FS News Brief—18 March 2019

Welcome to the third bulletin of the LexisPSL Financial Services 'News Brief'. This weekly update gives you a quick insight into some of the most important regulatory developments from the past week, and highlights some of the news stories that may have gone under your radar. 

See our full and comprehensive round up of the weeks regulatory developments in our Weekly Highlights, here.

 

News brief
Brexit report
Best of the rest
You may have missed
The week ahead

 

News brief

 

Spring Statement 2019: Chancellor makes key financial services announcements

The chancellor of the exchequer, Philip Hammond, delivered the 2019 Spring Statement. In it, Mr Hammond made two financial services announcements that form part of the government's work to ensure the UK remains an open and competitive place to do business. The announcements relate to financial services legislation (the government will legislate as necessary to ensure that in the immediate period after the UK leaves the EU, the UK can maintain world-leading financial services regulatory standards) and the future financial services regulatory framework ( the government will set out its approach to consulting on how to ensure the UK financial services regulatory framework adapts to its new constitutional position outside the EU).

Treasury Committee publishes Brexit preparations correspondence

The Treasury Committee published letters it received from the Secretary of State for Exiting the European Union, Steve Barclay MP, and from the Permanent Secretary to HMT, Tom Scholar, discussing the UK’s EU departure negotiations, dealing with specific queries raised by the Committee, and detailing the government and civil service preparations for various Brexit scenarios.

FCA review of the debt management sector finds improvements but some poor practice

The FCA published its second thematic review of the debt management sector (TR19/1), looking at commercial and not-for-profit firms that provide debt advice and administer debt management plans to help customers deal with their debts. The review found that most customers are getting better advice and outcomes than was previously the case. However, while firms’ identification and treatment of vulnerable consumers is generally better than at the time of the first review, two thirds of the firms that the FCA looked at still needed to make improvements in this area.

DWP, TPR and HM Treasury respond to CMA market investigation into investment consultancy and fiduciary management services

The government published a joint response by HM Treasury, the Department for Work and Pensions (DWP) and The Pensions Regulator (TPR) to the report by the Competition and Markets Authority (CMA) that set out the decision of its market investigation into investment consultancy and fiduciary management services. In the joint response, the DWP, TPR and HMT agree with the proposed remedies in the CMA’s report and explain their decisions on each of the recommendations.

BCBS issues statement on cryptoassets

The Basel Committee on Banking Supervision issued a statement regarding cryptoassets. In the statement BCBS highlights the potential for the continued growth of cryptoasset trading platforms and new financial products related to cryptoassets to raise financial stability concerns and increase risks faced by banks. The statement sets out the minimum measures the BCBS expects authorised banks to take if they decide to acquire cryptoasset exposures or provide related services. BCBS explains the risks cryptoassets present for banks, which include liquidity risk, credit risk, market risk, operational risk, money laundering and terrorist financing risk, and legal and reputational risks. On that basis, the BCBS expects authorised banks to adopt a number of precautionary measures as a minimum before acquiring cryptoasset exposures or providing related services.

Capital markets union: provisional deal reached on clearing house rules

The European Presidency and Parliament reached a provisional agreement on how EU and third country clearing houses should be supervised in the future. The deal takes into particular account the effects of Brexit on the European financial system. The new rules will be implemented through a revision of the European market infrastructure regulation (EMIR) and by revising the statute of the European system of central banks and the ECB. The aim of the reform is to strengthen the supervision of clearing houses or central counterparties (CCPs) in order to take into account the growing size, complexity and cross-border dimension of clearing in Europe.

EU-wide protection for whistleblowers agreed

The European Parliament and the Member States reached a provisional agreement on new rules that the European Commission says will guarantee a high level of protection for whistleblowers who report breaches of EU law. The new rules cover a wide range of areas of EU law, including AML and corporate taxation, data protection, and protection of the EU's financial interests and financial services among other topics.

