FSA warns FCA may change discretionary firms  

The FSA has in recent months warned the Financial Conduct Authority (FCA), which will take over conduct regulation when the FSA is split by the end of the year, will take a more aggressive approach to intervening in the design of financial products. Linda Woodall, head of the savings and investments department at the FSA, told Investment Adviser that “some development” may be required from discretionary fund managers (DFMs) in particular under the FCA regime. “We are not mandating the size and shape of the marketplace,” she added. “The key thing we want to see is good consumer outcomes.” The FSA’s focus on DFMs, and other solutions that financial advisers are using to outsource their investment duties ahead of the RDR, was made clear when it published a guidance consultation on outsourcing last week. 

Pension funds must reduce their estimates. 
 According to the FSA, firms must lower average estimates of a 7% rate of return for investment products that are a mix of equities and bonds to between 5.5% and 6.5%. The recommendation is based on the results of a study by PricewaterhouseCoopers LLP. The projected returns are “reasonable central estimates over a 10-15 year time period,” the report said.The report continued: "The near future remains highly uncertain and we should continue to expect volatility as markets react to any signs of recovery or further weakness. Effective policy actions in the Eurozone are crucial, but analysis of economic trends cannot easily predict the outcome of those decisions. The movements of the key macroeconomic variables over the next five years or so will reflect a process of adjustment back to trend and so are likely to differ from long-term trends." 

EU lawmakers set July 9 vote on market abuse, MiFID directives

 Members of the European Parliament's economy committee will vote July 9 on the European Commission's proposed revisions to the Market Abuse Directive and the Market in Financial Instruments Directive, the EP's press service said Thursday.The revisions to both directives aim to improve transparency and address loopholes in the regulation of derivatives markets, including commodity derivatives and the lack of criminal sanctions for abuse. The market abuse regulation would address gaps in the regulation of over-the-counter trading. 
 "It was decided that MAD and MiFID legislation should be voted [on] together since they are strongly interlinked," the EP press service said Thursday after the economy committee had its first debate on the Market Abuse Directive.  
 

 On-line fraud still a problem for financial services

The financial sector continues to be a magnet for frauds and cyber-crime is becoming a major threat as increased internet usage gives rise to scams and data theft, a global survey has found.

Information technology experts say online banking creates fertile ground for frauds who use scams such as phishing to steal clients’ money after obtaining their account details.

Professional services company PricewaterhouseCoopers (PwC) says in its latest global survey on crime: "Most individuals and organisations rely upon the internet and connected technologies, opening themselves up to the risk of attack from global criminals from anywhere in the world."

PwC partner Louis Strydom said up to 40% of respondents in SA had not received cyber crime training or awareness communications of any kind during the past 12 months.

About 46% saw cyber crime as an external threat, he said, warning that companies should recognise the potential internal risk of the crime and prepare themselves accordingly.

"We are experiencing comparable levels of cyber crime to our international counterparts. South African banks are at the forefront of technology and combating cyber crime, but continued vigilance is required," Mr Strydom said yesterday.

Criminals were posing as cellphone company representatives and tricking customers into switching off their phones while they tried to gain access to their bank accounts, the South African Banking Risk Information Centre warned recently.