Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
Find up-to-date guidance on points of law and then easily pull up sources to support your advice with Lexis PSL
Check out our straightforward definitions of common legal terms.
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Access our unrivalled global news content, business information and analytics solutions
Insurance, risk and compliance intelligence using big data, proprietary linking and advanced analytics.
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Welcome to the weekly Financial Services highlights from the Financial Services team for the week ending 1 February 2018.
The House of Lords EU financial affairs sub-committee published a report on financial regulation and supervision after Brexit. The report warns of the risks of market fragmentation and instability if the UK and EU cannot agree a deal on market access, and urges the government to clarify what it wants from phase two of the Brexit negotiations and on transitional arrangements. The Lords committee says that clarity is needed now before firms are forced to activate ‘costly and potentially irreversible’ contingency plans.
The government issued a letter to business leaders to clarify the industrial strategy implementation period after Brexit, saying that ‘the UK’s and the EU’s access to one another’s markets should continue on current terms’. It clarified that there will only be one set of changes at the end of the implementation period, which will be ‘strictly time-limited’.
The European Commission's high-level expert group delivered its final report on sustainable finance, which sets out strategic recommendations for a financial system that supports sustainable investments. The Commission will now move to finalise its strategy on sustainable finance on the basis of these recommendations.
The Bank for International Settlement’s committee on the global financial system (BIS CGFS) published a report examining trends in bank business models, performance and market structure since the financial crisis, and assessing their implications for the stability and efficiency of banking markets.
The Futures Industry Association (FIA) and the International Swaps and Derivatives Association (ISDA) responded to the European Commission’s draft implementing regulation on the operations of the European Supervisory Authorities (ESAs) and the proposed supervisory framework. The associations support the overall goal of the review package, but suggest that any plan to expand the direct supervisory powers of the European Securities and Markets Authority (ESMA) should respect the subsidiarity principle, and that the value of national supervisors should be recognised.
The date on which the Senior Managers and Certification Regime (SM&CR), first introduced for banks and building societies in 2016, will be extended to include insurance firms has been set for 10 December 2018. The economic secretary to the Treasury and city minister, John Glen, said the extension would ensure individual accountability for misconduct at the most senior levels within the insurance sector.
The Financial Conduct Authority (FCA) wrote a ‘dear CEO’ letter asking firms to consider how they are tackling authorised push payment (APP) fraud within the context of the SM&CR. The SM&CR aims to reduce harm to consumers and strengthen market integrity by making individuals more accountable for their conduct and competence.
The European Banking Authority (EBA) launched the 2018 EU-wide stress test and released the macroeconomic scenarios. The adverse scenario implies a deviation of EU GDP from its baseline level by 8.3% in 2020, resulting in the most severe scenario to date. The EBA expects to publish the results of the exercise by 2 November 2018. The European Central Bank (ECB) is to stress test 37 euro-area banks as part of the EBA stress test.
The vice-chair of the supervisory board of the ECB, Sabine Lautenschläger, delivered a speech stating that, now that Basel III has been finalised, it will help make banking safer, as long as it is properly implemented around the world and is not watered down. Ms Lautenschläger denies some banks’ claims that Basel III throws risk sensitivity overboard and penalises low risk exposures. She emphasises that Basel III preserves risk sensitivity whilst at the same time adds some safeguards. These safeguards include, for instance, aligning the degree of risk sensitivity with the extent to which it is possible to measure and model risks.
The chair of the EBA, Andrea Enria, discussed the finalisation of Basel III in the concluding remarks at the Institute for Law and Finance conference in Frankfurt on 29 January 2018. Mr Enria said Basel III was ‘a major achievement’, and had to be done to remove areas of regulatory uncertainty and bring the reform process to a close. The credibility of international standards had to be restored, addressing the issue of excessive variability of risk weighted assets calculated via internal models, and it was necessary to reaffirm the commitment to the implementation of the full reform package in all G20 jurisdictions.
The FCA fined Interactive Brokers (UK) (IBUK) £1,049,412 for failings in its post-trade systems and controls for identifying and reporting suspicious transactions between February 2014 and February 2015. The FCA considers that the breach revealed ‘serious and systemic weaknesses’ within IBUK’s procedures.
The head of technology, resilience & cyber at the FCA, Robin Jones, delivered a speech at the Personal Investment Management & Financial Advice Association (PIMFA) financial crime conference in London, in which he calls on firms to protect themselves from cyberattacks, identify threats and vulnerabilities, and be prepared to act quickly in the event of an attack.
