Monthly Archives: October 2018

HM Treasury publishes further Brexit SIs

As part of its preparation for the contingency of a ‘hard’ Brexit, HM Treasury has published draft onshoring legislation relating to: Payment accounts Financial markets infrastructure insolvency  Central securities depositories and Investment funds and managers  The changes made under these SIs are unlikely to take effect if an implementation period is agreed.

FCA fines for failings in oversight of third party claims handling

On 30 October 2018 the FCA announced that it had fined Liberty Mutual Insurance Europe SE (Liberty) £5,280,800. The fine relates to failures in Liberty’s oversight of claims and complaints relating to mobile phone insurance for the period 5 July 2010 until 7 June 2015. According to the Final Notice issued by the FCA, Liberty had entered into […]

FCA announces market study in insurance

On 31 October 2018, the FCA published the results of a thematic review on the pricing practices of household insurance firms. The review uncovered a number of issues on pricing practices. As a consequence, the FCA announced a number of next steps: conducting a market study on general insurance pricing practices; Publishing a discussion paper […]

UK Finance comments on sanctions regime

UK Finance has submitted a note to the Economic Crime enquiry on how to improve the effectiveness of the sanctions regime. It says its members regard SAMLA as a necessary piece of legislation which is largely as expected. It recognises that operating outside the EU framework might lead to greater flexibility, and makes some suggestions […]

FCA makes new rules on safeguarded to flexible benefits transfers

FCA’s latest Handbook Notice heralds just one set of rule changes.  The changes are to COBS, PERG and examination standards in respect of pension advisers providing suitable advice to consumers about whether to transfer from safeguarded benefits to flexible benefits.

FCA writes to CEOs on SIPP due diligence

FCA has written a “Dear CEO” letter on the duties of SIPP operators in respect of due diligence. The letter refers to the judgement in the Berkeley Burke case and several other pending civil claims, and asks firms to consider the potential implications of these cases for them and their customers. The Berkeley Burke case, […]

Cryptoassets task force publishes report

The Cryptoassets task force, led by Treasury, has published its report on the UK’s policy and regulatory approach to cryptoassets.  The report looks at the policy and regulatory implications of DLT and cryptoassets and comments on the considerable risks as well as the potential benefits. Now the Task force will consult on a number of initiatives, specifically: […]

Treasury Committee calls for SME lending to be brought within the regulatory perimeter

The Treasury Committee has published the Twenty-Fourth Report of Session 2017-2019 on SME Finance. The Committee highlighted the investigation into RBS’ Global Restructuring Group (GRG), and noted the FCA’s comment that the failures at the GRG might have triggered disciplinary action, had they occurred in a regulated business. The Committee commented that the justification for […]

FATF publishes risk-based guidance for the life insurance and securities sectors

FATF has published Guidance to a risk-based approach (RBA) to AML and CFT in the life insurance and securities sectors. The Guidance: outlines the key elements involved in applying a RBA to AML/ CFT associated with life insurance sets out the types of securities providers that may be involved in a securities transaction and their […]

Treasury updates AML advisory

Treasury has updated its periodic AML advisory notice to reflect the conclusions from the FATF plenary meeting. The notice reiterates the expectation that firms will: apply EDD and countermeasures in respect of North Korea apply EDD in respect of Iran and take appropriate measures to minimise risks in respect of the Bahamas, Botswana, Ethiopia, Ghana, […]

FCA and Pensions Regulator publish joint strategy

The FCA and the Pensions Regulator have published a joint strategy outlining how they will work together to address changes in the pensions and retirement income sector. The joint strategy sets out four areas of focus:  access and participation, funding and investments, governance and administration, and consumer understanding and decision-making. The Regulators have prioritised the […]

Bank of England communications on approach to financial services legislation under EU (Withdrawal) Act

The Bank of England has published a package of documents covering various aspects of contingency measures required in the event of there being no applicable Brexit transition period agreed. The publications include: ‘Dear CEO’ letters from the PRA to all PRA authorised and regulated firms and incoming EEA firms, and from Bank of England to […]

BoE consults on fees for non-UK CCP applications

The Bank of England is consulting on the proposed fee for applications for non-UK CCPs that will seek UK recognition both before and after Brexit. Comments and feedback on all aspects of the proposal are sought by 2 January.

