FS weekly highlights—9 May 2019

In this issue

 

Brexit news
UK regulator updates
European regulator updates
European System of Financial Supervision
International regulator updates
Prudential requirements
Risk management and controls
Financial crime
Consumer protection
Enforcement and redress
Markets and trading
Regulation of derivatives
Regulation of capital markets
Investment funds and asset management
Banks and mutuals
Consumer credit, mortgage and home finance
Insurance and pensions
Payment services and systems
FinTech and virtual currencies
Sustainable finance
Islamic finance
Dates for your diary

 

Brexit news

 

UK government issues guidance on Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019

The Foreign and Commonwealth Office and HM Treasury published guidance on the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019, if the UK leaves the EU without a deal. This document contains guidance on the prohibitions and requirements imposed by the Regulations. It additionally provides guidance on best practice for complying with the prohibitions and requirements, the enforcement of them, and circumstances where they do not apply.

Sir Jon Cunliffe on the BoE’s post-Brexit financial stability preparations

The Bank of England (BoE) published a speech by its Deputy Governor for Financial Stability, Sir Jon Cunliffe, on financial stability after Brexit and risks from global debt. Mr Cunliffe said the BoE worked since the referendum to reduce the risks to financial stability, and the risk of disruption to financial services, in the event that the UK leaves the EU without a deal and without any transition period. He said over 10,000 pages of financial sector related EU legislation were assessed to see what changes would be required to make the legislation operable in the UK statute book, and over 1,000 pages of amendments were made by the Treasury in 50 statutory instruments.

Lord Justice of Appeal says legal impact of Brexit has been ‘exaggerated’

Lord Justice of Appeal, Sir Nicholas Hamblen highlighted and discussed four aspects of the Financial List in a speech about litigating financial disputes in London. Hamblen highlights how important specific expertise in financial cases is when it comes to the knowledge and experience of the judges. Hamblen says that the Financial List judges are chosen from Chancery Division and Commercial Court judges based on their knowledge, case experience and training. Hamblen also discusses the potential impact of Brexit, stating that the legal impact of Brexit is being exaggerated.

Sir Geoffrey Vos speech highlights strengths of financial services disputes in London

Sir Geoffrey Vos, Chancellor of the High Court, delivered a speech at London International Disputes Week, outlining the position of English common Law and the UK jurisdiction after Brexit. He said it is unlikely Brexit will have a dramatic effect on financial services disputes in London, due to the strengths of English common law. He also says the English judiciary continues to develop and prepare for future technologies, making it an appealing jurisdiction for international disputes. 

 

Back to top of page

 

UK regulator updates

 

FCA policy development update for May 2019

The Financial Conduct Authority (FCA) published the latest version of its policy development update, which provides information on its recent and upcoming publications. Future developments include policy statements on changes to align the FCA Handbook with Regulation (EU) 2017/1129 (the Prospectus Regulation), on proposals to improve shareholder engagement and on loan-based (peer-to-peer) crowdfunding platforms, all of which are expected in May 2019.

Christopher Woolard on the FCA’s preparations for a data-driven future

The FCA’s Executive Director of Strategy and Competition, Christopher Woolard, delivered a speech on the FCA’s business plan and priorities for 2019/20, and beyond that, the future direction of the finance sector and the regulation that governs it. Mr Woolard discussed innovation, data and data ethics, intergenerational changes, and the changing international landscape.

FCA publishes skilled persons reports figures for Q4 2018/19

The FCA commissioned six skilled persons reports in Q4 2018/19. Details of the different skilled person report categories or lots can be found on the FCA website. The FCA says the figures stated are correct as at 31 March 2019, but may be subject to change.

Treasury Committee hears evidence on management of the Bank of England

The Treasury Committee held an oral evidence hearing with the Court of the BoE as part of the Committee's remit to scrutinise the management of the BoE. Evidence was given on 1 May 2019 by Bradley Fried, Chair of the Court of the BoE, Dorothy Thompson, Chair of the Audit & Risk Committee, and Diana Mary Harding, Chair of the Remuneration Committee.

 

Back to top of page

 

European regulator updates

 

Council of EU publishes updates on financial services files

The Council of the European Union published a number of documents clarifying the status of financial services files that were adopted by the European Parliament or are currently undergoing the corrigendum procedure, and which are agreed by the Council, the European Parliament and the Commission. It also published several legislative acts that are agreed with the European Parliament but not yet published in the Official Journal.

ECB supervisory fees for 2019 published in the Official Journal

Decision (EU) 2019/685 of the European Central Bank (ECB) of 18 April 2019 on the total amount of annual supervisory fees for 2019 (ECB/2019/10) was published in the Official Journal. The Decision sets the ECB’s estimated 2019 supervisory fees at €576m, comprising €559m in expected supervision costs plus €15.3m for the 2018 deficit, plus €1.7m due to adjustments to individual fees resulting from changes in banking structures to be taken into account in accordance Article 5(3) of Regulation (EU) No 1163/2014. This Decision shall enter into force on the twentieth day following that of its publication in the Official Journal.

