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 15 November 2018.
The UK government and the European Commission announced a deal in principle on the legal terms of the UK’s withdrawal from the EU. A copy of the draft Withdrawal Agreement agreed at negotiator level (to be ratified) is now published, along with an outline of the political declaration on the framework for the future EU-UK relationship (to be finalised). The UK Prime Minister confirmed the cabinet’s decision to back the deal and the European Commission recommended to the EU27 that decisive progress has been made and steps should be taken to initiate the process of formalising the deal. A special summit of the EU27 is expected to take place on 25 November 2018.
SI 2018/Draft: This draft enactment is laid before Parliament in exercise of legislative powers under the European Union (Withdrawal) Act 2018 (EU(W)A 2018) in preparation for Brexit. This enactment is being laid in order to address the deficiencies in retained EU law in relation to European Venture Capital Funds, arising from the withdrawal of the UK from the EU, ensuring the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day.
SI 2018/Draft: This draft enactment is laid before Parliament in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This draft enactment is being made in order to address the deficiencies in retained EU law in relation to European social entrepreneurship funds, arising from the withdrawal of the UK from the EU, ensuring the legislation continues to operate effectively at the point at which the UK leaves the EU. It comes into force on exit day.
HM Treasury published a draft statutory instrument (SI): the draft Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018 together with an explanatory information for the SI. The draft Money Laundering and Transfer of Funds (Information) (Amendment) (EU Exit) Regulations 2018 (SI) addresses deficiencies in each of the Fourth EU Anti-Money Laundering Directive, the EU Funds Transfer Regulation and the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017 that arise from the UK leaving the EU to ensure that this legislation continues to operate effectively. Changes introduced by the SI include the removal of references to EU institutions, and an equalisation of the regulatory treatment of EEA Member States and third countries.
The Commons European Statutory Instruments Committee (ESIC) and the Lords Secondary Legislation Scrutiny Committee (SLSC) are responsible for the sifting process under the European Union (Withdrawal) Act 2018 (EU(W)A 2018). These committees scrutinise proposed negative Brexit SIs and make recommendations on the appropriate parliamentary procedure before the instruments are laid in Parliament. This bulletin outlines the latest updates and recommendations, collated on 9 November 2018. Subjects covered include bank recovery and resolution measures.
The Council of the European Union voted to adopt the Regulation of the European Parliament and of the Council amending Regulation (EU) No 1093/2010 as regards the location of the seat of the European Banking Authority (EBA) (First reading).
The Council of the European Union asked the Permanent Representatives Committee to confirm its agreement with the European Parliament’s position on the draft regulation amending Regulation (EU) No 1093/2010 as regards the location of the seat of the EBA.
The European Securities and Markets Authority (ESMA) published a final report with draft regulatory technical standards (RTS) proposing to amend the three Commission Delegated Regulations on the clearing obligation under the European Market Infrastructure Regulation (EMIR). The draft RTS propose, in the context of the UK’s withdrawal from the EU, to introduce a limited exemption in order to facilitate the novation of certain non-centrally cleared OTC derivative contracts to EU counterparties during a specific time-window. The amendments would only apply if the UK leaves the EU without the conclusion of a withdrawal agreement.
The European Commission published information on its ongoing preparedness and contingency work in the event of a no-deal scenario in the Brexit negotiations with the UK. Over the past year, the Commission held technical discussions with the EU27 Member States both on general issues of preparedness and on specific sectorial, legal and administrative preparedness steps. The Commission says it will step up its co-ordination and support efforts over the coming weeks, by organising a series of intensive preparedness seminars on a range of issues, including financial services.
ESMA issued a public statement in order to raise market participants’ awareness on the readiness of credit rating agencies (CRAs) and trade repositories (TRs) for the possibility of no agreement being reached between the EU and the UK on Brexit.
The Prudential Regulation Authority (PRA) issued a Direction: Temporary permission and variation: notification before exit day. This sets out the detail of one of two routes which EEA firms may take to inform the PRA before exit day of their intention to enter into the temporary permissions regime (TPR).The TPR will allow EEA firms using a passport to operate for a limited period while they seek authorisation from the PRA if the passporting regime falls away on 29 March 2019.