The FCA issued a warning about the increased risk of online investment fraud, highlighting binary options, contracts for difference, forex and crypto-currencies as particularly risky. The FCA says UK investors are losing £87,000 a day in binary options scams.
The government announced plans to research whether companies buy back their own shares to artificially inflate executive pay, in light of concerns that executive pay can be ‘disconnected from company performance’. The research, which is being conducted by PwC consultants and supported by LSE academic Professor Alex Edmans, will highlight how companies use share buybacks, and whether further action to prevent misuse is necessary.
Commission Delegated Regulation (EU) 2018/105 of 27 October 2017 amending Delegated Regulation (EU) 2016/1675, as regards adding Ethiopia to the list of high-risk third countries in the table in point I of the Annex, was published in the Official Journal of the EU. Delegated Regulation (EU) 2016/1675 supplements Directive (EU) 2015/849, the Fourth Money Laundering Directive (MLD4). The table in point I of the Annex to Delegated Regulation (EU) 2016/1675 sets out high-risk third countries which have provided a written high-level political commitment to address identified deficiencies and have developed an action plan with the Financial Action Task Force.
MEPs on the Committee on Economic and Monetary Affairs (ECON) and the Committee on Civil Liberties, Justice and Home Affairs (LIBE) voted to support the European Commission's decision to include Tunisia, Sri Lanka and Trinidad and Tobago on the list of third countries considered to have strategic deficiencies in the anti-money laundering (AML) and terrorism financing regimes.
SI 2018/84: A new code of practice (CoP) on the exercise of functions of certain regulatory bodies under the Proceeds of Crime Act 2002 will be brought into operation on 31 January 2018. This follows changes extending or creating functions, made by the Criminal Finances Act 2017. (Updates from draft 26 January 2018).
The FCA published provisional decision notices in respect of One Call Insurance Services Limited (One Call) and its chief executive and majority shareholder, John Lawrence Radford, after finding that they had breached the client money rules. A connected company, One Insurance Limited (OIL), has made a reference to the Upper Tribunal as a third party in relation to certain statements in the decision notices.
Mr Samrat Bhandari was sentenced at Southwark Crown Court to three and a half years' imprisonment for his role in the operation of an unauthorised investment scheme which led to investors losing just over £1.4m. He was also disqualified from holding the position of director for 12 years. The conviction followed a trial which lasted 49 days. His sentence follows that of Dr Aleem Mirza, Michael Moore and Paul Moore, who were also given sentences of imprisonment at an earlier hearing for their involvement in the investment scheme, which attracted more than 300 investors.
The FCA welcomed the statement by Royal Bank of Scotland, given at the Treasury Committee hearing on 30 January 2018, that it will not object to the FCA publishing the section 166 report into the treatment of small and medium-sized enterprise customers transferred to its Global Restructuring Group. The FCA is therefore content to publish the section 166 report. This will also require the consent of those who provided the information in the report and any individuals who are identified. The FCA will approach these individuals, once the work on the focused investigation is completed, to ask for their consent to publish.
The FCA published data showing the numbers responding to its PPI campaign during the period 29 August to 31 December 2017. There were 16,763 calls to the PPI helpline, 853,123 visits to the PPI website (with 2,521,086 page views) and 5,354 comments on social media channels.
The Financial Ombudsman Service (FOS) published issue 143 of its monthly update. It contains an article on travel insurance, Q3 17/18 statistics, Q&As, and details about upcoming events.
ECON published its draft report on the European Commission's proposal for a regulation amending EMIR (the Regulation on OTC derivative transactions, central counterparties and trade repositories) (Regulation (EU) 648/2012 following the Commission's proposal for a review of EMIR in May 2017 as part of the Commission's regulatory fitness and performance (REFIT) programme.
The European Commission requested that 12 Member States, including Greece, Luxemburg, Poland, Portugal, Spain and Sweden, fully implement the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II) into their national framework. Although the original deadline for the transposition of the Directive was extended by one year, from 3 July 2016 to 3 July 2017, these Member States have not fully, or not at all, implemented the rules into their national legislation.
The FCA published position limits on a further commodity derivative contract which is traded on a UK trading venue. The limits have been established under Regulation 16 of the Financial Services and Marlets Act 2000 (Markets in Financial Instruments) Regulations 2017 (MIFI Regs) in accordance with Article 57 of MiFID II and the methodology set out in RTS 21. The limits apply from 31 March 2018 to positions held in the spot month and the other months' periods for the Swiss Baseload Power contract (‘Ch Phy BLSws’) which is traded on the organised trading facility of GFI Brokers Ltd.
