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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.
In light of the coronavirus COVID-19 pandemic, on 14 August 2020 the European Banking Authority (EBA) published an amended work programme for 2020 (dated July 2020). This provides an update to the original EBA work programme that was published in
Source: EBA Revised Work Programme 2020 (COVID-19 changes).
The Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) announced temporary relief for issuers who choose to use the amended International Financial Reporting Standard (IFRS) 16 during the COVID-19 pandemic and its aftermath.
IFRS 16 was amended by the International Accounting Standards Board (IASB) in May 2020 to provide practical relief to lessees in accounting for rent concessions granted due to COVID-19.
Sources: Statement on accounting for lease modifications (amendment to IFRS 16) and
FRC statement on accounting for lease modifications (amendment to IFRS 16—COVID-19-related rent concessions).
HM Treasury published the latest statistics on the government-backed COVID-19 business loan schemes, which show that over 1.23m businesses in the UK have now been supported by lenders through the schemes. However, research commissioned by UK Finance
members has revealed that businesses are still wary of drawing on additional credit largely due to ongoing economic uncertainty.
Sources: Lenders supporting 1.23 million businesses across the UK through COVID-19 support schemes and
HM Treasury coronavirus (COVID-19) business loan scheme statistics (update).
Pay.UK published a press release setting out its preparedness for the COVID-19 pandemic. Pay.UK says it is monitoring the COVID-19 outbreak closely to ensure it is taking the necessary steps to protect colleagues and maintain services to its participants
and end users.
Source: 17 August 2020 Pay.UK COVID-19 preparedness.
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The UK government and the Bank of Thailand (BoT) signed a memorandum of understanding (MoU) on 7 August 2020 with the aim of forming a strategic partnership on financial services. The key goal is to support Thailand’s inclusive economic recovery
and green growth in line with the Sustainable Development Goals (SDGs).
Source: UK government MoU press release.
UK Finance published a blog discussing the Bank of England (BoE)’s Future of Finance review one year on. The report made a number of recommendations in the areas of green and digital finance. The UK Finance blog flags up its series of podcasts
on the report, the latest episode of which seeks to explore what progress has been made and where the BoE and wider industry should be focusing their energies.
Source: The Future of Finance Review: one year on.
The FCA published a new webpage on conduct rules reporting for solo-regulated firms under the Senior Managers and Certification Regime (SM&CR). In a further update webpage, the FCA also provided information to firms on good and bad practice relating
to training staff on the conduct rules and carrying out fitness and propriety assessments.
Sources: FCA REP008 reporting solo-regulated firms and
FCA updated SM&CR webpage.
For further information, see: SM&CR—essentials for solo-regulated firms.
The EBA launched a consultation on draft guidelines on criteria for the use of data inputs in the risk-measurement model referred to in Article 325bc of the Capital Requirements Regulation (Regulation (EU) No 575/2013) (CRR) under the Internal
Model Approach (IMA) for market risk. The guidelines have been developed according to Article 325bh(3) of the CRR, which mandates the EBA to issue such guidelines. The consultation runs until 12 November 2020.
Source: EBA consults on guidelines on criteria for the use of data inputs in the expected shortfall risk measure under the internal model approach.
For further information, see: CRD IV—essentials.
Following the launch of the industry questionnaire to support its work on optimising supervisory reporting requirements and reducing reporting costs for institutions (see ‘EBA looks for ways to reduce reporting costs for further information’,
LNB News 22/07/2020 97), the EBA made available online tools to allow stakeholders to submit their responses.
Sources: EBA press release, EBA qualitative section of the questionnaire,
EBA quantitative section of the questionnaire and EBA Supervisory Reporting webpage.
Action brought on 2 July 2020—Landesbank Baden-Württemberg v Single Resolution Board (SRB) (Case T-406/20) has been published in the Official Journal.
Source: Action brought on 2 July 2020—Landesbank Baden-Württemberg v SRB
The Bank of England (BoE) published a staff working paper examining how constraints on bonus akin to bonus regulations, such as bonus cap and malus, could affect individuals’ risk-taking in the presence of relative performance pay.
Source: Does bonus cap curb risk taking? An experimental study of relative performance pay and bonus regulation.
The EBA published its response to the European Commission’s Action Plan for a comprehensive EU policy on preventing money laundering and terrorism financing. In its response, the EBA sets out technical points that policymakers should consider
when deciding on the scope and powers of an EU-level supervisor for anti-money laundering/combating the financing of terrorism (AML/CFT).
