Monthly Archives: Jun 2017
Following its 2016 thematic review, FCA has undertaken follow up work and visited 20 principal firms, focusing on London market insurance intermediaries that had diversified and developed networks of appointed representatives (ARs). The FCA found that issues in the thematic review existed in a wider sample of firms including: Widespread failings in principals’ oversight of their […]
EIOPA has published the first set of quarterly statistics on quantitative Solvency II reporting from insurance undertakings and groups in the EU and EEA. The statistics contain aggregated country level information about the balance sheet, own funds, capital requirements, premiums, claims and expenses and refer to the latest information available at the extraction date.
The European Commission is to launch a pan-European pension product (PEPP) that will have the same standard features wherever in the EU it is sold. The PEPP can be offered by a broad range of providers and will complement existing state-based, occupational and national personal pensions but not replace or harmonise any national personal pension […]
FCA has published its review of appropriateness assessments firms make when selling CFD products. The review followed last year’s dear CEO letter which asked firms to consider whether their client take on processes complied with the Principles and COBS requirements. FCA found that, despite this, firms were not meeting its expectations, especially: they were not […]
Andrew Bailey has spoken at BBA’s retail banking conference on FCA’s perspective on retail banking. He highlighted 3 points: the importance of understanding business models, in the light of Northern Rock. FCA needs to understand where banks earn their returns and how stable they are. He noted that, before the financial crisis, the pressure was […]
PRA and FCA are consulting on changes to the leverage framework following the FPC’s recommendation to exclude claims from central banks from the leverage exposure measure, and compensate for doing so by increasing the minimum leverage ratio requirement to 3.25%. A second consultation addresses how PRA would implement the FPC recommendation if it is adopted. Consultation […]
The Financial Guidance and Claims Bill has been introduced into Parliament and has had its first reading in the House of Lords. The Bill delivers on the promises in the Queen’s Speech to set up a new financial guidance body and to transfer regulation of claims management companies to FCA.
On 20 June 2017, Christopher Woolard, Executive Director of Strategy and Competition at the FCA, delivered a speech at the FCA Insurance Access event on improving access to insurance. Following the FCA’s engagement with various stakeholders, it found that those who have, or have had cancer experience difficulty in both travel insurance and other protection […]
FCA had made a provisional decision to make a market investigation reference of investment consultancy services. In February, three major providers of these services offered undertakings in lieu (UIL) for FCA to consider, saying they would amend their practices without the need for FCA to make new rules. FCA has decided to reject it, but […]
FCA has published the final findings of its asset management market study. As part of this, FCA set out a package of remedies to address the concerns identified. Alongside the market study, FCA has published a consultation paper on implementing the asset management market study remedies and changes to the Handbook. FCA conducted analysis of over 20,000 shareclasses […]
Transparency International has welcomed the changes the Government has made to implement the MLD4 beneficial ownership requirements in respect of Scottish Limited Partnerships. It had previously expressed significant concerns that the unique features of SLPs enabled them to be used as shell companies and present a “respectable” UK front to illicit activity. Surveys by TI […]
FCA has created a new page on its website to reflect the MLD4 requirement for firms that are authorised under FSMA and supervised by FCA for their MLR compliance to notify it if they undertake money services business (money transmission, currency exchange or cheque cashing) or trust and company service activities. The requirement to notify FCA […]
ESMA has published its final guidelines on trading halts under MiFID 2. The guidelines calibrate trading halts and provide guidance for regulated markets on how the calibration works and the information and reporting requirements associated with activating volatility-management mechanisms. National competent authorities now have 2 months in which to notify ESMA whether they intend to […]
BoE has published Financial Stability Report no. 41 which sets out the views of the Financial Policy Committee (FPC) on the current financial stability of the UK, including an assessment of the risks to, and resilience of, the UK financial system and its recommendations to reduce those risks. The FPC has assessed the overall risks in […]
FCA has published its policy statement and new rules banning firms from including within their customer documentation contractual clauses restricting competition without clear benefit to their clients. In particular, it bans the use of clauses that restrict a client’s choice of future providers of primary market services (DCM, ECM and M&A services). From 3 January 2018 firms […]
The FSB has been analysing the potential financial stability implications from FinTech with a view to identifying supervisory and regulatory issues that merit authorities’ attention. In a Report released this week, the FSB identified ten areas, of which the following three are seen as priorities for international collaboration: the need to manage operational risk from […]
The ESAs have published draft RTS to help Member States work out when PSPs and E-money issuers should appoint a “central contact point” to help effective AML oversight of the activities of their networks in “host” Member States.