The Financial Conduct Authority (FCA) published a webpage providing information for consumers on the implications of Brexit on their financial products and services. The webpage sets out different scenarios based on whether an implementation period goes ahead or not, and details how Brexit may affect consumers’ financial protections.
The FCA updated its approach on the temporary permissions regime for inbound passporting EEA firms and funds to include a direction related to the notification process for firms. The direction is given by the FCA under regulation 14(2) of the EEA Passport Rights (Amendment, etc, and Transitional Provisions) (EU Exit) Regulations 2018.
The European Union must approve a temporary system to allow UK central counter-parties to continue operating within the bloc after Brexit—or else thousands of contracts will have to move to EU clearinghouses at great risk and expense, the International Swaps and Derivatives Association (ISDA) warned Tuesday. The UK already said it would set up a temporary regime to grant permission to clearinghouses once it no longer falls within the EU umbrella, and ISDA said the EU would need to agree on a similar deal by December to fill the gap while UK clearinghouses seek authorisation from Europe's securities watchdog.
The FCA published the minutes of its board meeting which took place on 26 and 27 September 2018. Among other topics, the board discussed the progress against the FCA's business plan commitments and issues on quarterly performance, including that of the Enforcement division, the FCA's interim report on payment protection insurance (PPI), SME access to the Financial Ombudsman Service (FOS), the FCA's financial crime strategy—including proposals for a 2019 discussion paper on tackling fraud—crypto-assets and EU withdrawal.
The Committee on Economic and Monetary Affairs (ECON) of the European Parliament published a draft report on the Commission's March 2018 proposal for a regulation amending Regulation (EU) 575/2013 (CRR) as regards minimum loss coverage for non-performing exposures (COM(2018)0134). The draft report was prepared by rapporteurs Esther de Lange and Roberto Gualtieri and sets out a number of amendments to the text proposed by the Commission.
The PRA published a policy statement PS28/18, UK leverage ratio: Applying the framework to systemic ring-fenced bodies and reflecting the systemic risk buffer. The PS sets out the PRA's feedback to responses to its consultation paper CP14/18 on this topic, and also contains (in appendices to the CP) the PRA's final policy to update the following:
FSA083 leverage ratio reporting template, and reporting instructions
The EBA updated its recommendation on the equivalence of third country confidentiality regimes, which is based on the relevant provisions of the Capital Requirements Directive (CRD IV). The EBA considered the following third-country authorities as equivalent:
the Securities and Futures Commission—Hong Kong
The European Central Bank (ECB) published its expectations regarding institutions’ internal capital and liquidity adequacy assessment processes (ICAAPs and ILAAPs). The guides, which are not legally binding, will be applied from 1 January 2019 and replace the expectations published in January 2016. They aim to assist banks in strengthening their ICAAPs and ILAAPs, and to encourage the adoption of best practices. The ECB says banks are expected to assess the risks they face and, in a forward-looking manner, ensure that all material risks are identified, effectively managed and covered by adequate capital and liquidity levels at all times.
The Presidency of the Council of the EU published a further compromise text on the ECB's June 2017 recommendation for a decision of the European Parliament and Council amending Article 22 of the Statute of the European System of Central Banks and of the ECB. The latest compromise text is based on the previous Presidency compromise proposal, which was published on 25 October 2018.
The FCA reviewed how firms have implemented the new whistleblowing rules and published the findings on its website. The findings set out areas of good practice observed and areas for improvement, alongside an explanation of the FCA's expectations for firms' whistleblowing arrangements.
SI 2018/1170: Provisions are made to bring certain FSA 2012 offences into the DPA regime. The Crime and Courts Act 2013 (Deferred Prosecution Agreements) (Amendment of Specified Offences) Order 2018 is made before Parliament under section 58(4)(h) of the Crime and Courts Act 2013, for approval by resolution of each House of Parliament. If implemented, it would make certain offences under the Financial Services Act 2012 (FSA 2012) eligible to be dealt with by deferred prosecution agreements (DPA). The Order will come into force on 8 October 2018 (updated from draft on 12 November 2018).
