Monthly Archives: June 2017

FCA’s follow up work general insurance on appointed representatives

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 publishes first Solvency 2 statistics

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.

Commission launches pan-European pensions label

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 disappointed on CFD TCF

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 […]

FCA speaks on retail banking regulation

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 consult on leverage ratio changes

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 […]

ILS regulations expected to come into force in the autumn

In a letter dated 26 June 2017, HM Treasury has written to the London Market Group (LMG) regarding the Group’s response to the Government’s Insurance Linked Securities (ILS) Project. The Treasury confirmed its intention to complete the ILS project  and it has been working closely with the PRA, FCA and the LMG’s Market Group’s ILS Taskforce. The […]

Financial Guidance and Claims Bill in Parliament

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.

FCA speech on improving access to insurance

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 looks at competition and investment consultancy

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 publishes final asset management market study report

FCA has published the final findings from its asset management market study. It has considered the responses it received following its interim report and is now proposing a package of remedies falling into three broad categories: protection for investors who are not well placed to find better value for money; driving competitive pressure on asset […]

fca publishes asset management market study final report and consultation paper

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 […]

TI warns on SLP risks

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 advises firms on MLR notification requirements

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 issues MiFID 2 trading halt guidelines

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 publishes Financial Stability Report

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 confirms ban on choice restrictions in investment banking

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 […]

FSB issues a report on the financial stability implications from FinTech

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 […]

ESAs publish central contact point recommendations

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.

FATF holds plenary meeting

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 […]

PSC guidance updated for MLD4

BEIS has published updated guidance to reflect the effects of MLD4 on the PSC Register and regime.

ESAs publish MLD4 AML/CFT guidelines

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 […]

Commission reports on ML risks

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 makes MiFID 2 Regulations

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 […]

DRSP forms published in OJ

The ITS on standard forms, templates and procedures for DSRP authorisation under MiFID 2 have been published in the OJ.

FCA makes new rules

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 […]

Implementing Regulation on standard forms for DRSPs under MiFID 2 published in the OJ

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 makes MLR 2017 and JMLSG finalises guidance

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 Launches cyber security guide in wake of cyber attacks

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 […]

ECB to develop a service for the settlement of instant payments by end of 2018

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 […]

FCA to regulate claims management companies

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 […]

Bills of Sale Acts to go

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 […]

Commission publishes more MiFID 2 ITS

The ITS under MiFID 2 on the format of position reports have been published in the OJ.

PRA consults on new recovery planning standards

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 consults on pension transfer advice

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 […]

FCA call for input on access to insurance

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 amends IRB approach statement

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 […]

FOS consults on PPI voluntary jurisdiction

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 […]

Chancellor makes Mansion House Speech

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 publishes ORSA assessment

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 […]

EIOPA speaks on Brexit – “empty shells or letter boxes are not acceptable”

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 signs another Memorandum of Understanding with World Bank

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 publishes 2016 annual report

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 brings fraud charges against Barclays

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 responds to commission’s consultation on fintech

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 leaving the FCA

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 reports on order routing incentives

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 consults on MiFIR trading obligation RTS

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 […]

Commission publishes more MiFID 2 standards

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 says “get your MiFID 2 applications in now”

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.

Lending Standards Board considers enhancements to take account of technological advancements

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 […]

EBA provides draft response to EC consultation on Fintech

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 […]

BOE speaks on effects of ring-fencing for customers

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 […]

EBA publishes 2016 annual report – some key areas of focus for 2017

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 […]

ISSA updates financial crime principles

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 publishes annual report

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 […]

FCA speaks on approach to investigations

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 updates on sandbox

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 […]

EBA speaks on bank supervision priorities

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 publishes annual review

  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 consults on SMR/SIMR changes

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 […]

Up next from FCA

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 looks at digital developments

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 publishes pensions lifestyle strategy review

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, […]

BoE speaks on operational resilience

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 […]

MLD5 due for plenary in October

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 consults on regulatory reporting

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 publishes quarterly consultation

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 […]

Commission makes MiFID 2 ITS

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 consults on MLD4

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 publishes e-money update

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 […]

Council pushes forward on AML criminal laws

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.

ESMA speaks on priorities and Brexit.

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 […]

Basel Committee updates AML guidance

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 […]

Court concludes an insured with policy for buy-to-let property is a not consumer

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 responds on Fintech

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 […]

ECON publishes draft retail FS plan

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 finalises PAD terminology and disclosure Annex

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 looks at dividend arbitrage

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 […]

ICO publishes Information Rights Strategic Plan 2017 – 2021

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 finalises product governance guidelines

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 […]