FS weekly highlights—9 April 2020

FS weekly highlights—9 April 2020

In this issue

 

 

Coronavirus (COVID-19)
Brexit news
MiFID II
UK, EU and international regulators and bodies
Authorisation, approval and supervision
Prudential requirements
Financial stability, recovery and resolution
Risk management and controls
Financial crime
Consumer protection
Conduct requirements
Complaints, compensation and claims management
Investigations, enforcement and discipline
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)

Coronavirus (COVID-19)—BCBS and IOSCO defer final implementation phases of the margin requirements for non-centrally cleared derivatives

The Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) announced that they have agreed to extend by one year the deadline for completing the final two implementation phases of the margin requirements for non-centrally cleared derivatives. This is due to the significant challenges posed by the coronavirus (COVID-19), including the displacement of staff and the need for firms to focus resources on managing risks associated with current market volatility.

Source: Basel Committee and IOSCO announce deferral of final implementation phases of the margin requirements for non-centrally cleared derivatives.

For further information on initial margin requirements for non-centrally cleared derivatives, see: Margin for non-cleared derivatives—industry Margin for non-cleared derivatives—industry initiatives.

Coronavirus (COVID-19)—FCA welcomes BCBS-IOSCO statement on deferring the initial margin requirements by a year

The Financial Conduct Authority (FCA) issued a press release in which it welcomes the BCBS and IOSCO joint statement published on 3 April 2020 which announced a one-year deferral of the September 2020 and September 2021 phase-ins of the global initial margin requirements for non-centrally cleared derivatives.

Source: BCBS and IOSCO announce a one-year deferral of the remaining global initial margin requirements in response to coronavirus challenges.

Coronavirus (COVID-19)—BCBS sets out additional measures to alleviate impact

The BCBS set out additional measures to alleviate the impact of coronavirus (COVID-19) on the global banking system. These measures support the provision of lending by banks to the real economy and provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities

Source: Basel Committee sets out additional measures to alleviate the impact of COVID-19.

Coronavirus (COVID-19)—European Parliament publishes briefing on pandemic’s effect on the banking union

The European Parliament published a briefing note entitled Banking union: Corona crisis effects, summarising the observations made and actions taken by supervisory authorities, credit rating agencies, banking federations and other industry experts in response to the coronavirus (COVID-19) pandemic. The briefing is intended to support the members of the Banking Union Working Group and will be updated regularly.

Source: Banking union: Corona crisis effects.

For further information on the banking union, see: European Banking European Banking UnionUnion.

Coronavirus (COVID-19)—SRB sets out approach to MREL targets

The European Single Resolution Board (SRB) published a blog by its chair, Elke König, the purpose of which is to provide additional clarity on the SRB’s approach to minimum requirements for own funds and eligible liabilities (MREL), taking the impact of the coronavirus (COVID-19) crisis into account.

Source: COVID-19 crisis: SRB approach to MREL targets.

Coronavirus (COVID-19)—EIOPA sets out guidance for insurers

The European Insurance and Occupational Pensions Authority (EIOPA) is urging insurers and intermediaries to continue to take actions to mitigate the impact of coronavirus (COVID-19) on consumers. EIOPA says access to and continuity of insurance services should be considered essential in the context of the outbreak.

Source: EIOPA urges insurers and intermediaries to continue to take actions to mitigate the impact of coronavirus/COVID-19 on consumers.

Coronavirus (COVID-19)—EIOPA updates statement on the impact on insurance

EIOPA published an update on the impact of the coronavirus (COVID-19) pandemic, noting that it has significantly impacted the activities of EIOPA, national competent authorities (NCAs) and financial institutions, ranging from the need to assess implications for the market and propose immediate regulatory measures relevant for the current situation, to the deployment of business continuity plans.

Source: Update on other measures impacted by COVID-19 pandemic.

Coronavirus (COVID-19)—EIOPA moves to weekly calculation of RFRs and the symmetric adjustment to equity risk

Due to the coronavirus (COVID-19) outbreak, in the coming weeks EIOPA will carry out extraordinary calculations on a weekly basis to monitor the evolution of the relevant risk-free interest rate term structures (RFR) and the symmetric adjustment to equity risk (EDA). EIOPA is publishing this information in order to support insurance and reinsurance undertakings in the monitoring of their solvency and financial positions. 

Source: EIOPA publishes extraordinary information for Solvency II relevant risk free interest rate term structures and symmetric adjustment to equity risk with reference to 6 April 2020

Coronavirus (COVID-19)—ESMA updates risk assessment

The European Securities and Markets Authority (ESMA) updated its risk assessment in light of the coronavirus (COVID-19) pandemic.

Source: ESMA updates its risk assessment in light of the COVID-19 pandemic.

Coronavirus (COVID-19)—EBA guidelines on treatment of public and private moratoria

The European Banking Authority (EBA) published guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the coronavirus (COVID-19) crisis, which provide detailed guidance on the criteria to be fulfilled by legislative and non-legislative moratoria applied before 30 June 2020. The guidelines clarify the requirements for public and private moratoria, which if fulfilled, will help avoid the classification of exposures under the definition of forbearance or as defaulted under distressed restructuring.

Source: EBA publishes guidelines on treatment of public and private moratoria in light of COVID-19 measures.

Coronavirus (COVID-19)—ECB dividend recommendation published in the Official Journal

Coronavirus (COVID-19)—The European Central Bank (ECB)’s Recommendation on dividend payments was published in the Official Journal. ECB recommends that at least until 1 October 2020 no dividends are paid out (and no irrevocable commitment to pay out dividends is undertaken) by the credit institutions for the financial year 2019 and 2020 and that credit institutions refrain from share buy-backs aimed at remunerating shareholders.

Source: Recommendation of the European Central Bank of 27 March 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/1.

Coronavirus (COVID-19)—ECB provides further guidance on IFRS 9 for significant institutions

The chair of the ECB Supervisory Board, Andrea Enria, wrote to EU significant institutions setting out the ECB’s expectations around International Financial Reporting Standard (IFRS) 9 accounting in the context of the coronavirus (COVID-19) pandemic.

Source: IFRS 9 in the context of the coronavirus (COVID-19) pandemic.

Coronavirus (COVID-19)—IOSCO issues statement on application of IFRS 9

IOSCO published a statement on the application of IFRS 9 during the coronavirus (COVID-19) pandemic. IOSCO acknowledges the current uncertainty resulting from COVID-19, but says application of accounting standards must result in issuers providing clear, reliable, transparent and useful information to allow investors to make informed investment decisions.

Source: IOSCO statement on application of accounting standards during the COVID-19 outbreak.

Coronavirus (COVID-19)—PSR provides update on its work supporting cash access during the pandemic

The Payment Systems Regulator (PSR) issued a press release providing an update on its work supporting cash access during the coronavirus (COVID-19) pandemic. The PSR states that its immediate priority is to work with the other members of the Joint Authorities Cash Strategy (JACS) group, along with authorities and industry to support cash access for consumers that need it now, while also ensuring the safety of firms’ workforces.

Source: Update on our work supporting cash access during the COVID-19 pandemic.

Coronavirus (COVID-19)—FCA issues statement of policy setting out additional primary market measures to aid listed companies

The FCA issued a statement of policy containing a series of measures aimed at assisting companies to raise new share capital in response to the coronavirus (COVID-19) crisis while retaining an appropriate degree of investor protection. The FCA notes that the impact on people’s health and the health of companies in the real economy is significant and widespread. It is likely that many companies will turn to UK capital markets to raise money to support the recovery to come.

Sources: Statement of policy: listed companies and recapitalisation issuances during the coronavirus crisisAdditional primary market measures to aid listed companiesTechnical Supplement—modification of general meeting requirements under the Listing Rules and  Technical Supplement—working capital statements in prospectuses and circulars during the coronavirus epidemic

Coronavirus (COVID-19)—PRA and FCA set out SM&CR expectations

The FCA and the Prudential Regulation Authority (PRA) issued a joint statement on their approach to the Senior Managers and Certification Regime (SM&CR) for dual-regulated firms in light of the coronavirus (COVID-19) outbreak. Acknowledging the scale of disruption and likelihood of staff changes in the event of sickness, the regulators say they expect firms to resubmit relevant Statements of Responsibilities (SoRs) as soon as reasonably practicable taking into account the current circumstances and note that firms may take longer than usual to submit them.

Sources: Joint PRA and FCA statement on ‘Senior Managers and Certification Regime and coronavirus: Our expectations of firms’ and  FCA statement.

