Monthly Archives: December 2017

Treasury confirms establishment of Office for Professional Body AML Supervision

Following the announcement earlier this year of the new Office for Professional Body Anti-Money Laundering Supervision (OPBAS), which will operate within the FCA to oversee the 22 accountancy and legal professional body AML supervisors in the UK, the Treasury has confirmed that the necessary OPBAS regulations have been laid in Parliament and will take effect […]

Increase in limit on Building Societies’ maximum currency transaction size

Treasury has published the Building Societies (Restricted Transactions) (Amendment to the Limit on the Trade in Currencies) Order 2017. This Order increases the limit set out in section 9A of the Building Societies Act 1997 at which building societies can convert currency from £100,000 to £3 million, in order to better reflect the nature and […]

ESMA consults on draft Securitisation Regulation technical standards

The European Securities and Markets Authority has published three consultation papers on draft technical standards implementing the Securitisation Regulation that is expected to be published by the end of this year. The matters addressed by the draft technical standards include requirements for the content and format of underlying exposures and investor report templates, and operational […]

Treasury, FCA and EIOPA issue statements regarding continuity of activities and services after Brexit

Along with the PRA’s publication of consultation papers on its intended approach to supervision of third country firms, the Treasury, FCA and ESMA have recently issued statements providing an update on provision to enable firms across Europe to continue to do business after Brexit. The Treasury has announced that if necessary (ie depending on the […]

Digital comparison tools: government responds to CMA market study

Earlier this year, the Competition and Markets Authority (CMA) published the results of a market study into the use of digital comparison tools in a number of sectors, including car insurance, home insurance and credit cards. The findings of the market study included strong concern about the use of ‘most favoured nation’ clauses, which can […]

FCA updates AIFMD transparency reporting information

FCA has published updated guidance on reporting Annex IV transparency information under the Alternative Investment Fund Managers Directive (AIFMD). The document details: Transparency reporting requirements (pursuant to both the AIFMD and the FCA Handbook); How this information is submitted to the FCA (via the Gabriel system); The form of report (AIF001 Manager Report and AIF002 Fund Transparency Report); and […]

PRA publishes consultation papers on approach to supervision of third country firms after Brexit

The PRA has issued two consultation papers on its approach to branch authorisation and supervision, addressed to international banks and to international insurers.  Both consultations close on 27 February 2018. The Bank of England has also published letters from Sam Woods, Deputy Governor for Prudential Regulation regarding PRA regulated firms’ planning assumptions, and from Sir […]

ESMA and FCA issue statements on LEIs

In advance of the implementation date for MiFID II on 3 January 2018, ESMA has issued a public statement that provides a form of 6 month transitional period for certain trading venues and certain legal persons, to support the introduction of Legal Entity Identifier (LEI) requirements.  This includes provision that trading venues whose non-EEA issuer […]

European Commission publishes proposals regarding capital requirements for investment firms

The European Commission is proposing an overhaul of the prudential requirements for investment firms by bringing in a two track system. The largest, more systemically important firms will be subject to the same rules and requirements as banks; the other firms will be relieved from these more onerous requirements. The changes will be introduced by […]

ILPA issues Model Subscription Agreement

In December, the Institutional Limited Partners Association (ILPA) issued the first in a series of model documents to be produced through its Limited Partnership Agreement (LPA) Simplification Initiative. The Model Subscription Agreement (MSA) seeks to streamline fundraising, increase clarity and improve the efficiency of capital formation by providing a balanced, off-the-shelf subscription document solution which […]

Opinion of the EBA on the transition from PSD1 to PSD2

The European Blanking authority (EBA) has published an opinion (EBA/Op/2017/16) on the transition from the Payment Services Directive (2007/64/EC) (PSD) to the revised Directive on payment services in the internal market ((EU) 2015/2366) (PSD2), which will apply from 13 January 2018. The EBA clarifies a number of issues identified by market participants and competent authorities, including: […]

