FS weekly highlights—18 June 2020

FS weekly highlights—18 June 2020

In this issue

 

 

Coronavirus (COVID-19)
Brexit news
MiFID II
UK, EU and international regulators and bodies
Authorisation, approval and supervision
Prudential requirements
Financial crime
Complaints, compensation and claims management
Investigations, enforcement and discipline
Markets and trading
Regulation of benchmarks and IBOR reform
Regulation of capital markets
Regulation of derivatives
Investment funds and asset management
Banks and mutuals
Consumer credit, mortgage and home finance
Regulation of insurance
Regulation of personal pension and stakeholder products
Payment services and systems
Fintech and cryptoassets
Sustainable finance

 

Coronavirus (COVID-19)

For further information on the effects of coronavirus (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)–EESC publishes opinion on targeted amendments to CRR and CRR II

The Council of the EU published an opinion, given by its European Economic and Social Committee (EESC), on the proposal for a regulation making targeted amendments to Regulation (EU) 575/2013 (CRR) and Regulation (EU) 2019/876 (CRR II) in response to the coronavirus (COVID-19) pandemic. The EESC welcomed the proposed amending regulation but argued that the changes it makes do not go far enough and called for several further amendments to be made to the prudential regulatory framework.

Source: Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic—Opinion of the European Economic and Social Committee.

For further information, see: CRD IV—essentials.

Coronavirus (COVID-19)—EBA letter on CRD V, CRR II, BRRD II and EMIR technical standards

The European Banking Authority (EBA) published a letter to the European Commission, directorate-general financial stability, services and capital markets union executive vice-president, John Berrigan, on extended deadlines for the EBA’s submission of regulatory technical standards (RTS) and implementing technical standards (ITS) for the risk reduction package (CRD V, CRR II and BRRD II) (also known as the banking package) and EMIR. In the letter dated 12 June 2020, the EBA sets out amended deadlines for delivering the RTS and ITS.

Source: 2020 06 12 Letter to Mr Berrigan re request for new deadlines under the RRM.

For further information, see: Banking Union: The EU banking package.

Coronavirus (COVID-19)—ESMA renews short selling notification requirement

The European Securities and Markets Authority (ESMA) renewed its decision to temporarily require the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority (NCA) if the position exceeds 0.1% of the issued share capital. This temporary notification measure applies from 17 June 2020 for a period of three months. It applies to any natural or legal person, irrespective of their country of residence. However, it does not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.

Source: ESMA renews its decision requiring net short position holders to report positions of 0.1% and above.

For further information, see: An introduction to short selling.

Coronavirus (COVID-19)—ESRB recommendation on funds supervision published in Official Journal

Recommendation of the European Systemic Risk Board (ESRB) of 6 May 2020 on liquidity risks in investment funds (ESRB/2020/4) (2020/C 200/01) was published in the Official Journal. The ESRB recommends that ESMA should co-ordinate a supervisory exercise involving EU investment funds which have exposures to corporate debt or real estate. This recommendation is intended to enhance preparedness to respond to potential future adverse shocks that could lead to a deterioration in financial market liquidity.

Source: Recommendation of the European Systemic Risk Board of 6 May 2020 on liquidity risks in investment funds (ESRB/2020/4) 2020/C 200/01

Committee expresses concerns regarding fast-tracking of Bill amid coronavirus (COVID-19)

The Constitution Committee published a report on the Corporate Insolvency and Governance Bill amid the coronavirus (COVID-19) pandemic in which it highlights key concerns regarding the Bill, including that it is being fast-tracked through both Houses, ‘which constrains parliamentary scrutiny and restricts input from stakeholders and the public’.

Source: Fast-tracking permanent changes to the law is “inappropriate”, says Constitution Committee.

Coronavirus (COVID-19)—FCA chair on the lessons to be learned for the UK financial system

The Financial Conduct Authority (FCA) published a speech by its chair, Charles Randell, given at a virtual roundtable of bank chairs hosted by UK Finance, in which he said the coronavirus (COVID-19) crisis showed the UK needs to reassess its approach to consumer debt, high risk retail investments and financial exclusion. Randell called for a robust framework for dealing with small business loans which turn out to be unaffordable, but also set out some of the opportunities to reshape the UK financial system that the current crisis may open up.

Source: A financial system to support the recovery.

FCA and PSR outline joint approach to access to cash during coronavirus (COVID-19) crisis and beyond

The FCA and the Payment Systems Regulator (PSR) published a statement on their joint approach to access to cash. In the statement the FCA and the PSR outline the actions they have taken to address issues with access to cash during the coronavirus (COVID-19) pandemic and explain how they plan to deal with access in the longer term as legislation is developed.

Source: The FCA’s and PSR’s joint approach to access to cash.

For further information, see: Payment Systems Regulator—supervisory approach and FCA supervisory approach.

FCA updates guidance for firms on mortgages and coronavirus (COVID-19)

The FCA updated its guidance for firms on mortgages and coronavirus (COVID-19) in order to clarify its expectations regarding the information that firms should provide to customers when they are unable to provide personalised information on the impact of a payme-nt deferral or other support on their monthly payments and/or the term of their mortgage.

Source: Mortgages and coronavirus: updated guidance for firms.

For further information, see: Mortgage and home finance conduct of business—responsible lending, charges and arrears requirements.

FCA publishes finalised guidance for insurers during the business interruption test case

The FCA published finalised guidance setting out its expectations for insurers and insurance intermediaries when handling claims and complaints for business interruption (BI) policies during the test case brought by the FCA. The guidance comes into immediate effect. The FCA also published feedback statement FS20/8, which provides feedback on the draft guidance published on 1 June 2020.

Sources: Finalised guidance: Business interruption insurance test case and  FS20/8: Business interruption insurance test case: feedback on draft guidance.

Coronavirus (COVID-19)—FCA business interruption test case CMC

The FCA announced that the first case management conference (CMC) will take place on 16 June 2020 at 10.30am. The court will be invited to consider the FCA's application for expedition and admission to the Financial Markets Test Case Scheme, fix the timetable for the case (including the date for the court hearing in the second half of July) and deal with other procedural matters.

The court has agreed to live-stream here

TPR updates coronavirus (COVID-19) guidance

Guidance designed to help pension scheme trustees and employers cope with the financial impact of coronavirus (COVID-19) has been updated by The Pensions Regulator (TPR), and pension trustees should resume reporting information to TPR from 1 July.

Source: Measures extended to help pension schemes tackle COVID-19 challenges.