ESMA publishes newsletter for May 2019

The European Securities and Markets Authority (ESMA) published its monthly newsletter for May 2019. This edition focuses on ESMA’s April 2019 opinions on proposed national product intervention measures for binary options and contracts for difference, as well as providing a full list of publications in the previous month, speaking appearances by ESMA staff, consultation deadlines and key dates for the coming month.

José Manuel Campa begins term as EBA chair

The new Chair of the European Banking Authority (EBA), José Manuel Campa, officially assumed the role on 1 May 2019 after the European Parliament confirmed his nomination by the EBA's board of supervisors on 14 March 2019. Mr Campa, who was previously global head of regulatory affairs at Santander, will serve as chair of the EBA for a renewable five-year term. 

 

Back to top of page

 

European System of Financial Supervision

 

Council of EU publishes updates on financial services files on ESFS

In an information note to the Permanent Representatives Committee (COREPER), the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes the following European System of Financial Supervision (ESFS) files:

  • 2017/0230 (COD)—Amended proposal for a Regulation amending Regulation (EU) 1093/2010 establishing the EBA; Regulation (EU) 1094/2010 establishing the European Insurance and Occupational Pensions Authority (EIOPA); Regulation (EU) 1095/2010 establishing ESMA; Regulation (EU) 345/2013 (on European venture capital funds (EuVECA)); Regulation (EU) 346/2013 (on European social entrepreneurship funds (EuSEF)); Regulation (EU) 600/2014 (on markets in financial instruments (MiFIR)); Regulation (EU) 2015/760 (on European long-term investment funds); Regulation (EU) 2016/1011 (the Benchmarks Regulation); the Prospectus Regulation; and Directive (EU) 2015/849 (the fourth Money Laundering Directive (MLD4))
  • 2017/0231 (COD)—Proposal for a Directive amending Directive 2014/65/EU (on markets in financial instruments (MiFID II) and Directive 2009/138/EC (Solvency II), and
  • 2017/0232 (COD)—Proposal for a Regulation amending Regulation (EU) 1092/2010 on European Union macro-prudential oversight of the financial system and establishing a European Systemic Risk Board (ESRB)
HoC European Scrutiny Committee clears ESFS proposals from scrutiny

The House of Commons European Scrutiny Committee cleared from scrutiny and drew to the attention of the Treasury Committee a package of legislative proposals reviewing the ESFS. In its report on the proposals, the Committee sets out the impact of the proposed changes to the powers of the European Supervisory Authorities (ESAs) on the UK before and after it leaves the Single Market, but particularly if there is a Brexit transition phase. 

 

Back to top of page

 

International regulator updates

 

FSB RCG for MENA discusses upcoming G20 meeting, LIBOR preparation and financial stability

The Financial Stability Board (FSB)’s regional consultative group (RCG) for the Middle East and North Africa (MENA) met in Istanbul on 4 May 2019 to discuss regional financial stability issues as well as the FSB’s work programme and deliverables to the June 2019 G20 meetings in Japan. Members also exchanged experiences on the use of the London Interbank Offered Rate (LIBOR) in their financial systems and whether financial institutions will be ready for its discontinuation in 2021. From a regional perspective, members discussed the potential impact of trade issues and changes in commodities prices. 

 

Back to top of page

 

Prudential requirements

 

Council of EU publishes updates on financial services files on prudential supervision of investment firms

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes files: (1) 2017/0358 (COD)—Proposal for a Directive on the prudential supervision of investment firms and amending Directive 2013/36/EU (Capital Requirements Directive (CRD IV)) and MiFID II, and (2) 2017/0359 (COD)—Proposal for a Regulation on the prudential requirements of investment firms and amending Regulation (EU) 575/2013 (Capital Requirements Regulation (CRR)), MiFIR and Regulation (EU) 1093/2010.

EBA launches consultation on technical standards under proposed CRR II on the standardised approach for counterparty credit risk

The EBA published a consultation on four draft regulatory technical standards (RTS) on the standardised approach for counterparty credit risk (SA-CCR). These draft RTS specify key aspects of the SA-CCR and represent an important contribution to its smooth, harmonised implementation in the EU. The draft RTS were developed based on the mandates included in Article 277(5) and Article 279a(3) of the latest available version of proposed amended CRR II. CRR II entrusts the EBA with the drafting of RTS specifying the method for identifying those material risk drivers. The draft technical standards build on the proposals included in the discussion paper published on 18 December 2017 and industry feedback received as a result of the subsequent consultation. The consultation runs until 2 August 2019.