FCA publishes PPI complaints deadline progress report

On 24 October, the FCA published a report on the progress of its consumer communications campaign and supervisory work regarding the 29 August 2019 deadline for PPI complaints. The report looks at: The PPI campaign so far and how consumers are responding to it; The FCA’s supervisory work to ensure firms are helpful and accessible […]

EBA 2019 WORK PROGRAMME

The European Banking Authority (EBA) has published its work programme, setting out its main objectives, priorities and deliverables for 2019. The EBA’s 5 strategic areas for 2019 include to: lead the Basel III implementation in the EU; understand the risks and opportunities arising from financial innovation; collect, disseminate and analyse banking data; ensure a smooth relocation of the EBA […]

HMT confirms Mutuals’ Deferred Shares proposals to be dropped

HM  Treasury has published a response to the consultation conducted in August – September 2016 on proposed Mutuals’ Deferred Shares Regulations. These would have implemented provision in the Mutuals’ Deferred Shares Act 2015 for a new type of capital to be issued by mutual insurers. The government’s response noted that the nine responses to the […]

Further Brexit SIs published

HMT has published the latest set of Brexit transition draft and updated draft SIs to be made under the EU Withdrawal Act 2018 in the event of a ‘hard’ Brexit, and accompanying explanatory notes.  These cover: Central Securities Depositories Over the Counter Derivatives, Central Counterparties and Trade Repositories  Financial Conglomerates and Other Financial Groups (explanatory […]

FSB holds its plenary meeting

The Financial Stability Board (FSB) has published a press release following its plenary meeting in Ottawa, in which it reviewed the financial vulnerabilities and deliverables for the G20 Summit. Points of interest include: The Plenary discussed market developments and vulnerabilities in the global financial system. The members considered that, while global growth remained solid, it […]

PSR SPECIFIC DIRECTION TO OPERATOR OF THE LINK ATM SYSTEM

The Payment Systems Regulator (PSR) has published a Specific Direction (Specific Direction 8) given to Link Scheme Holdings Ltd, the operator of the LINK ATM system. The direction relates to the adoption of appropriate policies and measures, and reporting obligations regarding protected ATMs (LINK), and follows a consultation on the draft version of the direction in […]

FCA publishes information for registering as a trade repository

As part of its Brexit preparations, the FCA has updated its webpage for incoming trade repositories that wish to ensure they can continue to do business in the UK following Brexit. Firms are now able to complete draft application forms for registration as a trade repository.  The FCA has also published guidance notes for this […]

PRA publishes Occasional Consultation Paper 24/18

The latest Occasional Consultation Paper from the PRA covers changes to the Rulebook, Supervisory Statements, Statements of Policy and Forms, in the following areas: Reporting – amendment to the Branch Return Form and amendments to the reporting templates for calculating risk based levies Ring fencing – imposition of financial penalties Written reports by external auditors to […]

IFF surveys firms’ approach to Machine Learning in the Anti-Money Laundering space

The Institute of International Finance has published a short form summary report following a survey it conducted of 59 regulated firms. In particular, the study found that the use of machine learning techniques is spreading across the industry, and is being used to gain greater and faster insights to be reviewed by dedicated AML analysts, […]

ESMA publishes report on ICOs and Crypto-Assets

ESMA has published an own initiative report on additional steps it can take to contain the risks for investors arising from ICOs and crypto-assets (noting that there are no obvious related stability risks as yet). The report recommends that: additional guidance is produced by EMSA on the interpretation of MiFID with respect to applicability to […]

FCA evaluates bringing additional benchmarks into the regulatory and supervisory regime

FCA has today published Evaluation Paper 18/2 on the impact of bringing additional benchmarks into the regulatory and supervisory regime. The paper is the second of a new series of FCA evaluations on its past interventions. Background Misconduct and benchmark manipulation cases and FSA investigations led the Government to ask Martin Wheatley to establish an […]

FATF holds plenary

At FATF’s latest plenary meeting, in Paris, the US presidency discussed: streamlining FATF; strategic initiatives, such as further statements on monitoring of terrorist funds, amendments to FATF Recommendations to address regulation of virtual assets and future work on proliferation financing; peer reviews and review of jurisdictions with strategic deficiencies. The UK report is expected to […]

Court rules on inspection of SARs

The High Court has delivered a judgment in David Lonsdale v National Westminster Bank PLC.  The bank had made several SARs in relation to Mr Lonsdale and companies he was involved with and, as a result, had frozen all relevant accounts. After Mr Lonsdale applied to the court, the bank lifted the freeze. The next […]

