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The Financial Conduct Authority (FCA) published a draft transitional direction for the share trading obligation (STO), together with an explanatory note, pursuant to which Article 23(1) of MiFIR would be modified to allow an investment firm to trade
shares on an EU trading venue or systematic internaliser, in order to mitigate the disruption that could arise after the Brexit transition period.
Sources: FCA draft transitional direction for the share trading obligation and
Explanatory note: FCA draft transitional direction for the share trading obligation.
For further information, see: The impact of Brexit on the MiFID II regime.
The FCA updated its webpage which sets out news relating to the European Market Infrastructure Regulation (EU) 648/2012 (EMIR). The November 2020 update provides information on the requirement to notify the FCA of clearing thresholds for
UK financial counterparties (FCs) and non-financial counterparties (NFCs) under the retained EMIR (UK EMIR), and on the UK equivalence decision under UK EMIR for intragroup exemptions from the clearing obligation and margin requirements for uncleared
Source: FCA updated webpage: EMIR news (November 2020 update).
For further information, see: Quick Look Brexit Financial Services Legislation Status Guide—EMIR and
Impact of Brexit: EMIR—quick guide.
Together with six other trade associations, the International Swaps and Derivatives Association (ISDA) sent a 30 November 2020 letter to the European Commission asking it to issue an equivalence determination under Article 2a of the European Market
Infrastructure Regulation (EMIR) for UK regulated markets. In the absence of equivalence, exchange-traded derivatives traded on UK regulated markets will be considered over-the-counter derivatives, pushing some non-financial counterparties and
financial counterparties above the EMIR clearing threshold.
Source: Letter on equivalence of UK derivatives regulated markets under EMIR Article 2a.
The FCA issued a reminder to firms to ensure they are ready for the end of the Brexit transition period at 11pm on 31 December 2020. The FCA urges firms to be prepared for a number of changes to the regulatory environment in which they operate, and
includes links to the extensive information available on its website regarding the key issues firms need to focus on.
Source: 1 month to go: FCA reminds firms to be ready for end of transition period.
The FCA updated its guidance for the life insurance and general insurance and investment sectors on servicing European Economic Area (EEA) customers after the Brexit transition period.
Sources: Brexit: information for life insurers in the UK about pensions and retirement income and
Brexit: information for general insurers and intermediaries in the UK.
The Prudential Regulation Authority (PRA) published policy statement PS24/20, which provides feedback to responses to consultation paper CP5/20, ‘Solvency II technical information: The PRA’s proposed approach to the publication at the
end of the transition period’ and contains the PRA’s final policy in its statement of policy ‘The PRA’s approach to the publication of Solvency II technical information’.
Source: Solvency II technical information: The PRA’s proposed approach to the publication at the end of the transition period.
For further information, see: Impact of Brexit: Solvency II—quick guide.
The Bank of England (BoE) updated its webpage on the effect of the UK’s withdrawal from the EU on financial market infrastructure (FMI) supervision. The changes include new guidance and Dear CEO letters on the recognition of non-UK central securities
depositories (CSDs) and on applying to receive UK settlement finality protection.
Source: Information on the effect of the UK’s withdrawal from the EU on FMI supervision.
The Competition and Markets Authority (CMA) published the full outcome, responses and summary of responses to its consultation on draft guidance regarding its functions after the transition period ends (ie 31 December 2020).
Source: Draft guidance on the functions of the CMA after the end of the Transition Period (outcome).
The Commodity Futures Trading Commission (CFTC)’s Market Participants Division (MPD) and Division of Market Oversight (DMO) announced that they are extending their previously granted temporary no-action relief to provide greater certainty to
the global marketplace in connection with the UK’s withdrawal from the EU. The MPD and DMO are issuing two no-action letters to extend regulatory relief provided in April 2019. The relief will become effective when the Brexit transition
period ends on 31 December 2020.
Source: CFTC staff extends existing Brexit-related relief to provide market certainty.
The European Central Bank (ECB) published an interview with the chair of its supervisory board, Andrea Enria, in which he discussed progress made on the banking union; the creation of a bad bank in order to deal with the issue of non-performing loans
(NPLs); and competition from the UK banking system after the Brexit transition period.
Source: Andrea Enria interview with ERT.
For further information, see: Banking Union: The EU banking package.
Face-to-face negotiations on the future UK-EU relationship resumed at high-level in London, following a ‘short period’ of suspension after an EU negotiator tested positive for coronavirus (COVID-19). With negotiations entering ‘decisive
days’, EU chief negotiator, Michel Barnier, acknowledged the persistence of the ‘same significant divergences’. UK chief negotiator, David Frost, stressed that respecting UK sovereignty and its practical consequences is the key
to unlocking a deal in this ‘late’ stage.