Source: EBA supports the EU Commission’s call for a more efficient and effective framework to tackle money laundering and terrorism financing.
For further information, see: The anti-money laundering regime.
The European Central Board (ECB) published its sixth oversight report on card fraud. The report analyses developments in card payment fraud with a particular focus on data from 2018. The report looks back over a five-year period from 2014 to 2018.
Source: ECB sixth report on card fraud.
The FCA published a Legal Notice addressed to Richard David Baldwin stating that, on 4 September 2020, Southwark Crown Court sitting at 1 English Grounds, London SE1 2HU will hear the application of the FCA for a criminal confiscation order against
him under the Proceeds of Crime Act 2002.
Source: Legal Notice: Richard David Baldwin.
HM Revenue and Customs (HMRC) published a list of businesses for the tax year 2019 to 2020 that have not complied with the 2017 money laundering regulations. The list sets out details of businesses that received a penalty notice between 6 April 2019
and 31 January 2020, together with a brief description of the breach involved, the penalty amount and appeal status.
Source: List of businesses for tax year 2019 to 2020 that have not complied with the 2017 money laundering regulations.
The Joint Money Laundering Steering Group (JMLSG) received HM Treasury ministerial approval for its guidance material published in June/July 2020. This includes the new Sector 22 Cryptoasset exchange providers and custodian wallet providers, Annex
5-V Pooled Client Accounts, and the various other revisions within Part I and Part II.
Source: Ministerial approval of JMLSG guidance.
The International Organization of Securities Commissions (IOSCO) is preparing to launch its fourth annual World Investor Week (WIW) from 5 to 11 October 2020, as initially planned before the outbreak of the COVID 19 pandemic, saying: ‘More than
ever, investors and financial consumers worldwide need to manage their finances and investments efficiently and strengthen their financial resilience in the face of growing economic uncertainty.’
Source: IOSCO to launch 2020 World Investor Week to promote investor education.
Costs – Order for costs. The appellant company's application for costs, following its successful appeal against a decision notice of the Financial Conduct Authority, succeeded. The Upper Tribunal (Tax and Chancery Chamber) held that both the authority's
decision and its decision to defend the proceedings on the basis ofthat decision had been unreasonable. There was no reason why the court should not order the authority to pay all of FSE's costs of and incidental to the proceedings in the tribunal.
See:  All ER (D) 27 (Aug).
The board of Banking Competition Remedies Ltd (BCR) has announced the results of Application Period One of the Capability and Innovation Fund (CIF) Pool E grant process. The purpose of the fund is to facilitate the commercialisation of financial technology
that is relevant to small and medium-sized enterprises (SMEs).
Source: Banking Competition Remedies Ltd (BCR) announces the awards of Capability and Innovation Fund Pool E (Application Period One).
The Competition and Markets Authority (CMA) announced the publication of the latest service quality league table of personal and business current account providers. This is the fifth publication since the league tables were put in place following
the CMA’s market investigation into retail banking in 2016. For the first time, the data includes the service quality rankings for the new digital banks Monzo and Starling and for Virgin Money.
Sources: Latest banking customer satisfaction results published and
OBIE publishes Open Data Service Quality Indicators.
The FCA published Issue No 30 of its Primary Market Bulletin, the FCA newsletter for primary market participants. The edition summarises the latest changes to the Knowledge Base, includes a reminder of the person discharging managerial responsibilities
(PDMR) regime under the Market Abuse Regulation and gives updates on recent changes to the Prospectus Regulation.
Source: Primary Market Bulletin Issue no 30.
For further information, see: Market Abuse Regulation (MAR)—essentials and The Prospectus Regulation—essentials.
The European Securities and Markets Authority (ESMA) published updated reporting instructions and XML schema (version 1.2.0) for the templates set out in the technical standards on disclosure requirements under the Securitisation Regulation. The
updates address technical issues identified by stakeholders since December 2019.
Source: ESMA provides updated XML schema and reporting instructions for securitisation reporting.
For further information, see: Securitisation Regulation—essentials.
The Futures Industry Association hosted a webinar on the response of the cleared derivatives markets to the COVID-19 pandemic. Participants agreed that the sector had responded well and said industry preparedness through business continuity planning
had played a key role in the resilience of the markets. However, the panelists were open about the challenges created by high order volumes and trade backlogs during the peak of market volatility and discussed how the system could improve
its response to the next crisis.
Source: CCPs and FCMs in Asia Pacific discuss lessons learned from the crisis.