Coronavirus (COVID-19)—PRA to accept delays in some aspects of regulatory reporting and Pillar 3 disclosures

The PRA issued a statement on regulatory reporting and Pillar 3 disclosures for UK banks, building societies, designated investment firms and credit unions in response to the coronavirus (COVID-19) outbreak. It follows on from the EBA’s statement published on 31 March 2020.

Source: COVID-19 regulatory reporting and disclosure amendments.

Coronavirus (COVID-19)—HMT and PRA statement on delayed Basel 3.1 implementation

HM Treasury (HMT) and the PRA welcomed the Group of Central Bank Governors and Heads of Supervision (GHOS)’s decision to delay the implementation of the Basel 3.1 standards by one year.

Sources: Statement from HM Treasury and the Prudential Regulation Authority on the implementation of the Basel 3.1 standards and  Joint PRA and HMT statement on the delay to implementation of the Basel 3.1 standards.

Coronavirus (COVID-19)—FCA issues pensions and retirement income guidance

The FCA published guidance for pension providers and defined benefit (DB) transfer advisers, as the coronavirus (COVID-19) pandemic develops. The FCA states that it is working with industry to ensure the market can deliver fair outcomes for consumers. In its guidance the FCA explains that it has deferred the implementation date for the final suite of Retirement Outcomes Review remedies: Investment Pathways, active decision to invest in cash and actual charges disclosure rules. It also sets out how firms can and should support consumers that seek to access their pension savings during the current pandemic.

Source: Pensions and retirement income: our guidance for firms.

Coronavirus (COVID-19)—FCA proposes stop-gap protections for users of consumer credit products

The FCA is opening a brief consultation on a proposed range of temporary measures designed as a stop-gap to quickly support users of certain consumer credit products who are facing financial problems arising from the coronavirus (COVID-19) pandemic. Feedback is sought by 6 April 2020. If confirmed the measures would start to come into force by 9 April 2020.

Source: FCA proposes temporary financial relief for customers impacted by coronavirus.

Coronavirus (COVID-19)—PRA sets out measures to help credit unions

The PRA published a letter from its Credit Union Supervision Team to directors, staff members and volunteers of PRA-regulated credit unions. It sets out details of a PRA rule modification on minimum provisioning requirements, available to all credit unions from 8 April 2020 until 1 January 2021; explains the PRA’s supervisory focus and priorities for credit unions (CUs) in this period of stress; and reiterates messages on regulatory reporting.

Source: Letter from Credit Union Supervision Team to directors, staff members and volunteers of PRA-regulated credit unions

For further information on credit unions, see: Credit Credit unions—essentials.

FCA postpones implementation date for PS20/3 rules on signposting for consumers with medical conditions and publishes further feedback

The FCA updated its webpage on policy statement PS20/3, Signposting to travel insurance for consumers with medical conditions, to announce a postponement of the November 2020 start date for the signposting rules set out in the policy statement. The delay is intended to allow firms to focus on preventing and mitigating consumer harm during the coronavirus (COVID-19) pandemic, and the FCA says it will update stakeholders on the revised implementation date when it has more clarity on the impact of the pandemic. The FCA has also published an addendum to PS20/3, setting out its feedback to additional responses it received to its consultation on the proposed rules.

Sources: PS20/3 addendum: Signposting to travel insurance for consumers with medical conditions and  PS20/3: Signposting to travel insurance for consumers with medical conditions.

FCA publishes business plan for 2020/21

The FCA published its business plan for 2020/21, setting out its key priorities and planned specific activities for the year ahead. The business plan includes a specific focus on the challenges presented by the coronavirus (COVID-19) pandemic, which has led the FCA to delay other activity it had planned where it judged that it was not urgent and may have distracted firms from ‘the immediate priority’ of addressing those challenges.

Sources: Business plan 2020/21Our business plan 2020/21 and FCA sets out priorities for 2020/21.

Coronavirus (COVID-19)—FCA provides regulatory guidance for funds

The FCA published a webpage setting out its expectations regarding funds in light of the coronavirus (COVID-19) pandemic. It aims to provide guidance on the challenges firms are facing both operationally and as a result of significantly increased volatility in global markets.

Source: FCA expectations regarding funds in light of coronavirus (COVID-19).

Coronavirus (COVID-19)—FCA publishes new guidance for firms on messages to give customers following market volatility

The FCA published a new webpage on the messages firms can give customers about investments and life assurance following market volatility, in the context of the current coronavirus (COVID-19) pandemic. The webpage sets out guidance for firms on how to avoid straying into making personal recommendations when bringing out the implications for customers of realising their investments or cancelling life assurance.

Source: Messages firms can give customers about investments and life assurance following market volatility.

Coronavirus (COVID-19)—FCA delays implementation date for platform switching rules

The FCA published an update on its policy statement PS19/29: Making transfers simpler—feedback to CP19/12 and final rules. In its update the FCA confirms that the new rules will come into force on 31 July 2020 but announces that the implementation date for the rules will be delayed by six months to 1 February 2021, to support firms’ reprioritisation to focus on preventing and mitigating consumer harm during the coronavirus (COVID-19) pandemic.

Source: PS19/29: Making transfers simpler—feedback to CP19/12 and final rules.

Coronavirus (COVID-19)—FCA sets out expectations for implementing new rules on pension communications

The FCA updated its webpage providing information for firms on the coronavirus (COVID-19) crisis. In the update, the FCA notes that a number of firms are facing challenges implementing FCA rules that change both the information that firms give consumers entering pension drawdown or taking an income for the first time (including uncrystallised fund pension lump sum) and the annual information given to these customers. The update sets out the FCA’s expectations about implementation of the changes.

Source: FCA updates information for firms on coronavirus (COVID-19) webpage.

Coronavirus (COVID-19)—FCA highlights changes to commencement dates not yet in consolidated Handbook

The FCA issued a statement noting that changes to commencement dates of Handbook material as set out in the COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020 (FCA 2020/15) are not yet reflected in the consolidated text of the online Handbook.

Sources: Important Notice: Instrument FCA 2020/15 and COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020.

Coronavirus (COVID-19)—FCA publishes new webpage on applying CASS rules

The FCA published a new webpage on client assets (CASS) and coronavirus (COVID-19), which summarises some of the queries the FCA has received on CASS compliance related to the current disruption caused by COVID-19, and the FCA’s position on each relevant issue.

Source: Client assets and coronavirus (COVID-19).

Coronavirus (COVID-19)—Treasury Committee publishes economic impact evidence

The Treasury Committee published a summary of evidence received in response to its inquiry into the economic impact of the coronavirus (COVID-19) pandemic. The committee received evidence from individuals, organisations, trade unions and business representation groups across a wide range of sectors. Among the topics covered in the high-level summary are support for the self-employed; guidance on eligibility for support; entitlement to Universal Credit; entitlement to statutory sick pay; entitlement to business rates relief; access to finance (lending); cash flow assistance; relaxation of tax rules and compliance activity; debt management; insurance; charities; rent; and payment of bills.

Source: Treasury Committee publishes summary of evidence received in response to Economic Impact of Coronavirus inquiry.

Coronavirus (COVID-19)—BIS paper examines attitudes to cash handling

The Bank for International Settlements (BIS) published a paper on the coronavirus (COVID-19), cash, and the future of payments, in light of public concerns that the coronavirus could be transmitted by cash. The authors say scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads. Nevertheless, to bolster trust in cash, central banks are actively communicating, urging continued acceptance of cash and, in some instances, sterilising or quarantining banknotes. Some are encouraging contactless payments.

Source: COVID-19, cash, and the future of payments.

Coronavirus (COVID-19)—Better Finance highlights guidance for investors across the EU

Better Finance published a list of tools its members have put in place to provide information and guidance for individual investors and financial services users across EU Member States in response to the coronavirus (COVID-19) pandemic. Better Finance says EU citizens in their capacity as investors and savers are already feeling the squeeze and will be among the first in line to suffer from the economic and financial fallout that will undoubtably ensue following the large array of different financial measures taken by governments and financial institutions.

Source: Initiatives taken to try and help EU savers and investors navigate the economic fallout from the coronavirus epidemic.

Coronavirus (COVID-19)—BVCA calls for £500m funding bridge for early-stage tech businesses

The British Private Equity & Venture Capital Association (BVCA) recommended that the UK government introduces a £500m funding facility for venture capital-backed, early-stage companies operating in the digital, biotech and life sciences sectors, to support them during the coronavirus (COVID-19) crisis. The BVCA says early stage businesses have been a key driver in establishing the UK as a global leader in the digital economy and other high technology sectors, and this position is ‘now under severe threat’.

Source: BVCA proposes emergency bridge funding for early stage companies in the digital economy.

