FS weekly highlights—25 June 2020

FS weekly highlights—25 June 2020

In this issue

 

 

Coronavirus (COVID-19)
Brexit news
MiFID II
UK, EU and international regulators and bodies
Corporate Insolvency and Governance Bill
Authorisation, approval and supervision
Prudential requirements
Financial stability, recovery and resolution
Risk management and controls
Financial crime
Conduct requirements
Complaints, compensation and claims management
Competition in financial services
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
Dates for your diary

 

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.

Capital markets and banking unions: a progress report

The European Central Bank (ECB) published a speech delivered by Pentti Hakkarainen, a member of its supervisory board, on completing the banking and capital market unions amid the challenges of the coronavirus (COVID-19) pandemic. Hakkarainen said he strongly supports action on the capital markets union as an additional means of obtaining the funding Europe needs today and of strengthening the private risk-sharing channel within the euro area.

Source: Completing the banking and capital market union under new circumstances.

For further information, see: The Capital Markets Union.

Coronavirus (COVID-19)—Council of the EU adopts targeted banking package

The Council of the EU adopted a package of targeted amendments to EU prudential regulations in order to maximise the capacity of banks to lend money and help households and businesses to recover from the coronavirus (COVID-19) crisis.

Source: COVID-19: Council adopts exceptional rules to facilitate bank lending in the EU.

Coronavirus (COVID-19)—European Parliament and Council of EU publish text of Regulation amending CRR and CRR II

The European Parliament and Council of the EU published the text of a Regulation amending the Capital Requirements Regulation (Regulation (EU) 575/2013) (CRR) and the Capital Requirements Regulation II (Regulation (EU) 2019/876) (CRR II) to make certain adjustments in response to the coronavirus (COVID-19) pandemic. The amending Regulation, which was approved by the European Parliament at its plenary session on 18 June 2020, is part of a targeted EU banking package proposed by the European Commission in April 2020 in response to the coronavirus outbreak.

Source: Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic.

Coronavirus (COVID 19)—European Parliament approves targeted EU banking package

In its plenary session on 18 June 2020 the European Parliament approved revisions to the CRR that are intended to temporarily ease prudential rules to encourage EU banks to lend to companies and households stricken by the coronavirus (COVID-19) crisis.

Source: COVID-19: Easing rules to encourage banks to lend to companies and households.

Coronavirus (COVID-19)—EBA extends application date of its guidelines on payment moratoria

The European Banking Authority (EBA) extended the application date of its guidelines on legislative and non-legislative payment moratoria to 30 September 2020. With EU economies not yet fully opened, the EBA says the extension shows the importance of continued support for the measures taken by banks to extend loans in response to the extraordinary nature of the current coronavirus (COVID-19) situation. The extension aims to ensure that adequate treatment for borrowers is available across the EU, considering that the impact has been affecting EU countries in a different way and at a different pace.

Source: EBA extends deadline for the application of its guidelines on payment moratoria to 30 September.

ECB chair warns that EU banks could be hit by second wave of coronavirus (COVID-19)

The chair of the Supervisory Board of the ECB, Andrea Enria, said in an interview with Il Sole 24 Ore that although European banks have held up well in the current crisis, a second wave of coronavirus (COVID-19) would have far greater repercussions on banks’ balance sheets. The ECB is therefore launching a vulnerability assessment to see how banks’ balance sheets would perform in different scenarios, with the results due for publication in July 2020.

Source: Andrea Enria Interview with Il Sole 24 Ore.

ESRB publishes decision on the cancellation of certain reports on actions and measures as a result of the coronavirus (COVID-19) pandemic

The European Systemic Risk Board (ESRB) published a decision on the cancellation of certain reports on actions and measures taken pursuant to ESRB recommendation ESRB/2014/1 and ESRB Recommendation ESRB/2015/2 measures as a result of the coronavirus (COVID-19) pandemic.

Source: Decision of the European Systemic Risk Board of 2 June 2020.

Coronavirus (COVID-19)—Basel Committee discusses role of Basel III capital buffers

The Basel Committee on Banking Supervision (BCBS) met on 10 and 16 June 2020 to discuss a range of policy issues and to review the impact to date of the coronavirus disease (COVID-19) pandemic on the global banking system. The Committee reviewed the domestic regulatory and supervisory measures taken by members in response to the crisis and agreed to submit a stocktake of these measures to the Financial Stability Board (FSB) for its report to the G20 Finance Ministers and Central Bank Governors virtual meeting in July 2020.

Source: Basel Committee meets; discusses impact of COVID-19; reiterates guidance on buffers.

Call for central banks to evolve to meet digital innovation amid coronavirus (COVID-19)

The Bank for International Settlements (BIS) encouraged central banks to continue adapting to the challenge of digital payments. Writing in its Annual Economic Report, BIS stated that central banks, as ‘guardians of the safety and integrity of the payment system’, should keep evolving ‘to meet the challenge of rapidly accelerating digital innovation’. In a section of its report, BIS analyses the implications of the payment systems’ recent transformation, as well as the impact of the coronavirus (COVID-19) pandemic on payment behaviour.

Source: BIS encourages central banks to continue adapting to the challenge of digital payments.

Coronavirus (COVID-19)—BoE to discontinue one-month Contingent Term Repo Facility operations

The Bank of England (BoE) announced that, in light of continued improvements in funding market conditions and recent usage patterns, it will discontinue one-month Contingent Term Repo Facility operations at the end of June 2020. The final operation is scheduled to take place on 26 June 2020.

Source: Update on the Contingent Term Repo Facility (CTRF)—Market Notice 19 June 2020.

PRA provides guidance to UK firms on compliance with EBA’s guidelines targeting data gaps

The Prudential Regulation Authority (PRA) issued a statement that provides guidance to PRA-regulated firms on implementation of the EBA guidelines to address gaps in reporting data and public information in the context of coronavirus (COVID-19). The PRA has confirmed that UK banks will not be expected to prepare or transmit to the PRA the reporting templates contained within the EBA guidelines.

Source: Statement by the PRA on implementation of the EBA Guidelines to address gaps in reporting data and public information in the context of Covid-19.

PRA feeds back on the 2019 insurance stress test and coronavirus (COVID-19) assessments

The PRA wrote to firms that participated in its Insurance Stress Test 2019 and engaged with coronavirus COVID-19 stress assessments. The PRA says its analysis showed that the sector was robust to downside stresses, with the highest uncertainty centred on certain general insurers’ liabilities—particularly those arising from business interruption claims. To ensure that the sector remains robust in this evolving situation, the PRA expects firms to maintain close monitoring of the additional risks presented by COVID-19, update their risk and capital assessments as the situation evolves, and take appropriate management actions where necessary.

