FS weekly highlights—7 January 2021

FS weekly highlights—7 January 2021

In this issue

 

 

Brexit news
Coronavirus (COVID-19)
UK, EU and international regulators and bodies
Financial crime
Consumer protection
Complaints, compensation and claims management
Dispute resolution for financial services lawyers
Regulation of capital markets
Regulation of derivatives
Investment funds and asset management
Banks and mutuals
Regulation of insurance
Dates for your diary

 

Brexit news

For further information on financial services and Brexit, see: Brexit and financial services: materials on the post-Brexit UK/EU regulatory regime.

Brexit Bulletin—new and updated Brexit transition guidance published on IP completion day

As the Brexit transition period came to an end at 11pm on 31 December 2020, marking IP completion day in the UK, the government published over 300 items of new and updated Brexit transition guidance. While many of the updates are minor, including simple amendments to reflect the end of the transition period having occurred, a significant number of new documents and webpages were also published. Topics covered include, among others: movement of goods and services, immigration, travel, transport, professional qualifications, legal services, litigation, companies, data, telecoms, IP, life sciences, healthcare, education, energy, environment, benefits, pensions, EU funding and sanctions. Further new and updated guidance may be issued, so stakeholders are advised to monitor these pages for updates.

Brexit Bulletin—EU-UK Trade and Cooperation Agreement published in the Official Journal

The EU-UK Trade and Cooperation Agreement (TCA) and associated agreements, declarations and legislation have been published by the EU in the Official Journal of the European Union (OJEU). The deal applies provisionally from 1 January 2021, pending full ratification by the EU. The OJEU notes that due to the ‘very late availability’ of the versions of the Agreements in the EU official languages, the documents have been published without final legal-linguistic revision. The finalised versions will be published in the OJEU by 30 April 2021.

Sources: Official Journal of the European Union, L 444, 31 December 2020Official Journal of the European Union, L 445, 31 December 2020Official Journal of the European Union, L 446, 31 December 2020 and  Agreements reached between the United Kingdom of Great Britain and Northern Ireland and the European Union.

International agreements—Brexit transition guidance reissued on IP completion day

At the end of the Brexit transition/implementation period at 11 pm on 31 December 2020 (IP completion day), the government reissued a number of webpages and guidance documents, collating existing stakeholder and sectoral guidance on legal and practical changes taking effect from 1 January 2021. Subjects covered include guidance and information on the UK’s relationship with Switzerland, Norway, Iceland, Liechtenstein and other non-EU countries. The guidance within the refreshed webpages may not be new but the pages are worth noting for future reference and bookmarking. Some of the guidance contains simple updates and reference amendments to reflect the end of the transition period having occurred, some of the guidance published on IP completion day may also contain substantive updates to reflect changes taking effect in light of the EU-UK Trade and Cooperation Agreement (and related arrangements). Further guidance may be issued after IP completion day, so stakeholders are advised to monitor these pages for updates.

Source: GOV.UK—Brexit: new rules are here.

Lawyers, legal services and cross-border legal cases—Brexit transition guidance reissued on IP completion day

At the end of the Brexit transition/implementation period at 11 pm on 31 December 2020 (IP completion day), the government reissued a number of webpages and guidance documents, collating existing stakeholder and sectoral guidance on legal and practical changes taking effect from 1 January 2021. Subjects covered include guidance for legal professionals and service providers, recognition of professional qualifications and cross-border legal cases. The guidance within the refreshed webpages may not be new but the pages are worth noting for future reference and bookmarking. Some of the guidance contains simple updates and reference amendments to reflect the end of the transition period having occurred. Some of the guidance published on IP completion day may also contain substantive updates to reflect changes taking effect in light of the EU-UK Trade and Cooperation Agreement (and related arrangements). Further guidance may be issued after IP completion day, so stakeholders are advised to monitor these pages for updates.

Source: GOV.UK—Brexit: new rules are here.