ESRB paper on cyclicality in significant increase in credit risk: mortgage modelling under IFRS 9

The ESRB published a working paper on the cyclicality in significant increase in credit risk (SICR): mortgage modelling under International Financial Reporting Standard (IFRS) 9. The paper suggests that loan stage assignment can be highly pro-cyclical. The paper notes that banks must make forward-looking provisions for loan losses under new international accounting standards introduced in 2018. In Europe, banks will assign performing exposures to a new ‘Stage 2’ category with a higher provisioning penalty, if they experience SICR.

 

Back to top of page

 

Risk management and controls

 

Council of EU publishes updates on financial services files on proposed Whistleblowing Directive

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes file, 2018/0106 (COD) - Proposal for a Directive on the protection of persons reporting on breaches of EU law.

 

Back to top of page

 

Financial crime

 

Government responds to Treasury Committee report on economic crime

The government published its response to the Treasury Select Committee’s report on economic crime: anti-money laundering (AML) supervision and sanctions implementation, published on 8 March 2019. Treasury Committee Chair Nicky Morgan MP said the government listened to the report’s conclusions and taken up many of the recommendations, in particular on the ability of Companies House to carry out its duties. However, she said it was disappointing that the government chose not to endorse the Committee’s recommendation for the creation of a register of politically exposed persons. 

 

Back to top of page

 

Consumer protection

 

FCA publishes discussion paper 19/2 on intergenerational finance

The FCA published discussion paper DP19/2 on intergenerational differences, exploring the changing financial needs of consumers from different age groups. With one of the FCA’s statutory objectives being to protect consumers, the FCA states that it is important that its approach adapts to the changing needs of the different groups within and between generations. DP19/2 presents data, demographic and socio-economic trends to look at the financial needs of three generations of consumers–baby boomers (those born between 1946 and 1965), generation X (those born between 1966 and 1980) and millennials (those born between 1981 and 2000). The FCA is holding a summer conference on 2 July 2019 to discuss and debate the issues in this paper and the responses received.

FCA speech looks at big data, consumer empowerment and regulation

The FCA published a speech by its acting chief economist, Robin Finer, on the value of data, competition, and financial services. The speech argued that data can carry economic value for the consumer as it is a personalised input that reduces search costs and helps individuals to obtain products and services that better match their needs. Mr Finer argued that if the FCA can increase its understanding of the role and value of data for firms, it can help empower consumers to choose what to share, where, and for what, as well as informing debates about how to deal with technology firms’ market power.

UKRN encourages policy makers to use power of attorney guide

The FCA announced the publication of the UK Regulators’ Network (UKRN)’s power of attorney guide, which aims to help organisations understand what the law requires of them when dealing with powers of attorney. As part of the UKRN, the FCA is encouraging policy makers in financial services and utility companies to use this guide when reviewing how they engage with customers who do not make their own decisions. 

 

Back to top of page

 

Enforcement and redress

 

ICO fines PPI claims company £120,000 for sending over 3.5m spam texts

The Information Commissioner’s Office (ICO) fined a payment protection insurance (PPI) claims management company £120,000 for sending unlawful spam texts about its services. The ICO found that Hall and Hanley Ltd of Devonshire Street North, Manchester was responsible for sending over 3.5m direct marketing text messages about PPI compensation claims between 1 January 2018 and 26 June 2018.

Complaints Commissioner partially upholds FCA complaint for loss caused by defective Financial Services Register

The Office of the Complaints Commissioner published the final report (FCA00503) (dated 8 April 2019) of the Financial Regulators Complaints Commissioner concerning a complaint made against the FCA with regards to the accuracy of the Financial Services Register. The FCA responded to the Complaints Commissioner’s report by stating that it was unable to accept the Commissioner’s recommendation.

Complaints Commissioner rules in PSR complaint-handling case

The Complaints Commissioner ruled in a case brought against the Payment Systems Regulator (PSR) concerning the BACS direct debit indemnity claim (DDIC) system. The complainant said several payments made to their company under the BACS direct debit system were refunded to the payer under DDIC on the grounds that the amount paid or the date the payment was taken on had differed from the amount or date shown in the advance notice which had been sent to the payer. The complainant said that, in fact, the payment or date did not differ from the advance notice, and therefore the refund should not have been made. The complainant raised issues as to the PSR’s handling of the complaint, as well as the refund system generally.

FCA launches working group with fellow regulators to tackle ‘phoenixing’

The FCA held a roundtable event with its regulatory partners to build on existing collaboration and launch a working group to tackle the ongoing issue of ‘phoenixing’ in financial services. The FCA describes phoenixing in this context as firms and individuals deliberately seeking to avoid their liabilities to consumers, or poor conduct history, by closing down firms–or resigning senior positions–only to re-emerge in a different legal entity.