Treasury Committee calls on government to provide more support amid coronavirus (COVID-19)

The Treasury Committee published an interim report as part of its inquiry into the Economic Impact of Coronavirus called Gaps in Support. In its report, the Committee calls on the government to act to help more than a million people ‘who have lost livelihoods while being locked down’ amid the coronavirus (COVID-19) pandemic.

Source: Government must act over gaps in support during lockdown.

IMF and World Bank issue recommendations to help banking supervisors respond to coronavirus (COVID-19)

The International Monetary Fund (IMF) published a blog in which it introduces nine joint IMF-World Bank recommendations to help supervisors shape their response to the crisis caused by the coronavirus (COVID-19) pandemic. The recommendations encourage national authorities to ‘employ the embedded flexibility of regulatory, supervisory and accounting frameworks’, whilst upholding internationally-agreed minimum regulatory standards and supervisory principles to avoid undermining the medium-term soundness and health of the banking system.

Source: Combating COVID-19: How should banking supervisors respond?

MaPS announces corporate plan for 2020/21, including coronavirus (COVID-19) response

The Money and Pensions Service (MaPS) published its corporate plan for 2020/21, outlining the organisation’s strategic priorities and its immediate response to the coronavirus (COVID-19) outbreak. The plan was due to be published at the beginning of April 2020 but has been delayed to allow a review of how priorities will be flexed in response to the pandemic. These will continue to evolve as the COVID-19 situation unfolds.

Source: MaPS publishes corporate plan detailing key priorities and COVID-19 support.

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Brexit news

Brexit Bulletin—UK and EU schedule 'intensified' negotiations ahead of High Level (Video) Conference

The Prime Minister's Office confirmed plans for a High Level Conference with EU leaders on 15 June 2020. The meeting between Prime Minister, Boris Johnson, European Commission President, Ursula von der Leyen, European Parliament President, David Sassoli, and European Council President, Charles Michel, will take place by video conference. Though expectations of a breakthrough are relatively low at this point, the conference is still a key milestone in the original transition schedule, providing an opportunity for leaders on both sides to take stock of progress in negotiations on the future UK-EU relationship and agree actions in preparation for the end of the transition period on 31 December 2020. With negotiators hoping the conference might at least bring fresh impetus into the discussions, the UK and EU also announced a further programme of 'intensified' negotiations on the future UK-EU relationship.

Sources: EU-UK high level video conference, 15 June 2020Guide to the negotiationsTerms of reference on the UK-EU future relationship negotiationsTwitter: No 10 Press Office and Scottish Government and Welsh Government Joint letter: EU TRANSITION PERIOD .

Brexit Bulletin—UK rules out transition extension at second meeting of the Withdrawal Agreement Joint Committee

UK and EU delegations met by videoconference for the second meeting of the Withdrawal Agreement Joint Committee on 12 June 2020. The Committee took stock of discussions in the Specialised Committees and discussed progress on implementation of the Withdrawal Agreement, agreeing to accelerate its work. The UK delegation took the opportunity to restate that they will not seek an extension to the transition period. While the EU remains open to an extension, the UK delegation now views the matter to be closed.

Sources: Second meeting of the Withdrawal Agreement Joint Committee and Press statement by Vice-President Maroš Šefčovič following the second meeting of the EU-UK Joint Committee.

Government minister comments on Taxonomy Regulation as retained EU law post-Brexit

The Cabinet Office published a letter from the economic secretary to the Treasury, John Glen MP, to the chair of the House of Commons European Scrutiny Committee, Sir William Cash MP, regarding the status of the proposed regulation on the establishment of a framework to facilitate sustainable investment (the Taxonomy Regulation) at the end of the Brexit implementation period.

Source: Letter from John Glen to Sir William Cash MP (28 May 2020).

John Glen on the UK/EU financial services relationship

The House of Lords EU Financial Affairs Sub-Committee published a letter dated 27 May 2020 from the economic secretary to the Treasury, John Glen, responding to the recommendations made in the Sub-Committee’s letter dated 27 March 2020 to the chancellor of the exchequer, Rishi Sunak.

Source: Letter to chair of the EU Financial Affairs Sub-Committee.

For further information, see: Financial Services passporting, equivalence and the UK post-Brexit.

Lords Sub-Committee launches call for evidence on UK-US trade negotiations

The House of Lords International Agreements Sub-Committee launched its first call for evidence on the ongoing UK-US trade negotiations. The committee is seeking evidence on a range of areas including agriculture and food safety, healthcare and drug pricing and digital trade and services. Submissions of written evidence must be received by 26 June 2020, but the call for evidence will remain open throughout negotiations. Chairman of the International Agreements Sub-Committee, Lord Goldsmith commented ‘The Government has made clear that agreeing a comprehensive free trade agreement (FTA) with the US is an early priority for the UK’s independent trade policy…and Parliament has a role to play in ensuring that these negotiations deliver a good result for businesses and people across the country.'

Source: UK-US trade negotiations - new Lords committee seeks evidence.

UK Finance briefing examines the MiFIR third-country regime and the future of UK-EU cross-border services

With UK and EU banks' passport rights to provide cross-border services between the UK and EU set to end on 31 December 2020, UK Finance has published a briefing discussing how the EU regime for cross-border services under the Markets in Financial Instruments (MiFIR) operates.

Source: What the MiFIR third-country regime means for UK-EU cross-border services.

For further information, see: The impact of Brexit on the MiFID II regime and MiFID II & MiFIR—third-country regime.

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MiFID II

FCA statement on MiFIR open access regime for trading venues and CCPs

The FCA issued a statement referring to ESMA statement on the MiFIR open access regime. From 4 July 2020, this regime will apply to trading venues and central counterparties (CCPs) offering the trading and clearing of exchange-traded derivatives.

Source: Open access regime for the trading and clearing of exchange-traded derivatives.

ISDA and FIA issue joint response to ESMA’s MiFID II/MiFIR consultation

The International Swaps and Derivatives Association (ISDA) and the Futures Industry Association (FIA) have issued a joint response to the European Securities and Markets Authority’s (ESMA) consultation on the review of the MiFID II/MiFIR transparency regime for non-equity instruments and the derivatives trading obligation. In the response, ISDA and FIA outline the views of their members on several points including data harmonization and the assessment of liquidity of sub-asset classes.

Source: Joint response to ESMA consultation on MiFID II/MiFIR transparency regime for non-equity instruments and DTO.

For further information, see: MiFID II & MiFIR—pre- and post-trade transparency and  MiFIR—trading obligation for derivatives.

