Weekly highlights—20 December 2018

Brexit

 

Brexit: European Commission implements ‘no-deal’ Brexit Contingency Action Plan in relation to financial services

The European Commission published details of its ‘no-deal’ Brexit Contingency Action Plan in specific sectors, including in relation to financial services. Given the continued uncertainty in the UK surrounding the ratification of the Withdrawal Agreement—as agreed between the EU and the UK on 25 November 2018—and the call by the European Council (Article 50) on 13 December to intensify preparedness work at all levels and for all outcomes, the European Commission started implementing its ‘no deal’ Contingency Action Plan. This delivers on the Commission's commitment to adopt all necessary ‘no deal’ proposals by the end of the year, as outlined in its second preparedness communication of 13 November 2018.

European Commission takes action to facilitate transfers of derivative contracts to EU27 in event of no-deal Brexit

The European Commission adopted two delegated regulations (in relation to OTC derivative contracts not cleared by a CCP and  the date at which the clearing obligation takes effect for certain types of contracts) that would amend existing delegated regulations supplementing the European Market Infrastructure Regulation (EU) 648/2012 (EMIR) in order to facilitate the transfer of derivative contracts to counterparties located in the remaining 27 EU Member States (EU27) in the event that the UK withdraws from the EU without an agreement. The amendments would extend current exemptions from the clearing and margin requirements for a fixed period of time.

Long-term Investment Funds (Amendment) (EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This draft enactment proposes to amend UK legislation and retained direct EU legislation in relation to European Long-term Investment Funds (ELTIFs) to address the deficiencies in retained EU law, arising from the withdrawal of the UK from the EU. It comes into force partly on the day after the day on which these draft Regulations will be made and fully on exit day.

Collective Investment Schemes (Amendment etc) (EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Communities Act 1972 and the European Union (Withdrawal) Act 2018 in preparation for Brexit. This draft enactment proposes to amend UK legislation and retained direct EU legislation and revoke another UK legislation in relation to collective investment schemes, in particular undertakings for collective investment in transferable securities (UCITS) in order to address deficiencies in retained EU law, which arise from the withdrawal of the UK from the EU. It comes into force partly on the day after the day on which these Regulations will be made and fully on exit day.

Credit Rating Agencies (Amendment, etc) (EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 in preparation for Brexit. This draft enactment amends UK legislation and retained direct EU legislation and revokes other retained direct EU legislation in relation to credit rating agencies (CRAs) to ensure that it continues to operate effectively in the UK once the UK leaves the EU. It comes into force partly on the day after the day on which they are made and fully on exit day.

Financial Markets and Insolvency (Amendment and Transitional Provision) (EU Exit) Regulations 2019

SI 2019/Draft: This draft enactment is laid in exercise of legislative powers under the European Union (Withdrawal) Act 2018 and European Communities Act 1972 in preparation for Brexit. This amends the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 and the Financial Collateral Arrangements (No 2) Regulations 2003 and makes consequential amendments to legislation including the Companies Act 1989, the Banking Act 2009 and the Financial Markets and Insolvency Regulations 1991 in order to address failures of retained EU law to operate effectively and other deficiencies arising from the withdrawal of the UK from the EU. It also makes provisions for the exercise of functions conferred upon the Bank of England (BoE) by this instrument.

Brexit Financial Services draft SIs—19 December 2018

HM Treasury published draft EU Exit legislation relating to the financial services framework between the UK and Gibraltar, the draft Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019 and the draft Securitisation (Amendment) (EU Exit) Regulations 2019. HM Treasury also provided an update regarding an additional statutory instrument related to the Financial Regulators’ Powers (Technical Standards etc) (Amendment etc) (EU Exit) Regulations 2018.

HM Treasury publishes draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019

HM Treasury published the draft text of the Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019 together with explanatory information. The draft statutory instrument (SI) establishes the Financial Services Contracts Regime (FSCR), which will provide run-off mechanisms to a number of temporary regimes being put in place by separate EU exit SIs. The Government intends to lay the SI before Parliament before the UK exits the EU.