Directive (EU) 2018/1673 on the criminalisation of money laundering is now published in the Official Journal of the EU. Member States have up to 24 months to transpose it into national law. This Directive establishes minimum rules on the definition of criminal offences and sanctions relating to money laundering. Such activities will be punishable by a maximum term of imprisonment of four years, and judges may impose additional sanctions and measures (eg temporary or permanent exclusion from access to public funding and fines). Aggravating circumstances will apply to cases linked to criminal organisations or for offences conducted in the exercise of certain professional activities.
Regulation (EU) 2018/1672 on controls on cash entering or leaving the EU was published in the Official Journal of the EU. This regulation extends the definition of cash to include gold and other commodities used as highly-liquid stores of value, and anonymous prepaid electronic cash cards. It also enables authorities to register information about cash movements below the €10,000 threshold and to temporarily seize cash if they suspect criminal activity.
The European Commission published a corrigendum to its proposal to review the European Supervisory Authorities' regulations, which was amended in September 2018 to strengthen the role of the EBA in anti-money laundering (AML) and countering terrorist financing threats. The corrigendum corrects numbering errors in Articles 1–9 of the proposed regulation and corrects references.
The European Commission adopted an opinion requiring the Maltese anti-money laundering supervisor (the Financial Intelligence Analysis Unit or FIAU) to continue taking additional measures to fully comply with its obligations under the Fourth Anti-Money Laundering Directive (Directive (EU) 2015/849) (MLD4).
The European Commission referred Luxembourg to the Court of Justice of the EU (CJEU) for transposing only part of MLD4 into its national law. The Commission proposed that the CJEU charges a lump sum and daily penalties until Luxembourg takes the necessary action. As part of the same assessment, the Commission also sent Estonia and Denmark a Reasoned Opinion and Letter of Formal Notice respectively.
The Joint Committee of the European Supervisory Authorities (ESAs)—the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority—are consulting on draft guidelines on the co-operation and information exchange between competent authorities supervising credit and financial institutions for the purposes of AML and countering the financing of terrorism (CFT) supervision. The draft guidelines are part of the ESAs' wider work on fostering a common approach to AML/CFT within the EU. Feedback is sought by 8 February 2019.
The FCA published a report analysing the results of its first annual financial crime data return. In 2016 the FCA required over 2,000 firms, including all UK-based banks and building societies, to complete the return, allowing for a collective industry view of the risks that criminals pose to society and how firms are responding.
The Financial Stability Board (FSB) issued a summary note of the responses it received to its July 2018 consultation on a draft cyber lexicon. The FSB says respondents generally welcomed the consultative document and supported the FSB’s work to develop the lexicon. The FSB received 29 responses from individuals, consultants, financial institutions and industry associations and other groups representing participants and service providers, including banks, insurers, asset managers, exchanges, retirement plan providers and information technology and telecommunications firms.
The Bank of England (BoE) hosted a one-day exercise on 9 November 2018 to test the financial sector's resilience to a major cyber incident impacting the UK. The exercise was carried out in partnership with industry as well as HM Treasury and the Financial Conduct Authority. According to the BoE, the exercise forms a 'vital part' of the sector-wide biennial process that seeks to ensure the industry is prepared for and can respond effectively to any major disruption stemming from a cyber incident, protecting the financial system on which the public relies.
The European Commission decided to put on hold two referrals of Spain to the CJEU for failing to fully implement the revised Markets in Financial Instruments Directive (Directive 2014/65/EU) (MiFID II), as well as its supplementing directive (Commission Delegated Directive (EU) 2017/593) and CRD IV. The stays of proceedings follow action by Spain to fully transpose the Directives.
On the 13 November 2018, the Court of Appeal handed down a judgment in which it unanimously held that the Court of Appeal had jurisdiction under section 49(1A)(a) Competition Act 1998 to hear and determine an appeal lodged by Walter Hugh Merricks against a CAT judgment of 21 July 2017 (in which the CAT dismissed a collective proceedings order application brought by Walter Hugh Merricks in relation to potential follow-on actions against Mastercard) so far as it raised points of law. A consideration of a parallel request for judicial review in relation to the same CAT judgment is now no longer required.