Sources: David Frost—Twitter and Michel Barnier—Twitter.
The International Regulatory Strategy Group (IRSG) published a paper outlining the key principles it believes should underpin the future economic partnership between the UK and EU from the perspective of financial services firms operating across the
UK-EU border. It calls for a regulatory framework which ensures autonomy of decision-making of both the UK and EU, aligns closely with international standards to reduce fragmentation, and supports economic growth and investment in the UK and EU.
Source: An economic partnership based on close and structured co-operation: Key principles for the management of the future UK-EU relationship in financial services.
Lloyd's of London confirmed that it has received approval from the High Court to transfer EEA policies to Lloyd's Insurance Company SA, its registered office in Brussels. This follows previous confirmation that Lloyd’s of London would be transferring
existing European business, which will be affected by the loss of passporting rights from Lloyd’s members to Lloyd’s Europe.
Source: High Court approval of Lloyd’s Brexit transfer ensures continuity of cover for customers.
The Foreign, Commonwealth & Development Office (FCDO) published new guidance on the Mali (Sanctions) (EU Exit) Regulations 2020, SI 2020/705, to help stakeholders prepare for the end of the transition period and beyond. Further new and updated
guidance may be issued as the transition period progresses, so stakeholders are advised to monitor these pages for updates.
Source: Mali sanctions: guidance.
UK Finance published a blog, written by the UK government, on key actions that businesses and professionals in the UK banking and finance industry should take in order to prepare for the end of the Brexit transition period.
Source: Brexit transition: Key actions to take.
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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.
The European Banking Authority (EBA) decided to reactivate its guidelines on legislative and non-legislative moratoria, after monitoring the developments of the coronavirus (COVID-19) pandemic and, in particular, the impact of the second
coronavirus wave and the related government restrictions taken in many EU countries. The EBA says the reactivation will ensure that loans, which had previously not benefitted from payment moratoria, can now also benefit from them.
Source: The EBA reactivates its guidelines on legislative and non-legislative moratoria.
The ECB published an interview with its vice-president, Luis de Guindos, in which he discusses the key risks for the euro area recovery; the ECB’s available responses to a potentially worsening coronavirus (COVID-19) economic situation;
and the main vulnerabilities in the eurozone banking system.
Source: Interview with Helsingin Sanomat.
The European Parliament published a provisional text setting out its amendments to the European Commission’s proposal for a directive amending MiFID II. This proposal forms part of the ‘Capital Markets Recovery Package’
and is designed to help the recovery from the coronavirus (COVID-19) pandemic by making various changes to MiFID II provisions on information requirements, product governance and position limits.
Source: P9_TA-PROV(2020)0317 Markets in financial instruments: amending information requirements, product governance requirements and position limits to help the recovery from the COVID-19 pandemic: Amendments adopted by the European Parliament on 25 November 2020 on the proposal for a directive of the European Parliament and of the Council amending Directive 2014/65/EU as regards information requirements, product governance and position limits to help the recovery from the COVID-19 pandemic (COM(2020)0280—C9-0210/2020—2020/0152(COD)).
For further information, see: Coronavirus (COVID-19)—EU capital markets recovery package.
The International Capital Market Association (ICMA) published its feedback in response to the European Securities and Markets Authority’s (ESMA) consultation paper on the functioning of MiFID II/MiFID Organised Trading Facilities
Source: ICMA responds to ESMA Consultation Paper on MiFID II/ MiFIR review on the functioning of Organised Trading Facilities (OTF).
The FCA published Handbook Notice No 82, which includes changes to the Handbook made by the FCA board on 22 October 2020, 12 November 2020 and 26 November 2020. Feedback on the relevant consultation papers (CPs) is set
out in Chapter 3 of the Handbook Notice or in separate feedback statements.
Source: Handbook Notice No 82.
The Council of the EU announced the conclusions of a meeting of economics and finance ministers (ECOFIN) on 1 December 2020. Among other things, ministers assessed the progress that has been made on the EU banking union
and discussed draft Council conclusions on the European Commission's new Action Plan on the Capital Markets Union (CMU), which were due to be approved by the Council by written procedure after the meeting.
Sources: Video conference of economics and finance ministers, 1 December 2020 and
Remarks by executive vice-president Dombrovskis at the ECOFIN press conference.
The BoE announced that it appointed London-based cloud native delivery platform Appvia as a partner to assist in design, construction and assurance of a new modern, fit-for-purpose cloud environment.
Source: The Bank of England appoints Appvia as a partner to assist in design, construction and assurance of a new cloud environment.
