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.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
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
Printer Friendly Version
Welcome to the weekly Financial Services highlights from the Financial Services team for the week ending 11 January 2018.
The Chancellor and Brexit Secretary have appealed to German business leaders to help them ‘to craft a bespoke solution that builds on our deeply integrated, unique starting point to maximise economic cooperation, while minimising additional friction’. Writing in Frankfurter Allgemeine Zeitung, Philip Hammond and David Davis called for a UK/EU deal that would cover financial services, saying the 2008 financial crisis had shown how easily contagion can spread without global and regional safeguards in place. They said the EU and UK should ‘re-double our collective effort to ensure that we do not put that hard-earned financial stability at risk, by getting a deal that supports collaboration within the European banking sector, rather than forcing it to fragment’.
The European Commission published a speech given by Michel Barnier at the Trends Manager of the Year 2017 event in Brussels, in which Mr Barnier discussed the future relationship between the EU27 and the UK. In relation to financial services, Mr Barnier stated that the EU could treat some British financial regulation as equivalent to EU law after Brexit, but would not give financial firms a general ‘passport’ to do business in the single market.
The Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) have signed a memorandum of understanding (MoU) setting out how the two bodies co-operate and co-ordinate in carrying out their regulatory responsibilities under the Financial Services and Markets Act 2000 and the Financial Services Act 2012 for the FCA, and various responsibilities, including statutory responsibilities under the Companies Act 2006 and the Companies (Audit, Investigations and Community Enterprise) Act 2004for the FRC.
Charles Randell CBE has been appointed as the new chair of the FCA and the Payment Systems Regulator (PSR). Mr Randell was formerly a partner at Slaughter and May and is currently a non-executive board member of the Department for Business, Energy and Industrial Strategy. Mr Randell will leave his role as an external member of the Prudential Regulation Committee before joining the FCA and PSR. The appointment is for a five-year term from 1 April 2018.
The Prudential Regulation Authority (PRA) is consulting on its proposed expectations for reporting on the minimum requirement for own funds and eligible liabilities (MREL). The purpose of the proposals is to provide the PRA and the Bank of England (BoE) with information to monitor firms’ progress towards meeting interim MREL, and eventual compliance with end-state MREL, to ensure that the policy objectives that underpin MREL are met. Feedback is sought by 9 April 2018.
The Society of Lloyd’s (Lloyd’s) Enforcement Board has censured Mr Stuart Elswood for discreditable conduct, and suspended his membership of Lloyd’s as a non-underwriting working member for a period of two years. The charge related to the failure by Mr Elswood to comply with his employer’s controls intended to protect against the misappropriation of funds belonging to clients. As a result of Mr Elswood’s actions, a third party was successfully able to obtain, by fraud, funds belonging to a member of Lloyd’s.
The European Central Bank (ECB) has issued a recommendation on the dividend distribution policies of credit institutions, and wrote to the parent entities of banking groups regarding their variable remuneration policies. The ECB advises banks to adopt conservative policies that will enable them to satisfy their capital requirements and the outcomes of the supervisory review and evaluation process (SREP).
The Organisation for Economic Co-operation and Development (OECD) has published a number ofrecommendations aimed at enhancing the contribution of the cyber insurance market to managing the increasingly prevalent digital security and privacy protection risks. The OECD says that insurance should be considered an essential component of countries' strategies for addressing digital security risks.
The European Economic and Social Committee (EESC) has issued a press release following its public Cybersecurity Act hearing in Brussels in which it urges the EU to adopt a European-level cybersecurity model, strengthen the mandate of the European cybersecurity agency and establish an effective European certification scheme for online services and products.
New data shows that while the pay of FTSE 100 chief executives has fallen, the pay gap between the top and average worker remains wide. The Chartered Institute of Personnel and Development (CIPD) believes a ‘new era of transparency’ through pay ratio disclosure will keep up pressure on remuneration committees to check and challenge CEO pay levels and performance. The comments come on ‘Fat Cat Thursday’, the third working day of the year by which the average FTSE 100 CEO will have already earnt the median UK gross annual salary of a UK worker of £28,758.