UK Finance briefing examines the MiFIR third-country regime and the future of UK-EU cross-border services

With UK and EU banks' passport rights to provide cross-border services between the UK and EU set to end on 31 December 2020, UK Finance has published a briefing discussing how the EU regime for cross-border services under the Markets in Financial Instruments (MiFIR) operates.

Source: What the MiFIR third-country regime means for UK-EU cross-border services.

For further information, see: The impact of Brexit on the MiFID II regime and  MiFID II & MiFIR—third-country regime.

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UK, EU and international regulators and bodies

EBA annual review for 2019 highlights key areas of focus

The EBA published its 2019 annual report, which provides a detailed account of its work in the past year and anticipates the key areas of focus in the coming year. Highlighted aspects in the report include the advice prepared for the European Commission on the implementation of the Basel III framework in the EU; and the regulatory package on Risk Reduction Measures adopted by the Council of the EU and the European Parliament, for which the EBA has received a large number of mandates, which include large exposures, Pillar 2, supervisory reporting and disclosure, governance and remuneration, and resolution.

Source: EBA publishes its 2019 annual report.

ESMA publishes its annual report for 2019 and revised work programme

ESMA published its annual report, which reviews its achievements from 2019 against its mission of enhancing investor protection and promoting stable and orderly financial markets in the EU. It has also released a revised 2020 annual work programme which reprioritises its work and deliverables in light of the various actions it is taking in the context of the coronavirus (COVID-19) crisis.

Source: ESMA publishes 2019 annual report and updates 2020 annual work programme.

EIOPA publishes report on supervisory activities 2019

The European Insurance and Occupational Pensions Authority (EIOPA) published a report on its supervisory activities in 2019. The work focused on the priorities identified in the supervisory convergence work plan for 2019 as well on issues emerging during the year, covering both prudential and conduct of business supervision.

Sources: Report on Supervisory Activities 2019 and  Supervisory Activities in 2019 (press release).

EIOPA’s 2019 annual report summarises regulatory activities

EIOPA published its 2019 annual report, setting out its activities and achievements in the past year. EIOPA says in 2019 it significantly strengthened its work on conduct of business supervision, while also conducting thorough market monitoring activities. A thematic review on the use of Big Data analytics in motor and health insurance led to the establishment of a consultative expert group to assist EIOPA in the development of digital responsibility principles for the insurance sector. In addition, it conducted a thematic review on consumer protection issues in travel insurance.

Source: Publication of the annual report 2019.

EBA expands online tools to cover MLD4, WTR and consumer protection legislation

The EBA has expanded the scope of its questions and answers (Q&A) process and tool to enable the submission of questions on the Fourth Money Laundering Directive (MLD 4) and consumer protection legislation under the EBA’s scope. The EBA has also made changes to expand and update its online Interactive Single Rulebook (ISRB) to include MLD 4, the Wire Transfer Regulation (WTR) and recent amendments to prudential legislation.

Source: EBA makes changes to its Q&A tool.

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

ESMA appoints new Securities and Markets Stakeholder Group

ESMA published the new list of members of its Securities and Markets Stakeholder Group (SMSG), following approval by its Board of Supervisors. The selected individuals begin a four-year term on 1 July 2020. They will provide ESMA with advice on its policy work, and must be consulted on technical standards, guidelines and recommendations.

Source: ESMA appoints a new Securities and Markets Stakeholder Group.

EFAMA publishes annual review

The European Fund and Asset Management Association (EFAMA) published its annual review for June 2019—June 2020. It sets out the work of its standing committees, platforms and task force, including on Brexit and on environmental, social and government issues, as well as publications and events details.

Source: Annual review: June 2019—June 2020.

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Authorisation, approval and supervision

FCA publishes final guidance on adequate financial resources

The FCA published FG20/1: Assessing adequate financial resources, which sets out final guidance on a framework to help financial services firms ensure they have adequate financial resources and take effective steps to minimise harm. The framework explains the purpose of, and the FCA’s approach to, the assessment of adequate financial resources for all FCA solo-regulated firms subject to threshold conditions and/or the Principles for Businesses (PRIN). It also provides further guidance on the meaning of the term ‘adequate financial resources’.

Sources: FG20/1: Assessing adequate financial resources and  FG20/1 Our framework: assessing adequate financial resources.

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Prudential requirements

EBA expands online tools to cover MLD4, WTR and consumer protection legislation

The EBA has expanded the scope of its questions and answers (Q&A) process and tool to enable the submission of questions on the Fourth Money Laundering Directive (MLD 4) and consumer protection legislation under the EBA’s scope. The EBA has also made changes to expand and update its online Interactive Single Rulebook (ISRB) to include MLD 4, the Wire Transfer Regulation (WTR) and recent amendments to prudential legislation.

Source: EBA makes changes to its Q&A tool.

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

Coronavirus (COVID-19)–EESC publishes opinion on targeted amendments to CRR and CRR II

The Council of the EU published an opinion, given by its European Economic and Social Committee (EESC), on the proposal for a regulation making targeted amendments to the CRR and CRR II in response to the coronavirus (COVID-19) pandemic. The EESC welcomed the proposed amending regulation but argued that the changes it makes do not go far enough and called for several further amendments to be made to the prudential regulatory framework.

Source: Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic—Opinion of the European Economic and Social Committee.

For further information, see: CRD IV—essentials.

Coronavirus (COVID-19)—EBA letter on CRD V, CRR II, BRRD II and EMIR technical standards

The EBA published a letter to the European Commission, directorate-general financial stability, services and capital markets union executive vice-president, John Berrigan, on extended deadlines for the EBA’s submission of regulatory technical standards (RTS) and implementing technical standards (ITS) for the risk reduction package (CRD V, CRR II and BRRD II) (also known as the banking package) and EMIR. In the letter dated 12 June 2020, the EBA sets out amended deadlines for delivering the RTS and ITS.

Source: 2020 06 12 Letter to Mr Berrigan re request for new deadlines under the RRM.

For further information, see: Banking Union: The EU banking package

SRB director sets out objectives for build-up of MREL quantity and quality

The Single Resolution Board (SRB) published a blog post by its director of strategy and policy co-ordination, Sebastiano Laviola, on the minimum requirements for own funds and eligible liabilities (MREL), the buffer each bank must hold to absorb losses and prevent use of public money if it fails. Laviola discusses the SRB’s updated MREL policy, which implements the new requirements in the 2019 EU banking package, and the plan to build-up EU banks’ MREL quantity and quality

Source: MREL: the next steps.