FCA publishes statement on Brexit financial services contract regime

The Financial Conduct Authority (FCA) published a statement following the publication by HM Treasury of the draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019. The draft Regulations establish a FSCR, which will enable firms who in the event of a no-deal Brexit choose not to enter the temporary permissions regime to wind down their UK business in an orderly fashion.

FCA updates firms on preparing for Brexit

The FCA updated its webpage 'Preparing your firm for Brexit' with further information which was already available to firms. The update includes reminders for firms on contract continuity and data sharing and is intended to help firms consider the implications for their business and their customers, and to plan accordingly.

FCA publishes Brexit temporary permission notification directions in relation to payment services and e-money

The FCA published two directions under paragraphs 3(1)(a) and  15(1)(a) of schedule 3 of the Electronic Money, Payment Services and Payment Systems (Amendment and Transitional Provisions) (EU Exit) Regulations 2018 (the Regulations). The direction given under paragraph 3(1)(a) applies to notifications to the FCA in accordance with paragraph 2(1)(c) of schedule 3 of the Regulations. The direction given under paragraph 15(1)(a) applies to notifications to the FCA in accordance with paragraph 2(1)(c) of schedule 3 of the Regulations.

FCA publishes draft registration and conversion forms for CRAs

The FCA published draft registration and conversion forms for CRAs in advance of the FCA becoming the UK regulator of CRAs when the UK leaves the EU. Forms may be submitted from 7 January 2019. HM Treasury announced its proposed approach to amending retained EU law related to CRAs, to be laid under the EU (Withdrawal) Act. The draft SI transfers UK regulation of CRAs from the European Securities and Markets Authority (ESMA) to the FCA and makes amendments to retained EU law to ensure that it continues to operate effectively in the UK once the UK leaves the EU.

ESMA tells firms to inform clients about implications of Brexit

ESMA issued a statement to remind investment firms and credit institutions providing investment services of their obligations under the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) regime to provide clients with information on the implications of the UK's withdrawal from the EU on their relationship with clients and on the impact of Brexit-related measures that a firm has taken or intends to take.

EBA calls for financial institutions to improve Brexit-related communication to customers

The European Banking Authority (EBA) called for financial institutions to continue their contingency planning for the UK's withdrawal from the EU and to increase their efforts in communicating to customers on how Brexit may impact them, including how their contractual or statutory rights may be affected by the financial institution's contingency planning.

EACH issues statement on legal certainty for clearing activities in a 'no-deal' scenario

The European Association of CCP Clearing Houses (EACH) issued a statement welcoming the communication made by the European Commission on 13 November 2018 regarding a temporary and conditional regime for equivalence and recognition of UK central counterparties (CCPs) in the EU. Such a regime would ensure the continuity of critical clearing services for EU clearing members in case the withdrawal of the UK from the EU occurs without an agreement.

FIA Encouraged by reported EU Equivalence of UK CCPs in the event of 'no-deal' Brexit

FIA President and CEO Walt Lukken welcomed reported action by the European Commission to deem the UK's regulatory and legal framework for UK CCPs as equivalent under EMIR for a 12-month period in the event of a no-deal Brexit. The FIA believes this is an important step toward ensuring market stability and continued access to UK CCPs by EU27 firms. Mr Lukken said, ‘the FIA is highly encouraged by the action of the European Commission to grant temporary and conditional equivalence status that will not disrupt these essential markets'.

CLLS responds to FCA consultation (CP18/29) on temporary permissions regime

The City of London Law Society (CLLS) responded to the FCA’s consultation paper (CP18/29) on the temporary permissions regime for inbound European Economic Area (EEA) firms and funds. While the CLLS welcomes the FCA's proposals, it is concerned that the proposed approach will not provide adequate protection for client money and client assets in circumstances where these are held by a UK branch of an EEA firm. This is because of a difference that will arise in the handling of insolvency proceedings for investment firms and credit institutions in the absence of an implementation period.