Coronavirus (COVID-19)—Chancellor implements new measures to support businesses

The Chancellor of the Exchequer, Rishi Sunak MP, announced that the government is taking further action to support businesses affected by the coronavirus (COVID-19) pandemic. The new measures include the extension of the current loan scheme for small businesses, a ban on lenders requesting personal guarantees on loans under £250,000, and the launch of a new scheme to bolster support for larger firms currently ineligible for loans.

Source: Chancellor strengthens support on offer for business as first government-backed loans reach firms in need.

COP26 UN climate change conference postponed amid coronavirus (COVID-19) crisis

The COP26 United Nations (UN) climate change conference, initially scheduled to take place in Glasgow in November 2020, has now been postponed as a result of the coronavirus (COVID-19) pandemic. Representatives of the COP Bureau of the UNFCCC (United Nations Framework Convention on Climate Change) revealed their collaboration with the UK and its Italian partners in order to reach this decision. Dates for a rescheduled conference in 2021 are yet to be released, but will follow once a discussion with the parties has occurred. Increasing climate ambition, building resilience and lowering emissions will continue to be the emphasis of the COP26’s agenda.

Source: COP26 postponement.

Coronavirus (COVID-19)—EBA extends deadline for expression of interest for its new Banking Stakeholder Group

The EBA announced that, in light of the turbulence caused by the coronavirus (COVID-19) pandemic, and the need for potential applicants to focus on other issues, it has extended the deadline of the call for expression of interest for its Banking Stakeholder Group (BSG) to 17 April 2020.

Source: EBA extends call for expression of interest for its new Banking Stakeholder Group.

Coronavirus (COVID-19)—EIOPA extends deadline for stakeholder group applications

EIOPA issued a statement saying that it is currently seeking applications for its two Stakeholder Groups, the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group. In light of the challenges and difficulties caused by the coronavirus (COVID-19) pandemic, EIOPA decided to extend the deadline for interested stakeholders to submit their application.

Source: EIOPA extends deadline for stakeholder group applications.

Coronavirus (COVID-19)—FSB group discusses impact on Middle East and North Africa

The Financial Stability Board (FSB) Regional Consultative Group for the Middle East and North Africa has held a meeting via conference call to discuss recent macroeconomic and financial market developments, including the financial stability implications of the coronavirus (COVID-19).

Source: The 17th meeting of the FSB MENA group discusses regional financial stability and the impact of COVID-19.

Coronavirus (COVID-19)—FSB meets to discuss financial services continuity

The FSB issued a statement saying its members continue to co-operate and take action nationally and collectively to mitigate the financial risks posed by the coronavirus (COVID-19) pandemic. The FSB Plenary met by telephone on 30 March 2020 to review the numerous actions taken to support market functioning and maintain the provision of credit to households and businesses. A key issue discussed on the call was the critical nature of many financial services and the importance of ensuring their operation throughout the pandemic.

Source: FSB members take action to ensure continuity of critical financial services functions.

Coronavirus (COVID-19)—IA comments on executive pay and dividend payments

The chief executive of the Investment Association (IA), Chris Cummings, commented on dividend payments and executive pay in the current climate.

Source: Corporate governance COVID-19 update.

PRA welcomes insurance firms’ dividend pause announcement

The PRA welcomed the decision by some UK insurance firms to pause dividends given the uncertainties associated with the coronavirus (COVID-19) epidemic.

Source: PRA statement on decision by insurance companies to pause dividends.

Coronavirus (COVID-19)—PIMFA launches first ever Virtual Festival in June 2020

The Personal Investment Management & Financial Advice Association (PIMFA), the trade association for the investment services and financial advice industry, is to hold a two-day Virtual Festival on 3 and 4 June 2020 for industry colleagues working from home during the coronavirus COVID-19 lockdown. Virtual Fest will be a chance for wealth managers and financial advisers to hear from leading experts on topical areas and on key priorities for the sector.

Source: PIMFA launches first ever virtual festival in June.

Coronavirus (COVID-19)—Update on appointment to FCA board

HMT announced that Bernadette Conroy’s term as non-executive director to the FCA Board will commence on 6 April 2020. It was previously announced that Conroy’s three-year term would begin on 1 August 2020, but to ensure the board is ‘fully resilient’ while it responds to the coronavirus (COVID-19) pandemic, HMT has decided to bring forward the start date to 6 April 2020.

Source: Update to appointment on Financial Conduct Authority (FCA) board.

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Brexit news

House of Commons European Scrutiny Committee asks for clarifications on UK’s approach to equivalence

The House of Commons European Scrutiny Committee published a list of documents to be reported to the House as legally and/or politically important. These include a European Commission policy paper which sets out the EU’s position on ‘equivalence’ in finance. The committee stresses that the UK government’s approach to equivalence, including the balance between regulatory flexibility and market access for financial services, remains unresolved.

Source: 3rd Report—Documents considered by the Committee on 26 March 2020.

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MiFID II

ESMA issues opinions on Hungarian product intervention measures

ESMA issued two opinions on product intervention measures relating to contracts for difference and binary options, and taken by the Magyar Nemzeti Bank of Hungary (MNB) under the Markets in Financial Instruments Regulation (Regulation (EU) No 600/2014) (MiFIR). ESMA’s opinion concludes that the proposed measures are justified and proportionate. The opinion also concludes that it is necessary for national competent authorities (NCAs) of other Member States to take product intervention measures that are at least as stringent as ESMA’s measures.

Source: ESMA issues an opinion on Hungarian product intervention measures.

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UK, EU and international regulators and bodies

FCA publishes business plan for 2020/21

The FCA published its business plan for 2020/21, setting out its key priorities and planned specific activities for the year ahead. The business plan includes a specific focus on the challenges presented by the coronavirus (COVID-19) pandemic, which has led the FCA to delay other activity it had planned where it judged that it was not urgent and may have distracted firms from ‘the immediate priority’ of addressing those challenges.

Sources: Business plan 2020/21Our business plan 2020/21 and FCA sets out priorities for 2020/21.

FOS publishes plans and budget for 2020/21

The FOS published its plans and budget for 2020/21. This follows on from the publication of the details of its budget for 2020/21 on 1 April 2020. The FOS consulted on these plans between December 2019 and January 2020. A range of organisations responded to the consultation, including major banks, insurers, and industry and consumer groups.

Source: Our plans and budget for 2020/21.

ESMA public statement of consultation practices updated

The ESMA updated its Public Statement of Consultation Practices to take account of the amendments which the European Supervisory Authorities’ review has made to the ESMA Regulation.

Source: ESMA updates its public statement of consultation practices.

Coronavirus (COVID-19)—Update on appointment to FCA board

HM Treasury announced that Bernadette Conroy’s term as non-executive director to the FCA Board will commence on 6 April 2020. It was previously announced that Conroy’s three-year term would begin on 1 August 2020, but to ensure the board is ‘fully resilient’ while it responds to the coronavirus (COVID-19) pandemic, HM Treasury has decided to bring forward the start date to 6 April 2020.

Source: Update to appointment on Financial Conduct Authority (FCA) board.

Coronavirus (COVID-19)—EIOPA extends deadline for stakeholder group applications

EIOPA issued a statement saying that it is currently seeking applications for its two Stakeholder Groups, the Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group. In light of the challenges and difficulties caused by the coronavirus (COVID-19) pandemic, EIOPA has decided to extend the deadline for interested stakeholders to submit their application.

Source: EIOPA extends deadline for stakeholder group applications.

Coronavirus (COVID-19)—EBA extends deadline for expression of interest for its new Banking Stakeholder Group

The EBA announced that, in light of the turbulence caused by the coronavirus (COVID-19) pandemic, and the need for potential applicants to focus on other issues, it has extended the deadline of the call for expression of interest for its Banking Stakeholder Group (BSG) to 17 April 2020.

Source: EBA extends call for expression of interest for its new Banking Stakeholder Group.

Coronavirus (COVID-19)—PIMFA launches first ever Virtual Festival in June 2020

PIMFA, the trade association for the investment services and financial advice industry, is to hold a two-day Virtual Festival on 3 and 4 June 2020 for industry colleagues working from home during the coronavirus (COVID-19) lockdown. Virtual Fest will be a chance for wealth managers and financial advisers to hear from leading experts on topical areas and on key priorities for the sector.

Source: PIMFA launches first ever virtual festival in June.

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Authorisation, approval and supervision

ECB Guideline on the recording of certain data by national competent authorities in the RIAD published in the Official Journal

Guideline (EU) 2020/497 of the ECB of 20 March 2020 on the recording of certain data by national competent authorities in the Register of Institutions and Affiliates Data (RIAD) (ECB/2020/16), was published in the Official Journal of the EU.