Sanctions—Brexit transition guidance reissued on IP completion day

At the end of the Brexit transition/implementation period at 11 pm on 31 December 2020 (IP completion day), the government reissued a number of webpages and guidance documents, collating existing stakeholder and sectoral guidance on legal and practical changes taking effect from 1 January 2021. Subjects covered include the UK sanctions framework, sanctions relating to specific countries and related guidance. The guidance within the refreshed webpages may not be new but the pages are worth noting for future reference and bookmarking. Some of the guidance contains simple updates and reference amendments to reflect the end of the transition period having occurred. Some of the guidance published on IP completion day may also contain substantive updates to reflect changes taking effect in light of the EU-UK Trade and Cooperation Agreement (and related arrangements). Further guidance may be issued after IP completion day, so stakeholders are advised to monitor these pages for updates.

Source: GOV.UK—Brexit: new rules are here.

ESMA publishes MoUs with the BoE on CCPs and CSDs

The European Securities and Markets Authority (ESMA) published memoranda of understanding (MoU) reached with the Bank of England (BoE) in relation to arrangements for co-operation on the monitoring and supervision of central counterparties (CCPs) established in the UK, and in relation to ESMA’s monitoring of the ongoing compliance with recognition conditions by central securities depositories (CSDs) established in the UK.

Sources: MoU on monitoring and supervision of UK CCPs and  MoU on monitoring and supervision of UK CSDs.

ESMA update on FIRDS publication following end of the Brexit transition period

ESMA published its first set of Financial Instruments Reference Data System (FIRDS) files following the end of the Brexit transition period.

Source: ESMA: Publication of financial instruments reference data after the end of the Brexit transition period.

ESMA withdraws the registrations of six UK-based CRAs and four TRs following end of transition period

ESMA, the supervisor of EU credit rating agencies (CRAs) and trade repositories (TRs), announced the withdrawal of the registrations of a number of UK-based CRAs and TRs. ESMA’s decisions follow the end of the transition period of the UK’s withdrawal from the EU, which occurred on 31 December 2020.

Source: Brexit: ESMA withdraws the registrations of six UK-based credit rating agencies and four trade repositories.

Co-operation arrangement between the SRB and BoE comes into force

A co-operation arrangement between the Single Resolution Board (SRB) and the BoE come into force on 1 January 2021. The arrangement sets out a framework for the exchange of information and co-operation in connection with the resolution planning and the implementation of such planning with respect to entities with cross-border operations.

Source: SRB and Bank of England bank resolution co-operation arrangement comes into force.

FCA details MoUs with European authorities in the areas of securities, insurance and pensions, and banking

The Financial Conduct Authority (FCA) reminded stakeholders of memoranda of understanding (MoUs) that the FCA has entered into with European authorities in the areas of securities, insurance and pensions, and banking.

Source: MoUs with European authorities in the areas of securities, insurance and pensions, and banking.

FCA uses its TTP to modify UK MiFIR derivatives trading obligation

The FCA published a statement setting out how it will be using the temporary transitional power (TTP) to modify the UK derivatives trading obligation (DTO) in the onshored Markets in Financial Instruments Regulation (EU) 600/2014 (UK MIFIR).

Source: Statement on use of the Temporary Transitional Power to modify the UK’s derivatives trading obligation.

FCA and PRA publish webpages on post-Brexit Gibraltar passporting arrangements

The FCA and the Prudential Regulation Authority (PRA) published webpages on post-Brexit Gibraltar passporting arrangements. The FCA and PRA explain that the Brexit transition period has ended and passporting rights for EEA firms have ceased. However, the FCA and the PRA note that the transitional arrangements preserving deemed passporting for Gibraltarian firms after the end of the transition period under The Financial Services (Gibraltar) (Amendment) (EU Exit) Regulations 2019, SI 2019/589 have been extended until 31 December 2021 and can be further extended until such time as the permanent arrangements of the Gibraltar Authorisation Regime are in place.