UK retail payments authority re-named and re-branded

The New Payment System Operator (NPSO) has today announced its new name and brand: Pay.UK The new name and identity is aimed at helping the payments authority to better promote its core purpose, which is to transform the “UK’s payment infrastructure to enable a vibrant economy – as well as being a logical progression following […]

PRA publishes extension of SM&CR to insurers policy statement

On 18 October 2018, the PRA published responses to its consultation paper (CP) 18/18 ‘Strengthening accountability:  implementing the extension of the SM&CR to insurers’.  The policy statement (PS) 26/18 also includes amendments to the final rules for implementing the regime to insurers and corrections to the Insurance General Application Part of the PRA Rulebook. Background […]

John Neal takes up Lloyd’s CEO role

John Neal, most recently Group CEO of QBE Insurance Group, is to be the new Lloyd’s CEO.

FCA calls for more sandbox applications

FCA is calling for the next round of applications for the regulatory sandbox. The deadline for applications to join cohort 5 is 30 October 2018.

PRA consults on climate change supervisory statement

PRA is consulting on a draft supervisory statement setting out how it expects banks and insurers to manage the financial risks from climate change. The statement sets out how effective governance, risk management, scenario analysis and disclosures can be used to address the risks and is intended to build on previous statements and embed appropriate […]

PIFMA concerned about FOS limit increase

PIFMA is concerned that the proposed extension of the upper limits of compensation FOS can order firms to pay out, from £150, 000 to £350,000 could put some small firms out of the market as they will be unable to get affordable PII cover. From 1 April, 2019, FCA is proposing to increase the limits […]

PRA updates Solvency II supervisory expectations

PRA has published updated Supervisory Statements on: regulatory reporting, internal model outputs, and on ORSA and the ultimate time horizon for non-life firms. The new policies take effect for all financial year-ends on or after 31 December 2018; internal models – modelling of the volatility adjustment and am amended SS on internal models – assessment, […]

BoE publishes FPC minutes and confirms Brexit analysis

The FPC met on 3 October. At the meeting, it continued to assess the risks Brexit presents to the UK financial services sector, noting there had been considerable progress in the UK to address the risks, but not much in the rest of the EU, such that companies no longer have time to mitigate all […]

Treasury starts chemical weapons sanctions regime

Treasury has enabled a regime to implement the EU Regulation on financial sanctions against persons, entities and bodies involved in proliferation and use of chemical weapons. There are not any designated persons on the list as yet.

FCA Feedback Statement on Digital Regulatory Reporting

The FCA has published a feedback statement on digital regulatory reporting. This follows the FCA’s call for input on smarter regulatory reporting in February 2018. The FCA found that most respondents agreed that there are significant potential benefits to be gained by introducing digital regulatory reporting, with the most commonly cited benefit being increased efficiency. However, […]

FCA WRITES TO FIRMS ON AFFORDABILITY OF HCSTC LOANS

The FCA has published a ‘Dear CEO’ letter setting out the issues surrounding the increase in complaints about unaffordable lending (including complaints about a ‘chain’ of loans over an extended period), and how it expects high-cost short-term credit (HCSTC) firms to manage the impact. The FCA reminds firms that complaint-handling procedures should ensure that a […]

FCA publishes DP on climate change and green finance

Climate change is thought to have a significant impact on the UK’s financial services market and has led the FCA to publish its Discussion Paper on climate change and green finance (DP18/8). In its DP, the FCA recognises that the risks from climate change will affect the risks and value to some investments, noting that […]

EU adopts measures on criminal sanctions for money laundering

The EU has adopted a Directive on criminal sanctions for money laundering. The Directive: sets minimum requirements for Member States’ laws on defining criminal offences and sanctions in relation to money laundering; imposes a maximum 4 years’ imprisonment with the possibility for additional civil and administrative sanctions; introduces the possibility of holding legal entities liable […]

FCA consults on Statements of Responsibilities and Responsibilities Map guidance

The FCA has published a consultation on proposed  guidance to help solo-regulated firms draft their Statements of Responsibilities (SoR) and (for enhanced firms) Responsibilities Maps, in preparation for the SMCR extension in December 2019. Although targeted at solo-regulated firms, the FCA notes that the guidance may also be useful for dual-regulated firms preparing or updating […]

Treasury updates Brexit SIs

Treasury has published some new draft statutory instruments to be made under the EU (Withdrawal) Act, or announced plans to make them, and also updated existing drafts. New or updated documents include Regulations on : plans for the Solvency II and Insurance measures Bank Recovery and Resolution Credit Rating Agencies (FCA has also published an […]