The executive board of the ECB appointed Linette Field to the position of director general, on-site & internal model inspections and Mario Quagliariello to the position of director, supervisory strategy and risk. Both
start their new positions on 1 January 2021.
Source: ECB appoints two senior managers for banking supervision.
The Centre for Data Ethics and Innovation (CDEI) published the final report of its review into bias in algorithmic decision-making. The review focused on the use of algorithms in significant decisions about individuals,
looking across four sectors—financial services, recruitment, policing and local government—and making cross-cutting recommendations that aim to help build the right systems so that algorithms improve, rather
than worsen, decision-making.
Source: CDEI publishes review into bias in algorithmic decision-making.
The European Parliament published a summary of the fast track peer review (FTPR) published by the ESMA on 3 November 2020. In its FTPR ESMA assessed the effectiveness of the supervisory response by BaFin (Bundesanstalt
für Finanzdienstleistungaufsicht) and the Financial Reporting Enforcement Panel (FREP) to the events that led to the collapse of Wirecard AG.
Source: Banking union: ESMA report on Wirecard.
The FCA issued a statement on the regulation of pre-paid funeral plans, in which it welcomes the UK government’s publication of the draft Financial Services and Markets Act 2000 (Regulated Activities)
(Amendment) Order 2020, which sets out a timetable for bringing the regulation of pre-paid funeral plans into the FCA’s remit. The FCA expects to take responsibility for the regulation of the sector in
summer 2022, 18 months after the legislation is made.
Source: FCA statement on regulation of pre-paid funeral plans.
SI 2020/Draft: This draft Order is laid to amend the regulatory framework for providers of pre-paid funeral plan contracts, such that providers of funeral plan contracts will generally need to be appropriately authorised
under the Financial Services and Markets Act 2000 (‘the Act’) when entering into, or carrying out, such contracts. It comes into force partly on the day after the day on which this Order
is made (the initial commencement day), and fully on the first day following the expiry of a period of eighteen calendar months beginning on the day after the initial commencement day.
Read the official version of this draft legislation. The draft
explanatory memorandum can be found
The PRA published consultation paper CP21/20, in which it sets out its proposed rules in respect of regulatory transaction fees for applications for approval or exemption as a holding company. The proposals
would result in changes to the Fees Part of the PRA Rulebook. The consultation closes on 8 January 2021.
Source: PRA fees and levies: Holding company regulatory transaction fees.
The FCA published a speech by its executive director of supervision—retail and authorisations, Jonathan Davidson, given at the 6th Annual Culture and Conduct Forum.
Source: The business of social purpose.
The Basel Committee on Banking Supervision (BCBS) published the technical amendment ‘Capital treatment of securitisations of non-performing loans’ (NPLs). The rule, which the Committee
started developing before the onset of the coronavirus (COVID-19) pandemic, closes a gap in the Basel framework by setting out prudent and risk sensitive capital requirements for NPL securitisations.
Source: Basel Committee amends capital requirements for non-performing loan securitisations.
The PRA issued a statement explaining when to expect further information on its approach to transposing CRD V, including its approach to revisions to the definition of capital for Pillar 2A.
Source: PRA statement on forthcoming CRD V policy statement.
For further information, see: CRD IV—essentials.
The PRA published policy statement PS23/2 setting out feedback on consultation paper CP15/20: ‘Market risk: Calculation of risks not in value at risk, and stressed value at risk’, and
final policy in updated supervisory statement SS13/13 ‘Market Risk’, set out in the appendix.
Sources: Market risk: Calculation of risks not in value at risk, and stressed value at risk and
Policy statement: Market risk: Calculation of risks not in value at risk, and stressed value at risk.
The FCA published a transcript of its 17 August 2020 webinar on the new UK prudential regime for investment firms. The webinar was intended to help firms to identify which parts of the FCA’s
discussion paper (DP20/2) on the new Investment Firm Prudential Regime (IFPR) would be of interest to them, so that they could provide feedback. The feedback period closed on 25 September 2020,
but the transcript provides a helpful overview of the key concepts within the regime.
Source: Transcript: The new prudential regime for investment firms.
For further information, see: Review of the prudential framework for investment firms.
Two corrigenda to Regulation (EU) 2019/2033 on the prudential requirements of investment firms (the Investment Firms Regulation) and Directive (EU) 2019/2034 on the prudential supervision of investment
firms (the Investment Firms Directive) have been published in the Official Journal. The corrigenda make a number of technical corrections to the legislation.