Sources: Passporting in and out of Gibraltar (FCA) and Gibraltar passporting arrangements (PRA).

FCA closes window for temporary permissions regime notifications

The FCA updated its webpage on the temporary permissions regime (TPR). The updated webpage states that the window for EEA firms and fund managers to notify the FCA that they wish to use the TPR is now closed. The TPR will take effect at 11pm on 31 December 2020.

Source: Temporary permissions regime.

For further information, see: Brexit and financial services—the temporary permissions regime (TPR).

PFS article discusses lack of insurance equivalence and qualification recognition in EU/UK trade deal

The Personal Finance Society (PFS) published an article on the implications of the EU/UK trade deal for general insurance. The PFS notes that the deal contains ‘very limited’ detail on insurance and the mutual recognition of qualifications.

Source: Brexit: Implications for General Insurance [January 2020 Update].

European Union (Future Relationship) Act 2020

This Act makes provision to implement the EU-UK Trade and Cooperation Agreement and associated agreements, and further provision in connection with the UK’s future relationship with the EU and its Member States, as well as related provision on specific matters concerning trade and security, including provisions on criminal records, passenger name record data, evidence and extradition, customs, tax, social security, and privileges and immunities, and for connected purposes. It comes into force partly on 30 December 2020, and comes into force fully on such day as a Minister of the Crown may by regulations appoint. Different days may be appointed for different purposes.

Read the official version of this legislation.

European Union (Future Relationship) Act 2020 (Commencement No 1) Regulations 2020

SI 2020/1662: Certain provisions of the European Union (Future Relationship) Act 2020 (EU(FR)A 2020) came into force on IP completion day, while others come into force on 1 March 2021.

Read the official version of this legislation.

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Coronavirus (COVID-19)

ECB survey collates views on long-term economic impact of the coronavirus (COVID-19)

The European Central Bank (ECB) published an article discussing leading euro area firms’ perceptions on the long-term economic impact of the coronavirus (COVID-19) pandemic. It summarises the findings of an ad hoc ECB survey on the subject, which suggests that some changes in living and working habits brought about by the pandemic, especially the increased conduct of business and consumption online and a consequent reduction in travel, will become embedded.

Source: The long-term effects of the pandemic: insights from a survey of leading companies.

Coronavirus (COVID-19)—HMCTS publishes updated operational summary for week commencing 4 January

HM Courts & Tribunals Service (HMCTS) updated its operational summary on courts and tribunals operations during the coronavirus (COVID-19) pandemic. The summary for the week commencing (w/c) 4 January 2021 includes confirmation that the justice system will continue to operate in Tier 4 areas and that the Crown Court is now hearing all types of applications and cases, including multi-handler trials.

Source: HMCTS weekly operational summary on courts and tribunals during coronavirus (COVID-19) outbreak.

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UK, EU and international regulators and bodies

Agreement in principle for EU-China investment agreement

On 30 December 2020, the EU and China concluded in principle the negotiations for a Comprehensive Agreement on Investment (CAI). The parties' negotiations on investment protection and investment dispute settlement will, however, continue.

Source: EU and China reach agreement in principle on investment.

PRA publishes Regulatory Digest for December 2020

The PRA published its Regulatory Digest for December 2020, which discusses policy statement PS30/20, The Bank of England’s amendments under the European Union (Withdrawal) Act 2018: Changes before the end of the transition period, and PS29/20, Capital Requirements Directive V (CRD V).

Source: PRA Regulatory Digest—December 2020.

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Financial crime

HMCTS publishes form FTC6: Notice of Appeal

HM Courts & Tribunals Service (HMCTS) published form FTC6: Notice of Appeal (financial sanctions), which is to be used when appealing against a monetary penalty imposed for breach of financial sanctions.

Source: Form FTC6: Notice of Appeal (financial sanctions).