Source: Guideline (EU) 2020/497 of the European Central Bank of 20 March 2020 on the recording of certain data by national competent authorities in the Register of Institutions and Affiliates Data (ECB/2020/16).

FCA consults on rates proposals for 2020/21

The FCA published consultation paper CP20/6, FCA regulated fees and levies: Rates proposals 2020/21, seeking views on the FCA’s proposed periodic fee rates, revised authorisation application fees, further FCA fees policy proposals and a consumer harm campaign, as well as the proposed FOS, Money and Pensions Service, Devolved Authorities and illegal money lending levies. Feedback is sought by 19 May 2020.

Source: CP20/6: FCA regulated fees and levies: Rates proposals 2020/21.

Coronavirus (COVID-19)—PRA and FCA set out SM&CR expectations

The FCA and the PRA issued a joint statement on their approach to the SM&CR for dual-regulated firms in light of the coronavirus (COVID-19) outbreak. Acknowledging the scale of disruption and likelihood of staff changes in the event of sickness, the regulators say they expect firms to resubmit relevant SoRs as soon as reasonably practicable taking into account the current circumstances and note that firms may take longer than usual to submit them.

Sources: Joint PRA and FCA statement on ‘Senior Managers and Certification Regime and coronavirus: Our expectations of firms’ and  FCA statement.

EIOPA publishes opinion on the supervision of remuneration principles in the insurance and reinsurance sector

EIOPA published an opinion on the supervision of remuneration principles in the insurance and reinsurance sector. It aims to ensure consistent practices in the application of the remuneration principles included in the Solvency II Directive (Directive 2009/138/EC) (Solvency II). The opinion does not add any new requirements or create new administrative burdens for firms. The paper is accompanied by a feedback statement summarising responses to EIOPA’s 2019 consultation on the subject.

Source: EIOPA publishes opinion on the supervision of remuneration principles in the insurance and reinsurance sector.

ECB publishes Q4 2019 supervisory banking statistics

The ECB published its supervisory banking statistics for the fourth quarter of 2019. The statistics are broken down by business model classification for the first time.

Source: ECB publishes supervisory banking statistics for the fourth quarter of 2019.

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Prudential requirements

BCBS publishes Basel III monitoring results based on end-June 2019 data

The BCBS published the results of its latest Basel III monitoring exercise, based on data as of 30 June 2019. The report sets out the impact of the Basel III framework that was initially agreed in 2010, as well as the effects of the Committee's December 2017 finalisation of the Basel III reforms and the finalisation of the market risk framework published in January 2019. Given the June 2019 reporting date, the results do not reflect the economic impact of the coronavirus (COVID-19) on participating banks. Nevertheless, the Committee believes that the information contained in the report will provide relevant stakeholders with a useful benchmark for analysis.

Source: Basel III monitoring results based on end-June 2019 data published by the Basel Committee.

EBA reports set out impact of the Basel III reforms on EU banks’ capital and compliance with liquidity measures

The EBA published two reports which measure the impact of implementing the final Basel III reforms and monitor the current implementation of liquidity measures in the EU. Being based on June 2019 reporting data, these results do not reflect the economic impact of the coronavirus disease (COVID-19) on participating banks. Overall, the EBA estimates that the Basel III reforms, once fully implemented in 2028 after the additional delay of one year agreed by the Basel Committee, would determine an average increase by 16.1% of EU banks' Tier 1 minimum required capital. The liquidity coverage ratio (LCR) of EU banks, which was fully implemented in January 2018, stood at around 147% on average in June 2019.

Source: EBA updates impact of the Basel III reforms on EU banks’ capital and compliance with liquidity measures.

Coronavirus (COVID-19)—PRA to accept delays in some aspects of regulatory reporting and Pillar 3 disclosures

The PRA issued a statement on regulatory reporting and Pillar 3 disclosures for UK banks, building societies, designated investment firms and credit unions in response to the coronavirus (COVID-19) outbreak. It follows on from the European Banking Authority’s statement published on 31 March 2020.

Source: COVID-19 regulatory reporting and disclosure amendments.

Coronavirus (COVID-19)—ECB provides further guidance on IFRS 9 for significant institutions

The chair of the ECB Supervisory Board, Andrea Enria, has written to EU significant institutions setting out the ECB’s expectations around IFRS 9 accounting in the context of the coronavirus (COVID-19) pandemic.

Source: IFRS 9 in the context of the coronavirus (COVID-19) pandemic.

Coronavirus (COVID-19)—IOSCO issues statement on application of IFRS 9

IOSCO published a statement on the application of IFRS 9 during the coronavirus (COVID-19) pandemic. IOSCO acknowledges the current uncertainty resulting from COVID-19, but says application of accounting standards must result in issuers providing clear, reliable, transparent and useful information to allow investors to make informed investment decisions.

Source: IOSCO statement on application of accounting standards during the COVID-19 outbreak.

Coronavirus (COVID-19)—HMT and PRA statement on delayed Basel 3.1 implementation

HMT and the PRA welcomed the GHOS’s decision to delay the implementation of the Basel 3.1 standards by one year.

Sources: Statement from HM Treasury and the Prudential Regulation Authority on the implementation of the Basel 3.1 standards and  Joint PRA and HMT statement on the delay to implementation of the Basel 3.1 standards.

EBA publishes updated list of Other Systemically Important Institutions (O-SIIs)

The EBA published the updated 2019 list of Other Systemically Important Institutions (O-SIIs) in the EU. O-SIIs—those institutions which, along with Global Systemically Important Institutions (G-SIIs), are deemed systemically important—have been identified by the relevant authorities across the EU according to harmonised criteria provided by the EBA guidelines. This list also reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs. The list of O-SIIs is available also in a user-friendly visualisation tool, including the information on O-SII buffers assigned to identified institutions across the EU.

Source: EBA updates list of other systemically important institutions (O-SIIs).

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Financial stability, recovery and resolution 

Coronavirus (COVID-19)—BCBS sets out additional measures to alleviate impact

The BCBS set out additional measures to alleviate the impact of coronavirus (COVID-19) on the global banking system. These measures support the provision of lending by banks to the real economy and provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities.

Source: Basel Committee sets out additional measures to alleviate the impact of COVID-19.

Coronavirus (COVID-19)—SRB sets out approach to MREL targets

The SRB published a blog by its chair, Elke König, the purpose of which is to provide additional clarity on the SRB’s approach to minimum requirements for own funds and eligible liabilities (MREL), taking the impact of the coronavirus (COVID-19) crisis into account.

Source: COVID-19 crisis: SRB approach to MREL targets.

EBA publishes updated list of Other Systemically Important Institutions (O-SIIs)

The EBA published the updated 2019 list of Other Systemically Important Institutions (O-SIIs) in the EU. O-SIIs—those institutions which, along with Global Systemically Important Institutions (G-SIIs), are deemed systemically important—have been identified by the relevant authorities across the EU according to harmonised criteria provided by the EBA guidelines. This list also reflects the additional capital buffers that the relevant authorities have set for the identified O-SIIs. The list of O-SIIs is available also in a user-friendly visualisation tool, including the information on O-SII buffers assigned to identified institutions across the EU.

Source: EBA updates list of other systemically important institutions (O-SIIs).

Coronavirus (COVID-19)—EBA guidelines on treatment of public and private moratoria

The EBA published guidelines on legislative and non-legislative moratoria on loan repayments applied in the light of the coronavirus (COVID-19) crisis, which provide detailed guidance on the criteria to be fulfilled by legislative and non-legislative moratoria applied before 30 June 2020. The guidelines clarify the requirements for public and private moratoria, which if fulfilled, will help avoid the classification of exposures under the definition of forbearance or as defaulted under distressed restructuring.

Source: EBA publishes guidelines on treatment of public and private moratoria in light of COVID-19 measures.

Coronavirus (COVID-19)—FSB meets to discuss financial services continuity

The FSB issued a statement saying its members continue to co-operate and take action nationally and collectively to mitigate the financial risks posed by the coronavirus (COVID-19) pandemic. The FSB Plenary met by telephone on 30 March 2020 to review the numerous actions taken to support market functioning and maintain the provision of credit to households and businesses. A key issue discussed on the call was the critical nature of many financial services and the importance of ensuring their operation throughout the pandemic.

Source: FSB members take action to ensure continuity of critical financial services functions.

Coronavirus (COVID-19)—FSB group discusses impact on Middle East and North Africa

The FSB Regional Consultative Group for the Middle East and North Africa has held a meeting via conference call to discuss recent macroeconomic and financial market developments, including the financial stability implications of the coronavirus (COVID-19).

Source: The 17th meeting of the FSB MENA group discusses regional financial stability and the impact of COVID-19.