Guidance on UK data protection law under no-deal Brexit published

The Department for Digital, Culture, Media and Sport (DCMS) published guidance relating to its proposals on how the UK data protection regime will work in a no-deal scenario post-Brexit. DCMS intends to use the regulation-making power under the EU (Withdrawal) Act 2018 (EU(W)A 2018) to incorporate the regime under the General Data Protection Regulation (EU) 2016/679 (GDPR) into UK domestic law by making appropriate changes to the Data Protection Act 2018.

 

Financial Conduct Authority updates

 

FCA 2018/55: Periodic Fees (2018/2019) and Other Fees (No 2) Instrument 2018

The FCA Board published FCA 2018/55: Periodic Fees (2018/2019) and Other Fees (No 2) Instrument 2018. The instrument amends the Fees manual of the FCA's Handbook (FEES) in accordance with the Annex to the instrument. The instrument comes into effect on 14 December 2018. The instrument updates FEES in relation to:

  • FCA Fee rates and EEA/Treaty firm modifications for the period from 1 April 2018 to 31 March 2019/ Regulated benchmark administrators, and
  • periodic fees imposed under Regulation 27 of the OPBAS Regulations for the period 1 April 2019 to 31 March 2020/tariff rates applicable to professional body supervisors
FCA publishes Handbook Notice No. 61

The FCA published Handbook Notice No. 61, which includes changes to the FCA Handbook made by the FCA board on 15 November and 13 December 2018, as well as changes to the Handbook made by the Board of the Financial Ombudsman Service (FOS) on 7 December 2018 and approved by the FCA board on 13 December 2018. The Handbook Notice also includes feedback on consultation papers (CPs) that will not have a separate policy statement (PS).

FCA Regulation round-up for December 2018

The FCA published its 'Regulation round-​up' for December 2018. Hot topics include the Management of Long-Term Mortgage Arrears and Forbearance Thematic Review, cyber and technology resilience in UK financial services and preparing firms for Brexit.

 

Prudential Regulation Authority updates

 

PRA publishes results of firm feedback survey 2017/18

The Prudential Regulation Authority (PRA) published the results of its firm feedback survey 2017/18. The annual firm feedback survey gives PRA-authorised firms the opportunity to comment on their experience of being supervised. The survey consists of separate sets of questions for the largest firms regulated by the PRA and for small and medium firms.

Nicky Morgan comments on BoE's expenses review

In response to questioning from the Treasury Committee in July 2018, the BoE published the review of its travel and expenses policy. Commenting on the publication, Nicky Morgan MP, Chair of the Treasury Committee, said, ‘Given the staggeringly high level of expenses claimed by some members of the BoE’s policy committees, the review of its expenses policy is welcome. The Bank must now ensure that the new rules are followed in both letter and spirit by all staff across the organisation'.

 

Prudential requirements

 

BCBS consults on disclosure requirement to address leverage ratio 'window-dressing'

The Basel Committee on Banking Supervision (BCBS) published a consultative document entitled 'Revisions to leverage ratio disclosure requirements'. The consultation seeks stakeholders' views on revisions to leverage ratio Pillar 3 disclosure requirements. The BCBS intends to prevent banks 'window dressing' their leverage ratios by making temporary reductions of transaction volumes in key financial markets around reference dates. Feedback is sought by 13 March 2019.

European Parliament and Council of EU agree measures addressing non-performing loans

The European Parliament and the Council of the European Union reached a political agreement on prudential measures to further address non-performing loans (NPLs) in Europe. The political agreement relates to measures requiring banks to set aside funds to cover the risks associated with loans issued in the future that may become non-performing. A bank loan is considered non-performing when more than 90 days have passed without the borrower paying or with the borrower being unlikely to pay the agreed instalments or interest. The agreed measures require banks to set aside more capital in these circumstances on the assumption that the loan will not be paid back.