Libya (Sanctions) (EU Exit) Regulations 2020

SI 2020/1665: This enactment is made in exercise of legislative powers under the Sanctions and Anti-Money Laundering Act 2018 in preparation for IP completion day. This enactment gives effect to most of the UK’s obligations under United Nations Security Council Resolutions (UNSCR) 1970 (2011) in relation to UN sanctions imposed against Libya due to its violation of human rights. It came into force in part on 30 December 2020 and in full on IP completion day.

Read the official version of this legislation.

Declaring cash in and out of the UK—new Brexit transition guidance from HMRC

HM Revenue & Customs (HMRC) has published new guidance for service providers and Competent Authorities explaining what to do when carrying cash amounting to €10,000 or more when entering or leaving Northern Ireland or £10,000 or more when entering or leaving Great Britain to help stakeholders prepare for the end of the transition period and beyond. Further new and updated guidance may be issued, so stakeholders are advised to monitor these pages for updates.

Sources: Taking cash in and out of Great Britain and Taking cash in and out of Northern Ireland

 

Consumer protection

Better Finance comments on European Commission’s investment protection initiative

Better Finance issued a position paper on the European Commission’s initiative to strengthen and improve the intra-EU investment protection framework. It welcomes the Commission’s initiative as an essential step towards building a true internal market for capital and financial services and sets out a number of reasons why it considers the current framework to be flawed.

Source: Better Finance position paper on the Intra-EU Investment Facilitation Initiative.

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Complaints, compensation and claims management

Complaints Commissioner criticises FCA for delay in responding to complaint

The Complaints Commissioner criticised the FCA in her final report on a complaint regarding the FCA’s handling of an ongoing enforcement investigation. Although she concluded that the FCA was right to defer consideration of the complaint, she urged the FCA to ensure that timescales and progress reports are supplied promptly and effectively, and she criticised the FCA for its delay in responding to the complaint.

Source: Final report by the Complaints Commissioner: Complaint number Case Ref FCA00827.

Complaints Commissioner partially upholds complaint regarding FCA’s oversight of regulated firm

The Complaints Commissioner published a final report, dated 17 December 2020, in which it partially upheld a complaint against the FCA relating to the regulator’s oversight of a firm undergoing a remedial action plan. The FCA has also published its response to the final report.

Sources: Complaints Commissioner final report: FCA00769—Issued 17 December 2020. Published 5 January 2021 and  FCA response to the Complaints Commissioner’s Report FCA00769.

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Dispute resolution for financial services lawyers

HMCTS updates operational summary in light of UK lockdown

HMCTS made some amendments to its operational summary for the week commencing 4 January 2021 in light of the government’s decision to place England in a national lockdown. HMCTS announced that during the national lockdown, the justice system is to remain open ‘as an essential public service’ and that courts and tribunals are to ‘continue to operate within the national restrictions in England, alert levels in Wales and protection levels in Scotland’. HMCTS also confirms that ‘those essential to keeping the justice system running are considered critical workers’ and that ‘this applies to all those who work in courts and tribunals, as well as jurors and public court users, who are permitted to attend their place of work when necessary, to travel, to stay overnight in accommodation’. Finally, HMCTS has stated that the new variant of the coronavirus, and the ease at which it spreads, requires that existing mitigation measures be ‘rigorously adhered to’.

Source: HMCTS weekly operational summary on courts and tribunals during coronavirus (COVID-19) outbreak.

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Regulation of capital markets

FCA updates list of equivalent jurisdictions under Disclosure Guidance and Transparency Rules

The FCA updated its webpage on the equivalence of non-UK regimes for purposes of the financial reporting, major shareholding notification and general information requirements in the Disclosure Guidance and Transparency Rules sourcebook (DTR) at DTR 4 to 6. Third-country issuers from these jurisdictions will be exempt from certain requirements in DTR 4 to 6 if they comply with the equivalent requirements in those jurisdictions.

Source: Equivalence of non-UK regimes.