Sources: Corrigendum to Regulation (EU) 2019/2033 of the European Parliament and of the Council of 27 November 2019 on the prudential requirements of investment firms and amending Regulations (EU) No 1093/2010, (EU) No 575/2013, (EU) No 600/2014 and (EU) No 806/2014 (Official Journal of the European Union L 314 of 5 December 2019) and
Corrigendum to Directive (EU) 2019/2034 of the European Parliament and of the Council of 27 November 2019 on the prudential supervision of investment firms and amending Directives 2002/87/EC, 2009/65/EC, 2011/61/EU, 2013/36/EU, 2014/59/EU and
2014/65/EU (Official Journal of the European Union L 314 of 5 December 2019).
A European Commission notice regarding the interpretation of certain legal provisions of the revised bank resolution framework, in response to questions raised by Member States’ authorities,
has been published in the Official Journal of the EU. This is the second notice adopted by the Commission on the topic this year, and it clarifies a number of points relating to the BRRD as amended
by BRRD II, the SRMR as amended by SRMR II, the CRR as amended by CRR II and CRD IV as amended by CRD V.
Source: Commission Notice relating to the interpretation of certain legal provisions of the revised bank resolution framework in reply to questions raised by Member States’ authorities (second Commission Notice) 2020/C 417/02.
A recommendation of the European Systemic Risk Board of 24 September 2020 on identifying legal entities (ESRB/2020/12)(2020/C 403/01) has been published in the Official Journal.
Source: Recommendation of the European Systemic Risk Board of 24 September 2020 on identifying legal entities (ESRB/2020/12)(2020/C 403/01)
The Eurogroup agreed to proceed with the reform of the European Stability Mechanism (ESM), to sign the revised Treaty in January 2021 and launch the ratification process. It has also agreed
to introduce the common backstop to the Single Resolution Fund (SRF) early, so that it will be in force by the beginning of 2022. The Eurogroup says these decisions are another important
step towards completing the banking union.
Source: Statement of the Eurogroup in inclusive format on the ESM reform and the early introduction of the backstop to the Single Resolution Fund.
The Single Resolution Board (SRB) published its 2021-2023 multi-annual programme, including its work programme for 2021. The SRB will focus on achieving resolvability and a robust bank resolution
of the banks under its remit over the next three years, as well as further operationalisation of the Single Resolution Fund.
Source: Single Resolution Board publishes its 2021-2023 Multi-Annual Programme.
The FCA published the transcript of a webinar on leadership of healthy cultures in a post-coronavirus (COVID-19) world. The FCA’s executive director of retail supervision, Johnathan
Davidson, discussed the importance of speak up and listen up cultures, firm purpose, and the value of diversity of perspective.
Source: Transcript: Leading healthy cultures in a post-COVID-19 world webinar.
The Office of Financial Sanctions Implementation (OFSI) published new guidance on getting ready for the end of the transition period to help stakeholders prepare for the end of the
transition period and beyond. Further new and updated guidance may be issued as the transition period progresses, so stakeholders are advised to monitor these pages for updates.
The bulk of the government’s Brexit guidance has been gathered in its revised webpage: GOV.UK—Transition
The Investment Association (IA) published data suggesting that sophisticated fraudsters have ratcheted up their operations to target retail investors, with incidents of large-scale
investment scams nearly quadrupling since July 2020. The scams clone genuine investment management firms through impersonated products, websites and documentation, and then promote
the fake products through fake price comparison websites and adverts on social media and search engines.
Source: Almost £10m lost to investment scams since March lockdown.
Law enforcement authorities from 26 countries and Europol have announced the results of the European Money Mule Action ‘EMMA 6’, a worldwide operation against money mule
schemes. Operation EMMA is part of an ongoing project conducted under the umbrella of the EMPACT Cybercrime Payment Fraud Operational Action Plan, designed to combat online and
payment card fraud. Between September and November 2020, EMMA 6 was carried out for the sixth consecutive year with the support of the European Banking Federation (EBF), FinTech
FinCrime Exchange, INTERPOL and Western Union.
Source: 422 arrested and 4,031 money mules identified in global crackdown on money laundering.
The Personal Investment Management & Financial Advice Association (PIMFA) is calling on the government and the FCA to ‘urgently reform the supervision of financial advice
and consumer compensation through the Financial Services Compensation Scheme’ (FSCS). While acknowledging that the FSCS plays a vital role in UK retail financial services,
PIMFA says policy should be designed to minimise the need for the compensation scheme and protect consumers before the harm occurs, rather than relying on the FSCS as a safety
Source: PIMFA calls for urgent reform of supervision & FSCS levy to protect consumers & industry as it sets out a roadmap towards lower FSCS bills.
The judgment in the case of Re Prudential Assurance Company Ltd and another company has been published.