The Financial Sector Assessment Program (FSAP), a joint effort between the International Monetary Fund (IMF) and the World Bank, issued its latest review of the US on 10 August 2020. While the full assessment covered the entire US financial system,
the review also included a technical note entitled, ‘Supervision of financial market infrastructures, resilience of central counterparties and innovative technologies’. The technical note highlighted specific challenges for the
supervision of derivatives clearing houses, including ‘resource constraints’ at the Commodity Futures Trading Commission (CFTC) as well as the CFTC’s approach to consultation on rule changes at systemically important central
Sources: Financial System Stability Assessment and
FSAP Technical note on FMIs, CCPs and technology.
The executive director of supervision—investment, wholesale & specialists division of the FCA, Megan Butler, wrote a Dear CEO letter to firms that provide a non-discretionary investment service setting out the FCA’s expectations on
high client money balances due to changes made to portfolios in light of the COVID-19 pandemic.
Source: Dear CEO letter: increased client money balances since coronavirus (COVID-19).
The ESMAwrote to the European Commission suggesting areas to consider in the impending review of the Alternative Investment Fund Managers Directive 2011/61/EU (AIFMD). In annexes to the letter, ESMA sets out a number of problems and proposed
solutions in the areas of policy and reporting.
Sources: ESMA recommends priority topics in AIFMD review and
Letter to the Commission.
For further information, see: AIFMD—essentials.
The Solicitors Regulation Authority (SRA) released a report on dubious investment schemes, which details typical schemes and explores how and why solicitors can become involved. The SRA stressed that law firms must be vigilant when advising on investment
schemes—‘solicitors should be mindful of the risk of acting in a dubious scheme. They should act with integrity and protect consumers by robustly analysing the reality and risks of any financial arrangements they are involved in.'
The SRA advises that solicitors who suspect that a transaction is potentially fraudulent or so high risk that it is unfair to buyers, should provide full and frank advice to buyer clients and cease to act for seller clients.
Source: Investment schemes that are potentially dubious.
HM Treasury published letters from the economic secretary John Glen MP to the chair of the House of Lords European Union Committee, Lord Kinnoull, and to Sir William Cash MP, the chair of the Commons European Scrutiny Committee. The letters update the
committees on the proposals for a regulation on European Crowdfunding Service Providers for Business and the related proposal for a Directive amending Directive 2014/65/EU (MiFID II), noting that final compromise texts were published in
April 2020. Glen adds that legislation will not come into force during the transition period and the government will therefore consider whether similar changes in UK law would enhance the competitiveness of the UK’s crowdfunding and peer-to-peer
(P2P) lending sectors in the new trading environment, while also ensuring that consumer investors are adequately protected.
Sources: HM Treasury letters to Parliamentary Committee on EU crowdfunding service provider proposals: August 2020,
Letter to Sir William Cash and Letter to Lord Kinnoull.
The All-Party Parliamentary Group (APPG) on Fair Business Bankingpublished a blog discussing banks’ payment holiday support for business customers in light of the coronavirus (COVID-19) pandemic.
Source: Banks split over SME loan payment holidays.
The ECB set up repo lines with the Central Bank of the Republic of San Marino and the National Bank of the Republic of North Macedonia, each of which will remain in place until June 2021 unless extensions are decided. The arrangements provide euro
liquidity to financial institutions in the two countries through the central banks to address possible euro liquidity needs in the presence of market dysfunctions due to the coronavirus (COVID-19) shock.
Sources: ECB and Central Bank of the Republic of San Marino set up repo line to provide euro liquidity and
ECB and National Bank of the Republic of North Macedonia set up repo line to provide euro liquidity.
The Financial Stability Board (FSB) published a common template to gather information about continuity of access to financial market infrastructures (FMIs) for firms in resolution. All FMIs are encouraged to complete the template, which takes the
form of a questionnaire. The responses to the questionnaire will be published, or made available in other ways, to firms that use FMI services and their resolution authorities to inform their resolution planning.
Source: FSB publishes questionnaire on continuity of access to FMIs for firms in resolution.
The European Insurance and Occupational Pensions Authority (EIOPA) published its updated risk dashboard based on the first quarter of 2020 Solvency II data.
Source: EIOPA’s risk dashboard: European insurers remain exposed to high risks since the outbreak of COVID-19.
The FCA published the final transcript of all eight days of its business interruption (BI) insurance test case trial on its website. The FCA is seeking legal clarity on BI insurance during the coronavirus (COVID-19) crisis. It intends to obtain court
declarations as part of a test case, aimed at resolving the contractual uncertainty around the validity of many BI claims. The eight-day court hearing took place before Lord Justice Flaux and Mr Justice Butcher on 20–23 July and 27–30
Source: Business interruption insurance—Latest updates.