EC publishes proposal to delay IDD application date

The European Commission has today published a legislative proposal to push back the application date of IDD until 1 October 2018, at the request of the European Parliament and Member States. Member states will still be required to transpose IDD into national legislation by the current implementation date of 23 February 2018. The European Parliament […]

FCA publishes second IDD policy statement

As the implementation date for the Insurance Distribution Directive (IDD) approaches, the FCA has published the second of its three policy statements on the implementation of IDD, PS17/27.  This policy statement contains near-final amendments to the FCA’s rules to enable firms to be able to prepare based on the substance of what the final versions […]

FCA publishes distributed ledger technology feedback statement

Following the publication of its discussion paper regarding the risks and opportunities, and characteristics of distributed ledger technology (DLT) in April 2017, the FCA’s feedback statement FS17/4 sets out responses received and the FCA’s next steps. The responses related to the following issues: operational risk, including outsourcing and network security; digital currency, including digital currency […]

Payment Services Regulator requires change to Direct Debit rules regarding switching Facilities Management providers

The Payment Services Regulator (PSR) has published its decision to require the operator of the Bacs payment system, of which the Direct Debit scheme is a part, to change its rules to help clients switch Facilities Management (FM) service providers. Direct Debit FM service providers enable organisations which aren’t specifically approved or sponsored as Bacs […]

EBA Discussion Paper – Implementation in the European Union of the revised market risk and counterparty credit risk frameworks

The European Banking Association (EBA) has published a discussion paper (EBA/DP/2017/04) on the EU implementation of the revised market risk and counterparty credit risk frameworks. The discussion paper focuses on the implementation issues that are expected to have a significant impact on banks implementing the standardised approach for counterparty credit risk (SA-CCR) and/or the fundamental review of […]

FCA statement on the EBA Guidelines on Operational and Security Risks under PSD2

In response to the European Banking Authority (EBA) Guidelines on Operational and Security Risks under PSD2, published on 12 December 2017, the FCA published a statement on its website reminding payment service providers that they will be expected to comply with the Guidelines from 13 January 2018 in addition to the requirements set out in Regulation […]

Law Commission to address electronic signatures and smart contracts in 13th Programme of Law Reform

The Law Commission has announced the programme of reforms it will be working on over the next 3 years.  The projects include: Electronic signatures: there is an absence of explicit case law or legislation confirming that documents executed with an electronic signature satisfy statutory requirements for documents to be in writing and/or signed and/or under […]

ESMA UPDATES ITS Q&As RELATING TO MIFID II

The European Securities and Markets Authority (ESMA) has today published updated versions on its Questions and Answers (Q&As) relating to topics under the MiFID II Directive (2014/65/EU) and the Markets in Financial Instruments Regulation (Regulation 600/2014) (MiFIR). ESMA has added new Q&As covering: transparency and market structures; MiFID II and MiFIR investor protection and intermediaries […]

Agreement on the EU proposals to prevent money laundering and terrorism financing reached

The European Parliament and the Council has announced they have reached a political agreement on the EU Commission’s proposal to further strengthen EU rules on anti-money laundering and counter terrorist financing. This revision of the Fourth Anti-Money Laundering Directive, aims at: increasing transparency on who really owns companies and trusts by establishing beneficial ownership registers; […]

UK Finance publishes MiFID 2 guidelines

UK Finance has published guidance for firms on product governance and retail costs and charges under MiFID 2. The guidelines on product governance look at the “target market” criteria, which include recommendations on information exchange between manufacturers and distributors. UK Finance notes that MiFID 2 will have the effect of creating industry-wide renegotiations and has […]

Treasury committee calls for urgent agreement on Brexit transition

The Treasury Committee has published a report which supports a time-limited “standstill” transition arrangement after the Brexit Article 50 negotiations are finished. It thinks it should be simple to negotiate these, to provide certainty as soon as possible and maximise the time available for longer-term discussions. The report also notes that, for the financial services […]

FCA updates on persistent debt

FCA has updated its consultation paper on its proposals for rules to help customers in persistent credit card debt. The revised proposals follow feedback on its April consultation. Respondents were in favour of FCA’s proposals in principle and it has now done a new analysis of the costs to business of its remedies – the […]

Commission adopts MiFID 2 trading equivalence decisions

The Commission has recognised a number of trading venues in the US, Australia and Hong Kong as equivalent for the purposes of the MiFID 2/ MiFIR share trading obligation. This follows publication in the OJEU of the decision of equivalence in relation to certain US swaps markets.