In among the publications heralding MLD4’s implementation, FATF held its latest plenary meeting. Key announcements included: continuing concern over North Korea and a continued call for members to apply effective counter-measures and enhanced scrutiny when dealing with it. It also reminds jurisdictions to take “necessary measures” to close existing branches, subsidiaries and representative offices of […]
BEIS has published updated guidance to reflect the effects of MLD4 on the PSC Register and regime.
The ESAs have published their final guidelines on AML and CFT required under MLD4. The guidance is intended for credit and financial institutions and should provide them with the tools they need to make risk-based decisions on their management of business relationships and occasional transactions. There are some general guidelines and some sector-specific ones. The […]
The Commission has published its report to the EP and Council on its assessment of the AML and TF risks affecting the internal market and relating to cross-border activities. It published the report, and supporting working papers, as it heralded implementation of MLD4.
Treasury has made the FSMA (Markets in Financial Instruments) Regulations 2017 which make changes to FSMA and other primary and secondary legislation to make the legislative amendments necessary to implement MiFID 2 that are not separately addressed by the Regulations amending the RAO and putting in place the authorisation and supervision process for DSRPs. The […]
The ITS on standard forms, templates and procedures for DSRP authorisation under MiFID 2 have been published in the OJ.
FCA made 4 new rules instruments at its June Board meeting. new fees rules taking effect from 3 July, to raise fees and levies to provide funding for the FOS and MAS to meet their statutory objectives, and to raise necessary funds for pensions guidance services and for Treasury to tackle illegal money lending; the […]
Commission Implementing Regulation (EU) 2017/1110 of 22 June 2017 laying down implementing technical standards regarding standard forms, templates and procedures for the authorisation of DRSPs and related notifications under MiFID 2 has been published today in the Official Journal of the European Union.
Treasury has published the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, which were laid before Parliament late on 22 June to come into force to meet MLD4 deadlines, on 26 June. JMLSG has also published the finalised updates to its guidance, which it now needs to submit to […]
FCA’s guide can be found here. FCA has designed the guide to help firms, particularly smaller businesses, become more resilient to cyber attacks and to respond appropriately to cyber incidents. FCA has seen a significant increase in the number of material cyber incidents reported to it over the last three years: from five incidents in […]
Faster Payments launches Trust Service that will potentially cut the cost for challenger banks and others of obtaining the services that are essential to securely access the UK’s payments systems
In order to be able to access customer-sensitive data needed to use Faster Payments, participants need to have the use of a Public Key Infrastructure (PKI) Trust Service, which manages the digital certificates that are essential to keep customer information secure. Faster Payments created the service after it determined that the costs of the existing […]
The Governing Council of the ECB has decided to develop a new service for the settlement of instant payments. The new service, TARGET instant payment settlement (TIPS), will enable citizens and firms to transfer money between each other in real time and will be available around the clock, 365 days a year. The ECB is […]
It was also confirmed in the background notes to the Queen’s Speech that the Financial Guidance and Claims Bill will be brought forward to progress plans previously announced for: FCA to take over the regulation of claims management services. Among other things it will have power to cap fees CMCs charge. FOS will have responsibility for […]
One of the few financial services-related measures discussed in the Queen’s Speech confirmed the Government will act on Law Commission proposals to repeal the Bills of Sale Acts and replace them with a Goods Mortgage Bill. Among other things, this will increase protections for borrowers who have taken out a mortgage on goods they own […]
The ITS under MiFID 2 on the format of position reports have been published in the OJ.
