Monthly Archives: Jul 2018

FCA’S FINAL RULES ON ASSESSING CREDITWORTHINESS IN CONSUMER CREDIT

The FCA has published a policy statement setting out its final rules and guidance on assessing creditworthiness in consumer credit. The policy statement summarises and responds to the feedback the FCA received to the July 2017 consultation paper (CP12/27). In particular, the changes set out in the policy statement clarify the FCA’s existing rules and guidance […]

PRA consults on CRR definition of default

The PRA has today published its consultation paper (CP) 17/18 on the definition of default.  The CP follows the European Banking Authority’s (EBA) Opinion on the implementation of the regulatory review of internal rating based (IRB) models. Background The EBA put together a list of regulatory products for the IRB framework review, with the “aim […]

FCA plans changes for loan-based crowdfunding

FCA is consulting on rule changes for loan-based crowdfunding platforms, following its post-implementation review. It has noted the market has developed, and models have become increasingly complex, since FCA’s last review of the sector. It has also noticed some poor practices developing. Now it wants to make changes to ensure: investors get clear and accurate […]

FCA updated guidance for firms outsourcing IT

The FCA has updated FG 16/5, ‘Guidance for firms outsourcing to the ‘cloud’ and other third party IT services’. This update takes account of the publication of the European Banking Authority’s recommendations, and changes to relevant legislation.    

FATF reports on Professional Money Laundering

FATF has published its report on the techniques and tools used by professional money launderers – those who launder money for others, for a fee.  FATF has identified that many countries do not properly investigate and prosecute complex and third party laundering.   The report looks at the characteristics of the professional money launderers and at […]

PRA changes SII reporting format

On 26 July, the PRA published its policy statement (PS) 21/8 ‘Solvency II:  Changes to reporting format’.  The PS is a result of the PRA’s consultation paper (CP) 11/18, in which it proposed to change the reporting format for: national specific templates; internal model outputs; market risk sensitivities; and standard formula reporting for firms with […]

FCA publishes research note on credit card users’ debt

The FCA has published a note that summarises research conducted as part of the FCA Credit Card Market Study into helping credit card users who are only making the minimum payments increase the rate at which they repay their debt. In particular, the research describes the effectiveness (or otherwise) of a series of experiments designed […]

Corporate governance reporting and the impact on large private companies

We have written an article on the new corporate governance reporting requirements for certain large private companies. The requirements will come into force on 1 January 2019 applying to financial years beginning on or after 1 January 2019, with reporting effectively commencing in 2020 for the previous year. We also cover the consultation launched on […]

FCA seeks views on PRIIPs experience

FCA has opened a Call for Input to get firms’ and consumers’ initial experiences of the PRIIPs requirements.  It welcomes comments generally, but particularly in respect of: determining whether a product is within or out of scope; and the practical aspects of cost and risk disclosure requirements. The Call for Input usefully summarises the various […]

FCA bans individuals for misleading consumers

FCA has banned the 4 former directors of a now-dissolved credit broker, Secure My Money Limited. It found the firm misled customers into thinking they had been approved for short term loans and as a result took fees of over £7.2m from around 124,000 online customers. The failings happened over an 8 month period. Customers […]

FCA seeks feedback on price discrimination in the cash savings market

The FCA has published a discussion paper on price discrimination in the cash savings market. The FCA is concerned that longstanding customers receive lower interest rates on easy access cash savings accounts products than those received by customers who shop around; and that competition is not working well in the cash savings market, particularly for customers that […]

HM Treasury publishes temporary permissions draft SI

HM Treasury has published a draft SI setting out the proposed conditions for an incoming EEA firm to obtain a temporary permission to continue to carry on regulated activity in the UK after exit day, in the event of the proposed two year transition period not being agreed. This draft SI applies to firms that […]

FCA publishes intervention approach documents

On a new page on its website, ‘Measuring our impact before we intervene‘, the FCA has published a group of documents that aim to provide an indication of how the FCA assesses the likely impact of its policies. These documents consist of: a paper setting out the FCA’s approach to conducting cost benefit analyses for […]

PSR MARKET REVIEW INTO THE SUPPLY OF CARD-ACQUIRING SERVICES

The PSR has published its draft terms of reference setting out the proposed approach to the market review into the supply of card-acquiring services that it intends to carry out. The review follows concerns that the supply of these services may not be working well for merchants, and ultimately consumers. This includes, for example, concerns that there […]

ESMA updates funds FAQs

ESMA has updated its FAQs on the UCITS Directive and the AIFMD. New questions include those addressing when UCITS invest in UCITS with different investment policies and supervision of branches of UCITS management companies or AIFMs that provide MiFID investment services.