Re Prudential Assurance Company Ltd and another company  EWCA Civ 1626
Bank – Banker/client relationship. The defendant bank's application for an order striking out the claimant's claim succeeded, in a dispute concerning the administration of a
company. The claimant alleged that the administration and compulsory liquidation had been caused by the honouring of certain cheques signed by a temporary clerk in favour of VTV's
majority shareholder. The Commercial Court held that the claim should be struck out as disclosing no reasonable grounds for bringing the claim and that there be judgment for the
bank on it.
See:  All ER (D) 09 (Dec).
In September 2018 Citizens Advice submitted a super-complaint to the Competition and Market Authority (CMA) relating to concerns that longstanding customers were paying more than
new customers in five essential markets - mobile, broadband, cash savings, home insurance and mortgages. The CMA published its response and a package of reforms in December
2018, and has now published a progress report, 2 years on. The CMA believes that 'significant progress' has been made across all five areas, notes that although work is still
in progress, there is a clear commitment by regulators to address the problems and welcomes the progress made. The CMA notes that it is important for the regulators to monitor
the impact of the changes and to be prepared to take further action, if required.
Source: CMA - loyalty penalty update - progress two years on from the CMA's super-complaint investigation.
The CMA published a research report that it commissioned from a team at the economics consultancy E.CA Economics, which reviews the academic literature on the economic theory
of the loyalty penalty and sets out the lessons it has to offer.
Source: Economic Research on Loyalty Price Discrimination Report prepared for the Competition and Markets Authority.
ICE Benchmark Administration (IBA), the FCA-regulated and authorised administrator of LIBOR, announced that it will consult in early December 2020 on its intention to cease US$ LIBOR.
IBA intends that, subject to confirmation following its consultation, one week and two-month US$ LIBOR settings will cease at end-2021, and the US$ LIBOR panel will cease at end-June
Sources: ICE Benchmark Administration to consult on its intention to cease the publication of one week and two month USD LIBOR settings at end-December 2021, and the remaining USD LIBOR settings at end-June 2023,
FCA response to IBA’s proposed consultation on intention to cease US$ LIBOR and
ISDA statement on IBA, UK FCA and Federal Reserve Board announcements on US Dollar LIBOR consultation.
For further information, see: LIBOR transition.
The European Commission welcomed the agreement reached by the European Parliament and the Council on amendments to EU rules on financial benchmarks. The Commission proposed the amendments
on 24 July 2020 to ensure that the EU’s financial stability is not harmed when a widely used benchmark is phased out—as will soon be the case with LIBOR.
Source: The EU prepares for the end of LIBOR: the Commission welcomes the agreement reached between the European Parliament and the Council on financial benchmarks.
The FCA published a new webpage on its new UK benchmarks register, which will replace the ESMA’s register for UK supervised users and UK and third country-based benchmark administrators
that want their benchmarks to be used in the UK.
Source: Our new UK Benchmarks Register.
The BoE ublished the minutes of the 16 September 2020 meeting of the Working Group on Sterling Risk-Free Reference Rates (RFRs).
Source: Minutes of the Working Group on Sterling Risk-Free Reference Rates Wednesday 16 September 2020.
Commission Implementing Decision (EU) 2020/1766 of 25 November 2020 determining that the legal and supervisory arrangements applicable to UK CSDs (already established and authorised
in the UK) will be considered equivalent to the requirements set out in the CSD Regulation. This decision will apply from 1 January 2021 and will expire on 30 June 2021.
Source: Commission Implementing Decision (EU) 2020/1766 of 25 November 2020 determining, for a limited period of time, that the regulatory framework applicable to central securities depositories of the United Kingdom of Great Britain and Northern Ireland is equivalent in accordance with Regulation (EU) No 909/2014 of the European Parliament and of the Council C/2020/8342
For further information, see: Central Securities Depositories Regulation—essentials.
The executive director of the ESMA, Verena Ross, has given a speech in which she discussed the current challenges of the EU capital markets union (CMU) and some of the initiatives
within the European Commission’s action plan that are of particular importance to ESMA.
Source: Keynote address—CMU and current challenges—Verena Ross, International Investors Conference Frankfurt.
The FCA updated its webpage which sets out news relating to the European Market Infrastructure Regulation (EU) 648/2012 (EMIR). The November 2020 update provides information
on the requirement to notify the FCA of clearing thresholds for UK financial counterparties (FCs) and non-financial counterparties (NFCs) under the retained EMIR (UK EMIR),
and on the UK equivalence decision under UK EMIR for intragroup exemptions from the clearing obligation and margin requirements for uncleared derivatives.