PRA is consulting on a replacement supervisory statement on recovery planning, setting out additional expectations to those in the current statement 18/13. It says the basis of the statement is still correct, but it wants to introduce specific requirements and guidance in several areas and, separately, update its supervisory statement for ring-fenced bodies in relation […]
FCA is consulting on changes to its rules on advice relating to pension transfers, with a particular focus on transfers from defined benefit to defined contribution schemes. The changes seek to ensure consumers get advice that considers all relevant factors, and include requiring transfer advice to be provided as a personal recommendation. Alongside this is […]
On 20 June 2017, the Financial Conduct Authority published a Call for Input on access to insurance following the issues raised in its May 2016 Occasional Paper on access to financial services in the UK. The occasional paper discussed the problems faced by consumers when trying to find insurance to meet their needs – whether […]
PRA has published a policy statement on risk weights in the residential mortgages sector (PS13/17). The statement applies to banks and building societies who use an internal rating based (IRB) method to calculate credit risk capital requirements relating to residential mortgage portfolios. The statement contains the final amendments to the ‘IRB approaches’ supervisory statement, which includes […]
In March 2017 FCA announced it was introducing a 29 August 2019 deadline for all PPI complaints to be submitted to firms or ombudsman services (subject to limited exceptions). This rule comes into effect on 29 August 2017 and applies to firms within the FOS’ compulsory jurisdiction (CJ). However, this rule currently will not apply to firms that […]
Philip Hammond has given the delayed Mansion House speech. He spoke of the Government’s priorities and its commitment to delivering better public services, higher real wages and increased living standards through stronger growth, and how it needs to be delivered through rising productivity. He stressed that this means more trade, and strong trade links with […]
EIOPA has published an assessment of the first supervisory experiences of how European (re)insurance companies have implemented the own risk and solvency assessment (ORSA) process under Solvency II. The key findings are as follows: The majority of (re)insurance undertakings have made good progress in implementing the ORSA process. There is a need for a greater […]
Gabriel Bernardino, Chairman of EIOPA, delivered a speech on opportunities, challenges and regulatory developments. Mr Bernardino concluded his speech with an explanation that EIOPA’s priority on Brexit is focused on the supervisory approach towards the insurers based in the UK seeking relocation of subsidiaries in the EU. He confirmed in his speech that empty shells or letter […]
EIOPA and the World Bank have entered into a further Memorandum of Understanding (MoU). The MoU is for a period of three years and replaces the MoU signed in 2013. The Parties intend to collaborate, with a focus on insurance, on the common projects and areas of collaboration as outlined in the MoU. The Parties’ […]
EIOPA has published its annual report which reviews its mandate and programme of work during 2016. Highlights of what EIOPA considers to be its top achievements in 2016 include: Developments of the KID for PRIIPs. EIOPA’s readiness for Solvency II reporting. EIOPA Insurance Stress Test 2016. Launch of an EU-wide thematic review of market conduct among […]
SFO has charged Barclays Bank and 4 individuals with conspiracy to commit fraud and providing unlawful financial assistance in relation to capital raising and loan facilities relating to Qatar during 2008.
EIOPA has responded to the Commission’s consultation on FinTech. EIPOA notes that digitalisation / InsurTech is of strategic importance for the insurance and pensions sector. It has an impact in all of the areas of the value chain. They also note that there are some risks arising from digitalisation that supervisory authorities need to examine very […]
John Griffith – Jones has confirmed that he will leave both the FCA and the PSR at the end of his term of office on 31 March 2018.
IOSCO has published a report looking at supervisory practices relating to incentives for order routing. It considers how different jurisdictions require firms to manage conflicts associated with routing orders and best execution. The report focuses on: monetary incentives paid or received by brokers to or from third parties; internalisation and use of affiliated venues that […]
ESMA is consulting on its draft technical standards specifying the trading obligation for derivatives under MiFIR. It has revised its previous approach, and now wants comments by 31 July on the new proposals. These include how to phase-in the trading obligation. The MiFIR trading obligation is closely linked to EMIR. Once a class of derivatives needs […]
The RTS under MiFID 2 on information to be notified by investment firms, market operators and credit institutions when applying for a MiFID 2 passport has been published in the OJ. The RTS include the information required for a tied agent passport notification.
FCA has reminded firms that they need to submit applications for authorisation and variations of permission related to MiFID 2 by 3 July, to enable FCA to consider them before 3 January 2018. If an application is not determined by then, firms may be unable to carry on relevant business until properly authorised.