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Financial crime

EBA expands online tools to cover MLD4, WTR and consumer protection legislation

The EBA expanded the scope of its questions and answers (Q&A) process and tool to enable the submission of questions on the Fourth Money Laundering Directive (MLD 4) and consumer protection legislation under the EBA’s scope. The EBA also made changes to expand and update its online Interactive Single Rulebook (ISRB) to include MLD 4, the Wire Transfer Regulation (WTR) and recent amendments to prudential legislation.

Source: EBA makes changes to its Q&A tool.

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

EBA issues call for input on ML/TF de-risking

The EBA issued a call for input to understand the scale and drivers of ‘de-risking’ at EU level and its impact on customers. This call, which forms part of the EBA’s work to co-ordinate and monitor the EU financial sector’s efforts to combat money laundering and terrorist financing (ML/TF), aims primarily to understand why financial institutions choose to de-risk instead of managing the risks associated with certain sectors or customers. The call for input runs until 11 September 2020, and the EBA is keen to hear from all groups across the financial sector who are affected by de-risking.

Source: EBA calls for input to understand impact of de-risking on financial institutions and customers.

European Court of Auditors launches examination of money laundering in the EU

The European Court of Auditors started an audit to examine the EU’s efforts to tackle money laundering, focusing specifically on the banking sector. The auditors will focus on the transfer of EU legislation into Member State law, how risks to the internal market are managed, co-ordination between national supervisors and EU bodies, and the EU’s action to remedy breaches of its AML law at national level.

Source: EU action against money laundering in the banking sector to go under auditor scrutiny.

FCA fines Commerzbank’s London branch £37.8m for AML failings

The FCA fined Commerzbank AG (London Branch) £37,805,400 for failing to put adequate AML systems and controls in place between October 2012 and September 2017.

Sources: FCA fines Commerzbank London £37,805,400 over anti-money laundering failures and  Final notice.

OFSI issues early Russia financial sanctions guidance

The Office of Financial Sanctions Implementation has published specific guidance regarding financial and investment restrictions in the Russia financial sanctions regime. The guidance is only information at the time of publishing (17 June 2020) and will not apply until 11.00 pm, 31 December 2020, or when then the Russia (Sanctions) (EU Exit) Regulations, SI 2019/855 come into force.

Source: UK financial sanctions guidance from 11pm, 31 December 2020.

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Complaints, compensation and claims management

FCA sets out its current approach to remedies under the Complaints Scheme

The FCA issued a statement explaining its current approach to deciding on an appropriate remedy when it agrees that a complaint made about the FCA under the Complaints Scheme is well founded. The statement sets out the remedies the FCA applies, the factors it considers when determining the remedy, and the matters that remedies will not address. The FCA plans to consult on its approach to remedies for complaints, including compensation, ‘in the near future’.

Source: Complaints Scheme: our approach to remedies.

FCA rejects Complaints Commissioner’s call for compensation but agrees to clarify remedies approach

The Financial Regulators Complaints Commissioner published final reports in respect of three complaints about the FCA. The Complaints Commissioner has upheld each of the complaints, in whole or in part, and made recommendations. The FCA has rejected a recommendation to cover 50% of an investor’s losses, saying that consumers have a duty to carry out their own checks, but it has agreed to clarify its approach to remedies.

Sources: Final report by the Complaints Commissioner: Complaint number FCA00713The FCA’s response to the Complaints Commissioner’s Report FCA00713Final report by the Complaints Commissioner: Complaint number FCA00684The FCA’s response to the Complaints Commissioner’s Report FCA00684Final report by the Complaints Commissioner: Complaint number FCA00631 and  The FCA’s response to the Complaints Commissioner’s Report FCA00631.

Better Finance and the European Consumer Organisation call for pan-EU collective redress mechanism

Better Finance and BEUC (the European Consumer Organisation) wrote to the European Parliament to emphasise the need for a pan-EU collective redress mechanism that does not exclude European citizens as financial consumers and individual investors, and enables them to obtain compensation for damages incurred. They say this is crucial in the area of financial services where complex products have a serious impact on the quality of life of active and retired citizens. They add that, due to the lack of an effective redress mechanism, many financial consumers as investors are unable to exercise their rights.

Source: Joint Better Finance—BEUC letter on collective redress—HLF CMU: Representative actions for the protection of the collective interests of financial consumers as individual investors.

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Investigations, enforcement and discipline

FCA fines Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failures in mortgage arrears handling

The FCA fined Lloyds Bank plc, Bank of Scotland plc and the Mortgage Business plc (the banks) £64,046,800 for failures in relation to their handling of mortgage customers in payment difficulties or arrears. Under a redress programme which is nearly complete, the banks have estimated that they will have paid approximately £300m in redress. The banks did not dispute the FCA’s findings and exercised their right, under the FCA’s partly contested case process, to ask the FCA’s Regulatory Decisions Committee to assess the appropriate level of sanction. The banks’ agreement to accept all issues of fact and liability meant they qualified for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,495,400.

Sources: FCA fines Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failures in mortgage arrears handling and  Final Notice 2020: Lloyds Bank plc, Bank of Scotland plc, and The Mortgage Business plc.

FCA fines Commerzbank’s London branch £37.8m for AML failings

The FCA fined Commerzbank AG (London Branch) £37,805,400 for failing to put adequate anti-money laundering (AML) systems and controls in place between October 2012 and September 2017.

Sources: FCA fines Commerzbank London £37,805,400 over anti-money laundering failures and  Final notice.

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Markets and trading

FCA updates market abuse webpage

The FCA updated its webpage on market abuse. The updated page includes links to a new webpage on how to report suspected market abuse as an individual, and an updated webpage on how to report suspected market abuse as a firm or trading venue.

Source: Updated information on market abuse.

For further information, see: The UK implementation of the Market Abuse Regulation.

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Regulation of benchmarks and IBOR reform

PRA update on LIBOR transition targets

The Prudential Regulation Authority (PRA) updated its webpage relating to the joint letter it sent, with the FCA, in January 2020, regarding the next steps in LIBOR transition. The PRA notes that a number of the Working Group on Sterling Risk-Free Reference Rates (RFRWG)’s milestones included in the letter have since been revised to take into account the impact of the coronavirus (COVID-19) pandemic.

Source: Next steps on LIBOR transition.

For further information, see: LIBOR transition.

FSMB’s spotlight review on LIBOR transition

The FICC Markets Standards Board (FMSB) published a spotlight review on LIBOR transition with practical case studies to support firms when considering the risks to fairness and effectiveness as the market moves to risk-free rates as more sustainable and representative benchmarks.

Source: FMSB publishes a Spotlight Review on navigating conduct risks in LIBOR transition.