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Risk management and controls

Coronavirus (COVID-19)—ECB dividend recommendation published in the Official Journal

The ECB’s Recommendation on dividend payments was published in the Official Journal of the EU. ECB recommends that at least until 1 October 2020 no dividends are paid out (and no irrevocable commitment to pay out dividends is undertaken) by the credit institutions for the financial year 2019 and 2020 and that credit institutions refrain from share buy-backs aimed at remunerating shareholders.

Source: Recommendation of the European Central Bank of 27 March 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/1.

Coronavirus (COVID-19)—IA comments on executive pay and dividend payments

The chief executive of the IA, Chris Cummings, commented on dividend payments and executive pay in the current climate.

Source: Corporate governance COVID-19 update.

PRA welcomes insurance firms’ dividend pause announcement

The PRA welcomed the decision by some UK insurance firms to pause dividends given the uncertainties associated with the coronavirus (COVID-19) epidemic.

Source: PRA statement on decision by insurance companies to pause dividends.

Coronavirus (COVID-19)—ESMA updates risk assessment

ESMA updated its risk assessment in light of the coronavirus (COVID-19) pandemic.

Source: ESMA updates its risk assessment in light of the COVID-19 pandemic.

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Financial crime

PSR publishes documents from its conference on tackling APP scams

Following a 30 March 2020 meeting, via conference call, with representatives of the payments industry and colleagues from other authorities to discuss the progress being made on tackling authorised push payment (APP) scams, the PSR published the speaker’s notes and accompanying documents from the meeting.

Source: Authorised push payment (APP) scams conference call—30 March 2020.

PIMFA to launch scam awareness campaign

PIMFA is to launch a new initiative to help safeguard savers against investment scams now on the rise. The campaign is part of its existing Financial and Mental Wellbeing campaign, and will offer advice and resources to savers to encourage them to be vigilant and to seek professional finance advice when making decisions about their financial futures.

Source: PIMFA to provide consumer advice on how to avoid scams as part of Financial and Mental Wellbeing campaign.

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Consumer protection

Coronavirus (COVID-19)—FCA proposes stop-gap protections for users of consumer credit products

The FCA opened a brief consultation on a proposed range of temporary measures designed as a stop-gap to quickly support users of certain consumer credit products who are facing financial problems arising from the coronavirus (COVID-19) pandemic. Feedback was sought by 6 April 2020. If confirmed the measures would come into force by 9 April 2020.

Source: FCA proposes temporary financial relief for customers impacted by coronavirus.

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Conduct requirements

Coronavirus (COVID-19)—FCA publishes new webpage on applying CASS rules

The FCA published a new webpage on CASS and coronavirus (COVID-19), which summarises some of the queries the FCA has received on CASS compliance related to the current disruption caused by coronavirus, and the FCA’s position on each relevant issue.

Source: Client assets and coronavirus (COVID-19).

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Complaints, compensation and claims management

FOS publishes plans and budget for 2020/21

The FOS published its plans and budget for 2020/21. This follows on from the publication of the details of its budget for 2020/21 on 1 April 2020. The FOS consulted on these plans between December 2019 and January 2020. A range of organisations responded to the consultation, including major banks, insurers, and industry and consumer groups.

Source: Our plans and budget for 2020/21.

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Investigations, enforcement and discipline

ESMA publishes enforcement report and database extracts

ESMA published a report which contains an overview of the activities of ESMA and of accounting enforcers in the EEA when examining compliance of financial and non-financial information provided by issuers in 2019.

Sources: Enforcement and regulatory activities of European enforcers in 2019 and  ESMA publishes 24th extract from its EECS database.

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Competition in financial services

CMA publishes notice on changes to Retail Banking Market Investigation Order 2017 action plan

The Competition and Markets Authority (CMA) published a notice of approval of certain changes and requirements for additional changes to the agreed timetable and project plan for the Retail Banking Market Investigation Order 2017. The changes are relevant to Part 2 of the Order, which sets out the provisions relating to Open Banking.

Source: Retail Banking Market Investigation Order 2017—Notice of approval of certain changes and requirement for additional changes to the Agreed Timetable and Project Plan published.

Update on £775m RBS State Aid Alternative Remedies Package

Banking Competition Remedies Ltd has issued updates on the Capability and Innovation Fund and the Incentivised Switching Scheme under the £775m Royal Bank of Scotland (RBS) State Aid Alternative Remedies Package.

Source: Banking Competition Remedies Ltd (BCR) market update.

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Markets and trading

ICMA publishes repo trading technology directory

The ICMA published a repo trading technology directory, the result of a mapping exercise of electronic repo trading platforms. The directory is intended to help market participants understand what execution venues are available for repo trading; product scope; and differences in trading protocols, clearing and collateral configurations. The directory also provides information on the venues’ regulatory status, market identifier codes and additional services on offer such as regulatory reporting under the Securities Financing Transactions Regulation.

Source: ICMA publishes repo trading technology directory.

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Regulation of benchmarks and IBOR reform

ECB Guideline amending Guideline (EU) 2019/1265 on the €STR published in the Official Journal

Guideline (EU) 2020/496 of the ECB of 19 March 2020 amending Guideline (EU) 2019/1265 on the euro short-term rate (€STR) (ECB/2020/15), was published in the Official Journal of the EU.

Source: Guideline (EU) 2020/496 of the European Central Bank of 19 March 2020 amending Guideline (EU) 2019/1265 on the euro short-term rate (€STR) (ECB/2020/15).

Draft European Commission decision recognises Japan’s equivalence under BMR

The European Commission published a draft implementing decision on the equivalence of the legal and supervisory framework applicable to benchmarks in Japan under the Benchmarks Regulation (EU) 2016/1011 (BMR). The draft decision recognises Japan’s framework as equivalent to the corresponding requirements under the BMR, and finds that the relevant requirements are subject to effective supervision and enforcement on an ongoing basis. Feedback on the draft decision is sought by 4 May 2020.

Source: Equivalence decision for a third country (Japan) under the Benchmarks regulation (BMR).

For further information on the Benchmarks Regulation, see: Benchmarks Regulation—essentials Regulation—essentials.

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Regulation of capital markets

CMA publishes bond market post-trade transparency directory

The International Capital Market Association (ICMA) published an overview of current post-trade reporting obligations across multiple jurisdictions from Europe, the Americas and Asia-Pacific. The mapping is intended to provide a consolidated view to compare both regulatory rules and best practice guidance on bond post-trade transparency regimes, as well as details on reporting fields and exceptions.

Source: ICMA publishes Bond Market Post-Trade Transparency Directory.

ESMA statistical report contributes to CMU Action Plan and stresses impact of costs on retail investor benefits 

ESMA published its second annual statistical report on the cost and performance of retail investment products in the EU. The analysis contained in this report complements ESMA’s risk assessment and supervisory convergence work within its investor protection mandate and contributes to the European Commission’s project on cost and performance of investment products under the Capital Markets Union (CMU) Action Plan.

Source: ESMA report stresses impact of costs on retail investor benefits.

New National Storage Mechanism takes effect

The FCA launched a new National Storage Mechanism (NSM) effective from 6 April 2020. To upload regulated information to the new NSM, a person must be registered and authorised to use the FCA's Electronic Submission System (ESS).

Source: New NSM – What you need to do.

ESMA publishes translations of its guidelines on standardised procedures and messaging protocols

ESMA issued the official translations of its guidelines on standardised procedures and messaging protocols. National competent authorities (NCAs) to which these guidelines apply must notify ESMA whether they comply or intend to comply with the guidelines, within two months.

Source: ESMA publishes translations for guidelines on standardised procedures and messaging protocols.

Coronavirus (COVID-19)—FCA issues statement of policy setting out additional primary market measures to aid listed companies

The FCA issued a statement of policy containing a series of measures aimed at assisting companies to raise new share capital in response to the coronavirus (COVID-19) crisis while retaining an appropriate degree of investor protection. The FCA notes that the impact on people’s health and the health of companies in the real economy is significant and widespread. It is likely that many companies will turn to UK capital markets to raise money to support the recovery to come.

Sources: Statement of policy: listed companies and recapitalisation issuances during the coronavirus crisisAdditional primary market measures to aid listed companiesTechnical Supplement—modification of general meeting requirements under the Listing Rules and  Technical Supplement—working capital statements in prospectuses and circulars during the coronavirus epidemic

CPMI and IOSCO: jurisdictions move towards full implementation of FMI standards

The Committee on Payments and Market Infrastructures (CPMI) and IOSCO released an update showing that 25 of the 28 jurisdictions participating in the implementation monitoring programme have adopted measures implementing the international standards for all types of financial market infrastructures (FMIs).

