FS weekly highlights—13 June 2019

In this issue

 

Brexit news
Regulatory architecture
UK regulator updates
European regulator updates
Authorisation, approval and supervision
Prudential requirements
Financial stability, recovery and resolution
Risk management and controls
Financial crime
Conduct requirements
Competition in financial services
Enforcement and redress
Competition in financial services
Markets and trading
MiFID II
Regulation of capital markets
Regulation of derivatives
Investment funds and asset management
Banks and mutuals
Consumer credit, mortgage and home finance
Insurance and pensions
Payment services and systems
Fintech and virtual currencies
Sustainable finance
Dates for your diary

 

Brexit news

 

Financial Services (Miscellaneous) (Amendment) (EU Exit) (No 2) Regulations 2019

SI 2019/1010: This enactment is made in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This enactment is being made in order ensure a coherent and functioning financial services regulatory regime once the UK leaves the EU. It makes amendments to a number of financial services EU exit statutory instruments and to an EU delegated regulation, correcting errors identified in legislation after it was made, making amendments to ensure consistency between EU exit instruments and introducing a transitional provision. These amendments will ensure that these instruments operate effectively after the UK leaves the EU. It comes into force partly on 11 June 2019, partly on whichever is the later of immediately before exit day or 11 June 2019 and fully on whichever is the later of exit day or 11 June 2019. (Updated from draft on 11 June 2019).

HMT and OFSI publish Russia post EU-Exit financial sanctions guidance

The Office of Financial Sanctions Implementation (OFSI) published specific guidance in respect of the financial and investment restrictions in the Russia sanctions regime should the UK leave the EU without a deal. This guidance does not currently apply and would only come into effect if the UK leaves the EU without a deal and when the Russia (Sanctions) (EU Exit) Regulations 2019 come into force.

Government’s position on post-Brexit sanctions policy criticised

The Foreign Affairs Committee says the government’s position on sanctions post-Brexit remains unclear, fragmented and incoherent, and could affect national security. In a report on the future of UK sanctions policy, members of the committee expressed concern that little high-level thought went into considering the future of UK sanctions policy, despite the fact that most UK economic and financial sanctions are agreed and implemented by the EU. Brexit will therefore necessitate considerable change as to how the UK will implement its sanctions policy. Michael O’Kane, senior partner at Peters & Peters, Joanna Dimmock, partner at White & Case, and Gavin Irwin, barrister at 2 Hare Court comment on the committee’s report.

FCA publishes PS19/15 containing near final rules applying the FCA’s existing supervisory and enforcement processes to securitisation repositories on Brexit

The Financial Conduct Authority (FCA) published PS19/15 which outlines the near final rules applying the FCA’s existing supervisory and enforcement processes to securitisation repositories when the UK leaves the EU. It also sets out the final rules in respect of additional enforcement powers under the Securitisation Regulations 2018 (SI 2018/1288) (2018 Regulations). The policy statement follows on from the FCA’s CP19/11 and its earlier CP18/30 and PS18/25.

European Commission reports on measures taken in preparation for no-deal Brexit

The European Commission announced that a no-deal scenario remains a possible outcome of the Brexit process, especially in light of the continued uncertainty regarding the ratification of the Withdrawal Agreement by the UK Parliament, and appropriate measure are being taken to prepare for it. The Commission reports that, in the process, its so far tabled 19 legislative proposals, almost all of which were adopted by the European Parliament and Council of the EU. It also adopted 63 non-legislative acts and published 93 preparedness notices. There are no plans for any further measures before 31 October 2019.

CMA speech: UK competition law enforcement post-Brexit

On 11 June 2019, Michael Grenfell, Competition and Markets Authority (CMA) Executive Director, Enforcement, gave a speech at the City & Financial Global ‘Future of UK Competition Law’ summit, when he noted the uncertainty around when the UK will leave the EU and explained that, after Brexit, the CMA will enforce competition law on its own when companies’ conduct is focused in the UK, and it will be solely responsible for investigating effects in the UK even when the European Commission is also investigating.

House of Lords sub-committee hears evidence on UK financial services exports

The House of Lords Select Committee on the European Union published oral evidence that was given to the EU Financial Affairs Sub-Committee on 5 June 2019 regarding UK financial services exports. The evidence was given by TheCityUK’s chief economist and head of research, Anjalika Bardalai.

 

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Regulatory architecture

 

UK-China economic and financial dialogue to discuss financial services co-operation

HM Treasury announced that the 10th economic and financial dialogue (EFD) between the UK and China will be held on 17 June 2019 in London. The UK-China EFD will see the chancellor of the exchequer, Philip Hammond MP, host vice premier Hu Chunhua and a Chinese delegation in London for a series of events to discuss multilateral and bilateral economic issues, financial services co-operation, and trade and investment.

CityUK reports that regional financial centres have thrived while jobs have fallen in London and the south east

TheCityUK (the industry-led body representing UK-based financial and related professional services) published a report which notes that while UK-based financial and related professional services employment remained stable between 2016 and 2017 at 2.3m, jobs in London and the south east fell, down 1.3% (10,000 jobs) and 11.4% (32,000 jobs) respectively. In contrast, other UK financial centres across the country showed strong growth in employment. 