BoE publishes responses to discussion paper on compounded SONIA

The Bank of England (BoE) published a summary of responses to its February 2020 discussion paper entitled: ‘Supporting risk-free rate transition through the provision of compounded SONIA’. Based on feedback received from respondents, the BoE has confirmed that it will publish a daily SONIA compounded index which is anticipated to commence in early August 2020, but the exact date is still to be confirmed. However, given the lack of consensus, the BoE has confirmed that it will not be producing SONIA ‘period averages’ at this stage.

Sources: Supporting risk-free rate transition through the provision of compounded SONIASupporting risk-free rate transition through the provision of compounded SONIA: Summary and response to market feedback and  Supporting risk-free rate transition through the provision of compounded SONIA: Responses to the February 2020 discussion paper.

Working group on risk-free rates recommends voluntary compensation for swaptions impacted by discounting transition to the €STR

The ECB’s working group on euro risk-free rates (RFRs) has endorsed a recommendation that counterparties voluntarily exchange compensation for legacy swaption contracts affected by the transition of central counterparty (CCP) discounting from the euro overnight index average (EONIA) to the euro short-term rate (€STR), which is due to take place around 27 July 2020. The working group also recommends that market participants contact their swaptions counterparties to determine whether they plan to consider voluntary compensation.

Source: Working group on euro risk-free rates recommends voluntary compensation for legacy swaption contracts affected by the discounting transition to the €STR.

ISDA responds to European Securities and Markets Authority consultation

ISDA responded to ESMA’s consultation on the draft regulatory technical standards under the European Benchmarks Regulation. ISDA has shown concern over some of the requirements in the ESMA’s draft, particularly that they ‘impose disproportionate costs and operational burdens on benchmark administrators’, and continues to detail a response covering governance, methodology, infringements reporting and critical benchmarks.

Source: ISDA response to ESMA’s Consultation Paper on Draft regulatory technical standards under the Benchmarks Regulation.

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Regulation of capital markets

ESMA publishes example of annual report in ESEF format

ESMA published on its website an example of an annual financial report which is prepared in the new European Single Electronic Format (ESEF). The aim is to provide issuers with an example of an annual report in the ESEF format for their submissions to the national Officially Appointed Mechanisms.

Source: ESMA publishes example of an annual financial report in ESEF format.

European Commission seeks feedback on draft regulation on Prospectus Regulation exemptions

The European Commission announced that a feedback period is now open for the draft delegated regulation supplementing Regulation (EU) 2017/1129 (the Prospectus Regulation) as regards the minimum information content of the document to be published for a prospectus exemption in connection with a takeover by means of an exchange offer, a merger or a division. The feedback period closes on 14 July 2020.

Source: Public offerings during takeovers, mergers & divisions—prospectus exemption guidance.

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

Coronavirus (COVID-19)—ESMA renews short selling notification requirement

ESMA renewed its decision to temporarily require the holders of net short positions in shares traded on an EU regulated market to notify the relevant national competent authority (NCA) if the position exceeds 0.1% of the issued share capital. This temporary notification measure applies from 17 June 2020 for a period of three months. It applies to any natural or legal person, irrespective of their country of residence. However, it does not apply to shares admitted to trading on a regulated market where the principal venue for the trading of the shares is located in a third country, market making or stabilisation activities.

Source: ESMA renews its decision requiring net short position holders to report positions of 0.1% and above.

For further information, see: An introduction to short selling.

ECSDA asks for further postponement of CSDR settlement discipline regime

The European Central Securities Depositories Association (ECSDA) published a letter from its chair to the European Commission calling for a further postponement of the implementation of the settlement discipline regime (SDR) under the Central Securities Depositories Regulation (EU) 909/2014 (CSDR).

Source: COVID-19 impact on the implementation timeline of the Settlement Penalties regime under CSD regulation.

For further information, see: Central Securities Depositories Regulation—essentials.

ICMA sets out preliminary thoughts on High Level Forum report

The International Capital Market Association (ICMA) published its preliminary thoughts on the Report of the High Level Forum on the Capital Markets Union. According to ICMA, the report comes at a difficult time as ‘the European Union embarks on a difficult road to recovery following the COVID-19 pandemic, while also adjusting to the UK’s departure from the EU’.

Source: ICMA preliminary thoughts on the Report of the High Level Forum on the Capital Markets Union.

For further information, see: The Capital Markets Union.

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Regulation of derivatives

European Commission feedback periods open for EMIR delegated regulations

The European Commission announced that feedback periods are now open for three draft Commission Delegated Regulations, supplementing the European Market Infrastructure Regulation (EMIR) (Regulation (EU) No 648/2012). The draft Delegated Regulations cover: the systemic importance of non-EU central counterparties (CCPs); fees to be charged to non-EU CCPs; and compliance of non-EU clearing houses. Views on all three draft Regulations are sought by 9 July 2020.

Sources: Systemic importance of third-country central counterpartiesFees to be charged to third-country central counterparties and  Financial market regulation—compliance of non-EU clearing houses.

For further information, see: EMIR—essentials.

Coronavirus (COVID-19)—EBA letter on CRD V, CRR II, BRRD II and EMIR technical standards

The EBA published a letter to the European Commission, directorate-general financial stability, services and capital markets union executive vice-president, John Berrigan, on extended deadlines for the EBA’s submission of regulatory technical standards (RTS) and implementing technical standards (ITS) for the risk reduction package (CRD V, CRR II and BRRD II) (also known as the banking package) and EMIR. In the letter dated 12 June 2020, the EBA sets out amended deadlines for delivering the RTS and ITS.

Source: 2020 06 12 Letter to Mr Berrigan re request for new deadlines under the RRM.

For further information, see: Banking Union: The EU banking package

FCA publishes updated position limits for certain commodity derivative contracts

The FCA published updated position limits for certain commodity derivative contracts traded on ICE Futures Europe. The limits, established under the Financial Services and Markets Act 2000 (Markets in Financial Instruments) Regulations 2017 (MiFI Regulations), are being revised in accordance with Commission Delegated Regulation (EU) 2017/591 (RTS 21).

Source: June 2020 update of position limits for some commodity derivative contracts.

For further information, see: Commodity derivatives.

ICMA Council responds to ESMA consultation on Central Clearing Solutions

ICMA’s European Repo and Collateral Council (ERCC) submitted its response to the European Securities and Markets Authority’s (ESMA) consultation on its First Report on Central Clearing Solutions for Pension Scheme Arrangements. The ICMA’s ERCC has limited its response to the questions relating to Section 6.3 of the report—namely the market-based repo solution. In its response to the first question on solutions based on collateral transformation via the repo market, the ERCC stated that there are a number of other potential initiatives that should be considered alongside the market-based repo solution’ and that ‘supplementary solutions should focus both on increasing intermediary capacity to support access and on back-stopping it in extreme cases of market deterioration’.