FCA publishes Brexit consultations following HMT Guidance

As heralded at the end of last year, the FCA has now published two consultation papers that make provision for operations in the event of a ‘hard’ Brexit next March. The first consultation sets out changes to the FCA’s Handbook and to those EU Binding Technical Standards, which, it is proposed, would be incorporated directly […]

FCA finalises pension transfer advice rules

FCA has published feedback and final rules and guidance following its consultation on improving the quality of pension transfer advice. Since the introduction of “pension freedoms” in 2015 members have had more options available to them in terms of accessing their defined contribution (DC) pension savings. This has resulted in a substantial increase in the number of […]

FCA and SFC sign MoU on UK-Hong Kong Mutual Recognition of Funds

The FCA and Securities and Futures Commission (SFC) have signed a Memorandum of Understanding (MoU) on Mutual Recognition of Funds, which will allow eligible Hong Kong public funds and UK retail funds to be distributed in each other’s market through a streamlined process. The MoU also establishes a framework for exchange of information, regular dialogue, and regulatory cooperation […]

FCA consultation on rules for open-ended funds holding illiquid assets

The FCA is consulting on the introduction of rules to address issues that could arise where open-ended funds with illiquid asset holdings encounter stressed conditions.  Following the outcome of the Brexit referendum in June 2016, a number of such funds had to cease trading for a period of time, following a rush by investors to […]

Industry body calls for review of PRIIPs Regulation

Following the FCA’s Call for Input into the implementation of the PRIIPs Regulation, the Personal Investment Management and Financial Advice Association (PIMFA) has commented that it agrees with concerns about the practical operation and the detailed KID requirements of the regime. In particular, PIMFA has noted that there is a suggestion that UCITS and other […]

Treasury plans transitional regulatory tool

Treasury has set out its plans for a temporary transitional tool for the UK regulators to use that will enable them to phase in the requirements for UK firms that will change under the raft of onshoring legislation consequent on Brexit. The EU Withdrawal Act provides the enabling powers for Treasury to make the various […]

FATF publishes scoresheet

FATF has published its updated consolidated assessment ratings, based on reviews of its members AML/CFT measures after the 4th round of reviews. All countries are graded on methodology and technical compliance.  The UK does not yet feature in the table as the 4th round report for it has not yet been published.

OFSI publishes annual review

OFSI has published its annual review covering the period from April 2017-March 2018.  The review covers: that 29 regimes were implemented during the year, with the most active list by far being North Korea (with 96 additions, and other regimes accounting for less than 30, but the lists with the largest number of sanctioned targets […]

FCA sets out its expectations on debt packager firms providing debt advice and counselling services

The FCA has published a ‘Dear CEO’ letter to debt packager firms, setting out its expectations on the provision of debt advice and counselling services. The FCA is concerned about the poor standards it has seen after undertaking a review of a small sample of debt advice provided by debt packager firms. The FCA stated […]

Up next from FCA

FCA’s latest policy development update promises various publications before the end of this year, including: policy statement on the approach to the final RTS and EBA guidelines under PSD 2, in December; policy proposals on regulatory fees and levies for 2019/20, in November; and review of permitted links rules for insurers in relation to Patient […]

AFME publishes guidance on COBS

AFME has published guidance on financial analysts’ interaction with representatives of private companies and their financial advisers under the revised rules in COBS 12.2.21 which took effect in July. The change stemmed from the MiFID Org Reg, which states that financial analysts should not engage in activities other than the preparation of investment research where […]

ESMA updates MiFID 2 and MiFIR FAQs

ESMA has updated its FAQs on MiFID 2 and MiFIR on market structures and transparency.  New questions look at: how derivatives are classified for transparency purposes amending an existing question on the default liquidity status of bonds the scope of the MiFIR pre-trade transparency waiver market making activities and incentives in stressed trading consitions bulk […]

ESMA updates AIFMD FAQ

ESMA has updated its AIFMD FAQs to include questions on how notification requirements apply to AIFMs managing umbrella AIFs on a cross-border basis.

