Author Archives: Emma Radmore
Sir Brian Leveson and Lisa Osofsky (among others) were listed to give evidence to the Bribery Act Committee. They were expected to be asked questions such as: whether a company that self-reports at an early stage should be offered a DPA as a matter of course; the truth in a belief that some of the […]
ESMA has updated its FAQs on the Market Abuse Regulation, adding new questions on trading restrictions for persons discharging managerial responsibilities.
The Financial Stability Board has published a “cyber lexicon“, comprising a set of around 50 core terms related to cyber security and cyber resilience in the financial sector.
ESMA has updated its supervisory briefing for regulators on the suitability requirements under MiFID 2. The briefing covers: when a suitability assessment is needed; information to clients on the assessment; getting information from clients; arrangements necessary to understand products; arrangements necessary to understand the suitability of an investment; suitability report; staff qualifications; and record keeping.
FCA has completed its first financial crime survey. It intends to carry out the survey annually, using the Financial Crime Return. Over 2,000 firms were required to file the return, and FCA looked to establish: the number of customers that pose a higher risk of financial crime: Firms identified 120,000 PEPs and 11,000 non-EEA correspondent […]
The Foreign Affairs Committee in the Commons has launched an inquiry on the future of UK sanctions policy. Given SAMLA’s Royal Assent, the Committee is to look at different options for the UK’s sanctions policy post-Brexit. It is calling for written submissions on several elements of sanctions regimes, including views on the advantages and disadvantages […]
The ESAs are consulting on proposed amendments to the PRIIPs KID. The consultation follows the ESAs’ letter to the Commission on developing guidance on information on investment funds. It also noted the need to make targeted amendments to the PRIIPs delegated Regulation to apply the PRIIPs KID requirements appropriately to UCITS and relevant non-UCITS funds, […]
Hannah von Dedelszen has spoken on how companies that choose to self-report can engage with SFO. She stressed that being open, honest and transparent is the key. she noted some firms operate “smoke and mirrors”, involving admitting some things but hiding more major issues. She said any firm reporting must do so properly. Going forward, […]
The Treasury Committee in the Commons has launched a new inquiry into consumers’ access to financial services, with a focus on vulnerable customers. Nicky Morgan said the committee will look at FCA’s definition of vulnerability and how practical it is, as well as how financial institutions try to address the problems of financial exclusion and whether vulnerable […]
BoE, Treasury and FCA have hosted what has now become a regular one day exercise to test the financial sector’s resilience to a major cyber incident impacting the UK.
The Law Society has responded to the Law Commission’s consultation on reform of the SARs regime. It says the proposals, in the main, do no more than “tinker around the edges” of the issues. It says some of the more radical proposals, such as adopting a serious crimes approach instead of an all crimes approach, […]
The latest edition of Ombudsman News looks at complaints and trends around pensions. Complaints about pensions make up a very small proportion of all complaints, but as a pension is so important to consumers, FOS has focussed on assessing what it sees as the key rights, and included case studies on complaints involving defined benefit to […]
PRA has fined 2 individuals connected with the Bank of Tokyo-Mitsubishi following its action in 2017 against the bank and MUFJ Securities EMEA. It has fined Akira Kamiya, former Chair of Mitsubishi UFJ Securities International plc £22,700, and fined Takami Onodera, a former NED of the firm, £14,945. The actions occurred before the SMR took […]
EBA has published the results of its 2018 EU-wide stress tests. This year’s test involved 48 banks from 15 countries and generally shows increased resilience and capacity to withstand the shocks the exercise tested. The exercise did not have a defined pass/fail threshold but rather sought to give supervisors a tool to assess banks’ ability […]
The CMA has made a provisional finding that ComparetheMarket includes clauses in many of its contracts with home insurers that breach competition law and could lead to higher premiums for consumers. It says the clauses stop insurers quoting lower prices elsewhere and therefore prevent rival comparison sites and other channels from offering cheaper prices than […]
CMA has published a consultation paper as part of its review of the investment consultancy and fiduciary management services study. The paper contains draft definitions. The proposals define: “investment consultancy service” and “fiduciary management service” The paper also notes that other terms, such as “pension scheme trustees” and “interconnected body corporate” will need separate definition. […]
FCA’s latest Policy Development Update lists a number of publications due before the end of the year: policy statement on regulating CMCs policy statement on RTS and guidelines under PSD2 rates proposals for covering the costs of OPBAS review of permitted links for insurers in relation to Patient Capital and a discussion paper on Patient […]
HMRC has updated its guidance on how it takes civil measures for breaches of AML requirements. The guidance not only sets out HMRC’s approach, which is to promote compliance and prevent non-compliance, but then to respond to any non-compliance in a way that will encourage sustained future compliance but also explains how it will use […]
PRA has updated its “approach” documents in relation to banking and insurance supervision. Key changes to the previous versions include: an update on the changes to supervisory approach following implementation of the SMR and SIMR (and, in the case of insurers, looking forward to the SIMR changing to the SMCR at the end of the […]
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’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 has published its H1 2018 complaints data, which show that firms received more than 4 million complaints in the period. This was a 10% increase from the previous period. Nearly all the complaints were made to 235 of the more than 3,000 firms which recorded complaints. PPI accounted for 42% of complaints, and then […]
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, […]
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: […]
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 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, […]
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, […]
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 […]
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 […]
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.