FMLC comparative report examines validity of electronic signatures for global notes

The FMLC published a report on issues of legal uncertainty around the use of electronic signatures in authenticating global notes. With the coronavirus (COVID-19) pandemic affecting the ability to sign or witness documents in ‘wet-ink’, ie in person, the international central securities depositories (ICSDs), Euroclear Bank and Clearstream Banking, have suggested temporary amendments to their procedures which incorporate electronic signatures. The FMLC report surveys the validity position under the main jurisdictions which govern global notes.

Source: Report: The use of electronic signatures in authenticating global notes: 31 December 2020.

EFAMA suggests key objectives for successful creation of the CMU in letter to Commission

The European Fund and Asset Management Association (EFAMA) published a letter to the EU Commissioner in charge of financial services, financial stability and the capital markets union (CMU), Mairead McGuinness, in which it sets out three objectives it considers key to the success of the CMU project. An attachment to the letter also lists a number of specific actions, some of which are not part of the CMU action plan, which EFAMA says could make a significant contribution to those key objectives.

Source: EFAMA letter: Key objectives for the creation of the CMU—published 4 January 2021.

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Regulation of derivatives

ISDA publishes In Review for December 2020

The International Swaps and Derivatives Association (ISDA) published the latest issue of its In Review newsletter, which contains links to new documents, research papers, press releases and comment letters published by ISDA in December 2020.

Source: ISDA In Review.

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Investment funds and asset management

ESMA to conduct a Common Supervisory Action on the supervision of costs and fees of UCITS

ESMA announced that it is launching a Common Supervisory Action (CSA) with national competent authorities (NCAs) on the supervision of costs and fees of UCITS across the EU. It aims to assess the compliance of supervised entities with the relevant cost-related provisions in the UCITS framework, and the obligation of not charging investors with undue costs. The CSA will be conducted during 2021.

Source: ESMA launches a Common Supervisory Action with NCAs on the supervision of costs and fees of UCITS.

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Banks and mutuals

ESMA issues statement promoting transparency for TLTRO III transactions

ESMA issued a public statement promoting transparency in the IFRS financial statements of banks regarding accounting for the third series of the ECB’s Targeted Longer-Term Refinancing Operations (TLTRO III).

Source: ESMA promotes transparency for TLTRO III transactions.

FMLC paper examines boundary between monetary policy and monetary financing

The Financial Markets Law Committee (FMLC) published a report on issues of legal uncertainty arising in the context of monetary policy and monetary financing, so as to highlight particular consequences for stimulus policies by national central banks (NCBs).

Source: FMLC report: Issues of legal uncertainty arising in the context of monetary finance: 6 January 2021.

BCBS secretary general discusses Committee’s focus after Basel III

The secretary general of the Basel Committee on Banking Supervision (BCBS), Carolyn Rogers, told the German newspaper Börsen-Zeitung that work on the Basel III reforms is now finished and the focus of the BCBS will now shift to implementation of the reforms, as well as topics like structural trends in the banking sector, ongoing digitalisation and the issue of climate-related financial risk.

Source: Carolyn Rogers interview in Börsen-Zeitung.

APPG submits formal SM&CR complaint to FCA regarding Lloyds Banking Group

The All-Party Parliamentary Group (APPG) on Fair Business Banking a formal complaint to the FCA about Lloyds Banking Group (LBG) under the provisions of the Senior Managers and Certification Regime (SM&CR). The APPG says it has decided to take this action as its ‘exhaustive attempts’ to resolve matters directly with the bank have failed.

Source: The All-Party Parliamentary Group on Fair Business Banking: Letter to Nikhil Rathi, chief executive of the FCA—23/12/20.

New research reveals impact of coronavirus (COVID-19) on current account switching in the UK

Pay.UK has published new research commissioned by the Current Account Switch Service (CASS), which shows that consumer awareness of CASS has remained high, and that attitudes towards CASS and the simplicity of the switching process are generally positive. The research also suggests that the impact of the coronavirus (COVID-19) pandemic on switching bank accounts has led to more people feeling financially vulnerable.