 

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UK regulator updates

 

Bank of England and PRA publish 2018/19 annual reports

The Bank of England (BoE) and the Prudential Regulation Authority (PRA) published separate annual reports for the year ended 28 February 2019. The reports include information on their activities during the year. The BoE report also includes financial statements for the BoE and the PRA. Members of the public are invited to make representations to the PRA on its annual report by 13 September 2019.

PRA publishes occasional consultation paper CP13/19

The PRA published occasional consultation paper CP13/19, which proposes minor amendments to PRA Rulebook Parts, supervisory statements, and the relevant templates and LOG files. The deadline for comments is 7 August 2019.

FCA publishes Quarterly Consultation Paper No 24 (CP19/19)

The FCA published Quarterly Consultation Paper No 24 (CP19/19), in which it consults on proposed miscellaneous amendments to the FCA Handbook, including changes to the statement of responsibilities (SoR) form in SUP 10C Annex 10D. The deadline for comments is 7 August 2019.

FCA policy development update for June 2019

The FCA published the latest version of its policy development update, which provides information on its recent and upcoming publications. Future developments include a possible consultation on price discrimination in the cash savings market.

John Govett resigns as CEO of the Money and Pensions Service

The Money and Pensions Service (MAPS) announced that its CEO John Govett resigned due to an impending family relocation. MPS chair Sir Hector Sants said Mr Govett successfully integrated the Pensions Advisory Service, the Money Advice Service and Pension Wise into one body, and developed its strategy and business plan. 

 

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European regulator updates

 

Commission proposes to extend EEA EFTA co-operation on financial services

The European Commission proposed an amendment to Protocol 31 to the Agreement on the European Economic Area (EEA Agreement) in order to allow the EEA EFTA States (Norway, Iceland, and Liechtenstein) to continue to participate in actions funded from the general budget of the EU regarding the implementation and development of the single market for financial services.

Deepening Europe's economic and monetary union: Commission takes stock of progress

Ahead of the Euro Summit on 21 June 2019, the European Commission published a report looking at the progress made to deepen Europe's economic and monetary union since the Five Presidents' Report published on 22 June 2015, and calling on Member States to take steps to further deepen the union.

ECB appoints new director general of market infrastructure and payments

The European Central Bank (ECB) appointed Ulrich Binseil as director general of market infrastructure and payments, replacing Marc Boyle who is leaving the ECB to take up a role in the private sector. Mr Bindseil’s appointment will take effect on 1 November 2019.

Details announced for ECB’s new TLTRO III

The Governing Council of the ECB decided on the key parameters of the new series of targeted longer-term refinancing operations (TLTRO III), including the interest rates that will be charged. The quarterly operations, first announced in March 2019, aim to help preserve favourable bank lending conditions and support the accommodative stance of monetary policy. They will start in September 2019 and end in March 2021, with a maturity of two years each.

ECOFIN publishes agenda ahead of ECOFIN Council meeting on 14 June

The Economic and Financial Affairs Council (ECOFIN) of the Council of the EU will meet on 14 June 2019 in their capacity as governors of the European Investment Bank, at the annual governors meeting. ECOFIN published a background briefing note setting out items that will be covered at the meeting including a progress report on the state of play on the banking union and the action plan to tackle non-performing loans (NPLs).

ESMA publishes newsletter for June 2019

The European Securities and Markets Authority (ESMA) published the fifth edition of its monthly newsletter. This edition focuses on publications following the May 2019 Board of Supervisors meeting as well as the launch of consultations on the political agreement reached on the review (EMIR 2.2) of the regulatory framework for the authorisation and supervision of central counterparties (CCPs) established in Title III of Regulation (EU) No 648/2012 (the European Market Infrastructure Regulation (EMIR)). ESMA also highlights some upcoming dates, including the European Supervisory Authorities’ Consumer Protection Day in Dublin on 28 June 2019. 

 

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Authorisation, approval and supervision

 

PRA consults on strengthening individual accountability: resolution assessments and reporting amendments

The PRA published consultation paper CP12/19, which proposes to amend the prescribed responsibility for recovery plans and resolution packs that forms part of the Senior Managers and Certification Regime (SM&CR). It also sets out consequential changes to supervisory statement SS28/15, ‘Strengthening individual accountability in banking’, and the SoR form, together with other administrative changes to this form. Feedback is sought by 7 August 2019.

FCA webpage: checklists for solo-regulated firms implementing SM&CR

The FCA published a webpage containing checklists to assist solo-regulated firms in implementing the SM&CR. The checklists are set out according to the firm’s categorisation and based on information from the SM&CR Guide for solo-regulated firms.

FCA executive director speaks on diversity in financial services

The executive director of international at the FCA, Nausicaa Delfas, delivered a speech on diversity at the City & Financial Women in Finance Summit 2019 in London. Ms Delfas said that although progress is being made, there is further to go, and leaders need to foster an inclusive culture fit for the future.