BEIS announces Overseas Entities Bill

BEIS has heralded the Registration of Overseas Entities Bill which will require all foreign companies that own UK properties to disclose their beneficial owners on a public register. Key provisions of the Bill include that: any foreign entity that sells or leases property must first publicly declare its beneficial owner(s). If it does not, this is a […]

PRA consults on regulatory reporting

The PRA has published an occasional consultation paper on regulatory reporting. The consultation paper sets out proposed changes to the following reporting requirements: discontinuance of Prudent Valuation Return PV001; changes to PRA reporting instructions to align with updated EBA requirements; amendments to Pillar 2 reporting templates and instructions to reflect their application to ring-fenced bodies; […]

MOU ON THE REGULATION OF PAYMENT SYSTEMS

On 20 July 2018, the Bank Of England (BoE), the Financial Conduct Authority (FCA), the Prudential Regulation Authority (PRA) and Payment Systems Regulator (PSR) published their Memorandum of Understanding in relation to payment systems (MoU). The MoU sets out the high-level framework which the regulators will use to cooperate with one another in relation to payment […]

FCA responds on complaints

The Complaints Commissioner has published its annual report on complaints against FCA and FCA has responded. FCA notes that the Commissioner upheld FCA’s decision in 90% of the cases reviewed and generally feels FCA deals with the large majority of complaints fairly. It also takes on board the recommendations as to how it could have […]

FCA publishes annual enforcement report

FCA has published its annual report on enforcement actions. In 2017/18 it issued 269 final notices (of which only 21 were against individuals), secured 303 regulatory/civil outcomes (mainly involving refusal, variation or cancellation of permission or authorisation) and 14 criminal, and imposed 16 financial penalties which totalled nearly £70m.  This contrasts to the £884m of fines 2 […]

Treasury consults on pension cold calling ban

Treasury is consulting on a proposed ban on cold calling in relation to pensions. The consultation is a technical consultation on the wording of the legislation necessary to implement the ban, as the policy decision has already been taken following earlier consultation. The consultation period lasts only until 17 August, and Treasury hopes to lay […]

ESAs update KID FAQs

The ESAs have published some further guidance on KIDs under the PRIIPS Regulation. The additions to the existing guidance provide some additional FAQs and updates to the flow diagrams for risk and reward calculations. New questions include confirmation that a KID must be published on the public section of the manufacturer’s website, and guidance on […]

Law Commission consults on SAR regime

The Law Commission has published the long awaited consultation on making the AML and CFT SARs regime work better. The paper focuses on the consent provisions in POCA and the Terrorism Act and the disclosure offences in those laws. The regime has been beset with problems including proliferation of defensive reporting, the burdens of the […]

FCA publishes Annual Report

FCA has published its Annual Report and Accounts for 2017/18. The report includes details of: FCA’s work preparing for Brexit; key regulatory changes such as MiFID 2 and PSD 2; work on SMCR extension; thematic work on high cost credit and consumer debt; and the PPI customer information campaign. It also articulates what FCA has done […]

FATF issues updates

FATF has: reported to the G20 on its current work: highlights of the report include its work on crypto-currencies and assets, improving transparency of beneficial ownership, de-risking, and fintech/regtech and digital identity; published its objectives during its US presidency: it will prioritise work on virtual currencies, as well as the now standard work on CFT […]

FCA speaks on Brexit and the future

Nausicaa Delfas has spoken on the FCA’s approach to Brexit.  She looked at how it is preparing and forward to the future. She stressed that FCA is working hard with the Government and other regulators to ensure the smoothest transition possible and promised highly integrated markets in the future regardless of the Brexit outcome. FCA […]

EBA GUIDELINES ON FRAUD REPORTING UNDER PSD2

The European Banking Authority (EBA) has published its final report on the fraud reporting guidelines under PSD2 (Guidelines). The Guidelines have been published following the consultation which took place in August 2017. Article 96(6) of PSD2 states that payment services providers must provide ‘statistical data on fraud relating to different means of payment to their competent […]

CMA proposes pension investment reforms

CMA has published a report proposing several reforms to allay its concerns over competition in the investment consultancy and fiduciary management sectors. CMA was concerned that: many pension schemes (around half) choose the same provider for fiduciary management that they use for investment consultancy. CMA is concerned the investment consultant can encourage this and it means […]

Article on marketing of AIFs

We wrote an article for Compliance Monitor on the EU proposals for changes to the way in which AIFs can be marketed.

