FS weekly highlights—17 September 2020

FS weekly highlights—17 September 2020

In this issue

 

 

Coronavirus (COVID-19)
Brexit news
UK, EU and international regulators and bodies
Authorisation, approval and supervision
Financial crime
Complaints, compensation and claims management
Investigations, enforcement and discipline
Regulation of benchmarks and IBOR reform
Regulation of capital markets
Regulation of derivatives
Banks and mutuals
Investment funds and asset management
Consumer credit, mortgage and home finance
Regulation of insurance
Payment services and systems
Fintech and cryptoassets
Sustainable finance
Dates for your diary

 

Coronavirus (COVID-19)

For further information on the effects of COVID-19 on financial services, see: Coronavirus (COVID-19)—key developments for financial services lawyers and    Coronavirus (COVID-19)—key financial services issues.

Coronavirus (COVID-19)—FCA proposes updated guidance on consumer credit and overdrafts

The Financial Conduct Authority (FCA) announced proposals to ensure that firms provide tailored support for users of consumer credit and overdraft products who continue to face payment difficulties due to the coronavirus (COVID-19). The proposals will cover users of credit cards and other revolving credit (store card and catalogue credit), personal loans, overdrafts, motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products. The deadline for comments is 21 September 2020.

Source: FCA proposes the next stage of support for consumer credit and overdraft customers.

For further information ,see: FCA: Treating Customers Fairly—essentials.

FCA finalises coronavirus (COVID-19) guidance for mortgages

The FCA confirmed the support mortgage borrowers will receive if they continue to face payment difficulties due to the coronavirus (COVID-19) pandemic. It has also published finalised guidance on how firms should support ‘mortgage borrowers who have benefitted from payment deferrals under the current guidance and who continue to face financial difficulties, as well as those whose financial situation may be affected by coronavirus after 31 October.’ The FCA has also published FS20/14—a feedback statement on the draft guidance on mortgages and coronavirus.

Source: FCA confirms the next stage of support for mortgage borrowers.

FCA to follow up coronavirus (COVID-19) firm resilience survey

The FCA asked a number of the firms it regulates to complete a short follow-up survey to help it obtain a more accurate view of firms’ financial resilience as a result of coronavirus (COVID-19). The completion of this survey is mandatory.

Source: Coronavirus (COVID-19) Financial Resilience Survey.

Coronavirus (COVID-19)—EFAMA responds to Commission’s SME and fixed income instrument recovery plans

The European Fund and Asset Management Association (EFAMA) published a position paper on the European Commission’s proposal to modify the MiFID II investment research rules for SMEs and fixed income instruments, as part of its broader capital markets recovery package proposed in response to the coronavirus (COVID-19) pandemic. Loosening research and execution unbundling requirements when the research relates to small and mid-cap companies is one of several measures envisaged to improve the visibility and financing opportunities of SME companies during the recovery. EFAMA welcomes the optionality of the regime proposed, but says there are more effective ways to foster SMEs’ access to markets.

Source: EFAMA position paper on EC consultation paper on COVID-19’s ‘Capital markets recovery package’—Investment research for SME and fixed income instruments.

UK Finance says coronavirus (COVID-19) has fuelled spike in impersonation scams

UK Finance is urging people to be aware of criminals exploiting the coronavirus (COVID-19) to target their victims, after figures revealed a sharp rise in impersonation scams in the first half of 2020. According to the trade association, almost 15,000 impersonation scam cases were reported in the first half of 2020, up 84 per cent compared to the same period in 2019.

Sources: Impersonation scams almost double in first half of 2020 as criminals exploit COVID-19 to target victims and  Which? response to UK Finance figures on impersonation scams.

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Brexit news

ISDA asks Commission to address Brexit implications of the EMIR clearing obligation for pension scheme arrangements

The International Swaps and Derivatives Association (ISDA) has published a letter dated 7 September 2020 asking the European Commission and the European Securities and Markets Authority (ESMA) to consider taking action to mitigate the risks posed to EU banks, investment firms and pension funds, as well as UK pension funds, by the fact that UK pension funds will cease to benefit from the exemption under the EMIR clearing obligation for pension scheme arrangements following the end of the Brexit transition period on 31 December 2020.

Source: Letter on post-Brexit exemption for pension scheme arrangements under EMIR

ISDA recommends equivalence decisions to mitigate Brexit impact on derivatives trading obligation

The International Swaps and Derivatives Association (ISDA) has published a paper setting out its analysis of the impact of Brexit on the derivatives trading obligation (DTO) under the Markets in Financial Instruments Directive 2014/65/EU (MiFID II). In the paper ISDA recommends that the EU and the UK recognise the equivalence of each other’s derivatives trading venues to ensure EU and UK counterparties can continue to trade with each other after the Brexit implementation period has ended.