FCA sets out options for investors affected by failure of Secured Energy Bonds plc

The FCA published a webpage setting out the current options for investors affected by the failure of Secured Energy Bonds plc (SEB), which issued mini bonds that were sold to UK investors without advice from financial advisers. When SEB failed in 2015, investors largely lost their investments. As issuing mini bonds is not a regulated activity, firms issuing mini bonds do not need to be authorised by the FCA–the FCA did not regulate SEB. As such, there is no Financial Services Compensation Scheme (FSCS) protection for claims against SEB.

UK Finance highlights increased FCA market abuse enforcement

UK Finance published a blog which highlights details of enforcement cases that the FCA took in relation to market abuse. According to the blog, the FCA made no secret of its intention to crack down on firms and individuals that fail to meet their obligations under Regulation (EU) 596/2014 (the Market Abuse Regulations (MAR)) and FCA rules. The blog highlights a number of FCA Final Notices and Upper Tribunal decisions relating to both firms and individuals, leading to substantial fines for those involved.

APPG on Fair Business Banking issues statement on appointment of Sir Ross Cranston to examine Griggs Review

The All-Party Parliamentary Group (APPG) on Fair Business Banking issued a statement following the announcement that the FCA and Lloyds Banking Group have appointed Sir Ross Cranston to determine whether the Griggs Review–the compensation scheme established after the criminal convictions of six individuals in connection to the HBOS Reading fraud–is delivering fair outcomes and adequate compensation for the victims of the fraud.

APPG on fair business banking to intervene in Supreme Court reflective loss case

The Supreme Court granted permission to Trowers & Hamlins LLP, acting for the APPG on Fair Business Banking, to intervene in the hearing of Marex Financial Ltd v Carlos Sevilleja Garcia on 8 May 2019. The intervention will allow the court to take account of the APPG’s experience and the public policy considerations underpinning the rule against reflective loss. It is the first APPG to intervene in a Supreme Court case. The APPG says the rule against reflective loss presents an obstacle to accessing justice for the directors and shareholders of insolvent businesses as it acts as an exclusionary rule, preventing business owners from pursuing their own personal claims for losses resulting from a company’s losses when it goes into insolvency.

 

Back to top of page

 

Markets and trading

 

Working Group on sterling RFRs publishes April 2019 newsletter

The BoE’s Working Group on sterling risk-free reference rates (RFRs) published its monthly newsletter containing key milestone dates, market developments, key liquidity indicators, and general updates internationally on the transition to alternative RFRs. Key milestones highlighted included Nationwide Building Society issuing the first distributed SONIA-referencing UK residential mortgage-backed securities, and the International Swaps and Derivatives Association (ISDA)’s upcoming plans, including on pre-cessation issues for derivatives, and IBOR methodology and fall-back issues.

Loan Market Association provides updates on developments of EONIA

The Loan Market Association (LMA) released an update on developments relating to the future of the European Overnight Index Average (EONIA). The update covers the use of EONIA in LMA documentation, the planned change in methodology and discontinuation of EONIA, and the significance of these changes for loan market participants involved in transactions that reference EONIA.

EMMI applies for EURIBOR administrator authorisation under BMR, and sets out governance framework

The European Money Markets Institute (EMMI), administrator of the Euro Interbank Offered Rate (EURIBOR) benchmark, applied for authorisation from the Belgian Financial Services and Markets Authority under the Benchmarks Regulation. EMMI started transitioning panel banks from the current EURIBOR methodology to the new hybrid methodology. It also published a number of documents setting out the governance framework in relation to the provision of the EURIBOR benchmark under the hybrid methodology.

IASB proposes changes to financial instrument standards in light of IBOR reform

The International Accounting Standards Board (IASB) published for public comment proposed changes to the old and new financial instruments standards, International Accounting Standard (IAS) 39, Financial Instruments: Recognition and Measurement, and IFRS 9, Financial Instruments, in light of the reform of interest rate benchmarks such as IBORs. The proposed amendments aim to provide relief from specific hedge accounting requirements that could have resulted in the discontinuation of hedge accounting solely due to the uncertainty arising from interest rate benchmark reform. Comment is sought by 17 June 2019. The IASB aims to issue final amendments later in 2019.

NEX Exchange consults on changes to its Growth Market rules

NEX Exchange published a consultation paper setting out proposed changes to the NEX Exchange Growth Market Rules for Issuers (Rules). The consultation period ends on 31 May 2019. The main reason for the consultation is to reflect the changes being brought in by the Prospectus Regulation in July 2019, introducing the new EU growth prospectus for certain issues by SMEs. The EU growth prospectus will require a standardised format and allow reduced disclosure requirements. The consultation period ends on 31 May 2019.

