Nearly all Financial Planner clients will be affected from September and any firms carrying out online transactions.
When clients transfer money they will probably need to use SCA and planners should at least know the basics to avoid being hit with problems.
With this in mind, it’s good to see that the FCA has agreed a plan to implement SCA over an 18 month period, longer than expected, to give the financial sector more time to cope with the significant changes.
FCA to phase in Strong Customer Authentication rules
Inevitably much of this is related to tackling online fraud and scams. We’ve seen millions of people targeted by online fraudsters over the past few years and the problem is getting worse, much worse and will keep on getting worse unless we do something.
The newspapers and websites are full of stories of people who have been ripped off. When the FCA has to advertise on TV to warn people of the dangers of pension scammers cheating people out of their pensions you know it’s serious.
SCA will introduce 2-step authorisation on transactions in most cases. For online banking many of us are getting used to card readers or passcodes sent to mobile phones. This is part of the process of providers carrying out far more diligent checks when money is moved.
It is making online transactions more fiddly and time-consuming but if it protects against fraud it is a necessary evil.
Restoring confidence and faith in all aspects of financial services is key to the future growth of the sector.
If you can build up a pension pot over 30 years only to have a conman cheat you out of it in minutes something is wrong and it’s no wonder the public struggle to trust financial services if they can lose everything to a crook so easily.
We will have to get used to more security but if it tackles the scams it’s a price worth paying.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with 30 years experience. This topical comment on the Financial Planning news appears most weeks.