Source: ISDA analysis of the impact of Brexit on the MIFID derivatives trading obligation

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UK, EU and international regulators and bodies

Chris Woolard to leave FCA after review of unsecured credit market regulation

The FCA announced that its interim CEO, Chris Woolard, will chair a review of the future regulation of the unsecured credit market, reporting to the FCA board. The review will concentrate on how regulation can better support a healthy unsecured lending market. Woolard will leave the FCA after the review is finished.

Sources: Christopher Woolard to chair review of unsecured credit market regulation and  Governor Andrew Bailey statement on Chris Woolard’s departure from the Financial Conduct Authority.

FCA publishes 2019–2020 Annual Report and Accounts

The FCA published its 2019–2020 Annual Report and Accounts. Highlights from the FCA include work in relation to coronavirus (COVID-19), Brexit, imposing over £224m in fines, work in relation to the Senior Managers and Certification Regime (SM&CR), scam protection, protecting vulnerable customers from high-cost credit and disclosure failings.

Sources: FCA publishes Annual Report and Accounts 2019/20 and  Annual Report and Accounts 2019/20.

PSR publishes Annual Report and Accounts for 2019/20

The Payment Systems Regulator (PSR) published its Annual Report and Accounts for 2019/20, which sets out its work in tackling payment scams; helping protect people’s access to cash; supporting the development of a new interbank payment system; and continuing to promote competition and innovation in payment systems.

Sources: Payment Systems Regulator publishes Annual Report and Accounts for 2019/20 and  Factsheet—Annual Report and Accounts 2019/20.

FCA publishes policy development update for September 2020

The FCA published its latest policy development update, which sets out recent publications, upcoming consultations and feedbacks, and expected quarterly consultations.

Source: FCA policy development update.

ECB guideline on Eurosystem reserve management services published in Official Journal

Guideline (EU) 2020/1284 of the European Central Bank (ECB), which amends Guideline (EU) 2018/797 on the Eurosystem’s provision of reserve management services in euro to central banks and countries located outside the euro area and to international organisations (ECB/2020/34), has been published in the Official Journal of the EU. The amending guideline seeks to further increase transparency in reporting and information sharing within the Eurosystem.

Source: Guideline (EU) 2020/1284 of the European Central Bank of 7 September 2020 amending Guideline (EU) 2018/797 on the Eurosystem’s provision of reserve management services in euro to central banks and countries located outside the euro area and to international organisations (ECB/2020/34)

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Authorisation, approval and supervision

BoE issues policy statement on FMI fees regime 2020/21

The Bank of England (BoE) published a policy statement (PS) providing feedback on the responses it received to the consultation paper (CP) on the fees regime for financial market infrastructure (FMI) supervision 2020/21 and other related policy changes, which ran from May to July 2020. The PS also sets out the final FMI fee rates for 2020/21 and how the BoE will apportion the surplus from the 2019/20 FMI fee year.

Source: Fees regime for the supervision of financial market infrastructure (FMI)—September 2020.

Revised list of ITS validation rules issued by the EBA

The European Banking Authority (EBA) issued a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting. The revised list highlights those validation rules which have been deactivated due to incorrectness or for triggering IT problems. The EBA also informs EU Competent Authorities that ‘data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules’.

Source: EBA issues revised list of ITS validation rules.

FCA seeks views to help shape its work on improving the consumer investment market

The FCA launched a call for input (CFI) to help shape its work on improving the consumer investment market, with the aim of delivering ‘a market that works well for the millions of people who rely on it’. The CFI seeks to address the FCA’s goal of reducing harm in the consumer investments market, which was identified as a priority in its 2020/21 business plan. The deadline for comments is 15 December 2020.

Source: FCA seeks views on how to improve the consumer investment market.

PIMFA director says scams and FSCS issues are symptoms of supervisory failings

PIMFA, the trade association for the wealth management and financial advice industry, has given evidence to the House of Commons’ Work and Pension Select Committee inquiry into pension freedoms and scams, in which it said that scams and Financial Services Compensation Scheme (FSCS) issues are symptomatic of supervisory failings.

Source: Scams and FSCS issues are symptomatic of supervisory failings says PIMFA at Select Committee inquiry.

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Financial crime

Commission report shows inconsistent approach to trust-like arrangements under MLD4

The European Commission delivered a report to the European Parliament and Council assessing whether Member States have identified all trusts and similar legal arrangements governed under their laws and made them subject to the obligations of the Fourth Money Laundering Directive (EU) 2015/849 (MLD4). The report reveals a lack of consistency among Member States in identifying arrangements similar to trusts and monitoring and registering these legal arrangements, as well as variations in transparency of beneficial ownership information.

Source: Report from the Commission to the European Parliament and the Council assessing whether Member States have duly identified and made subject to the obligations of Directive (EU) 2015/849 all trusts and similar legal arrangements governed under their laws.