 

Back to top of page

 

Regulation of derivatives

 

Decision to recognise Japan FSA rules on OTC derivatives trades under EMIR published in Official Journal

Commission Implementing Decision (EU) 2019/684 of 25 April 2019 on the recognition of the legal, supervisory and enforcement arrangements of Japan for derivatives transactions supervised by the Japan Financial Services Agency as equivalent to the valuation, dispute resolution and margin requirements of Article 11 of Regulation (EU) No 648/2012 of the European Parliament and Council on OTC derivatives, central counterparties (CCPs) and trade repositories was published in the Official Journal. The Decision provides that the EU recognises, using the mechanism set out in Article 13 of the European Market Infrastructure Regulation (Regulation (EU) No 648/2012) (EMIR) that the Japan Financial Services Agency's (Japan FSA) rules covering the legal, supervisory and enforcement arrangements for over-the-counter (OTC) derivative contracts that are not cleared by a CCP meet EU standards under EMIR.

Council of EU invites COREPER to agree position on proposed amendments to EMIR

The Council of the European Union published an ‘I/A’ item note inviting COREPER to confirm its agreement to the European Parliament’s first reading position on the proposed Regulation amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a CCP the registration and supervision of trade repositories and the requirements for trade repositories.

Council of EU publishes updates on financial services files on EMIR 2.2

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes file, 2017/0136 (COD) - Proposal for a Regulation amending Regulation (EU) 1095/2010 establishing ESMA and amending EMIR as regards the procedures and authorities involved for the authorisation of CCPs and requirements for the recognition of third-country CCPs (EMIR 2.2).

Council of EU publishes updates on financial services files on EMIR Refit

The General Secretariat of the Council provided information notes to the COREPER with regard to the outcome of the European Parliament's first reading of file 2017/0090(COD)—proposal for a Regulation amending EMIR as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a CCP, the registration and supervision of trade repositories and the requirements for trade repositories (EMIR Refit).

Court of Justice: Advocate General Tanchev’s opinion—Advocate General proposes Court of Justice uphold General Court judgment partially annulling the Commission’s decision in the Yen interest derivatives cartels

On 2 May 2019, Advocate General Tanchev delivered his opinion in Case C-39/18 Commission v NEX International Limited (formerly Icap plc, Icap Management Services Ltd and Icap New Zealand Ltd), an appeal against the General Court’s judgment in Case T-180/15, which partially annulled the Commission’s decision concerning a cartel in the Yen interest rate derivatives market (Case AT.39861). The Advocate General proposed that the Court of Justice dismiss the Commission’s appeal in its entirety because the Commission should have been more diligent in explaining how it calculated the fine in its decision.

Bank for International Settlements updates OTC derivatives outstanding page

The Bank for International Settlements (BIS) updated its OTC derivatives outstanding page on 2 May 2019. The page now includes an explanatory notes document, which outlines how BIS OTC derivatives statistics are reported, aggregated, and valued.

FSB appoints Derivatives Service Bureau Ltd as UPI service provider

The FSB designated The Derivatives Service Bureau (DSB) Ltd as the service provider for the future unique product identifier (UPI) system. The FSB says the appointment is a key step in completing the governance framework for the UPI. As the sole issuer of UPI codes, DSB will also perform the function of operator of the UPI reference data library. UPIs will be assigned to OTC derivatives products and used for identifying the product in transaction reporting data.

ISDA CEO on risk, readiness and the IM margin rules

ISDA published the latest edition of derivatiViews, in which its CEO, Scott O'Malia, discusses preparations for the implementation of the fourth and penultimate phase of the initial margin (IM) requirements for non-cleared derivatives in September 2019, and the phase-five deadline one year later. Mr O’Malia said implementation poses a significant ongoing burden for firms that do not pose any systemic risk, potentially prompting some to reduce their derivatives exposure well below the threshold level, limiting their ability to effectively hedge. 

 

Back to top of page

 

Regulation of capital markets

 

Council of EU publishes updates on financial services files on covered bonds

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes files: (1) 2018/0042 (COD)—Proposal for a Regulation amending the CRR as regards exposures in the form of covered bonds, and (2) 2018/0043 (COD)—Proposal for a Directive on the issue of covered bonds and covered bond public supervision and amending Directives 2009/65/EC(the UCITS Directive) and 2014/59/EU (the Bank Recovery and Resolution Directive (BRRD)).

Council of EU publishes updates on financial services files on SME growth markets

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes file, 2018/0165 (COD) - Proposal for a Regulation amending MAR and the Prospectus Regulation as regards the promotion of the use of SME growth markets.

Council of the EU information note on the proposal for a sovereign bond-backed securities Regulation

The Council of the European Union published an information note on the Proposal for a Regulation of the European Parliament and of the Council on sovereign bond-backed securities–Outcome of the European Parliament's first reading (Strasbourg, 15 to 18 April 2019).