Source: Insurance Stress Test 2019: Feedback for general and life insurers.

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

The Financial Conduct Authority (FCA) published a further update concerning its business interruption (BI) test case. It has published insurers' defences to the claim and requests feedback from policyholders to the defences.

Source: Business interruption insurance.

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

Coronavirus (COVID-19)—FCA proposes extension of consumer credit support measures

The FCA announced proposals which aim to provide continued support for users of certain consumer credit products who are facing a financial impact from the coronavirus (COVID-19) pandemic. The FCA seeks feedback on the proposals by 5pm on 22 June 2020 and expects to finalise the guidance shortly afterwards.

Source: FCA announces proposals to further support consumer credit customers.

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

European Court of Auditors updates work programme to reflect coronavirus (COVID-19) impact

The European Court of Auditors (ECA) issued a statement on the measures it has taken in response to the coronavirus (COVID-19) pandemic. It has revised its 2020 work programme, re-scoped its ongoing tasks and adjusted the approach and timeline to take account of changing circumstances. Four tasks have been discontinued while two reviews with a specific focus on the COVID-19 crisis have been added to its programme

Source: ECA measures taken in view of the COVID-19 pandemic.

GFXC meeting discusses impact of coronavirus (COVID-19) on FX market

The Global Foreign Exchange Committee (GFXC) met by teleconference on 22 June 2020 to discuss market conditions and the impact of the coronavirus (COVID-19) pandemic. Members agreed that the experience following the outbreak of COVID-19 was qualitatively similar to what occurred in previous severe market crises: spreads widened, volatility increased sharply, liquidity deteriorated for both spot and swap markets, and funding costs surged in many currencies.

Source: GFXC meets via teleconference to discuss FX market conditions, impact of COVID-19 on industry.

JMLSG publishes coronavirus (COVID-19) update

The Joint Money Laundering Steering Group (JMLSG) issued a press release in light of the ongoing coronavirus (COVID-19) pandemic, noting that the virus has given rise to unusual circumstances and new anti-money laundering/counter terrorist financing (AML/CTF) challenges for firms.

Source: COVID-19 update June 2020.

UK Finance blog discusses operational resilience and firm culture amid coronavirus (COVID-19) disruption

UK Finance published a blog highlighting the need for financial firms to focus on operational resilience as they adapt to the coronavirus (COVID-19) workplace disruption. Author Caroline Winch notes that, while achieving business continuity during the pandemic, firms have become more exposed to risks such as occupational fraud and cyberattack.

Source: Why operational resilience is a strategic imperative.

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Brexit news

For further information on Brexit and its impact on financial services, see: Financial Services passporting, equivalence and the UK post-Brexit.

Brexit Bulletin—new European Union Continuity Bill introduced to Scottish Parliament

The Scottish Governmentintroduced the UK Withdrawal from the European Union (Continuity) (Scotland) Bill to the Scottish Parliament on 18 June 2020. The Bill aims to ensure Scottish law will remain aligned with EU law following the IP completion day regarding environmental law. If backed by the Scottish Parliament, the Bill would give Scottish Ministers the ‘power to keep devolved laws similar to EU laws’, ensure that the four core environmental EU principles are taken into account by Scottish Ministers and public bodies while making policies, and set up the Environmental Standards Scotland organisation ‘to replace the oversight of environmental law provided by the EU’.

Source: Parliament asked to back European Union Continuity Bill.

HM Treasury consults on UK’s proposed approach to transposing BRRD II

HM Treasury launched a consultation on the UK’s approach to the transposition of the Bank Recovery and Resolution Directive II (Directive (EU) 2019/879) (BRRD II), particularly in areas where a policy choice remains in transposition. Under the Withdrawal Agreement, the UK is required to transpose BRRD II by 28 December 2020, although it does not plan to transpose requirements that do not need to be complied with until after the end of the UK’s Brexit transition period. The consultation is open until 11 August 2020.

Source: Consultation on the transposition of the Bank Recovery and Resolution Directive II.

For further information, see: Bank Recovery and Resolution Directive (BRRD)—essentials.

HM Treasury issues policy statement on UK prudential regime for banks and investment firms

HM Treasury published a policy statement on the prudential standards in the Financial Services Bill. The policy statement provides an update on the government’s proposed legislative and policy approach to updating the prudential regime for banks to enable the implementation of Basel 3.1 and a UK version of Regulation (EU) 2019/876 (CRR II), and introducing a new prudential regime for investment firms, all of which HM Treasury proposes to include within the Financial Services Bill.

Sources: Prudential standards in the Financial Services Bill: June update and Financial Services Update: Written statement—HCWS309.

For further information, see: Review of the prudential framework for investment firms.

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MiFID II

European Parliament and Council reach agreement on CCP recovery and resolution

The European Parliament and the Presidency of the Council of the EU reached political agreement on the proposed framework for the recovery and resolution of central counterparties (CCPs). The co-legislators have also agreed to defer application of the MiFIR open access rules for trading venues and CCPs until July 2021.

Source: Clearing houses: Presidency and Parliament reach political agreement on recovery and resolution.

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UK, EU and international regulators and bodies

PRA publishes 2019/20 Annual Report

The PRA published its 2019/20 Annual Report. It includes information on the PRA’s activities for the year ended 29 February 2020 and completes its reporting obligations for that year, following the publication of the PRA Business Plan 2020/21, including the PRA’s Strategy.

Source: Prudential Regulation Authority Annual Report 2019/20.

HM Treasury reports strong rise in signatories to financial services gender equality initiatives

The City minister, John Glen MP, announced that over 40 new companies have signed up to the Women In Finance charter, which aims to promote gender diversity in Financial Services. The new signatories come as the third Women in Finance annual review is published, showing that the proportion of women in senior management has increased at Charter firms, with three out of four firms increasing or maintaining their proportion of women in top jobs in 2019. This brings the total number of signatories to over 370.

Source: Over 40 new firms commit to promoting gender diversity in financial services.

BoE apologises for indirect links to slave trade

The BoE issued a statement about its historical links to the slave trade, saying that while it was never itself directly involved, it is aware of some ‘inexcusable connections’ involving former governors and directors, and apologises for them.

Source: Statement in relation to the Bank’s historical links to the slave trade.

European Court of Auditors updates work programme to reflect coronavirus (COVID-19) impact

The European Court of Auditors (ECA)issued a statement on the measures it has taken in response to the coronavirus (COVID-19) pandemic. It has revised its 2020 work programme, re-scoped its ongoing tasks and adjusted the approach and timeline to take account of changing circumstances. Four tasks have been discontinued while two reviews with a specific focus on the COVID-19 crisis have been added to its programme

Source: ECA measures taken in view of the COVID-19 pandemic.