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 […]
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 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.
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 […]
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 […]
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 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 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 […]
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 […]
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 […]
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 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 […]
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 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 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 […]
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 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 is consulting on changes to various forms relating to: passporting change in control ISPVs and Notifications It asks for comments by 1 November.
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 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 […]
FCA has made three new rules instruments at its September board meetings: the Individual Accountability (Dual-Regulated Firms) Instrument 2018: this instrument makes significant changes to SYSC as well as to COCON, COND, APER FIT and SUP, and several other changes to many other handbook modules and guides. The changes mainly take effect on 10 December […]
ESMA has confirmed the further extension of the restriction on marketing, distributing and selling CFDs to retail clients, for another three months. Alongside the extension it has updated its FAQs, particularly to clarify how the measures apply to rolling spot forex.
MEPs from ECON have backed the Commission’s proposal for a proportionate regime for smaller, non-systemic investment firms. The proposals suggest that firms’ whose total average monthly assets over a 12 month period exceed €30 bn should be subject to the current capital requirements for banks, but that smaller firms can either be regulated at that […]
FCA’s latest Market Watch focuses on market conduct and transaction reporting issues. It follows up on previous editions, which looked at FCA’s conclusions from a series of supervisory visits on suspicious transaction reporting. FCA had been concerned about over-reliance on “out of the box” alert calibration and that surveillance was not very developed for some asset […]
The EP has published draft reports on the Commission’s proposals relating to fund marketing. The key concern of the rapporteur, Wolf Klinz, is that while it is a good idea to make pre-marketing to professional investors easier, reverse solicitation should be prevented. As a result, he says that, within 18 months of a pre-marketing, investors […]
LSB has published its first summary report on how banks have applied the Access to Banking Standard. Generally it found banks have used a positive approach, but suggests some improvements, such as improvement in training for staff in branches closest to a branch which is to be closed.
The Treasury Committee has published a report, in which it describes its unanimous support for regulation for the “Wild West” crypto-currency market. The report outlines all the problems and dangers the market presents and calls for proportionate regulation, which could improve customer outcomes, reduce some of the risks and see the UK become well placed […]
FCA has confirmed it has closed its remaining investigations into life insurers, following its thematic review into the fair treatment of longstanding customers in the life insurance sector. FCA has already closed investigations into some of the firms within its study and has now concluded no further action is needed in respect of the last […]
FCA has confirmed its ban on Christian Bittar, formerly interest rate derivative trader at Deutsche Bank. It found Mr Bittar requested EURIBOR submitters to make high or low submissions, both internally and externally, so that he could benefit his own and sometimes other traders’ profitability. Mr Bittar was convicted and imprisoned for his actions, otherwise […]
Treasury and the BoE have announced that Mark Carney is to carry on in his role as Governor of the Bank until 31 January 2020, an extension of 7 months to his originally agreed term, while Sir Jon Cunliffe, deputy-governor with responsibility for financial stability, has also been reappointed.
Treasury has made the Regulations extending the SMCR to insurers. The Regulations bring into force certain provisions of the Bank of England and Financial Services Act 2016 from 13 September to enable the making of the measures necessary to apply the SMCR to insurers from 10 December 2018. There are also transitional provisions delaying the […]
FCA’s latest quarterly consultation focuses on SUP. FCA proposes changes that will update the Gabriel validation rule and FCA guidance on the capital adequacy form for APIs, and update its supervisory principles in line with its Approach document. Consultation closes on 7 November and 7 October respectively.
FCA and the Chartered Insurance Institute have worked together to create a re-assessment test of the level 4 diploma in financial planning. The new “Regulated Retail Investment Adviser Re-Evaluation” will be available from October. FCA encourages firms to use the test and may ask them to use it as part of its supervisory activities if […]
FCA has appointed Sheldon Mills, currently senior director of mergers and state aid at the CMA, as its new director of competition. He will take up the role in November.