FCA writes to CEOs on PFOF

FCA has written a Dear CEO letter, expressing its concerns on the continued practice of “payment for order flow”. Despite FCA having criticised the practice in the past, it is aware that many brokers are still doing it, and are devising strategies to get round the even stricter MiFID 2 restrictions. FCA warns firms that […]

Regulators update on SMCR

FCA is consulting on how firms and individuals will manage the transition to the extended SMCR. Its key proposal is to grandfather persons from the existing approved persons regime, so that firms can focus on embedding the cultural changes required rather than filling in forms. FCA also seeks views on whether to extend the duty […]

ESMA clarifies application of MAR to trading in closed periods in updated MAR Questions and Answers

The European Securities and Markets Authority has published 2 new questions relating to the prohibition on dealings by persons discharging managerial responsibilities during a closed period in its updated MAR Questions and Answers.  Please read our briefing  for more.

EBA publishes PSD2 security measures guidelines

EBA has published its final guidelines on security measures for operational and security risks of payment services required by PSD2. The guidelines require PSPs to have in place: an effective operational and security risk management framework processes to detect, prevent and monitor potential security breaches and threats risk assessment procedures regular testing processes to raise […]

Government publishes anti-corruption strategy

The Department for International Development and the Home Office have published the UK’s anti-corruption strategy for 2017- 2022. It is predicated on six priorities, which include strengthening the integrity of the UK as an international financial centre and reducing corruption in public procurement and grants. Initiatives will include: greater transparency over ownership and control of […]

FCA highlights transaction reporting and MAR issues

The latest edition of Market Watch looks at: a reminder that an investment firm’s transaction report must reflect the transaction from its own perspective, reporting its immediate counterparty or client (whether or not subject to MiFIR). Whether to report at block or allocation level depends on what the immediate counterparty confirms as “executions” a reminder […]

EIOPA publishes editable IPID template

EIOPA and the European Commission have developed an editable version of the IPID template. Under the IDD, the IPID is required to be provided for non-life insurance products to enable the customer to make a more informed decision. FCA has proposed  for the IPID requirement to only apply to retail customers rather than commercial customers. The […]

PRA consults on internal models under Solvency 2

As part of its review into Solvency 2, PRA has published a consultation paper which proposes updated expectations of firms in respect of: the model change process set out in Supervisory Statement (SS) 12/16 ‘Solvency II: Changes to internal models used by UK insurance firms’; and the internal model change policies set out in SS17/16 […]

EIOPA publishes Opinion on monetary incentives and remuneration between asset managers and insurers

EIOPA has published an Opinion, addressed to national competent authorities (NCAs), which focuses on consumer protection issues related to monetary incentives and remuneration between providers of asset management services and insurance undertakings. While not an issue in all member states, EIOPA has found that unmitigated conflicts of interest and the management of unit-linked policies by insurers […]

PRA PUBLISHES policy statement on Pillar 2A requirements and disclosure

The PRA has today published a policy statement on Pillar 2A requirements and disclosure (PS30/17), which provides feedback to the responses to the consultation paper ‘Pillar 2A requirements and disclosure’ (CP12/17). The PRA has also set out the final amendments to – the  Supervisory Statement (SS) 31/15 ‘The Internal Capital Adequacy Assessment Process (ICAAP) and […]

Home Secretary announces new national economic crime centre to tackle high level fraud and money laundering

The Home Secretary Amber Rudd has announced plans to tackle economic crime to the assist in preventing fraud, money laundering and corruption. The measures include a new national economic crime centre within the National Crime Agency, which will be tasked with coordinating the national response to economic crime, backed by greater intelligence and analytical capabilities. The […]