Nikhil Rathi appointed as new FCA CEO

HM Treasury announced the appointment of Nikhil Rathi as the new permanent chief executive of the FCA. Rathi is currently the chief executive of London Stock Exchange plc. From September 2009 to April 2014 he was director of the financial services group at HM Treasury. In this role he led the Treasury’s work on the UK’s EU and international financial services interests. Nikhil is expected to take up the role in autumn 2020.

Source: Nikhil Rathi appointed as new chief executive of the FCA.

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Corporate Insolvency and Governance Bill

Corporate Insolvency and Governance Bill passes report stage and third reading

The Corporate Insolvency and Governance Bill has passed the report stage and third reading in the House of Lords. The Bill is now to go back to the House of Commons with amendments.

The Hansard transcripts of the debate on the Corporate Insolvency and Governance Bill can be found here and here.

Corporate Insolvency and Governance Bill passes Lords’ committee stage

The Corporate Insolvency and Governance Bill committee stage in the Lords was on 16 and 17 June 2020. The Bill goes to the report and third reading stages in the Lords on 23 June. The Bill makes provision about companies and other entities in financial difficulty and makes temporary changes to the law relating to the governance and regulation of companies and other entities.

Sources: Hansard: Corporate Insolvency and Governance Bill—1st day and Hansard: Corporate Insolvency and Governance Bill—2nd day.

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Authorisation, approval and supervision

FCA announces firms to prepare for phased move to new data collection platform

The FCA announced that it is preparing to gradually move firms across to its new data collection platform (newly named RegData), which replaces Gabriel. Since April 2020 firms have been registering for RegData through a one-off activity when accessing Gabriel.

Source: Firms to prepare for phased move to FCA’s new data collection platform RegData .

FCA issues reminder to cryptoasset firms to register by the end of June 2020

The FCA issued a reminder to businesses carrying out cryptoasset activity in the UK that they have to be registered with the FCA to comply with new regulations. The FCA is asking firms to register by the end of June 2020 to allow it to review submitted applications and raise any follow-up questions, with enough time for that process to be completed before 10 January 2021. The FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor of businesses carrying out certain cryptoasset activities in the UK on 10 January 2020.

Source: FCA reminds cryptoasset businesses to register before the end of June.

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Prudential requirements

European Parliament roadmap to completing the Banking Union

The European Parliament published a roadmap to completing the Banking Union, setting out what has been achieved so far, where work was before the coronavirus (COVID-19) outbreak, and areas where progress is still lacking and where work should continue once the urgency of the current crisis has been mitigated.

Source: A roadmap to completing the Banking Union.

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

Coronavirus (COVID-19)—Council of the EU adopts targeted banking package

The Council of the EU adopted a package of targeted amendments to EU prudential regulations in order to maximise the capacity of banks to lend money and help households and businesses to recover from the coronavirus (COVID-19) crisis.

Source: COVID-19: Council adopts exceptional rules to facilitate bank lending in the EU.

Coronavirus (COVID 19)—European Parliament approves targeted EU banking package

In its plenary session on 18 June 2020 the European Parliament approved revisions to the CRR that are intended to temporarily ease prudential rules to encourage EU banks to lend to companies and households stricken by the coronavirus (COVID-19) crisis.

Source: COVID-19: Easing rules to encourage banks to lend to companies and households.

Coronavirus (COVID-19)—European Parliament and Council of EU publish text of Regulation amending CRR and CRR II

The European Parliament and Council of the EU have published the text of a Regulation amending the CRR and the CRR II to make certain adjustments in response to the coronavirus (COVID-19) pandemic. The amending Regulation, which was approved by the European Parliament at its plenary session on 18 June 2020, is part of a targeted EU banking package proposed by the European Commission in April 2020 in response to the COVID-19 outbreak.

Source: Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic.

Council of the EU publishes corrigendum to CRD V

The Council of the EU published a corrigendum to Directive (EU) 2019/878 (CRD V), amending a cross-reference in the new Article 21a(2) inserted by CRD V into Directive 2013/36/EU (CRD IV).

Source: Directive (EU) 2019/878 of the European Parliament and of the Council of 20 May 2019 amending Directive 2013/36/EU as regards exempted entities, financial holding companies, mixed financial holding companies, remuneration, supervisory measures and powers and capital conservation measures.

For further information, see: CRD IV—essentials.

Andrea Enria discusses precautionary bank recapitalisation and other solvency issues

The chair of the Supervisory Board of the ECB, Andrea Enria, wrote to Sven Giegold, a member of the European Parliament, replying to questions about EU bank solvency criteria. Enria discusses precautionary recapitalisation—ie cases where extraordinary public financial support is necessary to remedy a serious disturbance in the economy of a Member State and preserve financial stability—and the definition of solvency for the purposes of emergency liquidity assistance (ELA).

Source: Letter from Andrea Enria, chair of the Supervisory Board, to Mr Giegold, MEP, on banking supervision.

EBA publishes amending technical standards on passport notification

The EBA published its final draft amending regulatory technical standards (RTS) and implementing technical standards (ITS) on passport notification made under the recast CRD IV. The two sets of amending technical standards aim to increase the quality and consistency of information to be provided by a credit institution notifying its home competent authorities when it intends to open a branch or provide services in another Member State, as well as communications between home and host authorities.

Source: EBA publishes final revised technical standards to enhance quality and consistency of information for passport notifications.

For further information, see: Passporting into and out of the UK under CRD IV.

EBA publishes revised standards for risk-taking staff

The EBA published its final draft RTS made under the CRD IV on the criteria to identify all categories of staff whose professional activities have a material impact on the institutions’ risk profile (‘risk takers’). The objective of these RTS is to define and harmonise the criteria for the identification of such staff and to ensure a consistent approach across the EU. The identification process is based on a combination of qualitative and quantitative criteria.

Source: EBA publishes revised standards to identify staff with a material impact on the institution’s risk profile.

FCA issues discussion paper DP20/2 on a new prudential regime for UK investment firms

The FCA published discussion paper DP20/2 on a new prudential regime for UK investment firms. The paper, which provides stakeholders with details of the Investment Firms Regulation (EU) 2019/2033 (IFR) and the Investment Firms Directive (EU) 2019/2034 (IFD), requests industry feedback on the design of a UK regime to better reflect investment firms’ business models and the risk of harm they pose to consumers and markets. The FCA is seeking comments and responses by 25 September 2020.

Source: FCA seeks industry views on a new prudential regime for UK investment firms.