Financial Services—Financial Conduct Authority. In the light of the applicants' conduct as former directors of Keydata Investment Services Ltd, the prohibition orders issued against them by the Financial Conduct Authority pursuant to s 56 of the Financial Services and Markets Act 2000, prohibiting each of them from performing any function in relation to any regulated activity carried on by an authorised person, exempt person or exempt professional person, were justified. Consequently, the Upper Tribunal (Tax and Chancery Chamber) dismissed the references made to it by the applicants and confirmed the financial penalties imposed on the applicants. For further information, see:  UKUT 358 (TCC).
ECON published its report on the directive proposed by the European Commission in March 2018 that would amend MiFID II so that crowdfunding service providers authorised under the proposed crowdfunding regulation would be excluded from the scope of MiFID II. The report was adopted on 5 November 2018 and is tabled for plenary.
ESMA published an updated version of its supervisory briefing on MiFID II suitability requirements. This publication is an updated version of ESMA's 2012 supervisory briefing and takes into account the content of ESMA's guidelines on certain aspects of the MIFID II suitability requirements published on 28 May 2018.
ESMA published a call for evidence on periodic auctions for equity instruments. ESMA aims to gather information to help it develop its understanding of frequent batch auction trading systems, to assess whether and to what extent they can be used to circumvent the MiFID II transparency requirements and, should this be the case, to develop appropriate policy measures.
ESMA updated its Q&As on its temporary product intervention measures on the marketing, distribution or sale of contracts for difference (CFDs) and binary options to retail clients based on Article 40 of Regulation (EU) 600/2014 (MiFIR).
ESMA updated its Q&As on MiFID II and MiFIR market structure and transparency topics. The new Q&As provide clarification on:
ESMA updated its public register with the latest set of double volume cap (DVC) data under MiFID II. It includes DVC data and calculations for the period of 1 October 2017 to 30 September 2018, as well as updates to already published DVC periods.
A group of trade associations urged EU regulators to reconsider proposed changes to MiFID II equivalence regime that they say would effectively remove the ability to provide certain investment services on a cross-border basis to European clients by third-country firms.
The Presidency of the Council of the EU published a further compromise text on the European Commission's June 2017 proposal for a regulation amending EMIR as regards the procedures and authorities involved for the authorisation of central counterparties (CCPs) and requirements for the recognition of third-country CCPs. The latest compromise text is based on the previous Presidency compromise proposal, which was published on 25 October 2018.
ESMA updated its Q&As document on the implementation of the Market Abuse Regulation (EU) 596/2014 (MAR). The updated document includes a new Q&A on the scope of the trading restrictions for persons discharging managerial responsibilities (PDMRs) under Article 19(11) of MAR.
ESMA updated its Q&As on the Short-Selling Regulation. The new Q&A clarifies that the identification of the relevant competent authority, following the entry into application of MiFID II/MiFIR, is no longer made under Commission Regulation No 1287/2006 but under Commission Delegated Regulation (EU) 2017/590 for the reporting of transactions to competent authorities.
ESMA renewed the prohibition of the marketing, distribution or sale of binary options to retail clients, in effect since 2 July 2018, for a further three-month period from 2 January 2019. ESMA says it considers that a significant investor protection concern continues to exist, and it extended the ban in the same terms as the previous renewal decision. ESMA intends to adopt the renewal measure in the official languages of the EU in the coming weeks, after which it will publish an official notice on its website. The measure will then be published in the Official Journal of the EU and will start to apply from 2 January 2019 for a period of three months.
The BoE published minutes of the SONIA stakeholder advisory group meeting on 10 October 2018. The group, made up of external stakeholders, supports the BoE's administration of the sterling overnight index average (SONIA) interest rate benchmark by providing advice and technical input to the BoE and the SONIA oversight committee. Discussion topics included the transition to reformed SONIA, market conditions, and the evolving uses of SONIA.
The FSB published a progress report on the implementation of its recommendations to reform major interest rate benchmarks. The report sets out the progress made on the development of overnight nearly risk-free rates (RFRs), and markets based on these rates, and on further reforms to interbank offered rates (IBORs).