The FCA’s discussion paper on the introduction of a duty of care

Alongside the Approach to Consumers document, which was published on 17 July 2018, the FCA has published a discussion paper (DP18/5) on the introduction of a duty of care for financial services firms. In response to the FCA’s consultation on its future approach to consumers (carried out in November 2017), some stakeholders raised concerns that […]

The FCA’s Approach to Consumers

Following its consultation in November 2017, the FCA has today published its Approach to Consumers document which aims to address the concerns raised in the feedback to the consultation. The consultation took place following the FCA’s April 2017 Mission statement, which set out how the FCA intended to serve the public interest and deliver public value to the […]

FSB looks at crypo-asset market monitoring

The Financial Stability Board has reported to the G20 Finance Ministers and Central Bank Governors on its work in relation to crypto-asset markets. It has worked with the CPMI to set up a framework for monitoring the financial stability implications of market developments, and has been working out the metrics for monitoring that it will […]

Treasury publishes Brexit consumer credit changes

Treasury has published a draft statutory instrument setting out changes to consumer credit legislation consequent on Brexit. The draft has not yet been laid before the relevant parliamentary committees for “sifting”.  Once the Committees are ready, it will be laid appropriately. Treasury will need to amend the following legislation to address situations where retained EU […]

FCA publishes interim report on investment platforms

FCA has published the interim findings of its market study on competition in the investment platform market. It has concluded that competition is working well for most consumers, but has identified a few areas that need attention to help consumers. It found: barriers to switching are significant and therefore the pressure on platforms to continue […]

Treasury updates AML advisory

Treasury has updated its AML advisory notice on high risk jurisdictions. The advisory meets the requirements of the 2017 MLRs to ensure the regulated sector applies EDD to high-risk countries with reference, among other things to the Commission’s Delegated Regulation setting out the high risk jurisdictions. Treasury has updated its guidance following the FATF June […]

FSB statement on reforming interest rate benchmarks

  The Financial Stability Board (FSB) has published a statement on reforms to interbank offered rates (IBORs) and the development of overnight risk-free rates (RFRs) and term rates. Points of interest include: to ensure financial stability, benchmarks which are used extensively must be especially robust; the Official Sector Steering Group (OSSG), set up to coordinate […]

BUSINESS CONTRACT TERMS REGULATIONS RESURRECTED

The draft Business Contract Terms (Assignment of Receivables) Regulations, which appeared to have been scrapped in late 2017, have been resurrected with a revised draft laid before Parliament for approval. The Regulations make ineffective contract terms that prohibit or restrict the assignment of receivables. Their aim is to facilitate businesses raising finance against invoices. The draft has […]

EIOPA publishes Q&As on application of IDD

The first set of Questions and Answers (Q&As) on the application of the Insurance Distribution Directive (IDD) were published today by the European Insurance and Occupational Pensions Authority (EIOPA).  Answers were given to questions on the requirements for the Product Oversight and Governance (POG) arrangements and for Insurance Based Investment Products (IBIPs).  Some of the Q&As […]

Andrew Bailey speaks on the transition from LIBOR

The FCA has published a speech by Andrew Bailey, Chief Executive of the FCA, on transitioning from LIBOR to alternative interest rate benchmarks. Although important steps have been taken towards transition, Andrew Bailey commented that the transition is not yet fast enough and there is much further to go. Points of interest in the speech […]

FCA proposes further consumer support and protection in the retirement income market

The FCA has launched a consultation on a package of measures designed to protect consumers, improve engagement and promote competition in the retirement income market. Alongside the consultation, the FCA has published the final report of its Retirement Outcomes Review, an investigation into how the pensions and retirement income sector has been working since the […]

FCA confirms that pension schemes will not need to start clearing OTC derivatives when EMIR exemption expires on 16 August 2018

On 3 July 2018, the European Securities and Markets Authority (ESMA) published a statement on the clearing obligations for pension scheme arrangements under the European Market Infrastructure Regulation (EMIR). EMIR introduced a temporary exemption for certain pension schemes from the obligation to clear their OTC derivative contracts to allow time for a suitable technical solution […]