Source: Financially vulnerable could miss best deals and require more support to switch bank accounts.

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Regulation of insurance

Insurance Europe responds to EIOPA consultation on ORSA climate risk requirements

Insurance Europe (IE) responded to the European Insurance and Occupational Pensions Authority (EIOPA) consultation on its draft opinion on the use of climate change scenarios in an insurer’s own risk & solvency assessment (ORSA). IE says while insurers agree that it is important to foster a forward-looking management of climate change risk, as well as other risks, climate change scenario analysis should only be included in an insurer’s ORSA if it actually faces material climate risks.

Source: Insurers warn EIOPA against prescriptiveness in ORSA climate risk requirements.

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Dates for your diary

 

DateSubjectEvent

8 January 2021

 

Brexit

 

Deadline for responses to the Treasury Committee inquiry into the future of UK financial services after the Brexit transition period ends.

 

8 January 2021

 

Risk management and controls

 

Deadline for responses to the FSB’s consultation on regulatory and supervisory issues relating to outsourcing and third-party relationships.

 

10 January 2021

 

Financial crime



Fintech and cypto-assets

 

Cryptoasset firms not registered with the FCA, on 10 January 2021, will have to cease trading.
From 10 January 2021, businesses (operating before 10 January 2021) carrying on cryptoasset activity in the UK have needed to be compliant with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, as amended (MLRs) and needed to register with the FCA.

 

11 January 2021

 

Regulation of capital markets

 

National competent authorities (NCAs) must notify ESMA as to whether they comply or intend to comply with its guidelines on securitisation repository data completeness and consistency within two months of the publication of official translations on 11 November 2020.

 

11 January 2021

 

Regulation of derivatives

 

Deadline for responses to the Derivatives Service Bureau (DSB)first industry consultation on the principles underlying the fee model for the new unique product identifier (UPI).

 

11 January 2021

 

Brexit



Securities financing transactions

 

The UK will not be taking action to incorporate into UK law the reporting obligation of the EU’s SFTR for non-financial counterparties (NFCs), which is due to apply in the EU from 11 January 2021.

 

11 January 2021

 

MiFID II

 

Deadline for responses to ESMA’s consultation paper seeking input from market participants in relation to its draft guidelines on the MiFID II/MiFIR obligations on market data.

 

11 January to 18 March 2021

 

SM&CR

 

Solo-regulated firms submitting Directory Persons data to the FCA after the earliest publication date but before the deadline should submit between 11 January and 18 March 2021. Firms can use the single submission form to submit up to the 31 March 2021 deadline.

 

12 January 2021

 

Regulation of insurance

 

Deadline for feedback on the draft application paper developed by the International Association of Insurance Supervisors and the Sustainable Insurance Forum on the supervision of climate-related risks in the insurance sector.

 

12 January 2021

 

Payment services and systems

 

Deadline to the PRA’s consultation on the approach to overseas IRB models in CP16/20. The proposed implementation date for the changes resulting from this CP would be Thursday 1 July 2021.

 

12 January 2021

 

Fintech and crypto-assets

 

Deadline for responses to the ECB’s consultation on the potential risks and benefits of a digital euro.

 

13 January 2021

 

Payment services and systems

 

Pursuant to Article 108 of the Payment Services Directive (EU) 2015/2366 (PSD2), the European Commission will, by 13 January 2021, submit to the European Parliament, the Council, the ECB and the European Economic and Social Committee, a report on the application and impact of PSD2. If appropriate, the Commission will submit a legislative proposal together with its report.

 

14 January 2021

 

Payment services and systems

 

HM Treasury launched a consultation on potential amendments to insolvency rules for payment and electronic money institutions (the institutions). Proposed changes include helping protect customers where the institutions have gone into insolvency thereby improving the outlook for the payment and e-money industries. The consultation closes at 11.59 pm on 14 January 2021.

 

 

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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.