Source: ICMA ERCC responds to ESMA’s consultation on its First Report on Central Clearing Solutions for Pension Scheme Arrangements.

ISDA and FIA respond to ESMA consultation on Central Clearing Solutions

ISDA and the Futures Industry Association (FIA) have submitted responses to ESMA’s consultation on its First Report on Central Clearing Solutions for Pension Scheme Arrangements. Both ISDA and FIA have focused on topics that affect the clearing market. ISDA and FIA have doubts about the Central Clearing Solutions and have emphasised ‘the need to re-visit current exemptions for the clearing obligation for PSAs in the context of Brexit’ because not being exempt from the clearing obligation under EU rules could have negative consequences.

Source: EBF and ISDA respond ESMA’s consultation “Clearing Solutions for Pension Scheme Arrangements”.

ISDA Member Showcase launched

ISDA launched the ISDA member showcase which is a directory of ISDA member firms that offer services and products for the derivatives industry.

Source: ISDA Member Showcase – Now Live on ISDA.org.

ISDA interview sets out changes to 2020 interest rate derivatives definitions

ISDA published a video interview on the subject of the 2020 ISDA interest rate derivatives definitions. The interview involves ISDA’s Senior Counsel of Europe, Rick Sandilands, who explains the changes to the definitions and why they are necessary.

Source: Video Interview: 2020 ISDA Interest Rate Derivatives Definitions.

ISDA suggests removing clearing obligation for transactions resulting of PTRR

ISDA and the European Banking Federation (EBF) jointly published their response to the ESMA’s consultation on post trade risk reduction (PTRR) services in relation to the clearing obligation. ISDA and EBF both argue that transactions that are the result of PTRR services should be allowed to remain uncleared ‘to the extent they are in derivatives classes that are otherwise subject to the clearing obligation’. They have outlined three conditions that would remove ‘any potential risk that these exercises can be used to avoid the clearing obligation’.

Source: EBF & ISDA respond to ESMA’s consultation on post trade risk reduction services with regards to clearing obligation.

WFE publishes paper on CCPs and non-default losses

The World Federation of Exchanges (WFE) published a briefing paper on how non-default losses (NDLs) may be treated and allocated in a ‘transparent, predictable and equitable manner’ by central counterparties (CCP). NDLs are separate from the risk of a clearing member’s default (which is managed through the provisions of the ‘default waterfall’). These are losses that may arise from any risk event including operational, bank and custody, and investment risks. The briefing refers to various parts of the Principles for Financial Market Infrastructures (PFMIs), which set out a framework for the appropriate management of operational, custody and investment risks. Individual jurisdictions may also have additional requirements. In the EU and the UK (before the end of the implementation period) detailed requirements are set out in the European Market Infrastructure Regulation as amended.

Sources: Briefing paper on non-default loss and  The World Federation of Exchanges issues industry guidance on non-default losses.

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Investment funds and asset management

Coronavirus (COVID-19)—ESRB recommendation on funds supervision published in Official Journal

Recommendation of ESRB of 6 May 2020 on liquidity risks in investment funds (ESRB/2020/4) (2020/C 200/01) was published in the Official Journal. The ESRB recommends that ESMA should co-ordinate a supervisory exercise involving EU investment funds which have exposures to corporate debt or real estate. This recommendation is intended to enhance preparedness to respond to potential future adverse shocks that could lead to a deterioration in financial market liquidity.

Source: Recommendation of the European Systemic Risk Board of 6 May 2020 on liquidity risks in investment funds (ESRB/2020/4) 2020/C 200/01

The Alternative Credit Council supports reform of the ELTIF regulation

The ACC welcomed the final report of the European Commission’s High-Level Forum on the Capital Markets Union, including its recommendation to reform the European Long Term Investment Fund (ELTIF) Regulation (Regulation (EU) 2015/760). The ACC notes that the ELTIF vehicle has the ability to originate loans on a cross-border basis and other positive features. However, it also has deficiencies, which has prevented a broader uptake by investors and asset managers of the ELTIF vehicle to date.

Source: The Alternative Credit Council (ACC) supports reform of the ELTIF regulation to finance European SMEs.

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Banks and mutuals

Coronavirus (COVID-19)—EBA letter on CRD V, CRR II, BRRD II and EMIR technical standards

The EBA published a letter to the European Commission, directorate-general financial stability, services and capital markets union executive vice-president, John Berrigan, on extended deadlines for the EBA’s submission of regulatory technical standards (RTS) and implementing technical standards (ITS) for the risk reduction package (CRD V, CRR II and BRRD II) (also known as the banking package) and EMIR. In the letter dated 12 June 2020, the EBA sets out amended deadlines for delivering the RTS and ITS.

Source: 2020 06 12 Letter to Mr Berrigan re request for new deadlines under the RRM.

For further information, see: Banking Union: The EU banking package

Coronavirus (COVID-19)–EESC publishes opinion on targeted amendments to CRR and CRR II

The Council of the EU published an opinion, given by its European Economic and Social Committee (EESC), on the proposal for a regulation making targeted amendments to Regulation (EU) 575/2013 (CRR) and Regulation (EU) 2019/876 (CRR II) in response to the coronavirus (COVID-19) pandemic. The EESC welcomed the proposed amending regulation but argued that the changes it makes do not go far enough and called for several further amendments to be made to the prudential regulatory framework.

Source: Proposal for a Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards adjustments in response to the COVID-19 pandemic—Opinion of the European Economic and Social Committee.

For further information, see: CRD IV—essentials.

EBA expands online tools to cover MLD4, WTR and consumer protection legislation

The EBA expanded the scope of its questions and answers (Q&A) process and tool to enable the submission of questions on the Fourth Money Laundering Directive (MLD 4) and consumer protection legislation under the EBA’s scope. The EBA has also made changes to expand and update its online Interactive Single Rulebook (ISRB) to include MLD 4, the Wire Transfer Regulation (WTR) and recent amendments to prudential legislation.

Source: EBA makes changes to its Q&A tool.

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

EBA publishes first peer review of stress tests and the resilience of deposit guarantee schemes

The EBA published its first peer review of stress tests and the resilience of deposit guarantee schemes (DGSs). The purpose of the peer review was to assess the resilience of DGSs based on the results of the DGS stress tests, and to identify good practices and areas for improvement. The EBA considers the overall resilience of DGSs to be ‘fair’, which is the second best result possible and means that any shortcomings identified are unlikely to affect the ability of DGSs to perform their tasks.