 

Back to top of page

 

Investment funds and asset management

 

Council of EU publishes updates on financial services files on collective investment funds

The General Secretariat of the Council provided information notes to the COREPER with regard to the outcome of the European Parliament's first reading of files: (1) 2018/0041(COD)—proposal for a Directive amending the UCITS Directive and Directive 2011/61/EU (the Alternative Investment Fund Managers Directive (AIFMD)) with regard to cross-border distribution of collective investment funds, and (2) 2018/0045(COD)—proposal for a Regulation on facilitating cross-border distribution of collective investment funds and amending EuVECA and EuSEF.

FCA updates notification forms for national private placement regime under AIFMD

The FCA made changes during April 2019 to the way firms that market funds under regulation 57 and regulation 59 of the Alternative Investment Fund Managers (AIFMs) Regulations 2013–the UK’s implementation of the AIFMD–submit their marketing and material change notifications to the FCA under the national private placement regime (NPPR). The FCA’s NPPR webpage is now updated and does not include the old forms, the new regulation 57 notification forms are now added.

ACC publishes a UK perspective on non-bank lending in Europe

The Alternative Credit Council (ACC) published a press release from ACC’s Nick Smith concerning his thoughts on the outlook for private credit in the UK and Europe. Mr Smith notes that the latest ACC roundtable on the future of private credit in Europe recently took place in London. This brought together London-based asset managers and the FCA to discuss key market trends in private credit, the UK’s role as a hub for European lending and the evolving regulatory environment for the industry. 

 

Back to top of page

 

Banks and mutuals

 

BCBS: Further progress made but more needed to implement Basel III standards

The Basel Committee on Banking Supervision (BCBS) published its ‘Sixteenth progress report on adoption of the Basel regulatory framework’, setting out the adoption status of Basel III standards for each Committee member jurisdiction as of end-March 2019. The report contains monitoring tables including all standards currently in the course of implementation in BCBS member jurisdictions. This updated report provides a high-level view of BCBS members' progress in adopting Basel III standards as of end-March 2019. The BCBS says it welcomes the overall progress made on the implementation of standards by member jurisdictions, but urges them to ‘strive for full, timely and consistent implementation of Basel III post-crisis reforms’, and says it will continue monitoring closely the implementation of the reforms.

Banking reform: Council of EU invites COREPER to agree position on CRR II, CRD V, BRRD II and SMR II

The Council of the European Union published four ‘I/A’ item notes—(1) 2016/0360/A (COD) (2)  2016/0361 (COD) (3) 2016/0362 (COD), and (4) 2016/0364 (COD)—inviting COREPER to confirm its agreement to the European Parliament’s first reading position on four legislative acts, which set out revised rules on capital requirements (CRR II and CRD V), the BRRD and the Single Resolution Mechanism Regulation (SRMR)) and together comprise the banking reform package.

EBA publishes its response to European Commission’s call for advice on benchmarking of national loan enforcement frameworks

The EBA published a letter, dated 5 March 2019, in which it responds to the European Commission’s call for advice for the purposes of a benchmarking of national loan enforcement frameworks (including insolvency frameworks) from a bank creditor perspective. In its response, the EBA asks the Commission to amend its proposed timeline of the call for advice to better suit the proposed data collection and analysis, taking into account concerns expressed by the EBA board of supervisors. 

 

Back to top of page

 

Consumer credit, mortgage and home finance

 

FCA publishes CP19/17 proposing changes to mortgage advice rules

The FCA published a consultation paper, CP19/17, containing proposals for changes to its mortgage advice and selling standards to address three harms identified through the FCA’s Mortgages Market Study. The proposals are part of a package of remedies from the Mortgages Market Study, published earlier in 2019, which aims to encourage innovation and make it easier for customers to find the right mortgage as well as helping to ensure they receive good value from advice. The consultation period closes on 7 July 2019 and the FCA plans to issue a policy statement setting out its feedback and final rules in Q4 2019.

Charlie Elphicke MP to present bill helping mortgage prisoners and establishing a Financial Services Tribunal

The APPG on Fair Business Banking announced that Charlie Elphicke MP will present a ten minute rule bill motion entitled Banking (Consumer and Small Business Protection), aiming to make a number of provisions to protect consumers and small businesses. The bill seeks to enable consumers to transfer mortgages between providers; to prohibit the sale of mortgage debt to unregulated entities; to prevent the foreclosure of certain business loans; and to establish a Financial Services Tribunal.

ESAs publish updated table of authorities’ compliance with Joint Committee guidelines on complaints-handling under PSD2 and/or MCD

The Joint Committee of the ESAs published an updated compliance table setting out which competent authorities comply or intend to comply with the Joint Committee’s guidelines on complaints-handling to authorities competent for supervising the new institutions under the recast Payment Services Directive (Directive (EU) 2015/2366) (PSD2) and/or the Mortgage Credit Directive (Directive 2014/17/EU) (MCD). 