ESMA updated its transitional transparency calculations (TTC) for equity and tick sizes under MiFID II. The update modifies the previously published values for two specific instruments—DK0060946788 and IE00BF0L3536.
The ECB released the results of the latest survey on credit terms and conditions in euro-denominated securities financing and over-the-counter derivatives markets (SESFOD). The December 2017 survey collected qualitative information on changes between September and November 2017, finding little change in credit terms, but clients’ efforts to negotiate more favourable terms were intensifying. There was little change in liquidity and functioning of markets, while market-making activities increase for debt securities, but decline for derivatives.
The European Parliament updated its procedure file for the European Commission's proposal for a regulation on a framework for the recovery and resolution of central counterparties (CCPs) to indicate that ECON had adopted its report on the proposal and voted to open interinstitutional negotiations.
The European Association of CCP Clearing Houses (EACH) released a statement welcoming the progress made by ECON to strengthen the European Commission legislative proposal on CCP recovery and resolution. EACH says ECON has added financial stability safeguards, preserved the crucial incentives structure on which CCPs are based, and ensured alignment with international standards.
The claimant's claims against the defendant bank for negligent advice and provision of information about hedging products, and misrepresentation failed. The Chancery Division held that no advice had been given, the risks had been explained and understood, and there was no evidence that representations had been false or had had any effect on the claimant's decision. The judgment is available at:  EWHC 74 (Ch).
ESMA responded to concerns expressed by EU issuers about accounting for the effects of the US Tax Cuts and Jobs Act in their IFRS financial statements. The Act, which makes significant changes in US tax laws, became effective on 1 January 2018.
Minor corrections have been published to the Central Securities Depositories Regulations 2017, SI 2017/1064. These include a small change to the amendment of the Financial Services Act 2012 set out in Part 1 of the Schedule to the Regulations.
SI 2018/87: Regulations are made to bring into force provisions for Help-to-Save Accounts. The regulations are made under the Savings (Government Contributions) Act 2017 and came into force on 25 January 2018.
A PwC report found that almost a quarter of sovereign wealth funds (SWFs) assets are made up of alternative investments such as private equity, real estate, gold and infrastructure. PwC says that this diversification of assets will protect portfolios from external shocks, and can fulfil mandates more effectively. However, PwC adds that alternatives can introduce new risks, such as illiquidity, complexity and cyclicality.
The Competition and Markets Authority (CMA) issued directions to Clydesdale Bank to ensure compliance with Part 5 of the Retail Banking Market Investigation Order 2017. It also issued directions to RBS Group to ensure compliance with Part 6 of the Order.
The CMA issued its annual corporate report on banks’ compliance with their 2002 behavioural undertakings on banking services for small and medium-sized enterprises (SMEs). The banks agreed that, except in specific circumstances, they would no longer require an SME customer to open or maintain a business current account to get a business loan, a practice known as ‘bundling’. The report found no evidence of material breaches of the undertakings provided.
The FCA published an update on its work in the high-cost credit sector, which covers overdrafts, rent-to-own, and home-collected and catalogue credit. The FCA says it intends to publish conclusions and proposals for consultation on each area in Spring 2018, with the exception of overdrafts, which will be addressed as part of the FCA’s strategic review of retail banking business models, reporting later in 2018.
The Money Advice Service (MAS) published an independent review of the funding of debt advice in England, Wales, Scotland and Northern Ireland, which was prepared by Peter Wyman. It sets out proposals aimed at creating a debt advice sector that is more efficient and adequately funded to allow a sufficient supply of high-quality advice for all who need it, using a delivery channel that is acceptable to them.
An FCA thematic review of interest-only mortgages raised concerns that shortfalls in repayment plans could lead to people losing their homes. Mortgage lenders are writing to customers prior to their mortgage maturing, but the FCA has found that engagement rates with firms are low.
The European Insurance and Occupational Pensions Authority (EIOPA) published a report to the European Commission, dated 22 December 2017, on the application of group supervision under the Solvency II Directive 2009/138/EC. The report says colleges generally function well, but there is scope for them to develop further in the direction of collaboration and even sharing of tasks within the college.