For further information, see: Review of the prudential framework for investment firms.

BCBS proposes changes to capital rules for NPL securitisations

The BCBS published a 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. The BCBS is inviting comments on the paper by 23 August 2020.

Sources: Basel Committee proposes amendment to capital rules for non-performing loan securitisations and  Capital treatment of securitisations of non-performing loans.

Coronavirus (COVID-19)—Basel Committee discusses role of Basel III capital buffers

The BCBS met on 10 and 16 June 2020 to discuss a range of policy issues and to review the impact to date of the coronavirus disease (COVID-19) pandemic on the global banking system. The Committee reviewed the domestic regulatory and supervisory measures taken by members in response to the crisis and agreed to submit a stocktake of these measures to the Financial Stability Board (FSB) for its report to the G20 Finance Ministers and Central Bank Governors virtual meeting in July 2020.

Source: Basel Committee meets; discusses impact of COVID-19; reiterates guidance on buffers.

HM Treasury consults on UK’s proposed approach to transposing BRRD II

HM Treasury launched a consultation on the UK’s approach to the transposition of the BRRD II, particularly in areas where a policy choice remains in transposition. Under the Withdrawal Agreement, the UK is required to transpose BRRD II by 28 December 2020, although it does not plan to transpose requirements that do not need to be complied with until after the end of the UK’s Brexit transition period. The consultation is open until 11 August 2020.

Source: Consultation on the transposition of the Bank Recovery and Resolution Directive II.

For further information, see: Bank Recovery and Resolution Directive (BRRD)—essentials.

HM Treasury issues policy statement on UK prudential regime for banks and investment firms

HM Treasury published a policy statement on the prudential standards in the Financial Services Bill. The policy statement provides an update on the government’s proposed legislative and policy approach to updating the prudential regime for banks to enable the implementation of Basel 3.1 and a UK version of Regulation (EU) 2019/876 (CRR II), and introducing a new prudential regime for investment firms, all of which HM Treasury proposes to include within the Financial Services Bill.

Sources: Prudential standards in the Financial Services Bill: June update and Financial Services Update: Written statement—HCWS309.

For further information, see: Review of the prudential framework for investment firms.

PRA provides guidance to UK firms on compliance with EBA’s guidelines targeting data gaps

The PRA issued a statement that provides guidance to PRA-regulated firms on implementation of the EBA guidelines to address gaps in reporting data and public information in the context of coronavirus (COVID-19). The PRA confirmed that UK banks will not be expected to prepare or transmit to the PRA the reporting templates contained within the EBA guidelines.

Source: Statement by the PRA on implementation of the EBA Guidelines to address gaps in reporting data and public information in the context of Covid-19.

 

Financial stability 

EIOPA seeks comment on second insurance stress testing discussion paper

The European Insurance and Occupational Pensions Authority (EIOPA) published its second Discussion Paper on Methodological Principles of Insurance Stress Testing. The second discussion paper is divided into three sections, which address the stress test framework on climate change, the approach to liquidity stress testing, and the multi-period framework for the bottom-up insurance stress testing. The second discussion paper forms part of the EIOPA’s wider efforts to improve its stress testing framework. The consultation on the paper closes on 2 October 2020.

Source: EIOPA publishes its second Discussion Paper on Methodological Principles of Insurance Stress Testing.

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Risk management and controls

BoE and PRA publish Annual Report 2019/20 under the Whistleblowing Regulations

The BoE and the PRA published their Annual Report 2019/20 under the Prescribed Persons (Reports on Disclosures of Information) Regulations 2017 (the Whistleblowing Regulations).

Source: The Prescribed Persons (Reports on Disclosures of Information) Regulations 2017—Annual Report 2019/20.

UK Finance blog discusses operational resilience and firm culture amid coronavirus (COVID-19) disruption

UK Finance published a blog highlighting the need for financial firms to focus on operational resilience as they adapt to the coronavirus (COVID-19) workplace disruption. Author Caroline Winch notes that, while achieving business continuity during the pandemic, firms have become more exposed to risks such as occupational fraud and cyberattack.

Source: Why operational resilience is a strategic imperative.

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Financial crime

Commons Committee says EU action plan on AML/CTF warrants UK scrutiny

The House of Commons European Scrutiny Committee has taken issue with assertions made by the Economic Secretary to the Treasury, John Glen MP, that there are no policy implications for the UK arising from the EU action plan on AML/CTF, which the European Commission adopted on May 2020. According to the Committee, the reforms outlined in the Commission’s policy paper are likely to affect both UK-EU flows of financial services and co-operation between British law enforcement and their European counterparts.

Source: Documents considered by the Committee on 18 June 2020.

For further information, see: The anti-money laundering regime.

JMLSG publishes coronavirus (COVID-19) update

The JMLSG issued a press release in light of the ongoing coronavirus (COVID-19) pandemic, noting that the virus has given rise to unusual circumstances and new AML/CTF challenges for firms.

Source: COVID-19 update June 2020.

National Crime Agency and another v Odewale and another

Proceeds of crime – Criminal property. Each of the defendants' disputed assets had been derived from, and represented, property obtained through unlawful conduct, and were recoverable property within the meaning of Ch 2 of Pt 5 of the Proceeds of Crime Act 2002. Accordingly, the Administrative Court made a recovery order, subject to the second claimant bank's claims to a watch and to trace the proceeds of the another to the defendants' accounts, such that they were not recoverable property under s 281 of the Act.

See: [2020] All ER (D) 122 (Jun).

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Conduct requirements

FCA research note considers preferences, comprehension and the effect of risk warnings on financial promotions for investment products

The FCA published a research note entitled ‘Choosing wisely: preferences, comprehension and the effect of risk warnings on financial promotions for investment products’. The FCA’s research from online laboratory experiments provides evidence-based understanding of how investors choose high-risk investment products..

Source: Research note: Choosing wisely: preferences, comprehension and the effect of risk warnings on financial promotions for investment products.

AFME publishes further paper on LIBOR transition conduct risks

The Association for Financial Markets in Europe (AFME), together with law firm Simmons & Simmons, has published the second in a series of papers, entitled LIBOR transition: managing the conduct and compliance risks—client communications. It provides practical guidance to senior managers and legal and compliance teams on managing conduct risks related to client communications posed to firms engaged in the transition away from LIBOR to alternative rates. The paper focuses on considerations for client communications, from establishing an effective strategy through to monitoring and record-keeping.

Source: AFME and Simmons & Simmons publish white paper on conduct risks and client communications during LIBOR transition.

For further information, see: LIBOR transition.