The FCA has published consultation paper CP18/1: Aligning the Financial Services Compensation Scheme (FSCS) levy time period, which sets out transitional provisions to ensure that the life and pensions intermediation class will continue to benefit from support from the retail pool over the next few months, consistent with the FSCS’s public messaging on this. The FCA aims to correct an unintended consequence of its recent alignment of the FSCS compensation levy year with the financial year, which resulted in a different allocation of costs to the life and pensions intermediation class. Comments are sought by 5 February 2018. .
The FCA has imposed a financial penalty of £250,000 on Neil Danziger, a former interest rate derivatives trader at the Royal Bank of Scotland (RBS), and prohibited him from performing any function in relation to any regulated financial activity. The FCA has taken this action due to Mr Danziger's misconduct in relation to LIBOR submissions, as well as his engagement in wash trades in order to facilitate the payment of brokerage payments.
The Financial Regulators Complaints Commissioner has published three final reports (FCA00375, FCA00383 and FCA00403) concerning complaints about the handling of the collapse of the Connaught Income Series 1 Fund (the Fund) by the FCA and, before that, the Financial Services Authority (FSA). The complaints allege that the FCA’s actions make it directly responsible for the losses and costs incurred by investors. As a result, each complainant requested compensation from the FCA based on findings that the Commissioner made on this matter in cases FCA00084 and FCA00114, made in November 2016 and published in December 2016.
The Financial Services Compensation Scheme (FSCS) has published the latest edition of its Outlook newsletter, in which the FSCS acknowledges that it made errors in handling the claims of investors in the Arch Cru funds, which were suspended by Capita Financial Managers in 2009. The FSCS also discusses how it proposes to manage the realignment of its levy year with the financial year, and it announces a supplementary levy and a return of an excessive surplus.
In Burns v Financial Conduct Authority the appellant, a non-executive director, had breached the duties which she had owed as a director to two UK mutual societies and the procedure adopted by the Upper Tribunal in coming to that conclusion had been fair. Nevertheless, the Court of Appeal Civil Division further held that the appellant was entitled to a substantial sum for her costs on the basis that the respondent, Financial Conduct Authority, had acted unreasonably in introducing an allegation of corrupt payment. See Burns v Financial Conduct Authority  All ER (D) 14 (Jan).
The European Securities and Markets Authority (ESMA) has published an overview of the position management controls that have been implemented by trading venues with respect to commodity derivatives and reported to competent authorities pursuant to Article 57 of Directive 2014/65/EU (MiFID II).
ESMA has decided to delay the publication of the data on the double volume cap (DVC) mechanism for January 2018. ESMA says the current quality and completeness of the data ‘does not allow for a sufficiently meaningful and comprehensive publication’ of DVC calculations, as required under MiFID II and the Markets in Financial Instruments Regulation (MiFIR), and it wants to avoid creating an unlevel playing field and a biased picture covering only a very limited number of instruments and markets.
ESMA has published a list of trading venues for which a temporary exemption from the open access provisions under Article 36(5) of MiFIR exists.
ESMA has published a public register of those derivative contracts that are subject to the trading obligation under MiFIR. The register clarifies the classes of derivatives subject to the trading obligation, the trading venues on which those derivatives can be traded, and the dates on which the obligation takes effect per category of counterparties.
ESMA has announced that data relating to MiFID II and MIFIR is now available on its website. The information includes relevant registers and statistical data that ESMA compiles on the basis of notifications and data provided by the relevant national competent authorities (NCAs) and information collected through ESMA’s supervisory activities.
The FCA has updated its transaction reporting webpage to reflect the implementation of MiFID II and MiFIR.
ESMA launched a consultation on draft guidelines that aim to clarify the implementation of anti-procyclicality provisions for central counterparties (CCPs) under the European Markets Infrastructure Regulation (EMIR). ESMA is seeking stakeholders' feedback by 28 February 2018 and aims to finalise the guidelines by the first half of 2018.