For further information, see: Coronavirus (COVID-19)—business interruption insurance.
The FCA published its letter dated 24 March 2020, to the Independent Inquiry into Child Sexual Abuse (IICSA), regarding their Accountability and Reparations report dated September 2019, which recommended that the FCA ‘should make the necessary
regulatory changes to compel insurers that provide public liability insurance to retain and publish details of all current policies’.
Source: Accountability and Reparations investigation report: recommendations.
EIOPA submitted to the European Commission a set of draft regulatory and implementing technical standards and its advice on Delegated Acts to implement the framework for the design and delivery of the pan-European personal pension product (PEPP).
Source: EIOPA finalises the regulation of the pan-European personal pension product.
The head of the Bank for International Settlements (BIS) Innovation Hub, Benoît Cœuré, gave a speech at the Peterson Institute for International Finance on leveraging technology to support supervision, as part of the Institute’s
Financial Statement event series. He provided a broad overview of the challenges that remain for suptech and regtech to be embraced more widely, and suggested ways to address these collectively to build solutions and avoid silos.
Source: Leveraging technology to support supervision: challenges and collaborative solutions.
The Climate Disclosure Standards Board (CDSB) warned the FCA that a ‘comply or explain approach’ to recommendations set out by the Task Force on Climate-related Financial Disclosures would not result in a timely response to the climate
risks faced by the market. The CDSB welcomed the heightened focus on climate disclosure, and instead recommended setting a mandatory Listing Rule. The FCA could then commit to more leniency in the first year of reporting under the Listing Requirement,
which would allow for time to develop corporate reporting capabilities.
Source: CDSB warns a comply or explain approach is not sufficient in reaction to UK FCA’s Proposals to enhance climate-related disclosure by listed issuers and clarification of existing disclosure obligations.
The FCA and the Prudential Regulation Authority (PRA) hosted the fourth meeting of the Climate Financial Risk Forum (CFRF) in July 2020. Members discussed how to publicise and promote use of the CFRF Guide by the financial services industry, and discussed
strategy for the coming year. The Bank of England published a summary of the meeting on 14 August 2020.
Source: Fourth meeting of the PRA and FCA’s joint Climate Financial Risk Forum.
The Global Infrastructure Investor Association (GIIA), in partnership with Marsh & McLennan, released the second in a three-part analysis of global risks for infrastructure investors. Looking at the climate challenge, the latest report discusses
the specific risks to infrastructure investors under each of the key risk categories outlined by the Task Force on Climate-related Financial Disclosures, as well as crucial levers for achieving climate resilience at both the portfolio and asset
level for the infrastructure sector.
Source: Global risks for infrastructure—the climate challenge.
Insurance Europe (IE) published its response to the European Supervisory Authorities' (ESAs) joint consultation on environmental, social and governance (ESG) disclosures. IE supports the development of a more sustainable economy and welcomes the new
Sustainable Finance Disclosure Regulation (EU) 2019/2088, developed by European co-legislators. IE believes that customer information is key in developing sustainable finance, however disclosure must be balanced to help customers make balanced
decisions. While the draft regulations are a step in the right direction, some changes are required.
Source: Insurers respond to ESAs consultation on ESG disclosures.
The Islamic Financial Services Board (IFSB) announced that its first virtual CEO’s forum, themed ‘COVID-19 and its implications on institutions offering Islamic financial services (IIFS)’, will be organised on 26 August 2020,
15:30-18:00 (Kuala Lumpur time). The forum aims to bring together industry leaders across the globe from different sectors to discuss their experiences, challenges and the opportunities created by the COVID-19 pandemic, as well as actions
needed to strengthen the resilience of the Islamic financial sector and the key ways forward.
Source: The IFSB to organise its first CEO’s forum on COVID-19 and its implications on institutions offering Islamic financial services (IIFS).
21 August 2020
Markets and trading
Deadline for responses to the FICC Markets Standards Board (FMSB) new draft Statement of Good Practice on Algorithmic Trading in FICC Markets.
23 August 2020
Deadline for responses to the BCBS’ proposed technical amendment to the capital rules for non-performing
loan (NPL) securitisations, with the aim of addressing a gap in the regulatory framework and setting out a prudent treatment for securitisations of NPLs.
26 August 2020
Deadline for feedback for the European Commission’s anti-money laundering and counter-terrorist financing action plan .
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