 

Back to top of page

 

Insurance and pensions

 

Implementing Regulation providing technical information for Solvency II reporting published in OJ

Commission Implementing Regulation (EU) 2019/699 of 6 May 2019 laying down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 31 March 2019 until 29 June 2019 in accordance with Solvency II was published in the Official Journal of the EU. EIOPA provided the technical information, which is based on end of March 2019 market data, to the European Commission on 4 April 2019. The Implementing Regulation will enter into force on 8 May 2019 and applies from 31 March 2019.

EIOPA reviews the use of big data analytics in motor and health insurance

EIOPA published its report on big data analytics in motor and health insurance. The review revealed a strong trend towards increasingly data-driven business models throughout the insurance value chain. Traditional data sources such as demographic data or exposure data are increasingly combined with new sources such as online or telematics data, providing greater granularity and frequency of information about consumers’ characteristics, behaviour and lifestyles. There is an extended use of data sourced from third-party data vendors.

EIOPA updates Solvency II Q&As

EIOPA updated its Q&As on the Solvency II Directive. The updates concern (1) (EU) No 2009-138 Solvency II Directive (Insurance and Reinsurance)–Annex I–Lines of Business, Articles 120-126 and 130 (2) (EU) No 2015-2450 templates for the submission of information to the supervisory authorities–Article 308b–Transitional measures–Paragraph 12–Transitional measure on the spread and concentration risk factors, and (3) (EU) No 2015-2450 templates for the submission of information to the supervisory authorities–LOG S.02.01 and S.06.02.

EIOPA calls for candidates to join PEPP Regulation expert panel

EIOPA published a call for candidates to join an expert panel on the pan-European personal pension product (PEPP) Regulation. Based on the forthcoming Regulation on PEPP, EIOPA is required to develop substantial policy and regulatory requirements for the effective implementation of the Regulation. It also mandates EIOPA to exercise a strong role in the future supervision of PEPPs. Therefore, EIOPA will provide for a central information hub on PEPP for all European citizens and competent authorities. The deadline for applications is 21 May 2019 at 23:59 CET. 

 

Back to top of page

 

Payment services and systems

 

ESAs publish updated table of authorities’ compliance with Joint Committee guidelines on complaints-handling under PSD2 and/or MCD

The Joint Committee of the ESAs published an updated compliance table setting out which competent authorities comply or intend to comply with the Joint Committee’s guidelines on complaints-handling to authorities competent for supervising the new institutions under PSD2 and/or the MCD.

Advocate General Szpunar opinion: payee cannot make payment under SEPA direct debit scheme dependent on location of payer’s place of residence

Advocate General Szpunar handed down his opinion in response to a request for a preliminary ruling in the case of Verein für Konsumenteninformation v Deutsche Bahn (Case C-28/18), regarding whether a payee can require a payer to have a residence in the same Member State as the payee in order to make payments by single euro payments area (SEPA) direct debit. The Advocate General’s opinion is that such a restriction should not be permitted, as although a company is not required to offer its customers payment by direct debit, once that possibility is available it must be offered in a non-discriminatory way.

HM Treasury confirms commitment to cash and digital payments

HM Treasury published a summary of the responses it received to its call for evidence into cash and digital payments in the new economy, together with the government’s position on the various issues raised. The government also announced a new Joint Authorities Cash Strategy Group and stated its commitment to act on the Access to Cash Review. The Chancellor of the Exchequer, Phillip Hammond MP, said that the government ‘is committed both to safeguarding access to cash for those who need it and to supporting digital payments’.

PSR responds to HM Treasury's commitment to protecting cash access

The PSR responded to the announcement made by HM Treasury and the chancellor of the exchequer, Philip Hammond MP, on 3 May 2019 that cash will be protected. The PSR states that making sure people can continue to access their cash is important and the PSR welcomes the chancellor's announcement that HM Treasury has established a Joint Authorities Cash Strategy Group. The PSR says it looks forward to continuing working with other regulators and government as this work evolves to address the issues over the longer-term. 

 

Back to top of page

 

FinTech and virtual currencies

 

IA announces second velocity cohort

The Investment Association (IA) revealed the second cohort of fintech firms which will be joining Velocity, the IA’s innovation hub and fintech accelerator for the buy-side and asset management industry. The second cohort was announced at the IA’s inaugural EmTech Futures event, which brought together 150 senior executives from the asset management industry and fintech innovators to discuss the trends and technological advances impacting the industry, including big data and artificial intelligence, which are benefiting the asset management operations. Applications for the third cohort will open in Q3 2019.