 

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Prudential requirements

 

PRA offers modification by consent of definition of capital Rules 7.1 and 7.5

The PRA published a modification by consent of Rules 7.1 and 7.5 of the Definition of Capital Part of the PRA Rulebook, which it says no longer achieve the purpose for which they were made in light of recent amendments to Regulation (EU) 575/2013 (the Capital Requirements Regulation (CRR)), which affect the instruments that firms may classify as common equity tier 1 (CET1). 

 

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Financial stability, recovery and resolution

 

Financial services aspects of June 2019 G20 communiqué

The G20 finance ministers and central bank governors affirmed their commitment to the ‘full, timely and consistent’ implementation of agreed financial reforms in a communiqué issued at their meeting in Fukoka, Japan on 8-9 June 2019. The G20 representatives also said that they would remain vigilant to the risks posed by crypto-assets, and they reiterated their commitment to fight money laundering, terrorist financing and proliferation financing.

FSB publishes report on decentralised financial technologies and stability risks

The Financial Stability Board (FSB) published a report on the financial stability, regulatory and governance implications of the use of decentralised financial technologies such as those involving distributed ledgers and online peer-to-peer, or user-matching, platforms. The report focuses on technologies that may reduce or eliminate the need for intermediaries or centralised processes that are traditionally involved in the provision of financial services, and highlights potential risks to financial stability as well as challenges to traditional regulatory approaches.

FSB seeks feedback on evaluation of financial regulatory reforms on SMEs

The FSB is consulting on its evaluation of the effects of post-crisis financial regulatory reforms on the financing of small and medium-sized enterprises (SMEs). The FSB says the analysis thus far does not identify material and persistent negative effects on SME financing in general, although there is some differentiation across jurisdictions. Feedback on the report is sought by 7 August 2019.

FSB roundtable looks at enhancing public confidence in audits for SIFIs

The FSB held the latest in a series of roundtables on external audit, exploring ways to promote international financial stability by enhancing public confidence in auditors and the quality of audits, especially for systemically important financial institutions (SIFIs).

Mark Carney delivers speech on sustainable cross-border capital flows

The governor of the BoE, Mark Carney, gave a speech on sustainable cross-border capital flows at the Institute of International Finance Spring Membership Meeting in Tokyo, in which he argued that better surveillance, a more resilient core of the financial system and a macroprudential approach to market-based finance will all help increase sustainable capital flows. However, he said they will be most effective if they are underpinned by an adequate global financial safety net, and he discussed areas of GFSN fragmentation.

 

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Risk management and controls

 

Bank of England and PRA publish whistleblowing annual report for 2018/19

The BoE and the PRA published an annual report on whistleblowing disclosures they received between April 2018 and March 2019. The report shows that the BoE and PRA received a total of 160 disclosures during the period, of which 128 were protected disclosures and were the subject of supervisory consideration. 

 

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Financial crime

 

HMT and OFSI publish guidance, FAQs and information on monetary penalties relating to financial sanctions

HM Treasury and OFSI published guidance, FAQs and information on the approach OFSI takes to financial sanctions and monetary penalties for breaches in financial sanctions. The documents are ‘Financial sanctions: general guidance’, ‘Monetary penalties for breaches of financial sanctions: guidance’, ‘FAQ guidance for the charity sector’, ‘Financial sanctions in the UK: a quick guide’ and ‘FAQ guidance for the import and export sector’.

HMT and OFSI publish Russia post EU-Exit financial sanctions guidance

OFSI published specific guidance in respect of the financial and investment restrictions in the Russia sanctions regime should the UK leave the EU without a deal. This guidance does not currently apply and would only come into effect if the UK leaves the EU without a deal and when the Russia (Sanctions) (EU Exit) Regulations 2019 come into force.

FCA reviews money-laundering risks in capital markets

The FCA published a thematic review (TR19/4) on the money-laundering risks and vulnerabilities in the capital markets. It advises firms to consider their approaches to identifying and assessing the money-laundering risks they are exposed to in light of this report and the related annex. The FCA is also considering its supervisory approach in response to this work.

Permission to appeal granted in case of KBR, Inc. v Director of the Serious Fraud Office

On 8 April 2019 the Supreme Court granted KBR, Inc. permission to appeal the decision of R (on the application of KBR Inc) v Director of the Serious Fraud Office [2018] EWHC 2368 (Admin). In its decision dated 6 September 2018 the Administrative Court refused to quash a notice issued by the Serious Fraud Office, requiring KBR, which was incorporated in the US, to produce documents held by it outside the UK.

Calls for further international cooperation against anti-money laundering

Europol announced that experts from around the world met in Sofia on 5 and 6 June 2019 for the annual general meeting of the anti-money laundering operational network (AMON). The event was organised under the Bulgarian presidency of AMON and was funded by a grant from Internal Security Fund—Police. The meeting was attended by experts from 37 countries, including EU Member States, Colombia, Georgia, Israel, Switzerland, Ukraine and the USA. The experts discussed that law enforcement agencies should 'find all available opportunities and instruments to disrupt money laundering, including strong cooperation with the financial sector'.