For further information, see: Money Laundering Directive 4 (MLD4)—essentials.

EBA responds to Commission’s call for advice on tackling money laundering and terrorist financing

The EBA published its response to the European Commission’s call for advice on how to strengthen the EU legal framework on anti-money laundering and countering the financing of terrorism (AML/CFT). In its advice, the EBA sets out ways to tackle vulnerabilities linked to divergent national approaches and gaps in the EU defences against money laundering and terrorist financing (ML/TF).

Source: EBA calls on the EU Commission to establish a single rulebook on fighting money laundering and terrorist financing.

FATF provides guidance for authorities on ML/TF indicators in virtual assets

The Financial Action Task Force (FATF) published a report on ‘red flag’ indicators of money laundering and terrorist financing (ML/TF) in virtual assets and related services. FATF hopes the report will help national authorities and other stakeholders detect whether virtual assets are being used for criminal activity. The report covers red flag indicators related to transactions, transaction patterns, anonymity, geographical risks, indicators about senders or recipients and indicators in the source of funds or wealth. The report highlights that the indicators are not exhaustive and ‘are best used when applying other contextual information from domestic law enforcement and public sources.’

Source: Virtual Assets Red Flag Indicators of Money Laundering and Terrorist Financing .

EU Cyber Information and Intelligence Sharing Initiative launched to tackle potential cyber threats

The Euro Cyber Resilience Board for pan-European Financial Infrastructures (ECRB) launched the Cyber Information and Intelligence Sharing Initiative (CIISI-EU), a multilateral initiative bringing together public and private entities to share strategic, operational and tactical cyber information through technical platforms and meetings. By exchanging knowledge and experience within a trusted community, the ECRB aims to improve both individual and joint preparedness to tackle potential cyber threats.

Source: New initiative to facilitate cyber information and intelligence sharing.

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Complaints, compensation and claims management

Complaints Commissioner partly upholds complaint about FCA’s online data collection system

The Complaints Commissioner issued final report FCA00763, dated 28 August 2020, concerning a complaint made against the FCA in relation to its online registration process. The complaint was partly upheld by the Complaints Commissioner, who recommended that the FCA ask the complainant for feedback and suggestions for improving the use of its screens and registering for its new data collection system.

Source: FCA00763—Issued 28 August 2020. Published 15 September 2020.

Financial Regulators extend consultation period for review of Complaints Scheme

The FCA, the Prudential Regulation Authority (PRA) and the BoE have accepted the Treasury Committee’s request to extend the deadline of the consultation (CP20/11) on the proposal to revise the Complaints Scheme, which handles complaints against the FCA, the BoE and the PRA. The new closing date will therefore be 12 October 2020.

Source: Bank of England and FCA letter to TSC re CP20/11: Complaints against the regulators.

Treasury Committee urges regulators to extend consultation window for proposed revision of the Complaints Scheme

The chair of the Treasury Committee, Mel Stride MP, has written to the FCA and the BoE urging them to consider extending the consultation period on the proposal to revise the Complaints Scheme, which handles complaints against the FCA, the BoE and the Prudential Regulation Authority (PRA). The consultation is due to end on 14 September 2020, but the Committee has received representations expressing concern that the eight-week consultation period is not sufficient.

Source: Financial regulators should urgently consider extending complaints scheme consultation.

 

Investigations, enforcement and discipline

Market abuse: FCA publishes decision notice against Corrado Abbattista

The FCA published a decision notice in respect of Corrado Abbattista, an experienced trader and a portfolio manager, partner and chief investment officer at Fenician Capital Management LLP, for market abuse, imposing a financial penalty of £100,000 and prohibiting him from performing any functions in relation to regulated activity.

Source: FCA publishes Decision Notice against Corrado Abbattista for market manipulation.

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Regulation of benchmarks and IBOR reform

Recommendations on how to prepare for LIBOR transition published

The Working Group on Sterling Risk-Free Reference Rates (WGSRFRR) recommended that, by the end of September 2020, lenders should be prepared to offer non-LIBOR linked products to customers as well as to work with their customers to ensure clear contractual arrangements are included which are able to facilitate conversion of all new or refinanced LIBOR-linked products to SONIA, or other alternatives, before the transition from LIBOR in 2021. In addition, the WGSRFRR advises that lenders cease to issue all sterling LIBOR-linked loan products which expire after 2021 by March 2021.

Source: The Working Group on Sterling Risk-Free Reference Rates News Release: Securing a SONIA-based sterling loan market.

For further information, see: LIBOR transition.

UK Finance releases updated guide on LIBOR transition for business customers

UK Finance and the CBI have jointly published a guide for business customers with LIBOR-linked loans to help them understand the anticipated discontinuation of the benchmark rate LIBOR and what they should expect to hear from their bank or lender in the coming months. This is an updated version of UK Finance’s November 2019 guide and reflects recent developments, including updated timelines.