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Complaints, compensation and claims management

European Parliament and Council reach deal on Representative Action Directive

The European Parliament announced that it has reached a deal with the European Council on the ‘Representative Action Directive’, which will allow EU consumers to defend their rights collectively. The Representative Action Directive is the first EU rule on collective redress that will protect consumers in ‘mass harm’ situations, allow organisations and public bodies to bring actions on behalf of consumers and has a ‘loser pays principle’. The European Parliament and European Council now have to approve the agreement and then the directive will enter into force 20 days after its publication in Official Journal. Member States will then have 24 months to incorporate the directive into national laws and a further six months to apply it.

Source: New rules allow EU consumers to defend their rights collectively.

FCA publishes letter urging former members of British Steel Pension Scheme to complain about unsuitable advice

The FCA published a letter it sent earlier in June 2020 to former members of the British Steel Pension Scheme (BSPS), urging them to consider whether they have received unsuitable advice to transfer out of the scheme and providing details of the action they should take to raise a complaint. The FCA says many people who have transferred out of the BSPS since 2017 received unsuitable advice and could be entitled to compensation, and flags that if they do nothing they may end up with less money during retirement that they should have done.

Source: FCA letter to former members of the British Steel Pension Scheme.

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Competition in financial services

RBS Incentivised Switching Scheme to be extended

Banking Competition Remedies Ltd (BCR), the independent body established to implement the £775m Royal Bank of Scotland (RBS) State Aid Alternative Remedies Package (ARP), has issued an update on the Incentivised Switching Scheme (ISS). In the update the BCR announced an extension of the deadline for the scheme and an increase in the number of customers eligible to participate, asked participating organisations to confirm they wish to continue their involvement, and encouraged SMEs intending to switch to take early advantage of the scheme.

Source: 23 June 2020—Media Bulletin—Incentivised Switching Scheme.

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Markets and trading

Comment sought on good practice statement on algorithmic trading in FICC markets

The FICC Markets Standards Board (FMSB) released for comment a new draft Statement of Good Practice on Algorithmic Trading in FICC Markets. The draft statement, which builds on the extensive work of regulators and endeavours to encourage good conduct and governance practices for those engaged in algorithmic trading across all FICC asset classes and markets, is a transparency draft for market consultation. It includes ten Good Practice Statements, which relate to both the governance of, and management of conduct risks associated with, the use of algorithmic trading. FMSB has invited its members, and other interested parties, to comment on the proposed statement. The consultation  will close on 21 August 2020, with the final version of the statement to be published shortly after.

Source: FMSB issues new Statement of Good Practice on algorithmic trading.

Coronavirus (COVID-19)—BoE to discontinue one-month Contingent Term Repo Facility operations

The BoE announced that, in light of continued improvements in funding market conditions and recent usage patterns, it will discontinue one-month Contingent Term Repo Facility operations at the end of June 2020. The final operation is scheduled to take place on 26 June 2020.

Source: Update on the Contingent Term Repo Facility (CTRF)—Market Notice 19 June 2020.

GFXC meeting discusses impact of coronavirus (COVID-19) on FX market

The GFXC met by teleconference on 22 June 2020 to discuss market conditions and the impact of the coronavirus (COVID-19) pandemic. Members agreed that the experience following the outbreak of COVID-19 was qualitatively similar to what occurred in previous severe market crises: spreads widened, volatility increased sharply, liquidity deteriorated for both spot and swap markets, and funding costs surged in many currencies.

Source: GFXC meets via teleconference to discuss FX market conditions, impact of COVID-19 on industry.

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Regulation of benchmarks and IBOR reform

Government to give FCA enhanced powers to drive benchmark reform

The FCA welcomed an announcement by the UK government that it intends to bring forward legislation to amend the Benchmarks Regulation (EU) 2016/1011 (BMR) to give the FCA enhanced powers. The FCA says the new powers could help manage and direct an orderly wind-down of critical benchmarks such as the London Inter-bank Offered Rate (LIBOR) and, in particular, help deal with the problem identified by the Sterling Risk Free Rate Working Group of ‘tough legacy’ contracts that cannot transition from LIBOR.

Sources: FCA statement on planned amendments to the Benchmarks Regulation and  Financial Services Regulation: Written statement—HCWS307.

For further information, see: Benchmarks Regulation—essentials.

AFME publishes further paper on LIBOR transition conduct risks

The AFME, together with law firm Simmons & Simmons, published the second in a series of papers, entitled LIBOR transition: managing the conduct and compliance risks—client communications. It provides practical guidance to senior managers and legal and compliance teams on managing conduct risks related to client communications posed to firms engaged in the transition away from LIBOR to alternative rates. The paper focuses on considerations for client communications, from establishing an effective strategy through to monitoring and record-keeping.

Source: AFME and Simmons & Simmons publish white paper on conduct risks and client communications during LIBOR transition.

For further information, see: LIBOR transition.

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Regulation of capital markets

FCA proposes to permanently ban mini-bond marketing

The FCA published consultation paper CP20/8: High-risk investments: Marketing speculative illiquid securities (including speculative mini-bonds) to retail investors, which contains proposals to make permanent its ban on the mass-marketing of speculative illiquid securities, including speculative mini-bonds, to retail investors.

Sources: CP20/8: High-risk investments: Marketing speculative illiquid securities (including speculative mini-bonds) to retail investors and  FCA to make mini-bond marketing ban permanent.

ESMA integrates the 2020 IFRS taxonomy into ESEF RTS

The European Securities and Markets Authority (ESMA) published a draft amendment to the RTS on the European Single Electronic Format (ESEF). The draft RTS have been submitted to the European Commission for approval and will continue to be amended on a yearly basis to reflect updates to the IFRS Taxonomy published by the IFRS Foundation.

Source: ESMA integrates the 2020 IFRS taxonomy into ESEF RTS.

GLEIF embeds own LEI in its annual report for 2019

The Global Legal Entity Identifier Foundation (GLEIF) published its 2019 annual report in human and machine-readable Inline XBRL and HTML format, with its Legal Entity Identifier (LEI) embedded within both the annual report and the digital certificates of GLEIF’s signing executive officers. This provides a demonstration of how issuers can meet the mandatory requirements of the European Single Electronic Format (ESEF).

Source: GLEIF 2019 Annual Report showcases early compliance with European Single Electronic Format and demonstrates benefits of LEI inclusion.

Capital markets and banking unions: a progress report

The ECB published a speech delivered by Pentti Hakkarainen, a member of its supervisory board, on completing the banking and capital market unions amid the challenges of the coronavirus (COVID-19) pandemic. Hakkarainen said he strongly supports action on the capital markets union as an additional means of obtaining the funding Europe needs today and of strengthening the private risk-sharing channel within the euro area.