Government proposes insurers’ right to restore dissolved company to register for PI claims

On 29 June 2018 the government published a draft statutory instrument, the Third Parties (Rights Against Insurers) Act 2010 (Consequential Amendment of Companies Act 2006) Regulations 2018. This regulation will give insurers the right to apply to restore a dissolved company to the register at any time in order to take legal proceedings, where such proceedings […]

Treasury Committee asks PRA to work with insurance industry in relation to areas covered by Solvency II

In a letter to the Chief Executive of the PRA regarding Solvency II, the House of Commons Treasury Committee has asked the PRA to consider challenges raised by industry in a number of areas, including to the current risk model change process and reporting requirements. Furthermore, in the light of Brexit and while acknowledging it […]

FCA publishes final rules for EU Money Market Funds Regulation

From 21 July 2018, the EU’s Money Market Funds (MMF) Regulation will require new MMFs to be authorised by national competent authorities. Existing funds that are already branded as, or substantially similar to (for the purposes of the Regulation), MMFs will have until 21 January 2019 to apply for authorisation. Accordingly, in Policy Statement  PS18/17, […]

FCA and PSR Chair discusses potential future algocracy

Charles Randell, the recently appointed Chair of the FCA and the PSR, has delivered a speech, in which he discussed the increasing dominance of algorithms in our day to day lives, and noted some of the consequent issues that will need to be grappled with, as  the rise of Big Data, AI and machine learning […]

Banking (Cash Machine Charges and Financial Inclusion) Bill 2017-19

Parliament has announced that the second reading of the Banking (Cash Machine Charges and Financial Inclusion) Bill 2017-19 is scheduled to take place on Friday 23 November 2018. The Bill contains provisions which prohibits cash machine charges; requires the Financial Conduct Authority to supervise an access to banking standard; imposes penalties for breaches of that standard; establishes a […]

New rules to prevent money laundering and combat terrorism financing in force

The European Commission (the Commission) announced that MLD5 entered into force on 9 July 2018. The new rules introduce stricter transparency requirements, including full public access to the beneficial ownership register for companies.  Some of the key improvements include limiting the use of anonymous payments through pre-paid cards and widening customer verification requirements. Věra Jourová, […]

FCA publishes new version of its Approach Document on payment services and e-money

The FCA has published a revised version of its Approach Document on payment services and electronic money. The updated document includes new guidance on operational and security risks under PSD2; which can be found in chapters 13 (reporting and notifications) and 18 (operational and security risks). The FCA has also made a number of other […]

European Parliament looks into use of cryptocurrencies and blockchain by criminals for illegal activities

A paper prepared by Policy Department A at the request of the European Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance delves into the increasing use of cryptocurrencies by criminals for illegal activities such as money laundering, tax evasion and terrorist financing. Regulators are said to be very concerned about the use […]

PRA publishes Policy Statement on changes in insurance reporting requirements

On 6 July, the PRA provided feedback to responses to its Consultation Paper (CP) 2/18 “Changes in insurance reporting requirements” in Policy Statement (PS)16/18. CP2/18, published in January 2018, set out the PRA’s proposals to change the regulatory reporting requirements for SII firms (and mutuals). The proposals were developed by the PRA as part of […]

Up next from FCA

FCA’s latest Policy Development Update shows plans for consultations on fees for claims management companies and for recovering the costs of OPBAS due over the next couple of months, and policy proposals for regulatory fees and levies for 2018/19 due in October. It notes these will address onshoring ESMA regulatory functions after Brexit.

FCA thinks about price discrimination

FCA has published a paper looking at how it should approach fairness in price discrimination in financial services. It notes that price discrimination is not in itself unfair as practices such as student discounts are widely accepted. But others are more controversial, such as where longstanding customers receive a worse deal than new ones. Views […]

Discussion Paper on building the financial sector’s operational resilience

The Bank of England, the PRA and FCA have published a joint discussion paper on its approach to improve operational resilience in the financial sector. The regulators envisage that boards and senior managers can achieve better standards of operational resilience through increased focus on setting, monitoring and testing specific impact tolerances for key business services. […]

BoE sets out next steps for prudential regulation of banks: present and future

Vicky Saporta, Executive Director for Prudential Policy at the Bank of England delivered a keynote speech on 4 July at The Westminster Business Forum.  The speech focused on the impact of Basel III, which was finalised on 7 December 2017, and discussed the achievements of the reforms, its finalisation and what lies ahead. Achievements The […]