The Lending Standards Board (LSB) published a report (dated May 2017) setting out the findings of its Standards Development Project (SDP) on digital. The SDP included credit card, loan and overdraft products. In the report, the LSB notes that, in the context of the Standards, the most significant areas of digital development for firms are […]
The EBA has produced a draft response to the EC’s consultation on ‘Fintech: a more competitive and innovative European Financial Sector.’ The response sets out the EBA’s views on questions in the consultation paper that fall within the scope of the work of the EBA. The EBA provided responses on the following topics: Big data […]
In a speech by James Proudman (Executive Director, UK Deposit Takers Supervision, Prudential Regulation Authority, Bank of England), it was discussed that the key component of the ring-fence is to provide ‘efficient resilience’ for domestic banking services (critical functions of lending, deposit-taking and payment services for retail and small corporate customers) ‘on which UK households and companies […]
The EBA published its 2016 Annual Report, which provides a detailed account of all the work the Authority achieved in the past year and anticipates the key areas of focus in the coming years. Some of the EBA’s key areas of focus for 2017 are: Monitoring FinTech and the regulatory perimeter the EBA will continue […]
The International Securities Services Association (ISSA) has updated its financial crime compliance principles for securities custody and settlement. The principles focus on governance and control, due diligence and third party client business. It has produced draft contractual terms, available to members, to support implementation of the principles, and a questionnaire to provide custodians with help […]
ESMA’s annual report for 2016 focusses on its activities in: assessing risks to investors, markets and stability; creating a single rulebook; promoting supervisory convergence; and supervising credit rating agencies and trade repositories. The narrative to the report looks at its work with the other ESAs, latterly on PRIIPs and work to come on transparency on […]
Jamie Symington, Director of Investigations at FCA has spoken on its approach to investigations. He explained that historically firms have feared investigations which often resulted in an adversarial and quasi-litigious relationship with investigators from the outset . This often prevented both the firm and the investigator doing their jobs properly. In 2014 Treasury recommended that FCA […]
FCA has updated information on its regulatory sandbox. It says the sandbox’s popularity is increasing and larger numbers of firms both applied for and were accepted for testing in cohort 2. FCA has named the 24 firms that are ready to begin testing shortly and describes the services they are testing. A wide range of […]
Sabine Lautenschläger, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, gave a speech on what ECB regards as the four key priorities for successful bank supervision: Global approach to regulation: banking is conducted globally and requires regulation on an equivalent scale. Banking reforms have dominated European discussions […]
FOS has published its annual review for 2016/17, a period which it described as ‘immensely demanding’. Similarly to previous years, FOS reported that much of its activity focused on PPI complaints, but this should finally reduce with the August 2019 time limit for potential claims. The rules and guidance following the Plevin judgement will come into […]
PRA has published a consultation paper proposing changes to both the SMR and SIMR, but focuses predominantly on the SIMR, introducing what PRA describes as “optimisations”. The proposed changes will apply to all Solvency II insurance firms and to large NDFs, and are designed to bring the SIMR more closely into line with the SMR. They include: creating […]
FCA’s latest policy development update provides information on its recent and upcoming publications. Only one key publication is shown as scheduled for June – a policy statement on enhancing conduct of business rules for firms providing cfd products to retail clients. The policy statement on the first CP on IDD implementation is due in September, but there is […]
LSB has reviewed its Standards to assess whether any amendments are needed to take account of various digital developments. It considered the effects of digitalisation of the customer experience on the whole customer journey apart for credit card, loan and overdraft products. Key findings included: firms increasingly use third parties to supply the required technology, […]
FCA has published the findings from its review of life insurers’ pension lifestyle investment strategies. It had asked 13 insurers what their approach was to these strategies in the light of the 2015 pension reforms and how consumer behaviour had changed as a result. FCA found that firms use different names for the books they operate, […]
Charlotte Gerken has spoken of the BoE’s approach to operational resilience. She focussed on how it is developing its approach in co-operation with firms and other regulators. BoE’s aim is to improve the ability of the financial services sector to absorb the impact of an unexpected event while continuing to perform its key activities. Part […]
The latest forecast from the European Parliament’s legislative observatory indicates the first plenary hearing of the MLD5 proposals will be on 23 October.