Libyan wealth fund's bribery suit stumbles over service

Libya's sovereign wealth fund could face significant delays pursuing bribery allegations against a businessman allegedly tied to the Moammar Gadhafi regime after a London judge revoked the fund's permission to serve the businessman in Dubai following ‘serious’ disclosure failures. High Court Judge Simon Bryan tossed orders allowing the Libyan Investment Authority to serve its lawsuit against Walid Al-Giahmi by courier in the United Arab Emirates because it never alerted the court to the fact that the allegations were possibly brought too late. 

 

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Conduct requirements

 

FCA publishes webpage on the retail intermediary market 2018

The FCA published a webpage which provides the regulator’s latest analysis of the intermediary sector based on data drawn from the retail mediation activities return (RMAR). Firms that provide advice on, or arrange, mortgages, insurance policies or retail investment products for consumers must send the FCA information about their activities on the RMAR. The FCA uses this information to help the regulator supervise the activities of these intermediary firms and inform the FCA’s other regulatory functions.

Council of the EU crowdfunding working party to meet on 18 June 2019

The Council of the European Union’s working party on financial services—crowdfunding (attachés only) is to hold a meeting on 18 June 2019, where it will examine the Commission Proposal for a Regulation of the European Parliament and of the Council on European Crowdfunding Service Providers for Business, and the Commission Proposal for a Directive of the European Parliament and of the Council amending Directive 2014/65/EU (the Markets in Financial Instruments Directive (MiFID II)).

 

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Competition in financial services

 

CMA issues Investment Consultancy and Fiduciary Management Market Investigation Order 2019

The CMA issued the Investment Consultancy and Fiduciary Management Market Investigation Order 2019, together with a summary of responses to its consultation on the draft order. The Order marks the final step of the CMA’s reform of the investment consultancy and fiduciary management sectors, after its investigation found significant competition concerns.

CMA confirms lapse of Non-Standard Finance plc’s offer to acquire Provident Financial plc

The CMA updated its webpage on the anticipated merger between Non-Standard Finance plc (NSF) and Provident Financial plc (Provident), to confirm that NSF’s offer to acquire the entire issued share capital of Provident now lapsed. The offer, made by NSF on 22 February 2019, was subject to certain conditions which were not all met by the deadline of 5 June 2019.

CMA speech: UK competition law enforcement post-Brexit

On 11 June 2019, Michael Grenfell, CMA Executive Director, Enforcement, gave a speech at the City & Financial Global ‘Future of UK Competition Law’ summit, when he noted the uncertainty around when the UK will leave the EU and explained that, after Brexit, the CMA will enforce competition law on its own when companies’ conduct is focused in the UK, and it will be solely responsible for investigating effects in the UK even when the Commission is also investigating.

5 banks fined $91M over forex-rigging claims

Five major banks including JP Morgan and Barclays were fined almost 90m Swiss francs ($91m) for allegedly colluding to manipulate trading in foreign exchange markets, Switzerland's antitrust authority said, bringing the total penalties imposed on the lenders for competition violations to nearly $1.3bn. The Swiss decision was the second of two settlements after the European Union's competition regulator fined the same banks—Barclays PLC, The Royal Bank of Scotland Group PLC, Citigroup Inc. JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group Inc.—a total of €1.07bn ($1.2bn) in May for collaborating in foreign exchange spot trading in two parallel cartels, which were dubbed Three-Way Banana split and Essex-Forex Express.

 

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Enforcement and redress

 

FCA confirms LAMP Insurance Company Limited liquidation

The FCA announced that, following application to the Supreme Court of Gibraltar, LAMP Insurance Company Limited entered into liquidation 31 May 2019. The Official Receiver was appointed as liquidator, and engaged the services of Grant Thornton Limited in Gibraltar. The liquidator appointed the financial services firm Quest Consulting (London) Ltd, of 52-53 Gracechurch Street, London EC3V OEH, to administer insurance claims.

FSCS to protect Braniel Credit Union customers

The Financial Services Compensation Scheme (FSCS) announced that it stepped in to protect members of Braniel Credit Union in Belfast, which stopped trading and is now in default. FSCS says it will compensate within seven days the vast majority of the credit union’s 238 members, sending out payments automatically. 

 

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Markets and trading

 

European Commission adopts draft implementing decisions on CRA III regulatory equivalence

The European Commission published for consultation four draft implementing decisions in which it recognises the legal and supervisory framework of Mexico, the US, Japan and Hong Kong as equivalent to the requirements of Regulation (EU) No 1060/2009 (the Credit Rating Agencies Regulation (CRA Regulation)). 

 

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MiFID II

 

MiFID II transparency: ESMA publishes final report on frequent batch auctions

ESMA published its final report on frequent batch auctions (FBAs). The report follows the call for evidence published by ESMA in November 2018 with the aim of better understanding FBA systems and assessing whether and to what extent they are used to circumvent the double volume cap (DVC). The report presents the feedback ESMA received to the call for evidence and informs stakeholders of the next steps ESMA intends to take.