High Court Chancellor speaks on smart legal contracts and English law

Sir Geoffrey Vos, Chancellor of the High Court, gave a speech to the Northern Chancery Bar Association and the University of Liverpool School of Law on how English law can boost the confidence of would-be parties to smart legal contracts. In his view, English law is in a good position to provide the legal infrastructure needed to facilitate smart legal contracts, but only if any necessary reforms are kept simple. For him, the key is to remove any fundamental legal impediment to the use of smart contracts and to avoid the creation of a new legal and regulatory regime that will discourage the use of new technologies. This would provide parties with the ability to contract as they wish and ensure that the economy and the financial system can benefit from innovation.

 

Back to top of page

 

Sustainable finance

 

Council of EU publishes updates on financial services files on sustainable finance

In an information note to the COREPER, the General Secretariat of the Council provided a list of files under the ordinary legislative procedure expected to undergo the corrigendum procedure in the European Parliament. The list includes files: (1) 2018/0179 (COD)—Proposal for a Regulation on disclosures relating to sustainable investments and sustainability risks and amending Directive (EU) 2016/2341(IORP II), and (2) 2018/0180 (COD)—Proposal for a Regulation of the European Parliament and of the Council amending the Benchmarks Regulation in relation to low carbon benchmarks and positive carbon impact benchmarks.

EIOPA and ESMA publish technical advice on sustainability risks and factors

EIOPA and ESMA published their technical advice to the European Commission on the integration of sustainability risks and factors, relating to environmental, social and governance (ESG) considerations, into Solvency II, Directive 2016/97/EU (Insurance Distribution Directive (IDD)), MiFID II, AIFMD and the UCITS Directive. EIOPA issued technical advice on potential amendments to, or introduction of, delegated acts under Solvency II and the IDD with regard to sustainability in the areas of risk management, investment strategy, stewardship and product oversight. ESMA issued two final reports containing technical advice with regard to investment firms under MiFID II and investment funds under AIFMD and the UCITS Directive. 

 

Back to top of page

 

Islamic finance

 

Draft guidance on Shari’ah-compliant lender-of-last-resort facilities issued for consultation

The Islamic Financial Services Board (IFSB) issued Exposure Draft of Guidance Note-7 on Shari’ah-Compliant Lender-of-Last-Resort Facilities (ED GN-7) for public consultation. Alongside existing guidance, ED GN-7 aims offer international benchmark guidelines to regulatory and supervisory authorities for developing and offering Shari’ah-compliant lender of last resort facilities as part of the financial safety net arrangement for Islamic financial services (IIFS). The deadline for responses is 5 July 2019.

 

Back to top of page

 

Dates for your diary

 

DateSubjectEvent

 

9 May 2019

 

Insurance

 

As part of its live and local series the FCA will host its ‘Ask the regulator’ Q&A roundtable discussion in Cambridge on 9 May 2019.

 

9 May 2019Markets and trading

The clearing obligation RTS for credit default swaps will take effect for Category 4 counterparties from this date.

 

9 May 2019Competition in financial services

The deadline for submissions to the Competition and Market Authority’s (CMA’s) issues statement outlining initial theories on what might be affecting competition and potential remedies (as part of its market investigation into the supply of services by funeral directors at the point of need and the supply of crematoria services) is 9 May 2019.

 

10 May 2019Enforcement and redress

As part of its consultation ‘CP10/19: Enforcement: Changes to the PRA’s settlement policy consultation paper’ the Prudential regulation Authority (PRA) will host a roundtable event for law firms working in this area on 11 June 2019. For those wishing to attend this roundtable they should register their interest in attending, by sending their name, the name of their firm, their position and their contact details to CP10_19@bankofengland.co.uk by Friday 10 May.

 

10 May 2019

Insurance

Prudential requirements

 

The PRA will host three industry roundtables, to answer questions and take comments in relation to its planned insurance stress test, on 10 May 2019.

 

10 May 2019

Markets and trading


MiFID II

 

The delayed date of publication of the systematic internaliser regime data for equity, equity-like instruments and bonds is 10 May 2019.

 

14 May 2019Insurance and pensions

The deadline for feedback to EIOPA’s consultation on amendments and corrections to the implementing technical standards (ITS) on reporting and disclosure is 14 May 2019.

 

14 May 2019Regulatory fees and levies

The deadline for feedback to PRA ‘CP9/19: Regulated fees and levies: Rates for 2019/20’ is 14 May 2019.

 

15 May 2019Mortgages and home finance

As part of its live and local series the FCA will host its ‘Ask the regulator’ Q&A roundtable discussion with FCA and industry panel on 15 May 2019 in Norwich.

 

15 May 2019Securitisation regulation

The EBA’s final Guidelines under the Securitisation Regulation, which will provide a harmonised interpretation of the criteria for the securitisation to be eligible as simple, transparent and standardised on a cross-sectoral basis throughout the EU will apply from 15 May 2019.

 

16 May 2019Markets and tradingThe next meeting of the BoE’s Money Markets Committee’s Sub-committee on the UK Code will take place on 16 May 2019.

 

Back to top of page

Relevant Articles
Area of Interest