Source: Completing the banking and capital market union under new circumstances.

For further information, see: The Capital Markets Union.

 

Regulation of derivatives

European Parliament and Council reach agreement on CCP recovery and resolution

The European Parliament and the Presidency of the Council of the EU have reached political agreement on the proposed framework for the recovery and resolution of central counterparties (CCPs). The co-legislators have also agreed to defer application of the MiFIR open access rules for trading venues and CCPs until July 2021.

Source: Clearing houses: Presidency and Parliament reach political agreement on recovery and resolution.

ISDA releases paper on application of DAC 6 to Financial Products and Services

The International Swaps and Derivatives Association (ISDA) and AFME have jointly published a paper on the EU directive regarding mandatory automatic exchange of information in the field of taxation in relation to reportable, cross-border arrangements (DAC 6). According to ISDA, ‘there is currently a lack of guidance specifically addressing the application of the DAC 6 disclosure hallmarks to financial products’. Consequently, ISDA and AFME ‘have therefore developed this paper to propose a common approach, based on market participants’ understanding of DAC 6 principles’..

Source: Application of DAC 6 to Financial Products and Services.

ISDA publishes standardized approaches benchmarking

ISDA published standardized approaches benchmarking for the Fundamental Review of the Trading Book, counterparty credit risk and credit valuation adjustment risk. The guidance aims to ‘[help] firms and regulators achieve consistent and accurate implementation of the standardized approaches for regulatory capital for market risk’. ISDA has also published a list of vendors who have licensed the ISDA standardized approaches benchmarking unit-tests.

Source: ISDA Standardized Approaches benchmarking for FRTB-SA, SA-CCR and CVA.

ISDA publishes chart of derivatives projects subject to margin rules

ISDA published a summary chart of various derivatives projects which are subject to initial and variation margin requirements.

Source: Derivatives Subject to Margin Rules.

ISDA expands ISDA Create with three new online negotiation documents

ISDA, in collaboration with Linklaters, announced the introduction of three new documentation modules on ISDA Create, enabling users to agree additional documents online. The new modules will form part of the existing ‘ISDA Create – IM’ module, which is used for arranging the documentation vital for meeting regulatory initial margin requirements.

Find out more here.

FIA brings together global derivatives industry in first digital conference

The Futures Industry Association (FIA) hosted its first ever digital conference, which brought together the cleared global derivatives industry to discuss key issues including the European regulatory environment, how derivatives exchanges are handling record volume and volatility, and ‘lessons learned’ from the coronavirus (COVID-19) pandemic.

Source: FIA highlights resilience of derivatives markets in first-ever digital conference.

 

Investment funds and asset management

ESMA publishes translations for guidelines on MMF reporting

The ESMA issued the official translations of its guidelines on standardised procedures and messaging protocols under the Money Market Funds Regulation (EU) 2017/1131 (MMF Regulation). National competent authorities to which the guidelines apply must notify ESMA within two months whether they comply or intend to comply with the guidelines.

Source: ESMA publishes translations for guidelines on the reporting to competent authorities under Article 37 of the MMF Regulation.

FCA research note considers preferences, comprehension and the effect of risk warnings on financial promotions for investment products

The FCA published a research note entitled ‘Choosing wisely: preferences, comprehension and the effect of risk warnings on financial promotions for investment products’. The FCA’s research from online laboratory experiments provides evidence-based understanding of how investors choose high-risk investment products.

Source: Research note: Choosing wisely: preferences, comprehension and the effect of risk warnings on financial promotions for investment products.

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Banks and mutuals

European Parliament roadmap to completing the Banking Union

The European Parliament published a roadmap to completing the Banking Union, setting out what has been achieved so far, where work was before the coronavirus (COVID-19) outbreak, and areas where progress is still lacking and where work should continue once the urgency of the current crisis has been mitigated.

Source: A roadmap to completing the Banking Union.

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

Capital markets and banking unions: a progress report

The ECB published a speech delivered by Pentti Hakkarainen, a member of its supervisory board, on completing the banking and capital market unions amid the challenges of the coronavirus (COVID-19) pandemic. Hakkarainen said he strongly supports action on the capital markets union as an additional means of obtaining the funding Europe needs today and of strengthening the private risk-sharing channel within the euro area.

Source: Completing the banking and capital market union under new circumstances.

For further information, see: The Capital Markets Union.

Coronavirus (COVID-19)—Council of the EU adopts targeted banking package

The Council of the EU adopted a package of targeted amendments to EU prudential regulations in order to maximise the capacity of banks to lend money and help households and businesses to recover from the coronavirus (COVID-19) crisis.

Source: COVID-19: Council adopts exceptional rules to facilitate bank lending in the EU.

Coronavirus (COVID-19)—European Parliament and Council of EU publish text of Regulation amending CRR and CRR II

The European Parliament and Council of the EU have published the text of a Regulation amending the CRR and CRR II to make certain adjustments in response to the coronavirus (COVID-19) pandemic. The amending Regulation, which was approved by the European Parliament at its plenary session on 18 June 2020, is part of a targeted EU banking package proposed by the European Commission in April 2020 in response to the COVID-19 outbreak.

Source: Regulation of the European Parliament and of the Council amending Regulations (EU) No 575/2013 and (EU) 2019/876 as regards certain adjustments in response to the COVID-19 pandemic.

Coronavirus (COVID 19)—European Parliament approves targeted EU banking package

In its plenary session on 18 June 2020 the European Parliament approved revisions to the CRR that are intended to temporarily ease prudential rules to encourage EU banks to lend to companies and households stricken by the coronavirus (COVID-19) crisis.

Source: COVID-19: Easing rules to encourage banks to lend to companies and households.

Coronavirus (COVID-19)—EBA extends application date of its guidelines on payment moratoria

The EBA extended the application date of its guidelines on legislative and non-legislative payment moratoria to 30 September 2020. With EU economies not yet fully opened, the EBA says the extension shows the importance of continued support for the measures taken by banks to extend loans in response to the extraordinary nature of the current coronavirus (COVID-19) situation. The extension aims to ensure that adequate treatment for borrowers is available across the EU, considering that the impact has been affecting EU countries in a different way and at a different pace.

 

Source: EBA extends deadline for the application of its guidelines on payment moratoria to 30 September.

EBA publishes amending technical standards on passport notification

The EBA published its final draft amending RTS and ITS on passport notification made under the recast CRD IV. The two sets of amending technical standards aim to increase the quality and consistency of information to be provided by a credit institution notifying its home competent authorities when it intends to open a branch or provide services in another Member State, as well as communications between home and host authorities.