ESMA updates MiFID II double volume cap data

ESMA updated its public register with the latest set of DVC data under MiFID II. The updates include DVC data and calculations for the period 1 May 2018 to 30 April 2019 as well as updates to already published DVC periods.

ESMA issues opinions on national product intervention measures

ESMA issued five positive opinions on product intervention measures taken by the national competent authorities (NCAs) of the Czech Republic, Estonia and Slovakia. ESMA’s opinion finds that the proposed measures are justified and proportionate and that it is necessary for NCAs of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures. 

 

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Regulation of capital markets

 

FCA publishes PS19/15 containing near final rules applying the FCA’s existing supervisory and enforcement processes to securitisation repositories on Brexit

The FCA published PS19/15 which outlines the near final rules applying the FCA’s existing supervisory and enforcement processes to securitisation repositories when the UK leaves the EU. It also sets out the final rules in respect of additional enforcement powers under the Securitisation Regulations 2018 (SI 2018/1288) (2018 Regulations). The policy statement follows on from the FCA’s CP19/11 and its earlier CP18/30 and PS18/25.

FCA reviews money-laundering risks in capital markets

The FCA published a thematic review (TR19/4) on the money-laundering risks and vulnerabilities in the capital markets. It advises firms to consider their approaches to identifying and assessing the money-laundering risks they are exposed to in light of this report and the related annex. The FCA is also considering its supervisory approach in response to this work.

ESMA updates core taxonomy to be used for ESEF reporting

ESMA published a draft amendment to the regulatory technical standards (RTS) on the European Single Electronic Format (ESEF) to update the core taxonomy to be used for ESEF reporting. This follows publication of the RTS on ESEF in the Official Journal of the EU on 29 May 2019.

ESMA’s Verena Ross delivers keynote speech on securitisation at Global ABS conference 2019

ESMA’s executive director Verena Ross delivered a keynote speech on securitisation at the Global ABS Conference 2019 in Barcelona, Spain. Ms Ross highlighted that current developments in relation to securitisation represent a crucial moment for EU securitisation markets. ESMA supports European securitisations that are well-regulated, with an appropriate transparency regime and an adequate infrastructure for assisting investors in understanding securitisation products.

ICMA publishes comparative review of practices and procedures in the Russian and international primary debt capital markets

The International Capital Markets Association (ICMA) published a joint report with the Russian National Finance Association (NFA) containing a comparative review of practices and procedures in the Russian and international primary debt capital markets. The bilingual report is focused on processes and practices in the Russian and international debt primary market, ie the market in which bonds are initially offered to investors before they begin to trade freely among investors and dealers in the secondary market.

 

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Regulation of derivatives

 

FCA updates EMIR notifications and exemptions webpage to reflect EMIR REFIT

The FCA updated its EMIR notifications and exemptions webpage for EMIR to reflect the changes to EMIR notifications under Regulation (EU) 2019/834 (EMIR REFIT).

ISDA publishes May 2019 Trade life cycle events guide for non-cleared margin

The International Swaps and Derivatives Association (ISDA) published a Trade life cycle events guide for non-cleared margin for May 2019. Initially developed in June 2016, this version makes no substantive changes. The intention is to provide an agreed market guide for firms to utilise in order to comply with certain aspects of the non-cleared margin rules within their respective jurisdictions.

ISDA publishes master regulatory disclosure letter for EMIR REFIT

ISDA published its master regulatory disclosure letter, which is a form of letter that is intended to allow market participants to exchange information regarding counterparty status as required under relevant regulatory regimes.

ISDA CEO on the accounting implications of the shift from IBORs to RFRs

ISDA published a blog by its CEO, Scott O’Malia, on the accounting implications of the shift from interbank offered rates (IBORs) to alternative risk-free rates (RFRs). Mr O’Malia discusses the work being done by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) to mitigate the effects of the shift.

 

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Investment funds and asset management

 

CMA issues Investment Consultancy and Fiduciary Management Market Investigation Order 2019

The CMA issued the Investment Consultancy and Fiduciary Management Market Investigation Order 2019, together with a summary of responses to its consultation on the draft order. The Order marks the final step of the CMA’s reform of the investment consultancy and fiduciary management sectors, after its investigation found significant competition concerns.

Nicky Morgan indicates Treasury Committee interest in Woodford Fund developments

The chair of the Treasury Select Committee, Nicky Morgan MP, commented on the news that dealing in the units of the LF Woodford Equity Income Fund was suspended, indicating that the Committee would be likely to raise the issue with the FCA and the BoE.

Treasury Committee asks FCA for information on Woodford fund suspension

The chair of the House of Commons Treasury Select Committee, Nicky Morgan MP, wrote to the chief executive of the FCA, Andrew Bailey, asking for information on the FCA’s work on the recent suspension of the LF Woodford Equity Income Fund, ahead of the FCA’s appearance before the Treasury Committee on 25 June 2019.