Source: Jurisdictions move towards full implementation of standards for financial market infrastructures.

Coronavirus (COVID-19)—IOSCO announces reprioritisation of its work programme

The board of the IOSCO issued a press release announcing that it has agreed to pause or delay some of its work in 2020 in order to redirect its resources to focus on the multiple challenges securities markets regulators are addressing as a result of the coronavirus (COVID-19) crisis.

Source: IOSCO reprioritizes its work program to address impact of COVID-19.

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Regulation of derivatives

ESMA consults on potential central clearing solutions for pension scheme arrangements

ESMA is consulting on a range of issues regarding potential central clearing solutions for pension scheme arrangements (PSAs) under the European Market Infrastructure Regulation (EMIR). The consultation is based on ESMA’s first report to the European Commission documenting the progress made to date towards potential clearing solutions for PSAs. Feedback is sought by 15 June 2020, with ESMA aiming to publish a second report and submit it to the European Commission by the end of 2020.

Sources: ESMA consults on clearing solutions for pension scheme arrangements under EMIR and  First report for consultation: Central clearing solutions for pension scheme arrangements.

Coronavirus (COVID-19)—BCBS and IOSCO defer final implementation phases of the margin requirements for non-centrally cleared derivatives

The BCBS and the IOSCO announced that they have agreed to extend by one year the deadline for completing the final two implementation phases of the margin requirements for non-centrally cleared derivatives. This is due to the significant challenges posed by the coronavirus (COVID-19), including the displacement of staff and the need for firms to focus resources on managing risks associated with current market volatility.

Source: Basel Committee and IOSCO announce deferral of final implementation phases of the margin requirements for non-centrally cleared derivatives.

For further information on initial margin requirements for non-centrally cleared derivatives, see: Margin for non-cleared derivatives—industry  Margin for non-cleared derivatives—industry initiatives.

Coronavirus (COVID-19)—FCA welcomes BCBS-IOSCO statement on deferring the initial margin requirements by a year

The FCA issued a press release in which it welcomes the BCBS and IOSCO joint statement published on 3 April 2020 which announced a one-year deferral of the September 2020 and September 2021 phase-ins of the global initial margin requirements for non-centrally cleared derivatives.

Source: BCBS and IOSCO announce a one-year deferral of the remaining global initial margin requirements in response to coronavirus challenges.

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Investment funds and asset management

ESMA guidelines on performance fees in investment funds

ESMA published its final guidance on performance fees in investment funds. The guidelines are applicable to Undertakings for the Collective Investment in Transferable Securities (UCITS) and certain types of Alternative Investment Funds (AIFs) and aim to ensure a level playing field and a consistent level of protection to retail investors.

Source: ESMA publishes guidance on performance fees in UCITS and certain AIFS.

Commission launches ESCALAR to help high potential companies grow and expand in Europe

The European Commission announced that it has launched ESCALAR, a new investment approach, developed together with the European Investment Fund (EIF), that will support venture capital and growth financing for promising companies, enabling them to scale up in Europe and help reinforce Europe’s economic and technological sovereignty. It will provide up to €300m, aiming to increase the investment capacity of venture capital and private equity funds, triggering investments of up to €1.2bn, or four times the original investment, to support promising companies.

Source: ESCALAR: up to €1.2 billion to help high potential companies grow and expand in Europe.

Coronavirus (COVID-19)—FCA delays implementation date for platform switching rules

The FCA published an update on its policy statement PS19/29: Making transfers simpler—feedback to CP19/12 and final rules. In its update the FCA confirms that the new rules will come into force on 31 July 2020 but announces that the implementation date for the rules will be delayed by six months to 1 February 2021, to support firms’ reprioritisation to focus on preventing and mitigating consumer harm during the coronavirus (COVID-19) pandemic.

Source: PS19/29: Making transfers simpler—feedback to CP19/12 and final rules.

Coronavirus (COVID-19)—FCA highlights changes to commencement dates not yet in consolidated Handbook

The FCA issued a statement noting that changes to commencement dates of Handbook material as set out in the COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020 (FCA 2020/15) are not yet reflected in the consolidated text of the online Handbook.

Sources: Important Notice: Instrument FCA 2020/15 and  COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020.

AREF sets out proposals for a new fund vehicle

The Association of Real Estate Funds (AREF) issued a press release stating that it has been working with the IA on a contractual form of Onshore Professional Fund (OPF), called the Professional Investor Fund (PIF). This will sit alongside the IA’s proposed partnership and corporate vehicles and has been added in March 2020 to the IA’s UK Funds Regime Report to HM Treasury Asset Management Taskforce.

Source: New fund vehicle proposed.

PIMFA to launch scam awareness campaign

PIMFA is to launch a new initiative to help safeguard savers against investment scams now on the rise. The campaign is part of its existing Financial and Mental Wellbeing campaign, and will offer advice and resources to savers to encourage them to be vigilant and to seek professional finance advice when making decisions about their financial futures.

Source: PIMFA to provide consumer advice on how to avoid scams as part of Financial and Mental Wellbeing campaign.

Coronavirus (COVID-19)—Better Finance highlights guidance for investors across the EU

Better Finance published a list of tools its members have put in place to provide information and guidance for individual investors and financial services users across EU Member States in response to the coronavirus (COVID-19) pandemic. Better Finance says EU citizens in their capacity as investors and savers are already feeling the squeeze and will be among the first in line to suffer from the economic and financial fallout that will undoubtably ensue following the large array of different financial measures taken by governments and financial institutions.

Source: Initiatives taken to try and help EU savers and investors navigate the economic fallout from the coronavirus epidemic.

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Banks and mutuals

Coronavirus (COVID-19)—European Parliament publishes briefing on pandemic’s effect on the banking union

The European Parliament published a briefing note entitled Banking union: Corona crisis effects, summarising the observations made and actions taken by supervisory authorities, credit rating agencies, banking federations and other industry experts in response to the coronavirus (COVID-19) pandemic. The briefing is intended to support the members of the Banking Union Working Group and will be updated regularly.

Source: Banking union: Corona crisis effects.

For further information on the banking union, see: European Banking Union Banking Union.

Coronavirus (COVID-19)—PRA sets out measures to help credit unions

The PRA published a letter from its Credit Union Supervision Team to directors, staff members and volunteers of PRA-regulated credit unions. It sets out details of a PRA rule modification on minimum provisioning requirements, available to all credit unions from 8 April 2020 until 1 January 2021; explains the PRA’s supervisory focus and priorities for credit unions (CUs) in this period of stress; and reiterates messages on regulatory reporting.

Source: Letter from Credit Union Supervision Team to directors, staff members and volunteers of PRA-regulated credit unions

For further information on credit unions, see: Credit Credit unions—essentials.

Coronavirus (COVID-19)—ECB dividend recommendation published in the Official Journal

Coronavirus (COVID-19)—The European Central Bank (ECB)’s Recommendation on dividend payments was published in the Official Journal. ECB recommends that at least until 1 October 2020 no dividends are paid out (and no irrevocable commitment to pay out dividends is undertaken) by the credit institutions for the financial year 2019 and 2020 and that credit institutions refrain from share buy-backs aimed at remunerating shareholders.

Source: Recommendation of the European Central Bank of 27 March 2020 on dividend distributions during the COVID-19 pandemic and repealing Recommendation ECB/2020/1.

CMA publishes notice on changes to Retail Banking Market Investigation Order 2017 action plan

The CMA published a notice of approval of certain changes and requirements for additional changes to the agreed timetable and project plan for the Retail Banking Market Investigation Order 2017. The changes are relevant to Part 2 of the Order, which sets out the provisions relating to Open Banking.

Source: Retail Banking Market Investigation Order 2017—Notice of approval of certain changes and requirement for additional changes to the Agreed Timetable and Project Plan published.

Coronavirus (COVID-19)—BCBS sets out additional measures to alleviate impact

The BCBS set out additional measures to alleviate the impact of coronavirus (COVID-19) on the global banking system. These measures support the provision of lending by banks to the real economy and provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities.

Source: Basel Committee sets out additional measures to alleviate the impact of COVID-19.

Coronavirus (COVID-19)—HMT and PRA statement on delayed Basel 3.1 implementation

HMT and the PRA welcomed the Group of Central Bank Governors and Heads of Supervision (GHOS)’s decision to delay the implementation of the Basel 3.1 standards by one year.

Sources: Statement from HM Treasury and the Prudential Regulation Authority on the implementation of the Basel 3.1 standards and  Joint PRA and HMT statement on the delay to implementation of the Basel 3.1 standards.