Sources: Discontinuation of LIBOR—Guide for business customers and  The end of LIBOR: Time for businesses to prepare for transition.

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Regulation of capital markets

Commission Delegated Regulation (EU) 2020/1272 amending and correcting Delegated Regulation (EU) 2019/979 supplementing the Prospectus Regulation published in Official Journal

Commission Delegated Regulation (EU) 2020/1272 of 4 June 2020 amending and correcting Delegated Regulation (EU) 2019/979 supplementing the Regulation (EU) 2017/1129 of the European Parliament and of the Council (the Prospectus Regulation) with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal has been published in the Official Journal.

Source: Commission Delegated Regulation (EU) 2020/1272 of 4 June 2020 amending and correcting Delegated Regulation (EU) 2019/979 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council with regard to regulatory technical standards on key financial information in the summary of a prospectus, the publication and classification of prospectuses, advertisements for securities, supplements to a prospectus, and the notification portal

For further information, see: The Prospectus Regulation—essentials.

Commission Delegated Regulation (EU) 2020/1273 amending and correcting Delegated Regulation (EU) 2019/980 supplementing the Prospectus Regulation published in Official Journal

Commission Delegated Regulation (EU) 2020/1273 of 4 June 2020 amending and correcting Delegated Regulation (EU) 2019/980 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council (the Prospectus Regulation) as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market has been published in the Official Journal.

Source: Commission Delegated Regulation (EU) 2020/1273 of 4 June 2020 amending and correcting Delegated Regulation (EU) 2019/980 supplementing Regulation (EU) 2017/1129 of the European Parliament and of the Council as regards the format, content, scrutiny and approval of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market

AFME paper sets out vision for ‘resilient, innovative, and competitive’ capital markets

The Association for Financial Markets in Europe (AFME) is calling on the EU to help unlock the potential of new technologies for European capital markets, outlining a regulatory framework needed to support banks as they adopt new technologies such as cryptoassets, artificial intelligence (AI) and cloud computing, harness the value from data, and address the challenges of cybersecurity and operational resilience.

Source: AFME calls for the EU to unlock innovative, competitive, and resilient European capital markets in the digital age.

Coronavirus (COVID-19)—EFAMA responds to Commission’s SME and fixed income instrument recovery plans

The EFAMA published a position paper on the European Commission’s proposal to modify the MiFID II investment research rules for SMEs and fixed income instruments, as part of its broader capital markets recovery package proposed in response to the coronavirus (COVID-19) pandemic. Loosening research and execution unbundling requirements when the research relates to small and mid-cap companies is one of several measures envisaged to improve the visibility and financing opportunities of SME companies during the recovery. EFAMA welcomes the optionality of the regime proposed, but says there are more effective ways to foster SMEs’ access to markets.

Source: EFAMA position paper on EC consultation paper on COVID-19’s ‘Capital markets recovery package’—Investment research for SME and fixed income instruments.

Council of the EU publishes corrigendum to Securitisation Regulation RTS

The Council of the EU has published a corrigendum to the Commission Delegated Regulation of 16.10.2019 supplementing Regulation (EU) 2017/2402 (the Securitisation Regulation) with regard to regulatory technical standards (RTS) specifying the information and the details of a securitisation to be made available by the originator, sponsor and SSPE. Corrections are made to Annex XI: Underlying exposures information—asset-backed commercial paper..

Source: Corrigendum of 20.7.2020 to Annexes to the Commission Delegated Regulation (EU) …/... of 16.10.2019 supplementing Regulation (EU) 2017/2402 of the European Parliament and of the Council with regard to regulatory technical standards specifying the information and the details of a securitisation to be made available by the originator, sponsor and SSPE.

For further information, see: Securitisation Regulation—essentials.

ECON adopts report on further development of CMU

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has adopted a report on the further development of the capital markets union (CMU) to improve access to capital market finance, in particular by SMEs, and further enable retail investor participation.

Source: Results of the morning voting session of 10 September—updated.

For further information, see: The Capital Markets Union.

EFAMA report on household participation in capital markets

The EFAMA published a report entitled: 'Household participation in capital markets—Assessing the current state and measuring future progress'. The report precedes the European Commission’s forthcoming new action plan on the capital markets union (CMU) and contains ten policy recommendations to help advance the CMU goal of fostering retail investments in capital markets instruments.

Source: EFAMA calls for the use of KPIs to monitor national progress in household participation in capital markets.

FCA publishes data on market cleanliness and market liquidity

The FCA published its annual Market Cleanliness Statistic for the UK equity markets, alongside trade transparency and market liquidity data.

Sources: Market cleanliness statistics and Trade transparency and market liquidity data.