Nicky Morgan MP asks Hargreaves Lansdown for details of its links with Woodford Fund

The chair of the Treasury Committee, Nicky Morgan MP, wrote to the chief executive of Hargreaves Lansdown (HL), Chris Hill, asking a series of questions about the firm’s links with the Woodford Fund, the fund’s inclusion on HL’s Wealth 50 list, and the number of HL customers exposed to the fund. Trading in the units of the LF Woodford Equity Income Fund is suspended.

Investment Association comments on fund suspension and use of illiquid assets

The Investment Association (IA) issued a press release in which it commented on fund suspension and the use of illiquid assets in open ended funds. It said that suspension should not undertaken lightly, but it can be the right thing to do in some circumstances, and funds that invest in illiquid assets need to be open and transparent about that approach.

EFAMA calls for swift transposition of revised Shareholder Rights Directive

The European Fund and Asset Management Association (EFAMA) called on the European Commission to ensure a swift transposition in all Member States of Directive 2017/828/EU (the revised Shareholder Rights Directive (SRD II)), which came into force on 10 June 2019. EFAMA says that asset managers are supportive of the new rules and fully committed to comply with them, but says any country-specific nuances that are not yet known will be hard to comply with by the deadline.

AIMA survey looks at hedge funds’ use of alternative data

The Alternative Investment Management Association (AIMA) is conducting a survey examining hedge funds’ use of alternative data. The survey looks at issues such as the challenges of using such data and oversight within firms. AIMA will use the feedback to help inform a paper it will publish in Q3 2019.

 

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Banks and mutuals

 

EU banking package legislation published in Official Journal

Final legislation intended to reduce risks in the EU banking sector was published in the Official Journal of the EU. Known as the ‘banking package’, the two regulations (CRR II and Regulation (EU) 2019/877 amending the SRMR) and two directives (CRD V and  BRRD II) amend existing legislation related to bank capital requirements and the recovery and resolution of banks in difficulty. They were formally adopted by the European Parliament and Council on 20 May 2019.

European Commission figures show EU NPLs continue to decline

In its fourth progress report on the reduction of EU NPLs, the European Commission released figures showing the number of NPLs continues to fall towards pre-crisis levels, down to 3.3% in the third quarter of 2018 and down by 1.2 percentage points year-on-year. The Commission says the figures will inform discussions on the completion of the banking union at the next meeting of EU finance ministers, on 14 June 2019.

ECB chair addresses concerns on reimbursement of shareholders and bondholders in bank failures

The ECB published a letter from the chair of its supervisory board, Andrea Enria, to Markus Ferber MEP in response to a letter he wrote regarding the reimbursement of shareholders and bondholders in bank failures. The response addresses draft Italian and Slovenian legislation on the topic, as well as highlighting additional provisions that agreed by the Council of the EU and the European Parliament in the context of the recently adopted banking package, including additional safeguards in the BRRD.

ECB’s Andrea Enria on regulation and resilience in the EU banking sector

The ECB published an interview with the chair of its supervisory board, Andrea Enria, in which he discussed the state of the European banking sector, NPLs, and the need for a level playing field across Member States. He said the EU needed ‘a comprehensive roadmap’ for completing the banking union in order to accomplish risk reduction and risk sharing, ‘which mutually reinforce each other’.

PRA Director communicates findings from fast growing firms review

The PRA published a Dear CEO letter from its Director for UK deposit-takers supervision, Melanie Beaman, to relevant CEOs communicating the overall findings from a PRA review of 20 non-systemic deposit taking firms (fast growing firms—FGFs). The review was aimed at testing the financial resilience of FGFs and enhancing the PRA’s knowledge of the funding and lending markets in which they operate.

UK Finance publishes principles for banks when discontinuing or refusing banking facilities

UK Finance published a set of principles to help banks communicate with customers when they cannot offer, or continue to provide, banking facilities. It says it worked with its members and the FCA to develop the principles, which are intended to ensure that customers are treated fairly.

MAPS report on how retail banks can improve customers’ financial capability and wellbeing

MAPS published a report on financial capability challenges facing the UK population and why this should be a priority for retail banking providers. ‘Transforming customer wellbeing—what can retail banking do to build financial capability?’ highlights some of the existing features of current and savings accounts that can improve customers’ financial capability and wellbeing, while also setting out ways retail banking firms can better help their customers.

 

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Consumer credit, mortgage and home finance

 

FCA overdraft reforms ‘biggest overhaul for a generation’

The FCA announced final rules intended to overhaul the ‘dysfunctional’ overdraft market. The new rules are set out in PS19/16 and were consulted on in CP18/42. The FCA also published CP19/18, which sets out further proposals on overdrafts as part of its review of high-cost credit. The consultation closes on 7 August 2019.

FCA publishes PS19/17 with final rules on Buy Now Pay Later products

The FCA published PS19/17 on Buy Now Pay Later (BNPL) products, containing final rules including preventing firms from charging backdated interest on money repaid by consumers during BNPL offer periods. Firms will also be required to provide more detailed information to consumers regarding BNPL offers and provide prompt reminders to consumers regarding when the BNPL offer period is due to end.