Complaints Commissioner recommends Register review

The Complaints Commissioner has rejected a complaint against FCA from complainants who suffered loss when a firm that had passported into the UK sold products that were outside its permission. The firm was a Cypriot insurance mediation firm, and the Financial Services Register showed its passport was under the IMD. However, the firm sold investments […]

FCA sets out future approach to authorisation and competition

FCA has outlined its approach to authorisation and to competition. It notes it is one of the few financial regulators in the world with an objective that includes promoting competition. It wants to understand, in relation to authorisations: whether applicants clearly understand how to meet the Threshold Conditions – and, if not, how FCA could […]

FCA CLOSES CONSULTATION ON persistent debt and earlier intervention remedies

The FCA has updated its webpage on its consultation on persistent debt and earlier intervention remedies (CP17/10). Now that the consultation has closed, the FCA stated on its website that they are consulting on measures to address persistent credit card debt and require credit card firms to use their data to identify customers at risk of financial […]

IAIS consults on an activities-based approach to systemic risk

The International Association of Insurance Supervisors (IAIS) has published an interim public consultation paper on an activities-based approach to systemic risk in the insurance sector. While the consultation paper does not contain conclusive proposals, IAIS provides stakeholders with an opportunity to comment on the development of the approach. A public background call via telephone conference […]

PRA publishes feedback on general insurance stress test 2017

PRA has sent a letter to firms that were involved in the 2017 general insurance stress test and explained that its main findings were: the UK general insurance sector as a whole and individual firms are resilient to those scenarios within the regulatory threshold of Solvency 2; and with regard to reinsurance interconnectedness, PRA found no evidence […]

FCA feeds back on FAMR

FCA has published a policy statement on its consultation on FAMR and insistent clients.  Respondents were generally supportive of FCA’s proposed PERG guidance and also asked for more guidance in some areas. FCA will publish the new guidance in early 2018 and directs firms wanting to make use of the amendment to the RAO definition […]

FCA makes new rules

At FCA’s Board meeting on & December, it made several new rule instruments, covering (among other things), several changes to take effect from 3 January 2018: minor changes relating to MiFID 2 implementation, including a new definition of “high frequency algorithmic trading technique”, amending various definitions relating to derivatives to ensure they reflect changes to […]

Final text of ‘Basel IV’ published

The Basel Committee has endorsed the final set of reforms to Basel III (referred to by some as Basel IV). These reforms will mainly affect the affect the methodologies used by banks in calculating risk weighted assets.  It is expected that many banks will have increased capital requirements as a result. However, to soften the […]

Lloyd’s reacts to Brexit developments

Reacting to the news that the UK and EU are planning to move to the next phase of Brexit talks, Lloyds has released a press release stating that it is pleased that the Brexit talks can now enter the second phase focusing on trade and that an agreement has been reached with regards to the […]

PRA publishes final Policy Statement and Supervisory Statement regarding insurance special purpose vehicles

Following the publication of the Risk Transfer Regulations 2017 earlier this week, the PRA has now published the updated versions of Policy Statement (PS 26/17) and Supervisory Statement (SS 8/17) on the authorisation and supervision of insurance special purpose vehicles.  These were previously published at the beginning of November.

ECB Transcript of the public hearing on the addendum to the ECB Guidance on non-performing loans

The European Central Bank (ECB) has published a transcript of the public hearing on the addendum to the ECB Guidance on non-performing loans, held on 30 November 2017 at the ECB’s main building premises in Frankfurt and Main. This follows the publication of a letter, dated 6 December 2017, from Danièle Nouy, ECB Supervisory Board […]

ECB approves major projects in the field of large-value payments and collateral management

The European Central Bank (ECB) has announced the approval of the consolidation of the Eurosystem’s real-gross settlement system TARGET2 and the securities settlement system platform TARGET2-Securities (T2S), as well as the development of a European Collateral Management System (ECMS). The consolidation will provide market participants across the Eurosystem with enhanced liquidity management procedures and is expected to be […]