ICMA responds to consultation on alternative financing for companies amid coronavirus (COVID-19)

The International Capital Market Association (ICMA) responded to the European Commission consultation on investment research. The Commission had invited feedback about its delegated directive draft amending rules regarding the regime for research on small and mid-cap issuers and on fixed-income instruments to help the recovery from the coronavirus (COVID-19) pandemic. In its response, ICMA highlights that the Commission should consider other policy options to support SME research than to partially review unbundling rules. According to ICMA, the approach taken by the Commission would not ‘contribute to reviving SME research’ as an important number of ICMA’s members would not be able to make use of these potential new options.

Source: ICMA AMIC responds to EC consultation on investment research.

WFE issues guidance on fair and orderly markets

The World Federation of Exchanges (WFE), the global industry group for exchanges and central counterparties (CCPs), has issued a guidance note, aimed at policy questions arising from any resurgence of market volatility. In particular, the WFE’s guidance focuses on how exchanges create fair and orderly markets; and why, when navigating times of economic uncertainty, it is better and safer to maintain continuous visibility of asset prices and risk premia rather than suppressing markets. The WFE says understanding these issues is key to avoiding harmful public policy in relation to all three regulatory imperatives: investor protection, market integrity and systemic risk.

Source: The World Federation of Exchanges issues guidance on fair & orderly markets as new wave looms.

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Regulation of derivatives

ECON recommends no objection to EMIR delegated regulations on third country CCPs

The European Parliament’s Economic and Monetary Affairs Committee (ECON) has voted to recommend that the Parliament raise no objections to three Commission delegated regulations adopted by the European Commission on 14 July 2020 in relation to the treatment of third country central counterparties (CCPs) under Regulation (EU) 648/2012 (EMIR).

Sources: Recommendation for a decision pursuant to Rule 111(6) of the Rules of Procedure to raise no objections to the Commission delegated regulation of 14 July 2020 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to fees charged by the European Securities and Markets Authority to central counterparties established in third countries (C(2020)4891—2020/2720(DEA))Recommendation for a decision pursuant to Rule 111(6) of the Rules of Procedure to raise no objections to the Commission delegated regulation of 14 July 2020 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to the criteria that ESMA should take into account to determine whether a central counterparty established in a third country is systemically important or likely to become systemically important for the financial stability of the Union or of one or more of its Member States (C(2020)4892—2020/2726(DEA)) and Recommendation for a decision pursuant to Rule 111(6) of the Rules of Procedure to raise no objections to the Commission delegated regulation of 14 July 2020 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to the minimum elements to be assessed by ESMA when assessing third-country CCPs’ requests for comparable compliance and the modalities and conditions of that assessment (C(2020)4895—2020/2729(DEA)).

For further information, see: EMIR—essentials.

Council of the EU starts written procedure for EMIR delegated regulations on third country CCPs

The Council of the EU started a written procedure for three draft commission delegated regulations supplementing Regulation (EU) No 648/2012 on OTC derivatives, central counterparties and trade repositories (EMIR). The delegated regulations concern third country central counterparties (CCPs) and in particular requests for comparable compliance, fees payable and criteria for determining whether the CCPs are systemically important. Responses are due by 11 September 2020.

Source: START OF WRITTEN PROCEDURE.

ISDA unveils new online platform for document negotiation

The International Swaps and Derivatives Association (ISDA) announced the launch of a new online platform named ISDA Create. The platform allows buy- and sell-side firms to electronically negotiate their documentation, making the process 'more efficient and less time consuming'. In addition, the platform allows for legal and commercial data within the documents to be captured ‘without any additional effort’. The ISDA's press release contains all relevant information relating to ISDA Create, broken down into six key sections including features, fact sheets and webinars.

Source: ISDA Create InfoHub.

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Banks and mutuals

Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020

SI 2020/990: Provisions are made to extend the scope of the Pension Protection Fund’s rights as a creditor when moratoriums are in place in relation to relevant Co-operative and Community Benefit Societies and when restructuring plans are in place in relation to relevant societies (as defined in regulation 3), which include credit unions. The Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment) Regulations 2020 are revoked. These Regulations come into force on 16 September 2020.

Read the official version of this legislation and the explanatory memorandum.

ECB board member says EU banks need digital transformation to compete

Pentti Hakkarainen, a member of the supervisory board of the European Central Bank (ECB), has said in a speech that banks must pursue ambitious digital transformation plans in order to adapt to long-term technological changes that will alter the way customers demand and receive financial products. In Hakkarainen’s view, this will require innovation to place the focus on the customer service experience; merely adopting advanced technologies to improve internal processes is not enough.

Source: Technology exposes banks’ vulnerabilities.

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Investment funds and asset management

European Commission seeks feedback for its review of ELTIFs

The European Commission is seeking feedback for its upcoming review of European long-term investment funds (ELTIFs), which will analyse how well ELTIFs are working, and in particular how they are contributing to the integration of capital markets in Europe (CMU) and the EU’s goal of smart, sustainable and inclusive growth. Responses are sought by 14 October 2020.