EBA publishes clarifications for PSD2 APIs

The European Banking Authority (EBA) published clarifications to the first set of issues raised and discussed by participants of its working group on application programming interfaces (APIs) under the revised Payment Services Directive (PSD2). The group met for the first time on 21 February 2019. The issues relate to practical aspects regarding the reliability of testing platforms, the alignment of functionalities between API schemes, and the identification for testing purposes of entities that have not been authorised yet. The working group consists of 30 individuals representing account servicing payment service providers (ASPSPs), third party providers (TPPs), API schemes, and others market participants.

EU Parliament adopts new EU rules for standard minimum coverage of NPLs

The European Parliament adopted new EU rules for standard minimum coverage of bad loans. Measures to mitigate the risk of possible, future, non-performing loans (NPLs) accumulating due to the recessions brought about by the 2008 financial crisis were approved by the Parliament, with 426 votes to 151 and 22 abstentions. The measures are intended to help strengthen the banking union, preserve financial stability and help banks’ profitability and encourage lending, which creates jobs and growth across Europe. The new rules, which have already been informally agreed with the European Council, will only apply to NPLs taken out after the entry into force of the regulation.

EBA report finds good progress in supervisory convergence, but challenges remain

The EBA published its annual report on the convergence of supervisory practices in the EU. The report provides a summary of the EBA's observations on convergence of supervisory practices and highlights the EBA's activities in 2018 to promote this convergence in accordance with its mandates in its Founding Regulation and the Capital Requirements Directive (CRD). The EBA's work in supervisory convergence aims at fostering comparable supervisory approaches across the single market. This is necessary to ensure a level playing field, effective supervision of cross border groups, and to promote supervisory best practices.

European Commission reports on progress towards capital markets union ahead of Council meeting

The European Commission published a report on progress achieved on the capital markets union (CMU), including with regard to sustainable finance, ahead of the upcoming meeting of the Council of the EU on 21-22 March 2018. The Commission has called on EU leaders to keep up the political engagement necessary to lay down the foundation of the CMU. Following the previous progress report in November 2018 and the statement of the Euro Summit in December 2018, which called for ambitious progress on the CMU by spring 2019, the latest communication reviews developments including political compromises reached on several of the Commission's proposals, as well as a number of non-legislative actions.

 

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Brexit report

 

FCA issues statement on derivatives reporting in a no-deal scenario

FCA publishes CP19/11: Securitisation (Amendment) (EU Exit) Regulations 2019 and Securitisation Regulations 2018 (proposed changes to DEPP and EG)

Report finds Dublin the biggest winner in Brexit relocations

HM Treasury updates guidance webpage on no-deal Brexit for financial services

FCA publishes Brexit TPR and FSCR diagram

Delegated Regulation extending deferred application of clearing obligation under EMIR in event of no-deal Brexit published in OJ

Delegated Regulation extending dates for applying risk-management procedures under EMIR in event of no-deal Brexit published in OJ

FCA statement on MiFID II and BMR provisions in event of a no-deal Brexit

FCA publishes supervisory statement regarding MiFID II pre-and post-trade transparency regime

European Parliament non-objections to post-Brexit amendments regarding MiFIR and MAR

FCA and ESMA issue statements on endorsement of credit ratings in event of no-deal Brexit

 

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Best of the rest

 

EBA publishes 2017 high-earner figures

PRA and FCA host first meeting of joint Climate Financial Risk Forum

Commission welcomes progress on proposed EU taxonomy for sustainable economic activities

FIA white paper warns of increased fragmentation in cleared derivatives market caused by regulation

FCA fines The Carphone Warehouse £29m for insurance mis-selling

FCA provides updates on machine readable reporting pilots

ESAs' joint board of appeal decides on CRAR appeals

Working group on euro risk-free rates recommends replacing EONIA with the €STR and ECB announces its start date

European Securities Committee endorses Commission Decision recognising Singapore MiFID II equivalence

European Commission and CFTC joint statement on EMIR 2.2

European Commission grants exemptions to the Chinese central bank under MiFIR

BIS/IOSCO update on implementation of payment, clearing and settlement standards

Open Banking publishes new version of the Open Banking Standard

 

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You may have missed

 

Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (Made)

Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019 (Made)

Financial Regulators’ Powers (Technical Standards etc) and Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2019 (Made)