Ahead of the 1 February 2018 hearing in the European Parliament on the proposed Pan-European Pension Product (PEPP), Insurance Europe (IE) set out a list of ‘key priorities and recommendations that policymakers must address to ensure the PEPP is a success’.
IE responded to the consultation paper on EIOPA’s second set of advice to the European Commission on specific items in the Solvency II Delegated Regulation. IE raised concerns about what it called EIOPA’s unjustified focus on areas that were not mandated by the Commission—citing as examples interest rate risk and proposals on the loss absorbing capacity of deferred taxes (LAC DT). IE also asked EIOPA to further consider whether its proposals make economic sense (eg, on risk margin), and what the cumulative impact of all of its proposals would be.
The government proposed amendments to the Financial Guidance and Claims Bill, which received its second reading in the House of Commons on 22 January 2018. The amendments include the removal of the so-called ‘auto-guidance’ rule, which would have required pension scheme trustees and managers to provide information and guidance to pension scheme members who apply to access or transfer their pension assets if information and guidance has not already been received. The proposed amendment will instead require trustees and managers to recommend that appropriate pensions guidance or independent financial advice is sought in such cases and to ask whether the scheme member wishes to wait until advice and guidance has been obtained or proceed without it.
The International Association of Insurance Supervisors (IAIS) published answers to ten FAQs on the implementation of the risk-based global insurance capital standard (ICS) version 2.0. The guidance follows the IAIS announcement on 2 November 2017 regarding the implementation of ICS version 2.0, and provides responses to some of the frequently asked questions that the IAIS has received.
EIOPA published its 2017 Market Development Report on the occupational pensions market and cross-border activities of Institutions for Occupational Retirement Provisions (IORPs) in the European Economic Area (EEA). Total assets of the IORPs market equal €3.8trn, with the Netherlands and the UK accounting for 76% of them.
EIOPA issued a Revised Single Programming Document 2017-2019 which includes its updated work programme for 2018. This replaces the version issued in September 2017.
EIOPA published its risk dashboard based on data from the third quarter of 2017. EIOPA says the data continues to show relative stable risk exposure of the EU insurance sector but, despite positive macro and market trends, the risks linked to the low interest rates and to potential credit risk mispricing continue to be major concerns for the industry.
The Payment Systems Regulator (PSR) issued information notices to Visa Europe and Mastercard in order to help the PSR to monitor compliance with caps on interchange fees applicable to payment card transactions, which were introduced by the Interchange Fee Regulation (IFR). The PSR has been actively monitoring compliance of issuers and acquirers in the UK with these caps since the caps came into effect on 9 December 2015.
The chair of the EBA, Andrea Enria, wrote to the European Commission Director-General, DG FISMA, Olivier Guersent, about the regulatory technical standards (RTS) for strong customer authentication (SCA) and common and secure open standards of communication (CSC), which the Commission adopted on 27 November 2017. While welcoming the adoption of the RTS, Mr Enria expresses concern that the version of the RTS contains ‘significant changes’ to previous draft versions and says the EBA should have had the opportunity to provide its opinion on the new changes applied.
The PSR said that LINK’s UK ATM network plans meet the requirements to ensure consumers continue to have widespread free access to cash. Following a consultation, LINK added measures to protect the current broad geographical spread of free-to-use (FTU) ATMs and committed to fill gaps in the FTU network. The PSR had stipulated that any cuts in interchange must be incremental and accompanied by close monitoring by LINK to understand the impact on the overall ATM estate, with action taken by LINK where the impact is not as expected.
The European Commission published a report (COM(2018) 41 final) to the European Parliament and the Council of the EU on the implementation and impact of Directive 2009/110/EC, in particular on the application of prudential requirements for electronic money institutions (2EMD).
The PCI Security Standards Council released its January 2018 security requirements, which outline the principles, requirements and evaluation methodology for a mobile payment-acceptance solution on a commercial off-the-shelf device that requires a PIN Cardholder Verification Method (CVM) entry. The new security requirements set up a security risk framework that protects customers' sensitive payment information.
A workshop for financial investigators organised by three international intelligence agencies to broaden awareness surrounding the misuse of crypto-currencies to support criminal activities, agreed among other things to take action against digital currency mixers/tumblers, designed to anonymise transactions, which burdens the work of law enforcement agencies to detect and trace suspicious transactions. Europol, INTERPOL and the Basel Institute on Governance co-organised the workshop, which took place in Switzerland in January 2018, with the aim to develop strategies to investigate and recover digital criminal proceeds.
Principles on Bail-in Execution
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234