Together with six other trade associations, ISDA sent a 30 November 2020 letter to the European Commission asking it to issue an equivalence determination under Article 2a of
the European Market Infrastructure Regulation (EMIR) for UK regulated markets. In the absence of equivalence, exchange-traded derivatives traded on UK regulated markets will
be considered over-the-counter derivatives, pushing some non-financial counterparties and financial counterparties above the EMIR clearing threshold.
ISDA published the seventh in a series of legal guidelines for smart derivatives contracts, which aim to support technology developers, lawyers and other key stakeholders in the
development of smart derivatives contracts and other technology solutions in the foreign exchange (FX) market. The guidelines provide high level background on the FX market,
identify opportunities for the application of smart contract technology to FX and flag important issues for technology developers to consider when designing technology solutions
for trading and FX associated processes.
Source: Legal Guidelines for Smart Derivatives Contracts: Foreign Exchange (FX) Derivatives.
ISDA published its newsletter, ISDA In Review, for November 2020. It contains links to new documents, research papers, press releases and comment letters.
Source: ISDA In Review—November 2020.
The International Securities Lending Association (ISLA) announced that members of the Common Domain Model (CDM) Pilot have discussed the outcome of the CDM pilot phase in the
Securities Lending Times. The subgroup of ISLA’s Digital working group discussed a number of themes, including but not limited to, what the pilot consisted of and the
expected results, how difficult it was to take a CDM for derivatives and adapt it for securities finance and how successful the CDM has been for making derivatives transactions
more efficient and whether the success can be replicated for securities finance.
Source: ISLA Digital Working Group Panel Discussion in SLT.
The ECB published its final guide on climate-related and environmental risks for banks. The guide explains how the ECB expects banks to prudently manage and transparently disclose these
risks under current prudential rules, and applies immediately.
Sources: ECB publishes final guide on climate-related and environmental risks for banks,
Guide on climate-related and environmental risks and
ECB report on institutions’ climate-related and environmental risk disclosures.
The FCA published a letter to boards of mainstream consumer credit lenders, which sets out the FCA’s view of the key risks of harm such lenders could pose to their customers
and the markets in which they operate. The letter also outlines the regulator’s expectations of lenders, including how firms should be mitigating these key risks, and describes
the FCA supervisory strategy and programme of work to ensure that firms are meeting the regulator’s expectations and harms are being remedied.
Source: Mainstream Consumer Credit Lenders portfolio letter.
The FCA published an evaluation of its price cap on rent-to-own (RTO) products, which came into force in April 2019. The FCA says the evaluation shows that the price cap has been
effective in reducing the prices charged by RTO firms, and estimates that the cap led to an average fall in prices of 19% for the two largest firms that were in the market when
the FCA intervened, bringing RTO prices ‘much closer to the high-street average’.
Sources: FCA publishes evaluation of rent-to-own price cap and
Evaluation paper 20/1: An evaluation of our rent-to-own price cap.
The European Insurance and Occupational Pensions Authority (EIOPA) started a consultation on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within
the scope of the Non-Financial Reporting Directive, as well as on the methodologies to build those ratios. As a result of this document EIOPA responds to a call for advice, addressed
to the three European Supervisory Authorities, to support the European Commission in developing the definitions and methodologies to be used for the disclosure requirements stemming
from the Taxonomy Regulation.
Source: EIOPA consults on insurers’ key performance indicators on sustainability for non-financial reporting.
EIOPA published a discussion paper on a methodology for the potential inclusion of climate change in the Solvency II standard formula when calculating natural catastrophe underwriting
risk. The deadline for comments is 26 February 2021.
Source: EIOPA launches discussion paper on a methodology for integrating climate change in the standard formula.
The PRA has published policy statement PS24/20, which provides feedback to responses to consultation paper CP5/20, ‘Solvency II technical information: The PRA’s proposed
approach to the publication at the end of the transition period’ and contains the PRA’s final policy in its statement of policy ‘The PRA’s approach to
the publication of Solvency II technical information’.
HM Treasury updated its webpages relating to the Solvency II review: Call for evidence and Future Regulatory Framework (FRF) review: Consultation. Further to the call for evidence
as part of the Solvency II review and the consultation document on the second phase of the FRF review, both of which were published on 19 October 2020, the period of consultation
has been extended by one month to 19 February 2021.
Sources: Solvency II review: Call for evidence and Future Regulatory Framework (FRF) review: Consultation.
The Financial Conduct Authority's (FCA) Supreme Court appeal concerning its test case on non-damage business interruption insurance claims arising out of the coronavirus (COVID-19)
lockdown concluded on 19 November 2020. The final transcripts of all four days of the hearing have now been published to the FCA's dedicated business interruption website.