Source: Long-term investment funds—review of EU rules.

For further information, see: European Long-Term Investment Funds Regulation (the ELTIF Regulation).

Coronavirus (COVID-19)—FCA moves to end temporary relief on extending deadlines to publishing fund reports and accounts

The FCA updated its coronavirus (COVID-19)-related webpage on extending deadlines to publishing fund reports and accounts.

Source: Extending deadlines to publishing fund reports and accounts.

Investment Association consultation on future of its global bonds sector launched

The Investment Association (IA) launched a consultation on the future of its global bonds sector; one of its 37 open-ended fund sectors. This consultation forms part of IA’s work to include exchange-traded funds (ETFs) into its fund sectors. Responses are due by 10 October 2020.

Source: IA LAUNCHES CONSULTATION ON GLOBAL BONDS SECTOR.

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Consumer credit, mortgage and home finance

PRA annual assessment of credit union sector—letters to Category 5 credit unions with findings of 2020 assessment

The PRA has published letters it has emailed to the boards of directors of Category 5 credit unions with the findings of its 2020 annual assessment. Credit unions (CUs) received one of two letters, depending on which peer group they fell into. The PRA carries out individual assessments for those Category 5 plus credit unions, but also an annual assessment of all Category 5 credit unions as part of their larger peer group.

Sources: PRA 2020 annual assessment of category 5 credit unionsCategory 5 plus credit unions and Category 5 credit unions under £15m and 10,000 members.

For further information, see: Credit unions—essentials.

Co-operative and Community Benefit Societies and Credit Unions (Arrangements, Reconstructions and Administration) (Amendment) (No 2) Order 2020

SI 2020/963: Amendments are made to the Co-operative and Community Benefit Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 to omit paragraph 1J of Part 1A of Schedule 1. Paragraph 1J made a modification omitting section A55 of the Insolvency Act 1986, which provides that the Secretary of State may make regulations making different provision for different purposes, and consequential and other provisions. The effect of omitting paragraph 1J is that section A55 applies, by virtue of article 2 of the 2014 Order. This Order comes into force on 10 September 2020.

Read the official version of this legislation and the explanatory memorandum.

Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020

SI 2020/Draft: This draft enactment replaces the previous draft SI published on 15 July 2020. These draft Regulations are laid to establish the first part of a debt respite scheme for people with debt problems. This part gives eligible people with debt problems who receive professional debt advice access to a 60-day period in which interest, fees and charges are frozen and enforcement action is paused in England and Wales. They come into force partly on the day that section 157, 181 and 187 of the Renting Homes (Wales) Act 2016 and Schedule AA1 to the Mental Capacity Act 2005 come into force, and fully on 4 May 2021. This draft enactment was re-laid with technical corrections.

The full draft legislation can be found here. The draft explanatory memorandum can be found  here.

Coronavirus (COVID-19)—FCA proposes updated guidance on consumer credit and overdrafts

The FCA announced proposals to ensure that firms provide tailored support for users of consumer credit and overdraft products who continue to face payment difficulties due to the coronavirus (COVID-19). The proposals will cover users of credit cards and other revolving credit (store card and catalogue credit), personal loans, overdrafts, motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products. The deadline for comments is 21 September 2020.

Source: FCA proposes the next stage of support for consumer credit and overdraft customers.

For further information ,see: FCA: Treating Customers Fairly—essentials.

FCA finalises coronavirus (COVID-19) guidance for mortgages

The FCA confirmed the support mortgage borrowers will receive if they continue to face payment difficulties due to the coronavirus (COVID-19) pandemic. It has also published finalised guidance on how firms should support ‘mortgage borrowers who have benefitted from payment deferrals under the current guidance and who continue to face financial difficulties, as well as those whose financial situation may be affected by coronavirus after 31 October.’ The FCA also published FS20/14—a feedback statement on the draft guidance on mortgages and coronavirus.

Source: FCA confirms the next stage of support for mortgage borrowers.

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Regulation of insurance

Coronavirus (COVID-19)–FCA comments on business interruption test case result

The FCA issued a press release in response to the judgment handed down by the High Court in the FCA’s business interruption insurance test case. The FCA’s interim chief executive Christopher Woolard said the judgment, in which the court substantially found in favour of the arguments presented by the FCA on the majority of the key issues, was ‘a significant step in resolving the uncertainty being faced by policyholders’.

Source: Result of FCA’s Business Interruption test case.

For further information, see: Coronavirus (COVID-19)—business interruption insurance.

Joe Bryant of Beale & Co comments on High Court judgment on FCA test case

On 15 September 2020, the High Court handed down its judgment in the Financial Conduct Authority’s (FCA) test case. Joe Bryant, partner at Beale & Co, comments on the practical implications of the judgment for the insurance sector.

