Weekly highlights—20 April 2017

Welcome to the weekly Financial Services highlights from the Lexis®PSL Financial Services team for the week ending 20 April 2017.

Financial Conduct Authority updates

FCA board minutes available

On 13 April 2017, the Financial Conduct Authority (FCA) published the minutes of its 22 and 23 February 2017 board meeting.

FCA April round up now available

On 18 April 2017, the FCA published its April 2017 regulatory round up.

FCA mission, business plan and sector views published

On 18 April 2017, the FCA released its mission plan, setting out what it prioritises. The document describes the framework the FCA uses to make decisions, the reasoning behind its work and how it chooses ‘the best tools for the job’. The FCA also published its business plan and sector views.

ESAs updates

ESMA staff/stakeholder meetings listed

On 18 April 2017, the European Securities and Markets Authority (ESMA) released details of staff interactions with external stakeholders in Q1 2017.

Regulatory architecture

EBA calls for papers on quantitative models in financial regulation

On 10 April 2017, the European Banking Authority (EBA) launched a call for research papers for a workshop on ‘The future role of quantitative models in financial regulation’, to be held in London on 28-29 November 2017. The workshop will bring together economists and researchers from supervisory authorities and central banks, and leading academics, to discuss how the financial sector is evolving in the use of quantitative modelling, and future challenges for firms and their regulators. The submission deadline is 4 August 2017.

ECB Guideline on less significant institutions published in the Official Journal

On 13 April 2017, Guideline (EU) 2017/697 of the European Central Bank (ECB) of 4 April 2017 on the exercise of options and discretions available in Union law by national competent authorities (NCA) in relation to less significant institutions was published in the Official Journal of the EU.

EY FinTech head seconded to Open Banking

On 13 April 2017, the Competition and Marketing Authority (CMA) announced that Imran Gulamhuseinwala had been appointed as the new implementation trustee and head of Open Banking, the organisation the major banks were ordered to create and fund by the CMA to develop the common technical standards underpinning open banking.

Danièle Nouy discusses bad debt, consolidation of banks and US deregulation

On 18 April 2017, in an interview with German business daily Handelsblatt, the chair of the supervisory board of the ECB, Danièle Nouy, has discussed the state of European banks and the regulatory environment. Ms Nouy focused largely on non-performing loans and how the supervisory bodies have sought to reduce them.

Prudential requirements

Public hearing on capital requirements and bank resolution framework

On 19 April 2017, the European Parliament's Committee on Economic and Monetary Affairs (ECON) announced it is organising a 25 April 2017 public hearing on the new banking reform package published by the European Commission in November 2016. The proposals aim to update the capital requirements and resolution framework for banks, and incorporate international agreed standards into the EU legislative framework.

FSB gives broadly positive peer review of Brazil

On 19 April 2017, the Financial Stability Board (FSB) published its peer review of Brazil on April 19 2017. The report was prepared by a team of experts drawn from FSB member institutions and benefited from dialogue with the Brazilian authorities and private sector representatives as well as from discussion in the FSB Standing Committee on Standards Implementation.

Risk management and controls

Views sought on derogations in upcoming EU data protection legislation

On 12 April 2017, the derogations within the forthcoming General Data Protection Regulation (GDPR) were set out for consultation by the Department for Culture, Media and Sport (DCMS). The deadline for responses to this consultation is 10 May 2017.

ICO sets out how its approach to regulation supports innovation

On 17 April 2017, the Department for Culture, Media and Sport,(DCMS) published a policy paper by the Information Commissioner's Office (ICO), in which it outlined its approach to supporting innovation. Initiatives underway include developing a range of digital services with a focus on open policy development. The paper outlined the ICO's approach to issues of personal data arising from the internet of things, artificial intelligence and drones. The policy paper also looked at an assessment of how new technology could shape regulated sectors, and how legislation could be adapted to these new technologies.

Cyber-attacks are increasing, BCC digital survey finds

On 18 April 2017, the British Chambers of Commerce (BCC) published its Digital Economy Survey, which showed one in five businesses have been victims of cyber-attacks over the past year. The survey found large businesses are far more likely than smaller companies to be victims of attacks—42% of companies with more than 100 staff experienced cyber-attacks, compared to 18% of companies with fewer than 99 employees.

ICO fines loan firm for spam texts

On 19 April 2017, the ICO announced that finance brokerage firm Monevo Ltd, based in Macclesfield, Cheshire, had been fined £40,000 by the ICO for sending thousands of spam text messages promoting loans. The company sent 44,172 unsolicited marketing texts in three months, and had obtained recipients’ personal details from third-party websites in breach of privacy law.

Financial crime

MLD4: scrutiny period extended for modified list of high-risk third countries

On 12 April 2017, the European Parliament extended by one month the period for examining the Delegated Regulation adopted by the European Commission on 24 March 2017 (C(2017) 1951 final) to amend Delegated Regulation (EU) 2016/1675. The amended Delegated Regulation supplemented the Fourth Anti-Money Laundering Directive 2015/849/EU (MLD4) by listing high-risk third countries with strategic deficiencies in their anti-money laundering/counter terrorist financing regimes that pose significant threats to the financial system of the EU. The new Delegated Regulation deletes Guyana from the list and adds Ethiopia.

FCA conduct requirements

Firms making ‘significant progress’ on conduct risk, FCA says

On 18 April 2017, the FCA published feedback on its ‘5 Conduct Questions’ and the annual meetings it holds with the largest firms to assess how they have considered the questions and what measures they are taking to improve internal conduct. One of the key findings is that frontline business areas are taking greater ownership of conduct risk. However, the FCA stresses that conduct risk may arise across the whole organisation.