Source: Business interruption insurance.
For further information, see: Coronavirus (COVID-19)—business interruption insurance.
Insurance Europe (IE) published its response to EIOPA consultation on its draft supervisory statement on the use of reinsurance risk mitigation techniques.
Source: EIOPA must not undermine the ability of insurers to use reinsurance to manage risk.
The FCA published a letter addressed to the CEOs of self-invested personal pension (SIPP) operators. The letter is addressed to CEOs of firms which form part of the FCA’s SIPP operators’
portfolio, and sets out the FCA’s key concerns and expectations for firms in the portfolio.
Source: Portfolio letter for SIPP operators.
The ECB published for consultation a draft ECB Regulation amending Regulation (EU) No 795/2014 on oversight requirements for systemically important payment systems (the
ECB Oversight Regulation) along with two implementing ECB decisions.
Source: Public consultation on the revision of the ECB Regulation on oversight requirements for systemically important payment systems and two implementing ECB Decisions.
The ECB published data from a survey launched in 2019 showing that euro area consumers are gradually shifting towards cards for in-person retail payments, although cash remained the
most used instrument at the end of 2019. The data is complemented by an ad hoc ECB survey carried out in July 2020, which suggests the coronavirus (COVID-19) pandemic has accelerated
use of cashless payment methods, with card payments becoming increasingly contactless.
Source: Gradual change seen in euro area payment behaviour.
Following a three-month public consultation, and in close collaboration with stakeholders from the entire payment value chain, the European Payments Council (EPC) published the first
version of the Single Euro Payments Area (SEPA) Request-To-Pay (RTP) scheme (SRTP scheme) rulebook. The SRTP scheme covers the set of operating rules and technical elements (including
messages) that allow a payee to request the initiation of a payment from a payer in a wide range of physical or online use cases. The scheme can be considered as a complement
to the payment flow because it supports the end-to-end process and lies between an underlying commercial transaction and the payment itself. An RTP as such can be an enabler for
Source: The EPC publishes the first SRTP scheme rulebook.
The EPC published the 2021 EPC SEPA payment scheme rulebooks and the related Implementation guidelines. The 2021 payment scheme rulebooks enter into force on 21 November 2021.
Source: Publication of the 2021 EPC SEPA payment scheme rulebooks.
For further information, see: SEPA Regulation and cross-border payments—essentials.
The Financial Action Task Force (FATF), in collaboration with the BCBS, published an online questionnaire seeking feedback from the private sector on the challenges of cross-border
payment services. The questionnaire forms part of the G20 Cross-Border Payments Roadmap, which, among other things, seeks to identify and address areas where divergent anti-money
laundering (AML) and combating the financing of terrorism (CFT) rules or their implementation at national level cause challenges for cross-border payments. The FATF/BCBS questionnaire
seeks feedback on these challenges and the possible means to address them without compromising AML/CFT safeguards. The deadline for feedback is 15 January 2021.
Source: Survey on enhancing cross-border payments.
The governor of the Bank of Italy, Ignazio Visco, gave a speech in which he talked about the characteristics of the TARGET Instant Payment Settlement (TIPS) platform and its possible
role in the future European payments landscape. He said that the platform has the potential to support instantaneous payments from mobile devices and could provide a possible
technical solution for a digital euro.
Source: Ignazio Visco: The role of TIPS for the future payments landscape.
Pay.UK published the conclusions and next steps from its Q1 2020 consultation on ‘Next Generation Standard for UK Retail Payments’. Pay.UK received a large number of responses
from a range of financial institution participants, service providers, end user representatives and other interested parties, and says a substantial proportion of its proposals
received ‘overwhelming support’.
Sources: Pay.UK: Next Generation Standard for UK Retail Payments: conclusions and shaping the way ahead and
The Payment Systems Regulator (PSR) announced the appointment of Dr Ruth Wandhöfer as chair of the PSR Panel from 1 December 2020. She succeeds Stephen Locke, independent adviser.
Source: New chair of Payment Systems Regulator Panel confirmed.
The PSR announced its plans to disclose material from the merchant survey commissioned as part of its card-acquiring services market review. The material will be disclosed to certain
interested parties through a confidentiality ring and comprises anonymised raw data containing the responses of 1,037 small and medium sized merchants to questions in the merchant
Source: Merchant survey disclosure in the market review into card-acquiring services.
UK Finance published a blog aimed at helping payment services firms navigate operational and regulatory challenges in an age of uncertainty by highlighting recent initiatives by PwC
and the FCA.
Source: Payment services firms: Navigating operational and regulatory challenges in an age of uncertainty.