Source: EBA publishes its first peer review of the stress tests and the resilience of deposit guarantee schemes (DGSs).

For further information, see: Deposit Guarantee Schemes Directive.

ECB chair: banks must act now to manage long-term climate risks

The chair of the Supervisory Board of the ECB, Andrea Enria, said that the ECB is committed to ensuring the resilience of banks as climate-related risks become a reality in the longer term. Speaking at the ECB’s Climate and Environmental Risks webinar, he said that overcoming the future challenges of climate change will require immediate action now.

Source: ECB Banking Supervision’s approach to climate risks.

SRB director sets out objectives for build-up of MREL quantity and quality

The SRB published a blog post by its director of strategy and policy co-ordination, Sebastiano Laviola, on the minimum requirements for own funds and eligible liabilities (MREL), the buffer each bank must hold to absorb losses and prevent use of public money if it fails. Laviola discusses the SRB’s updated MREL policy, which implements the new requirements in the 2019 EU banking package, and the plan to build-up EU banks’ MREL quantity and quality

Source: MREL: the next steps.

IMF and World Bank issue recommendations to help banking supervisors respond to coronavirus (COVID-19)

The International Monetary Fund (IMF) published a blog in which it introduces nine joint IMF-World Bank recommendations to help supervisors shape their response to the crisis caused by the coronavirus (COVID-19) pandemic. The recommendations encourage national authorities to ‘employ the embedded flexibility of regulatory, supervisory and accounting frameworks’, whilst upholding internationally-agreed minimum regulatory standards and supervisory principles to avoid undermining the medium-term soundness and health of the banking system.

Source: Combating COVID-19: How should banking supervisors respond?

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Consumer credit, mortgage and home finance

FCA updates guidance for firms on mortgages and coronavirus (COVID-19)

The FCA updated its guidance for firms on mortgages and coronavirus (COVID-19) in order to clarify its expectations regarding the information that firms should provide to customers when they are unable to provide personalised information on the impact of a payment deferral or other support on their monthly payments and/or the term of their mortgage.

Source: Mortgages and coronavirus: updated guidance for firms.

For further information, see: Mortgage and home finance conduct of business—responsible lending, charges and arrears requirements.

FCA review says equity release can work well, but finds areas of concern

The FCA published the results of its review of the advice firms are giving to equity release consumers. The review found that equity release was working well for many consumers, but the FCA highlights three significant areas of concern: advice given by firms did not always sufficiently take into account consumers’ personal circumstances; consumers’ reasons for looking at equity release were not always challenged by firms; and firms weren’t always able to evidence that their advice was suitable.

Source: Firms must do more to ensure that they are always giving appropriate equity release advice, FCA review finds.

FCA fines Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failures in mortgage arrears handling

The FCA fined Lloyds Bank plc, Bank of Scotland plc and the Mortgage Business plc (the banks) £64,046,800 for failures in relation to their handling of mortgage customers in payment difficulties or arrears. Under a redress programme which is nearly complete, the banks have estimated that they will have paid approximately £300m in redress. The banks did not dispute the FCA’s findings and exercised their right, under the FCA’s partly contested case process, to ask the FCA’s Regulatory Decisions Committee to assess the appropriate level of sanction. The banks’ agreement to accept all issues of fact and liability meant they qualified for a 30% discount. Otherwise, the FCA would have imposed a financial penalty of £91,495,400.

Sources: FCA fines Lloyds Bank, Bank of Scotland and The Mortgage Business £64,046,800 for failures in mortgage arrears handling and  Final Notice 2020: Lloyds Bank plc, Bank of Scotland plc, and The Mortgage Business plc.

Coronavirus (COVID-19)—FCA chair on the lessons to be learned for the UK financial system

The FCA published a speech by its chair, Charles Randell, given at a virtual roundtable of bank chairs hosted by UK Finance, in which he said the coronavirus (COVID-19) crisis showed the UK needs to reassess its approach to consumer debt, high risk retail investments and financial exclusion. Randell called for a robust framework for dealing with small business loans which turn out to be unaffordable, but also set out some of the opportunities to reshape the UK financial system that the current crisis may open up.

Source: A financial system to support the recovery.

MaPS announces corporate plan for 2020/21, including coronavirus (COVID-19) response

The MaPS published its corporate plan for 2020/21, outlining the organisation’s strategic priorities and its immediate response to the coronavirus (COVID-19) outbreak. The plan was due to be published at the beginning of April 2020 but has been delayed to allow a review of how priorities will be flexed in response to the pandemic. These will continue to evolve as the COVID-19 situation unfolds.

Source: MaPS publishes corporate plan detailing key priorities and COVID-19 support.

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Regulation of insurance

FCA publishes finalised guidance for insurers during the business interruption test case

The FCA published finalised guidance setting out its expectations for insurers and insurance intermediaries when handling claims and complaints for business interruption (BI) policies during the test case brought by the FCA. The guidance comes into immediate effect. The FCA has also published feedback statement FS20/8, which provides feedback on the draft guidance published on 1 June 2020.

Sources: Finalised guidance: Business interruption insurance test case and  FS20/8: Business interruption insurance test case: feedback on draft guidance.

Coronavirus (COVID-19)—FCA business interruption test case CMC

The FCA announced that the first case management conference (CMC) will take place on 16 June 2020 at 10.30am. The court will be invited to consider the FCA's application for expedition and admission to the Financial Markets Test Case Scheme, fix the timetable for the case (including the date for the court hearing in the second half of July) and deal with other procedural matters.

The court has agreed to live-stream here

EIOPA updates list of IAIGs

The EIOPA published an updated list of internationally active insurance groups (IAIGs) headquartered in the EU.

Source: Update of the list of Internationally Active Insurance Groups in the EU.

IE responds to European Commission white paper on AI and insurance

Insurance Europe (IE) published its response to a white paper by the European Commission on its upcoming consultation on a framework for artificial intelligence (AI). IE supports actions at EU level to promote and support the development and uptake of AI, as well as actions to facilitate access to and use of data, which it says is essential for the further development of AI systems. However, IE says any future regulatory framework for AI needs to be consistent with the overall objectives of the EU to promote and encourage innovation, while ensuring respect for European values and principles.

Sources: European insurers call for principles-based EU framework for AI that supports innovation and  Position paper: Artificial intelligence (AI): Views of the European insurance industry.