Coronavirus (COVID-19)—PRA to accept delays in some aspects of regulatory reporting and Pillar 3 disclosures

The PRA issued a statement on regulatory reporting and Pillar 3 disclosures for UK banks, building societies, designated investment firms and credit unions in response to the coronavirus (COVID-19) outbreak. It follows on from the European Banking Authority’s statement published on 31 March 2020.

Source: COVID-19 regulatory reporting and disclosure amendments.

ECB publishes Q4 2019 supervisory banking statistics

The ECB published its supervisory banking statistics for the fourth quarter of 2019. The statistics are broken down by business model classification for the first time.

Source: ECB publishes supervisory banking statistics for the fourth quarter of 2019.

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Consumer credit, mortgage and home finance

Coronavirus (COVID-19)—FCA proposes stop-gap protections for users of consumer credit products

The FCA is opening a brief consultation on a proposed range of temporary measures designed as a stop-gap to quickly support users of certain consumer credit products who are facing financial problems arising from the coronavirus (COVID-19) pandemic. Feedback is sought by 6 April 2020. If confirmed the measures would start to come into force by 9 April 2020.

Source: FCA proposes temporary financial relief for customers impacted by coronavirus.

ECJ advocate general opinion on interpretation of Unfair Contract Terms Directive and Consumer Credit Directive

Advocate general Hogan has given his opinion in the linked cases of Profi Credit Polska S.A. z siedzibą w Bielsku- Białej v QJ (C‑84/19), BW v DR (C‑222/19), and QL v CG (C‑252/19).

Source: Profi Credit Polska S.A. z siedzibą w Bielsku- Białej v QJ (C‑84/19), BW v DR (C‑222/19), and QL v CG (C‑252/19).

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Regulation of insurance

PRA policy statement and supervisory statement on Solvency II real estate loans and illiquid unrated assets

The PRA published policy statement PS9/20, Solvency II: Income producing real estate loans and internal credit assessment for illiquid, unrated assets. It contains feedback to responses to consultation paper CP23/19 ‘Solvency II: Income producing real estate loans and internal credit assessment for illiquid, unrated assets’ and the PRA’s final supervisory statement SS3/17, ‘Solvency II: Illiquid unrated assets’.

Source: Solvency II: Income producing real estate loans and internal credit assessments for illiquid, unrated assets.

For further information on Solvency II, see: Solvency Solvency II—essentials.

EIOPA publishes opinion on the supervision of remuneration principles in the insurance and reinsurance sector

EIOPA published an opinion on the supervision of remuneration principles in the insurance and reinsurance sector. It aims to ensure consistent practices in the application of the remuneration principles included in the Solvency II Directive (Directive 2009/138/EC) (Solvency II). The opinion does not add any new requirements or create new administrative burdens for firms. The paper is accompanied by a feedback statement summarising responses to EIOPA’s 2019 consultation on the subject.

Source: EIOPA publishes opinion on the supervision of remuneration principles in the insurance and reinsurance sector.

EIOPA publishes second report on cost and past performance of IBIPs and PPPs

EIOPA published its second report on cost and past performance of insurance-based investment products (IBIPs) and personal pension products (PPPs) in the EU. It analyses costs for 2018 and past performance for the period 2014-2018, finding that the 2018 performance was the lowest for the last five years.

Source: EIOPA publishes second report on costs and past performance of insurance-based investment products and personal pension products.

PRA welcomes insurance firms’ dividend pause announcement

The PRA welcomed the decision by some UK insurance firms to pause dividends given the uncertainties associated with the coronavirus (COVID-19) epidemic.

Source: PRA statement on decision by insurance companies to pause dividends.

Coronavirus (COVID-19)—EIOPA moves to weekly calculation of RFRs and the symmetric adjustment to equity risk

Due to the coronavirus (COVID-19) outbreak, in the coming weeks EIOPA will carry out extraordinary calculations on a weekly basis to monitor the evolution of the relevant RFR and the symmetric EDA. EIOPA is publishing this information in order to support insurance and reinsurance undertakings in the monitoring of their solvency and financial positions. 

Source: EIOPA publishes extraordinary information for Solvency II relevant risk free interest rate term structures and symmetric adjustment to equity risk with reference to 6 April 2020

Coronavirus (COVID-19)—EIOPA sets out guidance for insurers

EIOPA is urging insurers and intermediaries to continue to take actions to mitigate the impact of coronavirus (COVID-19) on consumers. EIOPA says access to and continuity of insurance services should be considered essential in the context of the outbreak.

Source: EIOPA urges insurers and intermediaries to continue to take actions to mitigate the impact of coronavirus/COVID-19 on consumers.

Coronavirus (COVID-19)—EIOPA updates statement on the impact on insurance

EIOPA published an update on the impact of the coronavirus (COVID-19) pandemic, noting that it has significantly impacted the activities of EIOPA, national competent authorities (NCAs) and financial institutions, ranging from the need to assess implications for the market and propose immediate regulatory measures relevant for the current situation, to the deployment of business continuity plans.

Source: Update on other measures impacted by COVID-19 pandemic.

FCA postpones implementation date for PS20/3 rules on signposting for consumers with medical conditions and publishes further feedback

The FCA updated its webpage on policy statement PS20/3, Signposting to travel insurance for consumers with medical conditions, to announce a postponement of the November 2020 start date for the signposting rules set out in the policy statement. The delay is intended to allow firms to focus on preventing and mitigating consumer harm during the coronavirus (COVID-19) pandemic, and the FCA says it will update stakeholders on the revised implementation date when it has more clarity on the impact of the pandemic. The FCA has also published an addendum to PS20/3, setting out its feedback to additional responses it received to its consultation on the proposed rules.

Sources: PS20/3 addendum: Signposting to travel insurance for consumers with medical conditions and  PS20/3: Signposting to travel insurance for consumers with medical conditions.

Coronavirus (COVID-19)—FCA highlights changes to commencement dates not yet in consolidated Handbook

The FCA issued a statement noting that changes to commencement dates of Handbook material as set out in the COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020 (FCA 2020/15) are not yet reflected in the consolidated text of the online Handbook.

Sources: Important Notice: Instrument FCA 2020/15 and  COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020.

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Regulation of personal pension and stakeholder products

ESMA consults on potential central clearing solutions for pension scheme arrangements

ESMA is consulting on a range of issues regarding potential central clearing solutions for pension scheme arrangements (PSAs) under the European Market Infrastructure Regulation (EMIR). The consultation is based on ESMA’s first report to the European Commission documenting the progress made to date towards potential clearing solutions for PSAs. Feedback is sought by 15 June 2020, with ESMA aiming to publish a second report and submit it to the European Commission by the end of 2020.

Sources: ESMA consults on clearing solutions for pension scheme arrangements under EMIR and  First report for consultation: Central clearing solutions for pension scheme arrangements.

EIOPA publishes second report on cost and past performance of IBIPs and PPPs

EIOPA published its second report on cost and past performance of IBIPs and PPPs in the EU. It analyses costs for 2018 and past performance for the period 2014-2018, finding that the 2018 performance was the lowest for the last five years.

Source: EIOPA publishes second report on costs and past performance of insurance-based investment products and personal pension products.

Coronavirus (COVID-19)—FCA sets out expectations for implementing new rules on pension communications

The FCA updated its webpage providing information for firms on the coronavirus (COVID-19) crisis. In the update, the FCA notes that a number of firms are facing challenges implementing FCA rules that change both the information that firms give consumers entering pension drawdown or taking an income for the first time (including uncrystallised fund pension lump sum) and the annual information given to these customers. The update sets out the FCA’s expectations about implementation of the changes.

Source: FCA updates information for firms on coronavirus (COVID-19) webpage.

Coronavirus (COVID-19)—FCA highlights changes to commencement dates not yet in consolidated Handbook

The FCA issued a statement noting that changes to commencement dates of Handbook material as set out in the COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020 (FCA 2020/15) are not yet reflected in the consolidated text of the online Handbook.

Sources: Important Notice: Instrument FCA 2020/15 and  COVID-19: Deferral of Commencement (Pension Transfers, Investment Pathways, Platform Switching, Access to Insurance) Instrument 2020.

Coronavirus (COVID-19)—FCA issues pensions and retirement income guidance

The FCA published guidance for pension providers and defined benefit (DB) transfer advisers, as the coronavirus (COVID-19) pandemic develops. The FCA states that it is working with industry to ensure the market can deliver fair outcomes for consumers. In its guidance the FCA explains that it has deferred the implementation date for the final suite of Retirement Outcomes Review remedies: Investment Pathways, active decision to invest in cash and actual charges disclosure rules. It also sets out how firms can and should support consumers that seek to access their pension savings during the current pandemic.