Sources: Business interruption insurance and Result of FCA’s Business Interruption test case.

Sarah Irwin of Weightmans comments on High Court judgment on FCA test case

On 15 September 2020, the High Court handed down its judgment in the Financial Conduct Authority’s (FCA) test case. Sarah Irwin, solicitor at Weightmans, comments on the practical implications of the judgment for the insurance sector.

Sources: Business interruption insurance and Result of FCA’s Business Interruption test case.

FCA awaits business interruption insurance test case decision

The FCA announced that the court has advised that the judgment in the business interruption (BI) insurance test case will be handed down at 10.30 am on 15 September 2020. The FCA will publish it on its dedicated BI website and LexisPSL will also provide comprehensive analysis of the judgment.

Source: Business interruption insurance.

IE says insurers support improved investment protection and facilitation in relation to intra-EU investment

Insurance Europe (IE) published its high-level views in response to a consultation by the European Commission on an intra-EU investment protection and facilitation initiative. IE states that a stable and favourable investment environment with clear rules, effective remedies and measures to facilitate access to investment opportunities is crucial and is in line with the objectives of flagship initiatives, such as the capital markets union (CMU) project.

Source: Intra-EU investment: Insurers support improved investment protection and facilitation.

Insurance Europe calls for level regulatory playing field for new entrants and business models

IE published its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on the (re)insurance value chain and new business models arising from digitalisation, in which it calls for a level regulatory playing field for new market entrants and business models.

Source: Insurers call for level regulatory playing field for new market entrants and business models.

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Payment services and systems

FCA publishes finalised guidance on its expectation for firms on maintaining access to cash for customers

The FCA published finalised guidance FG20/3: Branch and ATM closures or conversions, which sets out the regulator’s expectations for the steps firms should take when considering closing branches or ATMs, or converting a free-to-use ATM to pay-to-use.

Source: FCA finalises its expectation for firms on maintaining access to cash for customers.

PSR comments on CASS’s compliance with the Payment Account Regulations 2015

The PSR published details of its annual monitoring exercise into the Current Account Switch Service (CASS)’s compliance with the Payment Account Regulations 2015 (PARs 2015). According to the PSR, it is satisfied that the CASS continues to meet the criteria for designation as an alternative switching scheme. This follows a review of information and evidence submitted by Pay.UK, the operator of CASS, for the purpose of an annual assessment.

Source: PSR’s annual monitoring 2020: CASS’s compliance with the Payment Account Regulations 2015.

PSR publishes documents on pass-through disclosure in the market review into card-acquiring services

The PSR published two documents which set out its plans to disclose material underlying its pass-through analysis through a ‘confidentiality ring’, to help in responding to the soon-to-be-published consultation that will accompany the PSR’s interim report of its market review into card-acquiring services (the Market Review). The consultation is due to last for 12 weeks.

Sources: Pass-through disclosure in the market review into card-acquiring services and  Draft undertakings for the confidentiality ring used for pass-through disclosure.

PSR’s interim report on card-acquiring services makes search and switch recommendations

The PSR published its interim report on the supply of card-acquiring services, which shows that merchants could make savings by shopping around and either switching or negotiating with their current provider—but many small and medium ones don’t. The PSR has been carrying out a market review following concerns that the supply of these services may not be working well for merchants, and ultimately consumers. The PSR has been examining competition issues, the fees merchants pay for card-acquiring services, and the quality of service they receive.

Sources: MR18/1.7—Market review into the supply of card-acquiring services: Interim reportPSR announces provisional findings of card acquiring market reviewMR18/1.7—Glossary—Card-acquiring market reviewInfographic—What happens when a consumer uses a credit or debit card?MR18/1.7 Annex 1—Industry background—Card-acquiring market reviewMR18/1.7 Annex 2—Pass-through analysis—Card-acquiring market reviewMR18/1.7 Annex 3—Financial Review—Card-acquiring market reviewMR18/1.7—Annex 4—Scheme fees—Card-acquiring market reviewMR18/1.7 Annex 5—Barriers to entry and expansion—Card-acquiring market reviewMR18/1.7 Annex on merchant survey results and MR18/1.7 Annex on merchant survey technical report.

Pay.UK publishes progress report on Next Generation Standard for UK Retail Payments consultation

Pay.UK published an update regarding its consultation on the ‘Next Generation Standard for UK Retail Payments’, which closed in April 2020 (following a coronavirus (COVID-19)-related extension). The update includes details of Pay.UK’s recommended direction for the adoption of ISO 20022 and information regarding the delivery plan for the next generation standard.

Source: ‘Next Generation Standard for UK Retail Payments’ consultation update.

Karen Braithwaite appointed chair of the Standards Advisory Panel

Pay.UK and the BoE announced the appointment of Karen Braithwaite, the global head of transaction banking at Barclays, as the new chair of the Standards Advisory Panel, from 16 September 2020.