As the financial industry is preparing to transition from LIBOR and other IBORs to alternative RFRs, ISDA published a quarterly review of trading volumes of interest rate derivatives (IRD) referencing alternative RFRs and major IBORs. The report is entitled Interest rate benchmarks review: Third quarter of 2018 and nine months ended September 30, 2018.
ISDA published a summary chart of derivatives which are subject to regulatory initial and variation margin requirements in jurisdictions which have final requirements for regulatory margin. ISDA points out that the document is intended as an information resource only and does not contain legal advice.
ISDA CEO, Scott O’Malia, gave the opening remarks at the ISDA Tech Forum in New York. Mr O’Malia discussed ‘DerivHack’, a hackathon hosted by Barclays and supported by ISDA, the automation of ISDA legal documents through the new ISDA Create platform, as well as ISDA’s long-term vision for smart contracts.
ESMA published several documents which aim to implement the new European regulatory framework for securitisations (Regulation (EU) 2017/2402) (the Securitisation Regulation) and help promote simple, transparent and standardised (STS) securitisations. The documents that ESMA published include a final report containing draft RTS and ITS on the information and templates to be provided as part of an application by a firm to register as a securitisation repository with ESMA. ESMA also published its final technical advice to the Commission on fees to be charged by ESMA for registering and supervising securitisation repositories.
ESMA updated its Q&As on the implementation of the Central Securities Depositories Regulation (CSDR). The updated Q&As provide answers to questions on the following topics:
settlement discipline: the new Q&As relate to the calculation of cash penalties
The implementing regulation amends Regulation (EU) No 680/2014 (Implementing Technical Standards (ITS) on Supervisory Reporting) with regard to the inclusion of prudent valuation into the Common Reporting Framework (COREP) as well as other amendments. The amendments aim to keep reporting requirements in line with changes in the regulatory framework and with the evolving needs for supervisory authorities' risk assessments. The updated ITS include:
Q&A-based changes and other minor amendments
The ECB published a speech given by its vice-president, Luis de Guindos, at the Opening Conference of the 21st Euro Finance Week in Frankfurt on 12 November 2018. In his speech, Mr de Guindos outlined what the ECB see as the main financial stability risks for the euro area and focused on the situation in the investment fund sector. Mr de Guindos pointed out that over the past decade, this sector has almost tripled in terms of total assets and taken on more risk and therefore deserves greater attention from a financial stability perspective.
ESMA is consulting on its draft guidelines providing further specifications on how to fill-in the Money Market Fund Regulation (MMFR) reporting template. From the end of the first quarter of 2020, European money market funds will have to disclose certain information under the MMFR to their national competent authorities (NCAs). Feedback is sought by 14 February 2018.
The Single Resolution Board (SRB) published its 2019 work programme, setting out its priorities and core tasks for the year ahead. The SRB says its main tasks will focus on tailoring resolution strategies and identifying and addressing impediments to resolvability.
The economic secretary to the Treasury, John Glen MP, wrote to the chair of House of Commons European Scrutiny Committee, Sir William Cash, with an update on the progress of negotiations on EU bank capital requirements (known as the risk reduction package) where trilogues have commenced. The negotiations concern the Banking Recovery and Resolution Directive (BRRD) and the CRD and the CRR.
The PRA announced that its director of UK deposit takers, Melanie Beaman, hosted an International Financial Reporting Standards (IFRS) 9 roundtable for non-systemic banks and building societies on Thursday 8 November 2018. The announcement explains that the roundtable was largely an opportunity for firms to talk to the PRA and share their experience regarding embedding IFRS 9 into their capital planning.
The chair of the Treasury Committee, Nicky Morgan MP, stated that ‘time is clearly of the essence’ in helping customers who are unable to remortgage or find a lower interest rate due to changes in legislation following the financial crash, also confirming that the FCA agreed that helping these customers is a matter of urgency. The comments are in response to a letter to the Treasury Committee from the economic secretary to the Treasury, John Glen MP, who stated that exploring solutions to help such customers, referred to as ‘mortgage prisoners’, is a top priority for his department.
