uk.