Markets and trading

FIA launches interactive data tracker

On 13 April 2017, the Futures Industry Association (FIA) announced the launch of a new interactive data tracker. The FCM Tracker uses data published by the Commodity Futures Trading Commission to allow users to explore key metrics and trends dating back to 2002.

Phase one of the Eonia review concludes with governance framework

On 13 April 2017, the European Money Markets Institute (EMMI) created a stand-alone governance frameworkfor the Euro OverNight Index Average (Eonia) benchmark, in line with regulatory requirements as to integrity and robustness, and setting out the obligations of parties that play a role in the determination of the benchmark.

ESMA signs CCP MoU with New Zealand regulators

On 18 April 2017, ESMA established a memorandum of understanding (MoU), under the European Market Infrastructure Regulation (EMIR), with the Reserve Bank of New Zealand and the Financial Markets Authority of New Zealand. The MoU contains co-operation arrangements, including the exchange of information, regarding central counterparties (CCPs) which are established and authorised or recognised in New Zealand, and which have applied for EU recognition under EMIR.

ECB survey shows tightening credit terms for securities financing and OTCs

On 19 April 2017, the ECB released details of the March 2017 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets (SESFOD). It showed credit terms offered to counterparties, both in the provision of finance collateralised by euro-denominated securities and in OTC derivatives markets, tightened for all counterparty types when comparing the three-month reference period from December 2016 to February 2017 with the previous three months.

Investment funds and wealth management

Delegated Regulation laying down PRIIPs RTS published in the Official Journal

On 12 April 2017, Commission Delegated Regulation (EU) 2017/653 of 8 March 2017 supplementing Regulation (EU) No 1286/2014 of the European Parliament and of the Council on key information documents for packaged retail and insurance-based investment products (PRIIPs) by laying down regulatory technical standards with regard to the presentation, content, review and revision of key information documents and the conditions for fulfilling the requirement to provide such documents was published in the Official Journal of the EU.

FCA continues High Court case against unauthorised collective investment schemes

On 12 April 2017, the FCA announced it is continuing its case against Capital Alternatives Limited and other firms in the High Court over claims of unauthorised promotion and operation of collective investment schemes.

Insurance and pensions

ABI discusses consumer applications of the Pensions Dashboard

On 12 April 2017, as part of UK FinTech Week, the Association of British Insurers (ABI) met with more than 20 technology firms to look at potential consumer services and applications that could flow from its Pensions Dashboard project. The data standards which sit behind the prototype are being placed in the public domain, showing exactly how data has to be presented by firms to connect successfully to the Dashboard prototype. While these will be refined with input from stakeholders before any final system is made available to the public, they are a guide for industry to the likely data requirements they should be preparing their businesses for.

Payments and fintech

FCA consults on its approach to the Payment Services Regulations 2017

The UK is required to transpose the second EU Payment Services Directive (PSD2) by 13 January 2018, and will do so via the Payment Services Regulations 2017 (PSRs 2017), replacing the Payment Services Regulations 2009. As part of the preparatory process, on 13 April 2017, the FCA announced it is consulting on a proposed revised approach document, which sets out how it plans to apply the PSRs 2017 and the amended Electronic Money Regulations 2011. It will be a single document replacing the existing payment services and e-money approach documents. Responses are sought by 8 June 2017.

PSR consults on monitoring and enforcement as PSD2 approaches

On 13 April 2017, the Payment Systems Regulator (PSR) announced it is consulting on its approach to monitoring and enforcing Regulation 61 and part 8 (Regulations 102-105) of the Payment Services Regulations 2017. The areas covered are information on ATM withdrawal charges, prohibition on restrictive rules on access to payment systems, indirect access to designated payment systems, and access to bank accounts. Responses are sought by 8 June 2017.

EU study tender opens for extension of Regulation on cross-border payments

On 18 April 2017, the European Commission announced a negotiated call for tender in order to conduct a study on the extension of the Regulation on cross-border payments, Regulation (EU) 924/2009, to currencies of Member States outside the euro area. The aim of the study is to gather evidence to support a review of the Regulation on cross-border payments. Potential participants in the study should express their interest by 2 May 2017.

International—financial services and related sectors

IFSB releases disclosure guidance for Islamic capital markets

On 13 April 2017, the Islamic Financial Services Board (IFSB) issued guiding principles on disclosure requirements for Islamic capital market products, setting a standard for disclosure for sukūk and Islamic collective investment schemes (ICIS). The standard is aimed at those ṣukūk that represent proportional, undivided ownership rights in tangible assets, or a pool of tangible assets and other types of assets, and at ICIS' that invest in transferable securities.

Dates for your diary

Key Date Subject Event
21 April 2017 Fourth Money Laundering Directive The Joint Committee of the European Supervisory Authorities (ESAs) are to hold a public hearing on draft RTS on the criteria for determining the circumstances in which the appointment of a central contact point (CCP) under Article 45(9) of MLD4 is appropriate, and the functions of the CCP.
24 April 2017 FCA conduct requirements—client asset rules Deadline for responses to FCA consultation 'CP17/2: CASS 7A & the Special Administration Regime Review’ in relation to chapter 2.
25 April 2017 Financial Crime The House of Lords intend to further examine the Criminal Finances Bill.
26 April 2017 Financial Crime—anti-money laundering and counter terrorist financing Deadline for responses to HM Treasury's call for further views on the mandate and powers of the new Office for Professional Body Anti-Money Laundering Supervision (OPBAMLS).
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