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Regulation of personal pension and stakeholder products

Insurance Europe calls on EIOPA to streamline PEPP reporting requirements

Insurance Europe (IE) called on the EIOPA to clarify and streamline the reporting requirements for the pan-European personal pension product (PEPP). In a response to EIOPA’s consultation on the implementing technical standards (ITS) for supervisory reporting and co-operation and the exchange of information between authorities, IE said insurers are concerned that the suggested ‘reduced’ approach could in reality turn out to be an ‘extended’ burdensome, costly and disproportionate one.

Source: EIOPA should further clarify and streamline reporting requirements for the PEPP.

PLSA calls for changes to Insolvency Bill to avoid negative consequences for pension schemes

The Pensions and Lifetime Savings Association (PLSA) wrote to the Business, Energy and Industrial Strategy (BEIS) Parliamentary Under Secretary of State, Paul Scully MP, to express its concern about ‘unintended negative consequences’ the Corporate Insolvency and Governance Bill could have on its members.

Source: PLSA urges government to make changes to its Insolvency Bill in a bid to avoid negative consequences for pension schemes.

TPR updates coronavirus (COVID-19) guidance

Guidance designed to help pension scheme trustees and employers cope with the financial impact of coronavirus (COVID-19) has been updated by The Pensions Regulator (TPR), and pension trustees should resume reporting information to TPR from 1 July.

Source: Measures extended to help pension schemes tackle COVID-19 challenges.

MaPS announces corporate plan for 2020/21, including coronavirus (COVID-19) response

The MaPS published its corporate plan for 2020/21, outlining the organisation’s strategic priorities and its immediate response to the coronavirus (COVID-19) outbreak. The plan was due to be published at the beginning of April 2020 but has been delayed to allow a review of how priorities will be flexed in response to the pandemic. These will continue to evolve as the COVID-19 situation unfolds.

Source: MaPS publishes corporate plan detailing key priorities and COVID-19 support.

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Payment services and systems

FCA and PSR outline joint approach to access to cash during coronavirus (COVID-19) crisis and beyond

The FCA and the PSR published a statement on their joint approach to access to cash. In the statement the FCA and the PSR outline the actions they have taken to address issues with access to cash during the coronavirus (COVID-19) pandemic and explain how they plan to deal with access in the longer term as legislation is developed.

Source: The FCA’s and PSR’s joint approach to access to cash.

For further information, see: Payment Systems Regulator—supervisory approach and  FCA supervisory approach.

PSR updates Powers and Procedures Guidance and Interchange Fee Regulation Guidance

The PSR published a revised version of its Powers and Procedures Guidance (PPG), which explains its approach to using its powers under the Financial Services (Banking Reform) Act 2013. It has also published a revised version of its Interchange Fee Regulation (IFR) Guidance to reflect the changes made to the PPG.

Source: RP20/2—Revision of our Powers and Procedures Guidance (PPG): Response to consultation on revisions to our PPG.

For further information, see: Interchange Fee Regulation—essentials.

BoE executive discusses payments innovation and the role of the central banks

The BoE executive director for financial market infrastructure directorate, Christina Segal-Knowles, has given a webinar speech on changes to the way people pay for goods and services, and the impact of the coronavirus (COVID-19) on payment methods. She went on to explore how digital currencies fit in and what central banks can and are doing in response.

Source: Payments after the COVID crisis—emerging issues and challenges—speech by Christina Segal-Knowles.

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Fintech and cryptoassets

IE responds to European Commission white paper on AI and insurance

IE published its response to a white paper by the European Commission on its upcoming consultation on a framework for artificial intelligence (AI). IE supports actions at EU level to promote and support the development and uptake of AI, as well as actions to facilitate access to and use of data, which it says is essential for the further development of AI systems. However, IE says any future regulatory framework for AI needs to be consistent with the overall objectives of the EU to promote and encourage innovation, while ensuring respect for European values and principles.

Sources: European insurers call for principles-based EU framework for AI that supports innovation and  Position paper: Artificial intelligence (AI): Views of the European insurance industry.

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Sustainable finance

European Commission seeks opinion on Green Bond Standard

The European Commission launched a targeted consultation on the establishment of a uniform Green Bond Standard in the EU and requests that interested parties and stakeholders submit their opinion by 2 October 2020. Respondents should refer to the inception impact assessment when submitting responses. Green bonds will play an important role in financing the assets needed for a low-carbon transition and were recommended in the final report of the Commission’s High-Level Expert Group on Sustainable Finance.

Source: Targeted consultation on the establishment of an EU Green Bond Standard.

European Supervisory Authorities respond to Commission’s NFRD consultation

The European Supervisory Authorities (ESAs) (ESMA, the EBA and the European Insurance Occupational Pensions Authority (EIOPA)) responded to the European Commission’s consultation on revising the Non-Financial Reporting Directive 2014/95/EU (NFRD). While the ESAs have issued their own individual responses, their collective response welcomes the consultation, agreeing that it ‘addresses a number of important aspects of the future of the NFRD’. The collective response recommends a higher level of standardisation of the disclosure requirements used by companies when preparing non-financial information, as well as suggesting that the ESAs play a ‘leading role’ in standard-setting tasks, as each ESA has benefitted from increased legislative mandates on environmental, social and governance (ESG) matters.

Sources: joint European Supervisory Authorities responseESMA responds to European Commission consultation on revision of NFRDEBA proposes enhanced standardisation of disclosure requirements laid down in the Non-Financial Reporting Directive and EIOPA responds to the European Commission’s consultation on the revision of the Non-Financial Reporting Directive.

ECB chair: banks must act now to manage long-term climate risks

The chair of the Supervisory Board of the ECB, Andrea Enria, said that the ECB is committed to ensuring the resilience of banks as climate-related risks become a reality in the longer term. Speaking at the ECB’s Climate and Environmental Risks webinar, he said that overcoming the future challenges of climate change will require immediate action now.

Source: ECB Banking Supervision’s approach to climate risks.

Government minister comments on Taxonomy Regulation as retained EU law post-Brexit

The Cabinet Office published a letter from the economic secretary to the Treasury, John Glen MP, to the chair of the House of Commons European Scrutiny Committee, Sir William Cash MP, regarding the status of the proposed regulation on the establishment of a framework to facilitate sustainable investment (the Taxonomy Regulation) at the end of the Brexit implementation period.

Source: Letter from John Glen to Sir William Cash MP (28 May 2020).

New Zealand and Singapore join the International Platform on Sustainable Finance

The European Commission announced that New Zealand and Singapore are joining the International Platform on Sustainable Finance (IPSF). As part of the international efforts to meet the Paris agreement commitments, the International Platform on Sustainable Finance (IPSF) was created in October 2019.

Source: Singapore and New Zealand are joining the International Platform on Sustainable Finance (IPSF).

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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.