PRA is consulting on minor changes to its regulatory reporting templates. It has found a few inconsistencies relating to forms on the Capital + data items, and an error in the Regulatory Reporting Glossary. Consultation closes on 7 July.
FCA’s latest quarterly consultation proposes changes to: TC to update the list of appropriate qualifications; SUP to clarify how the requirement to have a client assets report applies to loan-based crowdfunding platforms – primarily to clarify FCA’s expectation that these firms appoint an auditor to prepare and submit a client assets report; and also to […]
The Commission has made some of the outstanding technical standards under MiFID 2, and these have been published in the OJEU: ITS on standard forms, templates and procedures for supervisory co-operation; ITS on standard forms, templates and procedures for consulting other supervisors before granting authorisation; and ITS on standard forms and cooperation agreements in respect of […]
FCA is consulting on changes to its Handbook and Guidance to ensure it is in line with MLD4 and the Fund Transfer Regulation. The draft MLRs that will replace the 2007 version give FCA greater supervisory powers over both regulated firms subject to the MLR and “Annex 1 financial institutions”. The changes affect only DEPP […]
JMLSG has published (on 10 June) its consultation draft of changes to the electronic money chapter within Part 2 of its guidance. It asks for comments by 20 June – justifying the short period by saying the chapter is of limited interest to the wider financial sector and has essentially been revised only to reflect MLD4 […]
The Council of the EU has adopted its position on the proposal for a Directive to set minimum rules defining criminal offences and sanctions relation to money laundering. Now the EP needs to decide on its position before negotiations towards adoption of the Directive can start.
Steven Maijoor has spoken to the FIA on ESMA’s current work, including its preparations for MiFID 2. He stressed that there will be no further delay in implementation. He referenced ESMA’s recent and ongoing work on trading and transparency requirements, and heralded an imminent consultation on the trading obligation for derivatives. He also spoke of […]
The Basel Committee has updated its guidelines on sound management of risks relating to money laundering and the financing of terrorism to provide clearer guidance in the chapters on correspondent banking and the general guide to account opening. The new guidance includes a list of risk indicators that correspondent banks should consider, and are aimed to respond to […]
The Court of Appeal has dismissed an appeal by an insured because he was not a consumer within the meaning of ICOBS and the Unfair Terms in Consumer Contracts Regulations 1999 (the Regulations). The insured took out a policy in 2012 (before the abolishment of ‘basis of the contract’ clauses insurance contracts) and the proposal form contained […]
ESMA has responded to the Commission’s consultation on Fintech. It sees Fintech as a positive evolution so long as business models continue to aim to improve the customer experience and financial inclusion. It identifies some concerns that it thinks need to be addressed, including: the risks (from a market integrity and investor protection standpoint) and costs […]
The EP has published a draft report on the Action Plan for retail financial services. The report: says the EU retail financial services market is still underdeveloped and fragmented, but recognises that such a market will work only if it delivers real customer value; welcomes the Commission’s action plan working towards a single technology-enabled market; […]
EBA finalised its technical standards on standard terminology and disclosure under the PAD and submitted it to the Commission in early May. It has now published the Annex which contains the 8 terms in all official languages. The terms, in English, are: maintaining the account providing a debit card providing a credit card arranged overdraft sending […]
FCA’s latest MarketWatch newsletter sets out the results of its review of dividend arbitrage, a process which involves placing shares in alternative tax jurisdictions around dividend dates, with the intention of minimising withholding taxes (WHT) or generating WHT reclaims. The review focused on the activities of a number of inter-dealer brokers, settlement agents and custodians involved in […]
The Information Commissioner’s Office (ICO) recently published its information rights strategic plan 2017 – 2021. The strategic plan sets out the ICO’s mission to increase the trust that the public has in government, public bodies and the private sector; including trust in transparency, in the digital economy and in digital public service delivery. It also […]
ESMA has published its final report on product governance guidelines under MiFID 2. It received over 100 responses to its consultation on the guidelines, which were generally supportive. However, ESMA has made some changes to the guidelines as a result of the comments. The final guidelines will now apply from 3 January 2018 and will […]