Financial Services (Distance Marketing) (Amendment and Savings Provisions) (EU Exit) Regulations 2019 (Made)

PRA publishes PS8/19 and updates SS17/13 on credit risk mitigation

PRA consults on ways to increase transparency of Pillar 2 capital framework

PRA publishes policy statement (PS9/19) on Solvency II: Group own fund availability

PSR publishes policy statement and consultation (CP19/3) regarding ‘day one’ directions

FCA reports on Investment Platforms Market Study and publishes consultation paper 19/12 on remedies

FCA issues final rules on OPBAS fees and consults further on minimum fee threshold

 

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The week ahead

 

DateSubjectEvent

 

14 March 2019

 

Brexit

 

The FCA will host a briefing on 14 March 2019 in Edinburgh. The briefing will be for regulated firms in preparation for the UK leaving the EU. At the briefing Nausicaa Delfas, Executive Director of International, will explain how the FCA is preparing for Brexit and its expectations of firms. The session will also include a panel Q&A session where firms can discuss any concerns.

 

14 March 2019Payment services

Paragraphs 3 and 5 of Article 30 of Commission Delegated Regulation (EU) 2018/389 (in relation to the regulatory technical standards supplementing the revised Payment Services Directive with regard to strong customer authentication and common and secure open standards of communication) will apply from 14 March 2019.

 

14 March 2019MiFID II

The deadline for the European Commission to endorse ESMA’s final report in relation to amending the tick size regime under Commission Delegated Regulation (EU) 2017/588 (RTS 11) is 14 March 2019.

 

15 March 2019

Investment funds

Asset management

The deadline for applications to ESMA’s             call for candidates in order to renew the composition of its Consultative Working Group which advises its Investment Management Standing Committee is 15 March 2019.

 

18 March 2019Consumer credit

The deadline for feedback to FCA ‘CP18/42: High-Cost Credit Review: Overdrafts consultation paper and policy statement’ and ‘CP18/43: High-cost Credit Review: Feedback on CP18/12 with final rules and guidance and consultation on Buy Now Pay Later offers’ is 18 March 2019.

 

18 March 2019

SME Financing


Regulatory architecture

 

The deadline to provide feedback to the Financial Stability Board’s (FSB) evaluation of the effects of financial regulatory reforms on the provision of financing to small and medium size enterprises (SMEs) (which is part of the FSB’s broader examination of the effects of the G20s programme of post-crisis reforms on financial intermediation) is 18 March 2019.

 

19 March 2019EU Regulators updates

The deadline for the European Parliament to object to the European Banking Authority’s (EBA’s) nomination of Jose Manuel Campa as new EBA chairperson is 19 March 2019.

 

19 March 2019Insurance

As part of its live and local series the FCA will host its ‘Regulatory update focusing on the extension of the SM&CR and the Insurance Distribution Directive’ Workshop in Sutton Coldfield on 19 March 2019.

 

19 March 2019Sustainable finance

The deadline for feedback to ESMA’s consultation ‘Disclosure Requirements Applicable to Credit Ratings’ is 19 March 2019.

 

19 March 2019Retail investments

As part of its live and local series the FCA will host its interactive workshop on defined benefit pension transfers on 19 March 2019 in Exeter.

 

20 March 2019Risk management and controls

The deadline for responses to the Banking Standards Board’s (BSB) consultation on good practice guidance for SM&CR regulatory references is 20 March 2019.

 

20 March 2019Retail investments

As part of its live and local series the FCA will host its interactive workshop on defined benefit pension transfers on 20 March 2019 in Telford.

 

21 March 2019

Regulatory architecture


Investment funds

 

Regulation of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments into the Union will be published in the Official Journal of the EU on 21 March 2019.

 

21 March 2019Mortgage Credit Directive

The European Commission to begin a review of the MCD.
Deadline for the European Commission to submit a comprehensive report assessing the wider challenges of private over-indebtedness directly linked to credit activity.

 

21 March 2019

Sustainable finance

Capital markets union

 
The European Commission will host a high level conference on ‘The Global Approach to Sustainable Finance’ which will be held in Brussels on March 21.

 

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