CMA calls for evidence in response to ‘loyalty penalty’ super-complaint

Following a super-complaint  by the Citizens Advice bureau, the CMA has announced that it is seeking views on concerns about long term customers paying more for goods and services. The CMA has identified four key issues to which it invites responses by 14 October 2018: the existence, impact and root causes of a ‘loyalty penalty’ […]

ESMA updates MiFID and MiFID II materials

ESMA has published an update to its Q&As  on MiFID II and MiFIR, answering questions relating to investor protection and intermediaries.  The answers address: best execution: reporting for firms using a venue’s RFQ system to agree a trade; and investment advice on an independent basis: use of a ‘look-through’ approach. EMSA has also formally withdrawn […]

CMA brings forward investment consultant report date

The CMA has announced that it is bringing forward the date for publishing its final report on its investigation into the supply and acquisition of investment consultancy and fiduciary management services in the UK. Having considered the responses to its Provisional Decision Report, the CMA has announced that it will aim to publish its final […]

LMA’s Brexit Bulletin

The LMA’s recent bulletin, which was published on 2 October 2018, provided the Lloyd’s community and its members with:  (i) new model clauses for EEA and non-EEA risks placed with Lloyd’s Brussels; (ii) suggested wording for “Brexit affected policies”; and (iii) treaty exclusion wording for outwards reinsurance placed with Lloyd’s Brussels. New model clauses The […]

First UWO stands up in court

The respondent to the first Unexplained Wealth Order granted under the Criminal Finances Act 2017 failed in an appeal against it. NCA had obtained the order in February, and it was appealed in July. The respondent is the wife of a banker from a non-EEA country. £22m of UK property has been frozen, and the respondent […]

ESMA speaks on MiFID 2 and Brexit

Steven Maijoor has spoken on the state of implementation of MiFID 2 and preparing for Brexit. He focussed on the impact of MiFID 2 on non-EU trading venues – in particular looking at the impact of the trading obligation and on secondary markets and transparency.  He looked also at the role and increase in market […]

FCA publishes financial crime e-money review

FCA has published its Thematic Review into money laundering and terrorist financing risks in the E-money sector. Its review covered 13 firms and focused on e-money products including prepaid cards and digital wallets, but not money remittance services or any services that fall outside FCA’s regulatory remit (such as exempt cards). FCA found the firms […]

Skilled person not for judicial review

The Court of Appeal has handed down its judgement in R (Holmcroft Properties Ltd) v KPMG LLP. The case had raised the issue of whether KPMG, as a “skilled person” appointed to carry out an independent review of Barclays in the context of the IRHP redress scheme, could be judicially reviewed. The High Court had […]

ESMA updates FAQs

ESMA has updated its FAQs on: commodity derivatives.  Changes address the ancillary activity test, and position limits and reporting; and MAR.   Changes clarify delayed disclosure of inside information. It has also published a number of documents tracking compliance of Member States with MAR, including on the delay in disclosure of inside information and on […]

ESMA publishes 2019 work programme

ESMA has published its 2019 work programme. As ever, its top priority is supervisory convergence. It will be working particularly on prospectuses, investment funds and MiFID 2 as well as cross-cutting supervisory themes. Of course, all activities will consider Brexit.  It also plans to work on improvement of data quality and risk monitoring and further […]

FCA speaks on crises

Charles Randell, speaking at AFME’s conference, highlighted the damage that a cycle of deregulation, crisis and regulation can do. He discussed in particular the risks of deregulation, or the choice not to apply regulation to something innovative, thus encouraging business into that area – which often then leads to a scandal and then the introduction […]

ESMA writes to Commission on third-country regimes

ESMA has written to the European Commission on various issues which are relevant in the context of Brexit but also to third-countries generally. There has already been discussion on the MiFID 2/MiFIR requirements on trading venues, and this letter now addresses: how MiFIR treats third country firms providing services and activities to ECPs and per […]

PRA consults on notification form changes

PRA is consulting on changes to various forms relating to: passporting change in control ISPVs and Notifications It asks for comments by 1 November.

FCA speaks on intervention testing

Christopher Woolard has spoken on how FCA recognises the value of testing interventions so that regulation works most effectively.  He highlighted how what may seem well intentioned and well designed interventions may in fact fail and how FCA has made significant use of behavioural economics to assess what works best.  He gave an example of […]

FCA fines Tesco Bank for failing to prevent cyber attack

FCA has fined Tesco Personal Finance plc £16,400,000. It found the bank failed to exercise due skill, care and diligence in protecting its PCA holders against a cyber attack that took place in November 2016.  As a result, it breached Principle 2 by failing to act with due skill, care and diligence. When the cyber […]