MPs debate motion to help mortgage prisoners and protect SMEs from ‘vulture funds’

On 6 June 2019 MPs debated a cross-party motion, co-sponsored by Charlie Elphicke MP and Martin Whitfield MP, aimed at pressuring the FCA and the Treasury to act to free ‘mortgage prisoners’ and protect SMEs from the ‘unscrupulous asset stripping’ of ‘vulture funds’.

FCA and PRA publish mortgage lending statistics for Q1 2019

The FCA and the PRA jointly published mortgage lending statistics for the first quarter of 2019. The statistics are based on information received via the mortgage lenders and administrators return (MLAR), a quarterly return submitted to the FCA and the PRA by firms carrying out mortgage lending and administration.

 

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Insurance and pensions

 

Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations (Northern Ireland) 2019

SR 2019/115: Amendments are made to Northern Ireland existing occupational pension schemes subordinate legislation in order to implement provisions of SRD II, on the encouragement of long-term shareholder engagement by institutions for occupational retirement provision, which relate to workplace pension scheme stewardship and governance in Northern Ireland. The Regulations will come into force partly on 30 September 2019 and on 1 October 2019 and fully on 1 October 2020.

EIOPA re-consults on amended ITS on ECAI mapping

The European Insurance and Occupational Pensions Authority (EIOPA) published a further consultation paper on amendments to Commission Implementing Regulation (EU) 2016/1800 on the mapping of credit assessments of external credit assessment institutions in accordance with the Solvency II Directive 2009/138/EC. The closing date for responses is 10 July 2019.

FCA to host live events for British Steel pension scheme members

The FCA is to host a series of events for British Steel pension scheme members, designed to provide information for members concerned about the advice they received when they transferred their pension out of the scheme. The first sessions will be held on 14 June 2019 at the Princess Royal Theatre in Port Talbot.

Pension Scams Industry Group updates code of practice on combating pension scams

The Pension Scams Industry Group (PSIG), the voluntary body set up to support trustees, providers and administrators in combating pension scams, updated its code of good practice on combating pension scams. 

 

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Payment services and systems

 

HM Treasury publishes terms of reference for Joint Authorities Cash Strategy Group

HM Treasury published a document setting out the terms of reference for a Joint Authorities Cash Strategy (JACS) Group, which will bring together HM Treasury, the Payment Systems Regulator (PSR), the FCA and the BoE to inform and co-ordinate members’ activities related to cash. The JACS Group was established in the context of the government’s commitment to support digital payments whilst safeguarding access to cash for those who need it.

FCA updates payment services and electronic money approach document

The FCA published an updated version of its approach document for payment services and electronic money. The latest version adds guidance on refused payment fees, which the FCA consulted on in consultation paper CP18/42. The approach document contains the FCA’s guidance on payment services and electronic money. It is designed to help businesses navigate the Payment Services Regulations 2017, SI 2017/752, and the Electronic Money Regulations 2011, SI 2011/99.

PSR’s CP19/5 reviews the structure of LINK interchange fees

The PSR CP19/5—Call for views: Review of the structure of LINK interchange fees, which specifically focuses on the structure of interchange fees, rather than the level of those fees. The PSR says the fee structure creates a significant impact on the incentives for providing ATM services around the UK.

PSR speech on UK ATMs and access to cash

The PSR published a speech by its co-managing director, Chris Hemsley, at the Which? Cash Summit, in which he set out the PSR’s role in ensuring consumers’ access to cash and the steps it is taking to protect access to free-to-use ATMs.

EPC publishes white paper on mobile SEPA card payment solutions

The multi-stakeholder group on mobile contactless single euro payments area (SEPA) card payments, facilitated by the European Payments Council (EPC), developed a white paper to create awareness of mobile card payment solutions. It aims to provide a high-level overview of non-near field communication (NFC)-based mobile SEPA card proximity payments (MCPPs), utilising SEPA card payments (as specified in the SEPA Cards Standardisation Volume) as the underlying payment instrument.

UK Finance publishes Payment Markets Report 2019

UK Finance published a report setting out how the payments markets and specifically payment methods evolved in recent years, particularly given the significant innovation and rate of technological change in this area.

UK Finance notes rise in mobile banking and contactless as consumers take ‘pick n mix’ approach to payments

UK Finance set out details of research it carried out which reveals that UK consumers are taking a ‘pick n mix’ approach to how they make payments, with mobile banking, mobile payments and contactless all becoming increasingly popular. Just as digital technology allowed people to customise the way they listen to music or read the news, it is now transforming the world of payments, as consumers take advantage of the ever-widening range of payment choices available to suit their needs and lifestyle. 

 

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Fintech and virtual currencies

 

FSB publishes report on decentralised financial technologies and stability risks

The FSB published a report on the financial stability, regulatory and governance implications of the use of decentralised financial technologies such as those involving distributed ledgers and online peer-to-peer, or user-matching, platforms. The report focuses on technologies that may reduce or eliminate the need for intermediaries or centralised processes that are traditionally involved in the provision of financial services, and highlights potential risks to financial stability as well as challenges to traditional regulatory approaches.