Source: Pensions and retirement income: our guidance for firms.

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Payment services and systems

European Commission launches consultation on a retail payments strategy for the EU

The European Commission published a consultation document on a retail payments strategy for the EU, seeking feedback on the forthcoming Retail Payments Strategy for the EU, which will be adopted later in 2020. The consultation closes on 26 June 2020.

Source: Consultation on a retail payments strategy for the EU.

Version 3.1.5 of the Open Banking Standard now available

Open Banking publishes the latest version of the Open Banking Standard. Version 3.1.5 includes new features which aim to help participants further improve Open Banking services.

Source: Open Banking publishes the latest version of the Open Banking Standard.

Coronavirus (COVID-19)—PSR provides update on its work supporting cash access during the pandemic

The PSR issued a press release providing an update on its work supporting cash access during the coronavirus (COVID-19) pandemic. The PSR states that its immediate priority is to work with the other members of the Joint Authorities Cash Strategy (JACS) group, along with authorities and industry to support cash access for consumers that need it now, while also ensuring the safety of firms’ workforces.

Source: Update on our work supporting cash access during the COVID-19 pandemic.

Coronavirus (COVID-19)—BIS paper examines attitudes to cash handling

The BIS published a paper on the coronavirus COVID-19, cash, and the future of payments, in light of public concerns that the coronavirus could be transmitted by cash. The authors say scientific evidence suggests that the probability of transmission via banknotes is low when compared with other frequently-touched objects, such as credit card terminals or PIN pads. Nevertheless, to bolster trust in cash, central banks are actively communicating, urging continued acceptance of cash and, in some instances, sterilising or quarantining banknotes. Some are encouraging contactless payments.

Source: COVID-19, cash, and the future of payments.

PSR publishes documents from its conference on tackling APP scams

Following a 30 March 2020 meeting, via conference call, with representatives of the payments industry and colleagues from other authorities to discuss the progress being made on tackling APP scams, the PSR published the speaker’s notes and accompanying documents from the meeting.

Source: Authorised push payment (APP) scams conference call—30 March 2020.

ECB announces that Sweden is to join the instant payments settlement platform

The ECB, the Eurosystem and Sveriges Riksbank concluded a co-operation agreement offering Sweden access to the Eurosystem’s TARGET Instant Payment Settlement (TIPS) to support the Swedish instant payment service, called RIX-INST. Based on this agreement, electronic payments made in Swedish krona can be settled on the settlement platform for instant payments operated by the Eurosystem. Payments will be cleared under the agreement as of May 2022.

Sources: Sweden joins ECB’s instant payments settlement platform and  Statement on European payments: Co-operation agreement concluded between the European Central Bank, the Eurosystem and Sveriges Riksbank.

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Fintech and cryptoassets

European Commission launches consultation on new digital finance strategy for Europe

The European Commission published a consultation document on a new digital finance strategy for the EU, seeking views on possible measures needed to further enable innovative digital financial services in the EU and possible competition issues with BigTech companies. The consultation will feed into the Commission's new Digital Finance Strategy, to be presented later in 2020, and closes on 26 June 2020.

Source: Consultation on a new digital finance strategy for Europe/fintech action plan.

FCA publishes cryptoasset registration flowchart

The FCA published a flowchart which can be used to determine whether a business needs to be registered with the FCA for carrying on cryptoasset activity.

Source: Cryptoasset activity registration flowchart.

ICMA publishes repo trading technology directory

The ICMA published a repo trading technology directory, the result of a mapping exercise of electronic repo trading platforms. The directory is intended to help market participants understand what execution venues are available for repo trading; product scope; and differences in trading protocols, clearing and collateral configurations. The directory also provides information on the venues’ regulatory status, market identifier codes and additional services on offer such as regulatory reporting under the Securities Financing Transactions Regulation.

Source: ICMA publishes repo trading technology directory.

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Sustainable finance

Council of the EU seeks use of written procedure for the Taxonomy Regulation

In the absence of live meetings, the Council of the EU asked the Permanent Representatives Committee to decide, in accordance with the first subparagraph of Article 12(1) of the Council's Rules of Procedure and Article 1 of Council Decision 2020/430, that the Council uses the written procedure for the adoption of its position at first reading on the draft Regulation of the European Parliament and the Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 as set out in document 5639/20 and the Statement of reasons as set out in document 5639/20 ADD 1.

Source: Draft Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (first reading).

Council position at first reading on Taxonomy Regulation

The Council of the EU published a position of the Council at first reading with a view to the adoption of a Regulation on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (the Taxonomy Regulation). The Taxonomy Regulation is intended to harmonise the meaning of ‘environmentally sustainable economic activities’ to prevent illegitimate use of this term in (amongst other) financial products and corporate bonds (‘green washing’).

Sources: Position of the Council at first reading with a view to the adoption of a Regulation of the European Parliament and of the Council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 and  Position of the Council at first reading with a view to the adoption of a regulation of the European Parliament and of the council on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088—Draft Statement of the Council's reasons.

LMA publishes green and sustainable lending glossary of terms

The Loan Market Association (LMA) published a glossary of terms concerning green and sustainable lending. The LMA hopes the glossary will aid transparency in this rapidly evolving area of the market.

Source: LMA new Green and Sustainable Lending Glossary of terms.

Commission consults on the renewed sustainable finance strategy

The European Commission published a consultation paper on the renewed sustainable finance strategy for the EU. For reasons set out in the introduction to the consultation, the European Green Deal announced a Renewed Sustainable Finance Strategy. This is an integral part of the European Green Deal and the Commission's overall efforts to ensure a sustainable and resilient economic recovery following the coronavirus (COVID-19) outbreak. The aim of this consultation is to collect as many views as possible to feed into the Commission's work to help mobilise private investment in sustainable projects.

Source: Consultation on the renewed sustainable finance strategy.

COP26 UN climate change conference postponed amid Coronavirus (COVID-19) crisis

The COP26 UN climate change conference, initially scheduled to take place in Glasgow in November 2020, has now been postponed as a result of the coronavirus (COVID-19) pandemic. Representatives of the COP Bureau of the UNFCCC (United Nations Framework Convention on Climate Change) have revealed their collaboration with the UK and its Italian partners in order to reach this decision. Dates for a rescheduled conference in 2021 are yet to be released, but will follow once a discussion with the parties has occurred. Increasing climate ambition, building resilience and lowering emissions will continue to be the emphasis of the COP26’s agenda.

Source: COP26 postponement.

Wider collaboration found to be key to climate risk challenge

The LMA announced that it will launch a cross-functional Working Group where members will be encouraged to collaborate on approaches to climate risk analysis and help promote better understanding of the risks and opportunities that affect the insurance industry.

Source: Wider Collaboration key to meeting climate risk challenge.

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Dates for your diary

 

DateSubjectEvent
13 April 2020Regulation of capital markets

Deadline for responses to ESMA consultation ‘ Guidelines on securitisation repository data completeness and consistency thresholds’.

 

13 April 2020Regulation of capital markets

Deadline for responses to ESMA ‘ Consultation on Guidelines on Internal Controls for CRAs ESMA33-9-355‘.

 

13 April 2020UK, EU and international regulators and bodies

Deadline to apply to become a member of EIOPA’s  Insurance and Reinsurance Stakeholder Group and the Occupational Pensions Stakeholder Group.

 

14 April 2020MiFID II

Deadline for responses to ESMA ‘ Consultation Paper MiFID II/ MiFIR review report on the transparency regime for equity and equity-like instruments, the double volume cap mechanism and the trading obligations for shares ESMA70-156-2188’.

 

15 April 2020MiFID II

Deadline for responses to ESMA ‘ Consultation on MiFIR report on SI ESMA70-156-1757’.

 

15 April 2020Regulation of benchmarks and IBOR reform

Deadline for responses to European Commission  initiative on the review of the Benchmarks Regulation.

 

16 April 2020Investment funds and asset management

Deadline for responses to the  consultation on proposals to expand the dormant assets scheme.

 

16 April 2020Regulation of capital markets

The temporary ban on short selling by the AMF on all transactions which might constitute or increase net short positions on shares admitted to trading on French trading venues for which the AMF is the relevant competent authority, as well as to all related instruments relevant for the calculation of the net short position is expected to end.

 

17 April 2020Regulation of capital markets

The temporary ban on short selling by the Comisión Nacional del Mercado de Valores (CNMV) of Spain on all transactions which might constitute or increase net short positions on shares admitted to trading to Spanish trading venues for which the CNMV is the competent authority, as well as to all related instruments relevant for the calculation of the net short position is expected to end.

 

 

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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.