Source: EBA publishes final revised technical standards to enhance quality and consistency of information for passport notifications.

For further information, see: Passporting into and out of the UK under CRD IV.

EBA publishes revised standards for risk-taking staff

The EBA published its final draft RTS made under the CRD IV on the criteria to identify all categories of staff whose professional activities have a material impact on the institutions’ risk profile (‘risk takers’). The objective of these RTS is to define and harmonise the criteria for the identification of such staff and to ensure a consistent approach across the EU. The identification process is based on a combination of qualitative and quantitative criteria..

Source: EBA publishes revised standards to identify staff with a material impact on the institution’s risk profile.

For further information, see: CRD IV—essentials.

PRA provides guidance to UK firms on compliance with EBA’s guidelines targeting data gaps

The PRA issued a statement that provides guidance to PRA-regulated firms on implementation of the EBA guidelines to address gaps in reporting data and public information in the context of coronavirus (COVID-19). The PRA has confirmed that UK banks will not be expected to prepare or transmit to the PRA the reporting templates contained within the EBA guidelines.

Source: Statement by the PRA on implementation of the EBA Guidelines to address gaps in reporting data and public information in the context of Covid-19.

HM Treasury consults on UK’s proposed approach to transposing BRRD II

HM Treasury launched a consultation on the UK’s approach to the transposition of the Bank Recovery and Resolution Directive II (Directive (EU) 2019/879) (BRRD II), particularly in areas where a policy choice remains in transposition. Under the Withdrawal Agreement, the UK is required to transpose BRRD II by 28 December 2020, although it does not plan to transpose requirements that do not need to be complied with until after the end of the UK’s Brexit transition period. The consultation is open until 11 August 2020.

Source: Consultation on the transposition of the Bank Recovery and Resolution Directive II.

For further information, see: Bank Recovery and Resolution Directive (BRRD)—essentials.

Coronavirus (COVID-19)—Basel Committee discusses role of Basel III capital buffers

The Basel Committee on Banking Supervision met on 10 and 16 June 2020 to discuss a range of policy issues and to review the impact to date of the coronavirus disease (COVID-19) pandemic on the global banking system. The Committee reviewed the domestic regulatory and supervisory measures taken by members in response to the crisis and agreed to submit a stocktake of these measures to the Financial Stability Board (FSB) for its report to the G20 Finance Ministers and Central Bank Governors virtual meeting in July 2020.

Source: Basel Committee meets; discusses impact of COVID-19; reiterates guidance on buffers.

ECB chair warns that EU banks could be hit by second wave of coronavirus (COVID-19)

The chair of the Supervisory Board of the ECB, Andrea Enria, said in an interview with Il Sole 24 Ore that although European banks have held up well in the current crisis, a second wave of coronavirus (COVID-19) would have far greater repercussions on banks’ balance sheets. The ECB is therefore launching a vulnerability assessment to see how banks’ balance sheets would perform in different scenarios, with the results due for publication in July 2020.

Source: Andrea Enria Interview with Il Sole 24 Ore.

Andrea Enria discusses precautionary bank recapitalisation and other solvency issues

The chair of the Supervisory Board of the ECB, Andrea Enria, wrote to Sven Giegold, a member of the European Parliament, replying to questions about EU bank solvency criteria. Enria discusses precautionary recapitalisation—ie cases where extraordinary public financial support is necessary to remedy a serious disturbance in the economy of a Member State and preserve financial stability—and the definition of solvency for the purposes of emergency liquidity assistance (ELA).

Source: Letter from Andrea Enria, chair of the Supervisory Board, to Mr Giegold, MEP, on banking supervision.

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Consumer credit, mortgage and home finance

Commission seeks feedback on proposed review of the Consumer Credit Directive

The European Commission published an inception impact assessment for a proposed review of the Consumer Credit Directive 2008/48/EC. The initiative aims to reinforce, streamline and modernise consumer credit rules to ensure they are future-proof, better protect consumers, deliver a level playing field and reduce unnecessary burden for credit providers. Feedback is sought by 1 September 2020.

Source: Consumer Credit Agreement—review of EU rules.

Coronavirus (COVID-19)—FCA proposes extension of consumer credit support measures

The FCA announced proposals which aim to provide continued support for users of certain consumer credit products who are facing a financial impact from the coronavirus (COVID-19) pandemic. The FCA seeks feedback on the proposals by 5pm on 22 June 2020 and expects to finalise the guidance shortly afterwards.

Source: FCA announces proposals to further support consumer credit customers.

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

Milne v Open Access Finance Ltd and another company

Consumer credit – Agreement. The court had power to make an order under CPR r 19.6 for a claim under the Consumer Credit Act 1974, relating to a credit agreement or a regulated agreement, to continue against representatives of the defendant creditors and the chief master had correctly made such an order. However, the Chancery Division held that the chief master had wrongly appointed the first defendant as the representative defendant on the basis that, among other things, there was a significant risk of a conflict of interests. Consequently, the claimant's appeal against the making of the order was allowed to the limited extent of varying the identity of the representative defendant and ordering very limited disclosure of the identities of the corporate lenders.

See: [2020] All ER (D) 210 (Mar).

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Regulation of insurance

EIOPA publishes findings of the Regular Supervisory Report peer review

The EIOPA published the findings of its peer review of the Regular Supervisory Report (RSR). The peer review examined how and to what extent the proportionate approach set out under Delegated Regulation (EU) 2015/35 supplementing the Solvency II Directive (Directive 2009/138/EC) has been implemented among national competent authorities (NCAs). It also aims to determine if further convergence is needed on the frequency of submission of RSRs.

Source: Findings of the Regular Supervisory Report (RSR) peer review published.

For further information, see: Solvency II—essentials.

PRA feeds back on the 2019 insurance stress test and coronavirus (COVID-19) assessments

The PRA wrote to firms that participated in its Insurance Stress Test 2019 and engaged with coronavirus COVID-19 stress assessments. The PRA says its analysis showed that the sector was robust to downside stresses, with the highest uncertainty centred on certain general insurers’ liabilities—particularly those arising from business interruption claims. To ensure that the sector remains robust in this evolving situation, the PRA expects firms to maintain close monitoring of the additional risks presented by COVID-19, update their risk and capital assessments as the situation evolves, and take appropriate management actions where necessary.

Source: Insurance Stress Test 2019: Feedback for general and life insurers.

EIOPA seeks comment on second insurance stress testing discussion paper

The EIOPA published its second Discussion Paper on Methodological Principles of Insurance Stress Testing. The second discussion paper is divided into three sections, which address the stress test framework on climate change, the approach to liquidity stress testing, and the multi-period framework for the bottom-up insurance stress testing. The second discussion paper forms part of the EIOPA’s wider efforts to improve its stress testing framework. The consultation on the paper closes on 2 October 2020.