The FCA published the results of a survey of UK consumers’ attitudes towards complaining, as part of its campaign to encourage people to check if they were mis-sold PPI and make a complaint before the 29 August 2019 deadline. The FCA says more than 15 million people in the UK routinely miss out on refunds, replacement products and getting problems sorted because they don’t know how to complain with confidence.
Following consultation, the Competition and Markets Authority (CMA) decided that the new Insurance Distribution Directive (Directive (EU) 2016/97) represents a change of circumstances, such that the PPI Market Investigation Order 2011 should be varied to require the production of an insurance product information document (IPID) for all PPI providers to replace the policy summary. A draft Variation Order and a formal Notice of Intention to Vary are published alongside the final decision. The CMA is now consulting on the draft Variation Order, with feedback sought by 13 December 2018.
ECON published its report on the European Commission's March 2018 proposal for a regulation amending Regulation (EC) 924/2009 as regards certain charges on cross-border payments in the EU and currency conversion charges. The report was adopted on 5 November 2018 and is tabled for plenary.
The Application Programming Interface Evaluation Group (APIEG) published its recommended functionalities to enable APIs to achieve alignment with the revised Payment Services Directive (PSD2). The APIEG was set up by the European Commission to create new standards for APIs which are the technical interface between banks and FinTechs for use in open banking.
The BoE and Pay.UK issued an open call for interest for members of the payments industry wishing to join a newly created Standards advisory panel, jointly run by the two bodies. The panel will comprise a senior group of stakeholders representing the payments industry. BoE and Pay.UK are seeking diverse representation from payment service providers, technology firms and end-users such as businesses. Members of the panel will ‘have an opportunity to influence changes across wholesale and retail payments, shaping how benefits for the UK are maximised while ensuring changes are proportionate’.
Guideline (EU) 2018/1626 of the ECB of 3 August 2018 and Decision (EU) 2018/1625 of the ECB of 8 October 2018 are now published in the Official Journal. Guideline (EU) 2018/1626 amends Guideline ECB/2012/27 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2018/20) while Decision (EU) 2018/1625 amends Decision ECB/2007/7 concerning the terms and conditions of TARGET2-ECB (ECB/2018/24).
The PRA published policy statement PS27/18, Strengthening accountability: Implementing the extension of the SM&CR to insurers (Part 2). It provides feedback on the responses received to consultation paper CP20/18. It also provides the final set of rules for the implementation of the extension of the Senior Managers and Certification Regime (SM&CR) to insurers.
Commission Implementing Regulation (EU) 2018/1699 of 9 November 2018 laying down technical information for the calculation of technical provisions and basic own funds for reporting with reference dates from 30 September 2018 until 30 December 2018 in accordance with Directive 2009/138/EC (Solvency II) is now published in the Official Journal.
The European Commission launched a consultation on proposed amendments to the implementing rules in Commission Delegated Regulation (EU) 2015/35, which supplements Solvency II. Among other things, the Commission is proposing to introduce prudential criteria that would reduce the capital charges in the standard formula for insurers' unrated debt and unlisted equity investments. The deadline for feedback is 7 December 2018.
The ESAs issued a consultation paper on targeted amendments to Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 covering the rules for the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs). Comments are requested by 6 December 2018.
The PRA launched consultation paper CP28/18, PRA fees and levies: Changes to periodic and transaction fees. It contains proposals aiming to ensure that the methodologies for determining PRA fees for designated investment firms (DIFs), life insurers and general insurers are appropriate to the risks these firms pose to the PRA’s objectives. Other changes set out in the CP are intended to ensure that fees relating to Solvency II models are applied consistently. Feedback is sought by 7 January 2019.
The PRA published templates A and B for the disclosure of aggregate statistical data with regard to undertakings and groups supervised under Solvency II. The PRA published the templates as required under Article 31(2) of the Solvency II Directive. The information is accurate for year-end 2017.
The PRA summarised the responses it received from firms with respect to its May 2018 letter to the CEOs of specialist general insurers regarding market conditions and recent PRA work. The PRA says there was almost universal agreement from respondents that the issues raised in the letter presented clear risks to market participants. However, some firms did not believe that the issues applied to them.