EBA’s speech on fintech and cloud in banking

The European Banking Authority (EBA) has published Slavka Eley’s, Head of Supervisory Convergence Unit at the EBA, speech given at the EBF Cloud banking Conference. Slavka Eley’s speech covered three aspects relating to innovation: the observed changes in the banking landscape mainly driven by technological innovation; the use of cloud computing in banking; and FinTech […]

Risk Transformation Regulations 2017 published

The government has published the Risk Transformation Regulations 2017 (Regulations), which come into force on 8 December 2017, following publication of the draft text by HM Treasury in July.   The Regulations enable the creation of a new form of body corporate: a “protected cell company,” which can act as a special purpose vehicle in Insurance […]

FCA roundtables on high-cost credit

The FCA has issued a paper summarising the issues and ideas raised by participants in the FCA roundtables, held in September and October. The roundtables covered discussions on (i) alternatives to high-cost credit and (ii) the provision of essential goods. The following key themes emerged from the discussions: alternative lenders face challenges in accessing commercial capital at a […]

Compliance Trainer award – thank you!

Thank you to all of our FIN readers who nominated us for awards at the Compliance Register Platinum Awards 2017. Emma was delighted to retain her award for “most outstanding compliance trainer“.

FCA speaks on global capital market regulation and AMLTech

Megan Butler has spoken on the fundamental importance of co-ordination between national regulators, particularly in dealing with financial crime and cyber-threats. She looked at the particular benefits and risks that machine learning and algorithmic trading have brought. She stressed the importance of firms reporting material breaches, and the need to let FCA know when they […]

Regulation of crypto-currencies under negotiation

The UK government has published the answer to a written question asked of HM Treasury that reveals that they are in the process of negotiating amendments to the 4th Anti-Money Laundering Directive to bring virtual currency exchange platforms and custodian wallet providers into the AML regulatory framework, thereby bringing them within the scope of relevant […]

LMA publishes London Market Core Uses Information Notice in light of GDPR

The Lloyd’s Market Association (LMA), along with the International Underwriting Association of London, the London & International Insurance Brokers’ Association and the British Insurance Brokers’ Association, has published a London Insurance Market Core Uses Information Notice, which takes into account GDPR requirements. The Notice has been designed to assist a market participant and to help data […]

Government to use rental payment data to improve credit scores

Treasury has announced it is to offer financial support for the development of an application to allow those who rent properties to record and share their rent payment data, with a view to this helping them to improve their credit scores. It is inviting bids to its “Rent Recognition Challenge”, which will open to applications […]

US MiFIR equivalence decision in OJEU

The decision to consider the legal and supervisory framework of the USA applicable to designated contract markets and swap execution facilities as equivalent to MiFIR standards  under MiFIR has been published in the OJEU. The Annex to the decision names over 20 markets which are equivalent to EU trading venues.

ESAs publish draft group AML risk RTS

The ESAs have published draft RTS under MLD4 on how credit and financial institutions should manage their AML/TF risks at group level where their group includes branches or major subsidiaries in third countries that do not permit group wide policies to be used. The RTS include practical steps institutions should take, such as: getting customer […]

FCA fines broker for misleading customers

FCA has fined Bluefin Insurance Services Limited £4,023,800. It found the firm had inadequate systems and controls, as it held itself out to be truly independent but did not properly manage the conflicts that arose by virtue of its status as wholly owned subsidiary of AXA UK plc. As a result it used a policy […]

Treasury sets out long term approach to asset management

Treasury has revealed its “Investment Management Strategy II“, which sets out the Government’s priorities to ensure the UK remains a globally competitive sector for asset management. The approach focuses on six principles: establishing Centres of Excellence to strengthen the talent pipeline continuing to develop Fintech solutions such as blockchain enabled digital funds working to attract international […]