The joint committee of ESAs has published the results of its monitoring exercise on automation in financial advice. The ESAs found that automation is growing but that there are still only a limited number of firms and customers involved. Moreover, the risks many had identified with the practice have not materialised, not least because most […]
Lisa Osofsky has given her first speech since taking over as SFO Director. She spoke of her past, as a federal prosecutor and then working in financial institutions. Her speech focused on how SFO has now successfully used DPAs and how she plans to use many more. She noted that SFO will look at whether the company has […]
OFSI has reminded all firms that hold or control funds or economic resources belonging to, owned, held or controlled by a designated person to provide a report to OFSI by 12 October. The report should cover both the UK and overseas where they are subject to UK financial sanctions legislation and should report the value […]
The Committee on Economic and Monetary Affairs has published a report on relationships between the EU and third countries on financial services regulation and supervision. The report calls for a Resolution requiring the Commission to review how current equivalence decision procedures work, to provide greater and clearer transparency, and says there is a clear move […]
HMRC has published its guidance on civil measures it can take to address non-compliance with AML requirements. The guidance looks at HMRC’s role under the 2017 MLRs and how it will use its powers under those Regulations and under the CTA. The note addresses civil measures, but HMRC stresses that it may treat any breach […]
Lisa Osofsky has started her 5 year term as SFO Director.
FCA has confirmed its ban on Arif Hussein following a decision of the Upper Tribunal published in June. Mr Hussein was a derivatives trader with UBS, who engaged in internal chats with a UBS trader-submitter knowing that it would be improper to participate in conduct intended to influence UBS’ LIBOR submissions. FCA found that Mr […]
ESMA has confirmed the ban on binary options will remain in place for a further three months. The current ban, which prohibits marketing, distribution or sale of binary options to retail clients, expires on 2 October. ESMA has reviewed the specific features of certain binary options which make them less risky and as a result […]
Treasury has published guidance for the banking, insurance and other financial services sectors on the impact of what it still describes as an “unlikely” no-deal Brexit scenario. It stresses that increased preparations towards a no-deal were always likely to be necessary the closer Brexit becomes and that accelerating the plans does not mean the Government […]
The European Commission has adopted a Delegated Regulation adding Pakistan to the list of high-risk third countries under MLD4. Member States will be bound to require application of EDD when dealing with any persons from Pakistan. The requirement will take effect 20 days after it is published in the Official Journal.
FCA has started criminal proceedings against Mark Starling for three offences relating to operating CIS without authorisation or exemption over a 9 year period and of fraud. Mr Starling is alleged to have operated schemes that purported to carry out financial futures trading for investors.
FCA is consulting on how it proposes to set fees to recover its costs for setting up the regulatory regime for claims management companies and for ongoing supervision of the sector. The consultation covers fees under the temporary permissions regime and the ultimate full permissions regime. FCA plans to recover as many of its costs […]
Commission Delegated Regulation (EU) 2018/1108 has been published in the OJ. This Regulation sets out RTS relating to the criteria for determining when it may be appropriate to require electronic money issuers and payment service providers who have certain cross-border operations to appoint a central contact point for a particular territory. The RTS also address the […]
FMLC has published a report looking at contract continuity post-Brexit and highlights the legal uncertainties that will continue if there is no clear agreement on the UK/EU relationship. The paper, which reprises many views FMLC has already expressed, also looks at how not only legislation but also firms can take measures to mitigate the risks.
The Upper Tribunal has upheld FCA’s decision to ban Alistair Burns, Director and CF1 of TailorMade Independent Limited, firm that advised on pension transfers and opt-outs, from any significant influence or senior management function because of his lack of competence and capability. It also directed FCA to fine Mr Burns £60,000 for failing to ensure the […]
FCA has added its own views on selling high-risk speculative investments to retail clients. It fully supports ESMA’s measures and notes that ESMA has also recognised the risks of products similar to CFDs. However, it is concerned firms will try to get around the ESMA product intervention restrictions by selling to retail investors products that […]
ESMA has updated its FAQs on the use of its temporary product intervention measures in respect of CFDs and binary options. New questions: state that turbo certificates are not within the scope of the CFD decision as they have different product features to CFDs, including that they are transferable securities for MiFID purposes and are […]
We have written an article setting out the detail of the Sanctions and AML Act.
FCA’s latest Handbook Notice confirms several rule amendments, including: changes to DEPP and EG to explain the status of industry codes of conduct that FCA has formally recognised; changes to several parts of the Handbook including SYSC and COBS in respect of the IDD, to ensure professional firms regulated by FCA meet similar requirements to […]
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 […]
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 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 […]
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 […]
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 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 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 […]
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 […]
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 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 […]