The FCA has published a Dear CEO letter from its executive director of supervision, Megan Butler, addressed to the CEOs of providers and distributors of contracts for differences (CFDs) saying firms should review their arrangements as a result of failings the FCA has identified in a review of the sector.
The Association for Financial Markets in Europe (AFME) published a revised version of its due diligence questionnaire (DDQ) which harmonises and simplifies the process of completing questionnaires for global custodians. The revised DDQ now incorporates approximately 20 additional questions, and aims to further standardise the process by allowing firms to use the AFME DDQ without sending a sizeable addendum of additional questions. An additional section has also been added for when the recipient is providing global custody services, following requests from AFME members.
The International Organization of Securities Commissions (IOSCO) has published guidance for users on selecting appropriate financial benchmarks and on contingency planning, particularly for scenarios in which a benchmark is no longer available. In both cases, the statement recognises users’ reliance on benchmarks, aims to increase awareness of the risks involved, and encourages their mitigation, where appropriate.
The International Capital Market Association (ICMA) has published its Quarterly Report for Q1 2018. The issue contains a review of 2017 and the outlook for 2018 by ICMA’s chief executive, Martin Scheck, and feature articles on the transition from LIBOR, improving European corporate bond markets, and the implementation of MiFID II and MiFIR.
The FCA has published an insight piece on the types of borrowers driving recent UK consumer credit growth. The FCA say this type of borrowing—which covers mainstream products such as credit cards, motor finance and personal loans, and less mainstream ones such as rent-to-own agreements—has been growing at a rapid 10% a year. Studying credit reference agency (CRA) data for one in ten UK consumers, the FCA concludes that credit growth has not been driven by subprime borrowers, people without mortgages have mainly driven credit growth, and consumers remain indebted for longer than product-level data implies.
The FCA has adopted the Enforcement (Packaged Retail and Insurance-based Investment Products Regulations 2017) Instrument 2018 (FCA 2018/1), which amends the Decision Procedure and Penalties manual (DEPP) and the Enforcement Guide (EG) to set out the FCA's enforcement approach to breaches of Regulation (EU) 1286/2014 (the PRIIPs Regulation). The instrument was consulted on in the FCA's quarterly consultation paper of September 2017 (CP17/32) and came into force on 4 January 2018.
The European Insurance and Occupational Pensions Authority (EIOPA) has published technical information on the relevant risk free interest rate term structures (RFR) with reference to the end of December 2017. The information is used for the calculation of the technical provisions for (re)insurance obligations.
EIOPA has published the technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of December 2017.
The European Parliaments' Committee on Economic and Monetary Affairs (ECON) has published a working document on the European Commission's proposal for a regulation on a pan-European personal pension product (PEPP) and the Commission's recommendation on the tax treatment of personal pension products, including the PEPP. The document lists some of the main issues and dilemmas to be discussed, with a view to drafting a report and amendments in the ECON committee.
The European Banking Authority (EBA) Banking Stakeholder Group has responded to the EBA consultation (CP/2017/16) on draft regulatory technical standards (RTS) on co-operation between competent authorities in the home and host member states in the supervision of payment institutions operating on a cross-border basis under Article 29(6) of the revised Payment Services Directive (PSD2).
The PSR has published a report prepared for it by Lipis Advisors on fraud prevention and resolution in push payment systems. The report looks at 12 markets' real-time push payment systems comparable to Faster Payments and CHAPS in the UK, which were known to have a strong focus on consumer fraud protection, and examines what fraud processes are in place in these markets that could help prevent, mitigate, or respond to authorised push payment (APP) scams.
The ECB has published details of an interview given by Yves Mersch, a member of the executive board of the ECB, to German financial newspaper Börsen-Zeitung in which Mr Mersch expressed a number of concerns about bitcoin trading.
issue guidelines on complaints procedure (Article 100(6)), and guidelines on improving incident reporting (Article 96(3))
0330 161 1234