Treasury updates AML advisory

On 5 December 2017, HM Treasury published an Advisory Notice on money laundering and terrorist financing controls in higher risk jurisdictions. The Advisory Note follows the Financial Action Task Force (FATF) statements identifying high risk jurisdictions; which was discussed at its plenary meeting held on 3 November 2017. In the Advisory Note, HM Treasury draws […]

CMA consults on its 2018/19 annual plan

The Competition and Markets Authority (CMA) is consulting on its draft annual plan, which sets out its plans and priorities over the next year. Interested parties have the opportunity to provide views and comments on the proposed priorities until 14 January 2018. Over the next year, the CMA is proposing to take a particular interest […]

IFRS 9 transitional Regulation published

There has been concern about the anticipated regulatory capital impact when International Financial Reporting Standard 9 is implemented from January 2018, resulting from some firms seeing a significant increase in expected credit loss provisions. In response, the EU Council has published the text of a Regulation that, amending the Capital Requirements Regulation, sets out a […]

Treasury makes PRIIPs Regulations

Treasury has made the PRIIPs Regulations 2017, which will come into force on 1 January 2018.  The Regulations: designate FCA as the competent authority for the PRIIPs Regulation gives FCA powers where a person has infringed the PRIIPs requirements and sets out the extent of those powers and the procedure for using them provide for […]

BEIS gives payment surcharge guidance

BEIS has published guidance on the Consumer Rights (Payment Surcharges) Regulations 2012.  New rules come into force on 13 January 2018 as a result of PSD2 that ban surcharges on a wide range of transactions, while limiting them in others. PSD2 bans merchants from charging a fee on the basis of a consumer’s choice of payment […]

FCA stops airport parking CIS

FCA has investigated the operations of Park First Limited in relation to airport parking investment schemes. It believed the firm, which is not authorised, was operating a CIS. The firm has agreed to offer investors the choice of getting their investments back or moving into a new scheme which is not a CIS. In the […]

FCA speaks on financial advice

Megan Butler has spoken on assessing the value of financial advice.  She spoke of the growing importance of financial advice as increasing numbers of people need help making “sense” of their choices.  Recent FCA studies have shown that, in 2015, 93.1% of advice on investments, pension accumulation and retirement outcomes was suitable. This figure was […]

IAIS consults on draft Issues Paper on Index Based Insurances

The International Association of Insurance Supervisors has opened a consultation on a draft paper setting out issues on Index-based Insurances. Index Based Insurances involve contracts where a claim is defined with reference to a pre-determined index.  These are seen as a possible way forward for claims relating to weather related or natural catastrophe risk event […]

FCA succeeds in investment scheme prosecution

Two individuals have been found guilty of various offences relating to carrying on regulated activities without authorisation, false and misleading impressions and being a company director contrary to the Theft Act, in relation to an investment scheme which mis-sold shares to often vulnerable investors. Samrat Bhandari and Muhammed Mirza’s convictions follow the guilty pleas of […]

FCA publishes quarterly consultation

FCA’s latest quarterly consultation proposes minor changes to: DEPP due to a change in FCA’s governance structure LR, in the meaning of Premium Listing Principle 6 and, to DTR, on where diversity reporting may be located under corporate governance reporting requirements DISP relating to access to FOS for PEPs, and referrals to TPO the Glossary definition […]

Up next from FCA

FCA’s latest Policy Development Update promises the following publications before the end of 2017: Policy Statement on formalisation of the debt concession for smaller credit unions Policy Statement on market infrastructure providers’ fee rates Policy Statement on the second consultation on FAMR implementation Policy Statement on the second IDD implementation consultation (with a PS on […]

EIOPA speaks on insurance and pensions

The Chairman of the European Insurance and Occupational Pensions Authority (EIOPA), Gabriel Bernardino, delivered a speech at EIOPA’s 7th annual conference on Insurance and Pensions Reloaded: A Game Changer. The speech covered the following four themes that cross over EIOPA’s main strategic priorities: Maintaining sound regulation in an evolving landscape – this included a discussion on […]