Source: EIOPA publishes its second Discussion Paper on Methodological Principles of Insurance Stress Testing.

Association of British Insurers welcomes Solvency II review by government

The Association of British Insurers (ABI) has welcomed the government's proposed Solvency II review.

Source: ABI Comment on planned Solvency II review.

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

The FCA published a further update concerning its business interruption (BI) test case. It has published insurers' defences to the claim and requests feedback from policyholders to the defences.

Source: Business interruption insurance.

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Regulation of personal pension and stakeholder products

FCA consults on value for money comparability for pensions

The FCA published consultation paper CP20/9, which contains proposals that aim to make it easier for independent governance committees (IGCs) and governance advisory arrangements (GAAs) to compare the value for money (VfM) of pension products and services, enabling them to be more effective in assessing value for pension scheme members. Feedback is sought by 24 September 2020. The FCA has also published thematic review TR20/1 on the effectiveness of IGCs and GAAs in improving the value for money of workplace pensions.

Sources: FCA announces pensions value for money consultationCP20/9: Driving value for money in pensions and TR20/1: The effectiveness of independent governance committees and governance advisory arrangements.

FCA publishes letter urging former members of British Steel Pension Scheme to complain about unsuitable advice

The FCA published a letter it sent earlier in June 2020 to former members of the British Steel Pension Scheme (BSPS), urging them to consider whether they have received unsuitable advice to transfer out of the scheme and providing details of the action they should take to raise a complaint. The FCA says many people who have transferred out of the BSPS since 2017 received unsuitable advice and could be entitled to compensation, and flags that if they do nothing they may end up with less money during retirement that they should have done.

Source: FCA letter to former members of the British Steel Pension Scheme.

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Payment services and systems

Call for central banks to evolve to meet digital innovation amid coronavirus (COVID-19)

The BIS encouraged central banks to continue adapting to the challenge of digital payments. Writing in its Annual Economic Report, BIS stated that central banks, as ‘guardians of the safety and integrity of the payment system’, should keep evolving ‘to meet the challenge of rapidly accelerating digital innovation’. In a section of its report, BIS analyses the implications of the payment systems’ recent transformation, as well as the impact of the coronavirus (COVID-19) pandemic on payment behaviour.

Source: BIS encourages central banks to continue adapting to the challenge of digital payments.

UK Finance publishes Open Banking Future State report

UK Finance published the Open Banking Future State report, which outlines recommendations for a proposed model to support the future provision of Open Banking Services following the closure of the Implementation Roadmap.

Source: Open Banking Future State report.

For further information, see: Open banking.

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Fintech and cryptoassets

Commission’s Dombrovskis sets out roadmap for Europe’s digital finance strategy

In his keynote opening speech at the Commission’s Digital Finance Outreach 2020 event in Brussels, Valdis Dombrovskis, European Commission Executive Vice-President, has provided some insights into the EU’s digital finance strategy and what to expect in the coming months. According to Dombrovskis, Europe must make the most of digital opportunities if it is to compete globally. At the same time, EU authorities need to continue regulating and supervising risks appropriately in order to preserve trust in finance.

Source: Speech by Executive Vice-President Valdis Dombrovskis at the Digital Finance Outreach 2020 Closing conference.

FCA issues reminder to cryptoasset firms to register by the end of June 2020

The FCA issued a reminder to businesses carrying out cryptoasset activity in the UK that they have to be registered with the FCA to comply with new regulations. The FCA is asking firms to register by the end of June 2020 to allow it to review submitted applications and raise any follow-up questions, with enough time for that process to be completed before 10 January 2021. The FCA became the anti-money laundering and counter terrorist financing (AML/CTF) supervisor of businesses carrying out certain cryptoasset activities in the UK on 10 January 2020.

Source: FCA reminds cryptoasset businesses to register before the end of June.

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Sustainable finance

Regulation on a framework to facilitate sustainable investment published in Official Journal

Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 on sustainability‐related disclosures in the financial services sector has been published in the Official Journal.

Source: Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088

BoE publishes climate-related financial disclosure 2020

The BoE published its own climate-related financial disclosure 2020, which sets out the BoE’s approach to managing the risks from climate change across its entire operations. The report highlights the urgent need to assess, manage and deepen understanding of the financial risks from climate change.

Source: The Bank of England’s climate-related financial disclosure 2020.

European Parliament adopts Green Taxonomy in ‘game changer in the fight against climate change’

The European Parliament adopted the Taxonomy Regulation, which establishes the framework to facilitate sustainable investment, laying down environmental objectives and allowing economic activity to be labelled as environmentally sustainable if it contributes to at least one of those objectives without significantly harming any of the others.

Sources: Green finance: Parliament adopts criteria for sustainable investments and  P9_TA-PROV(2020)0130 Establishment of a framework to facilitate sustainable investment ***II.

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Dates for your diary

 

DateSubjectEvent

26 June 2020

 

Prudential requirements

 

Deadline for responses to PRA ‘Occasional Consultation Paper—March 2020’.

 

26 June 2020

 

Payment services and systems

 

Deadline for responses to European Commission consultation on a retail payments strategy for the EU.

 

26 June 2020

 

Fintech and crypto-assets

 

Deadline for responses to European Commission consultation on a new digital finance strategy for the EU.

 

30 June 2020

 

Banks and mutuals

 

Deadline for responses to the SRB’s consultation on its ‘standardised data set’ proposals, which aim to ensure that a minimum level of data is available to support a robust valuation of banks in resolution.

30 June 2020

 

Prudential requirements

Banks and mutuals

 

Deadline for responses to EBA ‘Discussion Paper: on the future changes to the EU-wide stress test

 

30 June 2020

 

Prudential requirements

Banks and mutuals

 

Deadline for the application of the EBA’s guidelines on the criteria to be fulfilled by legislative and non-legislative moratoria.

 

30 June 2020

 

Investment funds and asset management

 

Deadline for responses to ESMA ‘Consultation Paper: Draft implementing technical standards under the Regulation on crossborder distribution of funds (ESMA34-39-966)’.

 

30 June 2020

 

Investment funds and asset management

 

Deadline for responses to the European Commission’s proposal for a regulation on investment protection and facilitation of investment within the EU, aimed at clarifying, filling gaps and modernising the EU’s rules protecting intra-EU investments.

 

30 June 2020

 

Risk management and controls

Banks and mutuals

 

The EBA guidelines on ICT and security risk management come into force on this date.

 

 

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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.