FCA lets fintech co TokenMarket raise funds in ‘sandbox’

Investment platform TokenMarket announced that the UK's FCA gave it the go-ahead to raise funds in a security token offering using the regulator's ‘sandbox.’ TokenMarket allows SMEs to raise money from investors through utility token offerings, and is now preparing to launch an offering of its own under the protections afforded by the FCA's cross-border regulatory testing ground for companies experimenting with new financial technology. 

 

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Sustainable finance

 

European Commission publishes responses to consultation on climate-related reporting guidelines

The European Commission published the responses it received to its targeted consultation on the proposed revision of the non-binding guidelines on non-financial reporting, specifically with regard to the reporting of climate-related information, together with a summary report. The Commission received 114 responses to the consultation, which took place from 20 February 2019 to 20 March 2019.

Insurance Europe welcomes EU taxonomy proposal

Insurance Europe published its views on key aspects of the taxonomy proposal which would establish a technically robust classification system at EU level to provide clarity on what is 'green' or 'sustainable'. The comment is being issued amid the ongoing discussions on the taxonomy proposal and in light of the European Parliament’s position taken in March 2019. Insurance Europe generally welcomes the recommendations of the high-level expert group and the subsequent action plan on financing sustainable growth as well as EU efforts to make the European economy greener and more resilient.

BNP Paribas publishes ESG Global Survey 2019

BNP Paribas Securities Services published primary research into the practical implications of environmental, social and governance (ESG) integration for asset managers and asset owners in Europe, North America and Asia Pacific, to build on its 2017 survey.

 

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Dates for your diary

 

DateSubjectEvent

 

13 June 2019

 

Payment systems and services


Card-acquiring services

 

 

The deadline for feedback to the PSR’s consultation MR18/1.4—Consultation on our proposed approach to the merchant survey is 13 June 2019.

 

13 June 2019

Prudential requirements


PRA Pillar 2

 

The deadline for responses to the PRA’s CP5/19, in which it proposes to update the Pillar 2 capital framework to reflect continued refinements and developments in setting the PRA buffer (also referred to as Pillar 2B) is 13 June 2019.

 

14 June 2019

Investment platforms market study

 

The deadline for responses to FCA CP19/12: Consultation on Investment Platforms Market Study Remedies is 14 June 2019.

 

14 June 2019

Payment services and systems 


PSD2

The FCA encourages all relevant payment services and electronic money firms to submit an ‘open banking’ exemption request before 14 June 2019.

 

14 June 2019

Banks and mutuals


Competition in financial services

 

The deadline for applications to Banking Competition Remedies Ltd for Incentivised Switching Scheme funding as part of the RBS State Aid Alternative Remedies Package is 17.00 on 14 June 2019.

 

15 June 2019Markets and trading

Pursuant to Commission Implementing Regulation (EU) 2018/1889, the transitional period made out under Article 497 of the CRR and in the second subparagraph of Article 89(5a) of EMIR is extended until 15 June 2019.

 

17 June 2019

Markets and trading


Regulation of derivatives

 

Regulation (EU) 2019/834—EMIR REFIT of the European Parliament and of the Council of 20 May 2019 amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivative contracts not cleared by a CCP, the registration and supervision of TRs and the requirements for TRs will enter into force on 17 June 2019.

 

17 June 2019

IFRS


Benchmarks

 

The deadline for feedback to the IASB request for comment on proposed changes to the old and new financial instruments standards, IAS 39, Financial Instruments: Recognition and Measurement, and IFRS 9, Financial Instruments, in light of the reform of interest rate benchmarks such as IBORs is 17 June 2019.

 

17 June 2019

Markets and trading


Regulation of derivatives

 

The deadline for feedback to the ISDA’s proposed amendments to the 2014 ISDA Credit Derivatives Definitions to address issues relating to narrowly tailored credit events (NTCEs), focusing on the outstanding principal balance (OPB) definition is 17 June 2019.

 

18 June 2019

Markets and trading


Regulation of capital markets

 

Commission Delegated Regulation (EU) 2019/885 of 5 February 2019 supplementing the Securitisation Regulation regard to RTS specifying information to be provided to a competent authority in an application for authorisation of a third party assessing STS compliance enters into force into 18 June 2019.

 

18 June 2019Sustainable finance

The European Commission technical expert group (TEG) on sustainable finance is expected to publish the following reports (1) final report on the EU taxonomy (2) final report on the EU green bond standard, and (3) interim report on climate benchmarks on 18 June 2019.

 

19 June 2019

Competition in financial services


Banks and mutuals

 

The deadline for comments on the CMA’s investigation of the potential acquisition by OneSavings Bank PLC of Charter Court Financial Services Group PLC is 19 June 2019.

 

19 to 20 June 2019International regulator updatesThe Basel Committee on Banking Supervision (BCBS) will hold its next meeting on 19 to 20 June 2019.

 

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