Source: New chair announced for the Standards Advisory Panel.

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Fintech and cryptoassets

IA publishes guide to help investment managers and fintechs collaborate

The Investment Association (IA) has published a guide for investment managers working with fintechs, providing advice for understanding, on-boarding and implementing fintech within the investment and wealth management sector. The guide follows the process of considering fintech engagement from the establishment of a clear ‘problem statement’ or business need through to the implementation of new technologies within firms, and provides operational advice and checklists for both investment managers and fintechs.

Source: IA launches guidance for investment managers working with fintechs.

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Sustainable finance

EBA questionnaire seeks information on institutions’ ESG disclosures

The EBA has prepared a questionnaire to collect information on institutions’ current practices regarding environmental, social and governance (ESG) disclosures, and on the classifications and metrics currently in use, and on their view on how Pillar 3 disclosures should be implemented and interact with other disclosure frameworks.

Source: Pillar 3 disclosures on ESG risks under Article 449a CRR.

For further information, see: Environmental social governance—the investment market.

The Personal Investment Management & Financial Advice Association (PIMFA) is launching an environmental, social and governance (ESG) online training platform for financial advisers, to help them to advise their clients about ESG investing. The CPD-accredited course is free to PIMFA members, and has been designed especially for financial advisers ‘to provide them with an immersive and engaging learning experience that supports them in making the most of the growing opportunities arising for their clients from ESG investments’.

Source: PIMFA launches online ESG Academy to help advisers meet soaring investor demand.

SMSG calls for iterative, aligned approach to ESG disclosures

The Securities and Markets Stakeholder Group (SMSG) issued advice to the European Supervisory Authorities (ESAs) on their joint consultation paper on draft regulatory technical standards (RTS) with regard to environmental, social and corporate governance (ESG) disclosures pursuant to the Sustainable Finance Disclosure Regulation (EU) 2019/2088 (SFDR). The SMSG calls for more alignment between the the SFDR and other legislation, in particular the Non-Financial Reporting Directive (NFRD) and the Taxonomy Regulation.

Source: SMSG advice to the ESA’s joint consultation paper on ESG disclosures (draft regulatory technical standards with regard to the content, methodologies and presentation pursuant to Article 2a, Article 4(6) and (7), Article 8(3), Article 9(5), Article 10(2) and Article 11(4) of Regulation EU 2019/2088.

NGFS publishes papers on environmental risk analysis for financial institutions

The Central Banks and Supervisors’ Network for Greening the Financial System (NGFS) published two papers on environmental risk analysis (ERA) by financial institutions, which aim to promote greater collective efforts to tackle climate-related and environmental risks by regulators, financial institutions, international organisations, third-party vendors, and academic institutions.

Source: NGFS promotes environmental risk analysis in financial industry.

AFME publishes roadmap on embedding sustainable finance into strategy and governance

The Association for Financial Markets in Europe (AFME) and global law firm Latham & Watkins have published an industry roadmap entitled: ‘Governance, conduct and compliance in the transition to sustainable finance’. It considers how banks can embed environmental, social and governance (ESG) principles into their business models, addressing issues such as corporate purpose, board governance oversight, shareholder activism and greenwashing from a legal, compliance and governance perspective.

Source: First industry roadmap helps embed sustainable finance into banks’ strategy and governance.

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Dates for your diary

 

DateSubjectEvent

 

21 September 2020

 

 

MiFID II

 

 

ESMA announced that trading venues and investment firms may postpone, for operational reasons, the application of the annual transparency calculations (required by the MiFIR) for non-equity instruments other than bonds to 21 September 2020. This decision also applies to the quarterly calculations for the purpose of the systematic internaliser (SI) regime for non-equity instruments other than bonds.

 

23 September 2020

 

Regulation of capital markets

 

Seven regulatory technical standards (RTS) under Regulation (EU) 2017/2402 (the Securitisation Regulation) will enter into force on 23 September 2020.

 

 

25 September 2020

 

Banks and Mutuals



Sustainable finance

 

Deadline for responses to the ECB’s guide for consultation that explains how it expects banks to safely and prudently manage climate-related and environmental risks, and how firms should disclose such risks transparently under the current prudential framework.

 

25 September 2020

 

Prudential requirements

 

Deadline for responses to the EBA’s discussion paper exploring ways on how to enhance the Bank Recovery and Resolution Directive (BRRD) framework on early intervention measures.

 

25 September 2020Prudential requirements

Deadline for responses to the FCA’s discussion paper (DP20/2) on a new prudential regime for UK investment firms.

 

 

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About the author:
Prior to joining LexisNexis in 2016 as a paralegal, Lauren was an adjudicator at the Financial Ombudsman Service. There she resolved consumers’ complaints, and gained knowledge about a wide variety of financial products. Before this she studied Law at Nottingham Trent University.