Changes in terminology. PRA updates its Supervisory Statements

The PRA updated a number of its Supervisory Statements (SSs) on 4 July 2018 to reflect changes in terminology, following the publication of policy statement 15/18 “Strengthening individual accountability in insurance: Extension of the Senior Managers and Certification Regime to insurers”. A list of those SSs can be found below. SS28/15 “Strengthening individual accountability in […]

PRA publishes policy statement on extension of the SM&CR to insurers

On 4 July 2018, the PRA published policy statement (PS)15/18 in response to Consultation Paper (CP) 14/17 ‘Strengthening individual accountability in insurance: extension of the Senior Managers and Certification Regime to insurers’ and CP 28/17 ‘Strengthening accountability: implementing the extension of the SM&CR to insurers and other amendments’.  As well as feedback to responses to […]

New economic and cybercrime court agreed

A new court dedicated to cybercrime, fraud and economic crime is to be built on the site of Fleetbank House, and is expected to be completed in 2025.

FCA feeds back on SMCR extension

FCA has published a suite of papers feeding back on the SMCR extension, and has proposed the creation of a new directory of individuals working in financial services to enable their status and history to be checked. The directory would include all individuals who require FCA approval to hold SMFs and those who fall within […]

Insurance Europe’s SII conference

On 26 June, insurers, policymakers and regulators attended Insurance Europe’s Solvency II Conference.  The theme of the conference, which was held in Brussels, was ” Two years on and two reviews”. Michaela Koller, Insurance Europe director general opened the conference, which featured two panel debates. The first debate “Two years on – Solvency II in […]

FCA consults on regular premium PPI complaints handling

FCA is consulting on new guidance on handling complaints about regular premium PPI, to deal with an uncertainty which has arisen since the post-Plevin rules.  The Plevin judgment and the rules that followed it say that if a lender fails to disclose at point of sale a large commission payable out of the PPI premium […]

Evaluation of the Consumer Credit Directive

The European Commission has published a roadmap on the Consumer Credit Directive (Directive). The Commission is looking to assess: effectiveness: whether the original objectives of the Directive have been achieved; efficiency: the functioning of the Directive from a simplification and burden reduction perspective; coherence: how the Directive works together with other legislation in the field of […]

Mobile Contactless SEPA Card Payments Interoperability Implementation Guidelines

Following a consultation in October 2017, the European Payments Council has published a revised version of its mobile contactless Single Euro Payments Area (SEPA) card payments interoperability implementation guidelines (MCP). The guidelines have been updated to reflect a rapidly evolving system and address the interoperability aspects relating to the MCP application lifecycle management.  

PSR: The consolidation of UK retail payment systems is now complete

The Payment Systems Regulator (PSR) has issued a press release stating that the consolidation of the UK retail payment systems is now complete, following the introduction of the New Payment Systems Operator (NPSO). The NPSO took over the running and managing of cheque paper and cheque image clearing systems on 1 July 2018.    

FATF/MENAFATF update in plenary

FATF and the Middle East and North African FATF have held their third plenary meeting. The meeting updated on a wide range of issues, including discussion on several typology reports and discussion of mutual evaluation and follow up reports on a number of jurisdictions. The plenary also discussed the progress Iraq and Venezuela have made […]

Prospectus exemptions amended

The FSMA (Prospectus and Markets in Financial Instruments) Regulations 2018 take effect on 21 July and amend two of the thresholds that trigger the requirement to produce a prospectus. The changes reflect the 2017 EU Prospectus Regulation and: increase the threshold amount for offers to trigger the prospectus requirement from €100,000 to €8 million; and reduce […]

Themes from thematic reviews

We recently wrote an article for Compliance Monitor setting out themes from recent FCA thematic reviews.

PSR updates on fees

The Payment Services Regulator has published a policy statement following its review of the regulatory fees regime.  It has now set out its decisions, and published a standalone document on fees figures for 2018/19.

FCA makes new rules

FCA has made new rules. The changes affect several parts of the Handbook, including: miscellaneous minor and clarificatory changes, including a change to the application chapter of SYSC to clarify that certain rules in SYSC 4.3A do not apply to an AIFM investment firm that is not a CRR firm; changes to make the Handbook consistent […]