The Fintech Working Group of the European Parliament’s Committee on Economic and Monetary Affairs (ECON), met to analyse the benefits, risks and challenges of global stablecoins.
The working group expressed concern that unregulated stablecoins may threaten financial stability and consumer protection, and explored how to establish a prudential regulatory
framework which would tackle abuses, preserve a level playing field, and boost innovation.
Sources: Fintech Working Group monitors benefits and threats of digital finance and
ECON Cross-sectoral policy—Fintech Working Group.
The ECB published an introductory address delivered by the chair of its supervisory board, Andrea Enria, at the Supervision Innovators Conference, in which he discussed SupTech
developments and the need to break down silos.
Source: Welcome address: Speech by Andrea Enria, chair of the supervisory board of the ECB, at the Supervision Innovators Conference.
The ECB published a speech by Pentti Hakkarainen, a member of its supervisory board, at the Supervision Innovators Conference, on digitalising banking supervision and how advanced
information technology can be harnessed to benefit supervisory work.
Source: Digitalising banking supervision: an ongoing journey, not a final destination.
UK Finance published a paper setting out high-level ethical principles for financial services firms developing advanced analytics and artificial intelligence (AI). The principles
are intended to serve as a useful resource and reference for firms developing their own internal frameworks and oversight for these emerging technologies.
Source: Ethical principles for advanced analytics and artificial intelligence in financial services.
The ECB published its final guide on climate-related and environmental risks for banks. The guide explains how the ECB expects banks to prudently manage and transparently disclose
these risks under current prudential rules, and applies immediately.
EIOPA started a consultation on the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive, as well
as on the methodologies to build those ratios. As a result of this document EIOPA responds to a call for advice, addressed to the three European Supervisory Authorities, to support
the European Commission in developing the definitions and methodologies to be used for the disclosure requirements stemming from the Taxonomy Regulation.
The International Association of Insurance Supervisors (IAIS) adopted an environmental policy to guide, monitor and improve its own performance on relevant issues. It focuses on meetings
and events, secretariat travel, and improved awareness around sustainable use of office resources.
Source: IAIS adopts an environmental policy.
The executive director, markets, at the BoE, Andrew Hauser, announced that the BoE will launch a new Shari’ah-compliant non-interest-based deposit facility in the first
quarter of 2021. Speaking at UK Islamic Finance Week 2020, Hauser said the new Alternative Liquidity Facility (ALF) will be the first such account from a Western central bank.
Source: Why Islamic finance has an important role to play in supporting the recovery from COVID—and how the Bank of England’s new Alternative Liquidity Facility can help.
The Islamic Financial Services Board (IFSB) issued a press release announcing details of its 21st Islamic Financial Stability Forum (IFSF), which will be held online on 16 December
2020 (14:30–16:15 Malaysia time). The theme for the 21st series is the implications of the coronavirus (COVID-19) for the stability of the Islamic financial services
Source: The IFSB’s 21st Islamic Financial Stability Forum to continue discourses on the implications of COVID-19 to the stability of Islamic financial services industry.
4 December 2020
Deadline for responses to ESMA’s consultation on its draft advice to the European Commission on Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation), which specifies the content, methodology and presentation of the key performance
indicators (KPIs) that non-financial undertakings and asset managers are required to disclose.
Payment services and systems
Deadline for responses to the Open Banking Implementation Entity’s (OBIE) consultations on variable recurring payments (VRPs) and sweeping.
7 December 2020
SM&CR and individual accountability
SMCR comes into force for benchmark administrators that do not undertake any other regulated activities. BEFSA 2016, s 21 and BEFSA 2016, Sch 4 came
into force on 9 December 2019 to bring most of the amendments set out in the Bank of England and Financial Services Act 2016 (Commencement No 6 and Transitional
Provisions) Regulations 2019, into force for solo-regulated firms, but for benchmark firms when they come into force on 7 December 2020
The FCA’s Individual Accountability (FCA-Authorised Benchmark Firms) Instrument 2020 comes
into force on this date.
8 December 2020
Deadline for comments on inception impact assessment of European Commission’s review of the EU bank crisis management and deposit insurance framework.
The Payment Services and Electronic Money (Amendment) Regulations 2020 come into force on 8 December 2020.
9 December 2020
Deadline for FCA solo-regulated
firms to submit all data on Directory Persons to the Directory by using the FCA’s Connect System in order for it to appear on the 14 December publication; any
updates submitted after 9 December will appear after the initial data is published
Investment funds and asset management
Fund managers that wish to update their previously submitted notification to the FCA regarding the temporary permissions regime should email email@example.com by the end of 9 December 2020 at the
very latest confirming this and including their FRN.
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