The EU-US Insurance Project continued their dialogue on cyber security, cyber insurance, the use of big data and intra-group transactions. The dialogue seeks to enhance mutual understanding of the respective regulatory frameworks and initiatives in the four areas. The chair of the European Insurance and Occupational Pensions Authority (EIOPA) said: ‘Considering the implications for the operational environment and the business models of insurers, globally, a collective response of supervisors is required to meet our primary objective, which is the protection of policyholders and beneficiaries'.
The International Association of Insurance Supervisors (IAIS) published a draft application paper for consulation: Application paper on proactive supervision of corporate governance. It sets out good practices related to the organisation and functioning of the supervisor, with the objective of promoting proactive supervision of corporate governance. Comments are requested by 17 December 2018.
The IAIS launched a public consultation on a draft holistic framework for systemic risk in the insurance sector. The IAIS published the consultation on its website to provide an opportunity for stakeholders to give feedback on the overall holistic framework and its key elements, with the aim of assessing and mitigating systemic risk in the insurance sector.
The IAIS published the revised insurance core principle (ICP) 6 that was adopted at its annual general meeting in Luxembourg, as well as draft revised ICPs 8, 15, 16 and 20 endorsed by the IAIS executive committee, together with resolution of public consultation comments following its consultations in June 2018. The IAIS also published application papers on supervision of insurer cybersecurity and on the composition and the role of the board, which were adopted by the executive committee on 7 November 2018. Application papers provide additional material related to one or more ICPs, the Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame) or G-SII policy measures, including actual examples or case studies that help practical application of supervisory material.
The IAIS published an application paper on the use of digital technology in inclusive insurance, which aims to provide guidance to supervisors, regulators and policymakers when considering, designing and implementing regulations and supervisory practices.
The IAIS published an application paper which aims to provide guidance on draft supervisory material related to recovery planning in the ICPs and ComFrame. The paper addresses issues that were identified in the development of the supervisory material, including feedback received from members and stakeholders during public consultations. The issues involve the nature of a recovery plan, as well as the roles of the supervisor and insurer with respect to the plan. Feedback is sought by 7 January 2019.
The IAIS published a paper on the increasing digitalisation of insurance and its potential impact on consumer outcomes, in light of Insurance Core Principle 19 on Conduct of Business. The focus of the paper is on product design and underwriting, along with marketing, sales and distribution aspects of the insurance value chain.
The IAIS announced it will hold background and discussion sessions on 15 November and 21 November 2018 on IAIS supervisory and supporting material, and invites interested parties to register.
The IAIS concluded its 25th annual conference, where it held its AGM. The executive committee approved a number of supervisory papers on the increasing digitalisation in insurance and its potential impact on consumer outcomes, supervision of insurer cybersecurity, and the composition and role of the board. The committee also re-elected the Bank of England’s Dr Victoria Saporta as chair.
EIOPA published its report on the implementation of IORP II in relation to the pension benefit statement: guidance and principles based on current practices. The report is part of EIOPA's work to facilitate the national implementation of Directive (EU) 2016/2341 on the activities and supervision of institutions for occupational retirement provision (IORP II Directive) and focuses on the requirement for institutions for occupational retirement provision (IORPs) to draw-up a pension benefit statement (PBS). This statement should be concise and made available to each member at least annually.
The vice-president of the European Commission, Valdis Dombrovskis, made a statement at the European Parliament plenary debate on regulating virtual currencies and initial coin offerings (ICOs). Mr Dombrovskis confirmed that, for the Commission, crypto-assets and ICOs present both opportunities and risks but it is clear from the current environment that crypto-assets are here to stay. Mr Dombrovskis set out that the underlying blockchain technology appears to be promising for the digital economy, which should be embraced and supported.
ECON published its report on the European Commission's May 2018 proposal for a regulation on disclosures relating to sustainable investments and sustainability risks and amending IORPs. The report was adopted on 5 November 2018 and is tabled for plenary. The report makes numerous changes to the Commission's proposal. ECON opened interinstitutional negotiations based on the report adopted in committee.
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234