EBA publishes final guidelines on disclosure of non-performing and forborne exposures

The EBA published its final guidelines on disclosure of non-performing and forborne exposures. The disclosure is intended to give market participants and stakeholders a better picture of the quality of the banks' assets, the main features of their non-performing and forborne exposures, and, in the case of more troubled banks, the distribution of the problematic assets and the value of the collateral backing those assets. The guidelines apply from 31 December 2019.

EBA will carry out next EU-wide stress test in 2020

The EBA announced that, in its meeting on 12 December 2018, the EBA Board of Supervisors decided to carry out the next EU-wide stress test in 2020 rather than 2019, in line with its June 2015 decision to aim for a biennial exercise. The EBA says it will start immediately to prepare the methodology for the 2020 stress test exercise. In 2019, the EBA will perform its regular annual transparency exercise. The decision of the EBA Board of Supervisors was communicated to the European Parliament, the Council and the Commission.

HM Treasury updates EU Scrutiny and European Union Committees on progress of CRR II, CRD V, BRRD II and SRM II: December 2018

HM Treasury published letters (to Sir William Cash and to  Lord Boswell of Aynho) sent by the Economic Secretary to the Treasury, John Glen, to the EU Scrutiny and European Union Committees on progress of the EU negotiations on amendments to the Banking Recovery and Resolution Directive (Directive 2014/59/EU) (BRRD), the Capital Requirements Directive (Directive 2013/36/EU) (CRD) and the Capital Requirements Regulation (Regulation (EU) 575/2013 (CRR) (together known as the Risk Reduction Package). In the letters, it was noted that since Mr Glen's last letter, there was a push for significant progress to be made by the end of 2018.

PRA publishes policy statement (PS32/18) updating SoP on systemic risk buffer

The PRA published 'The systemic risk buffer: Updates to the Statement of Policy' (PS32/18). This provides its final Statement of Policy following its CP29/18. PS32/18 is relevant to ring-fenced bodies within the meaning of section 142A of the Financial Services and Markets Act 2000 (FSMA) and large building societies that hold more than £25bn in deposits (where one or more of the account holders is a small business) and shares (excluding deferred shares)—jointly 'SRB institutions'.

ISDA publishes FAQs on the procedures for excluding non-EU non-financial counterparties from the CVA capital risk charge under the CRR

ISDA published FAQs on Commission Delegated Regulation (EU) 2018/728 supplementing the CRR in regard to RTS for procedures for excluding transactions with non-financial counterparties established in a third country from the own funds requirement for credit valuation adjustment risk. The FAQs are divided into three sections covering:

  • the scope of the RTS
  • the requirements applicable under the RTS, and
  • the potential effects resulting from the current review of EMIR and Brexit
AFME publishes Prudential Data Report Q3 2018 on EU-GSIBs

The Association for Financial Markets in Europe (AFME) published its Prudential Data Report Q3​ 2018. The report publishes comparable statistics on European systemically important banks' (EU-GSIBs) prudential capital, leverage and liquidity ratios with updated information as at 30 September 2018. It also illustrates the recent performance of the debt and contingent convertibles markets for banks in Europe. The report illustrates that EU-GSIBs improved their capital, leverage and liquidity positions over the last years, in compliance with the CRD and the CRR (together CRD IV).

 

Financial stability

 

ESRB: risks to the stability of the EU financial system remain high amid significant political uncertainties

The General Board of the European Systemic Risk Board (ESRB) met on 6 December 2018 and noted that risks to the stability of the EU financial system remain elevated amid significant political uncertainties globally and within the EU. Against this background, the General Board exchanged views on the potential vulnerabilities related to cyclical developments. The discussion focused on the profitability of the banking sector, risks in the area of highly-leveraged investment funds and the sufficiency of macroprudential policy measures in view of the different cyclical positions of individual Member States. In addition, the General Board discussed credit and real estate price dynamics across the EU countries, as well as private non-financial sector indebtedness, taking into consideration the macroprudential measures already activated.

 

Regulatory architecture

 

Euro Summit endorses Eurogroup report to Leaders on EMU deepening

Following their meeting on 14 December 2018, the Euro Summit, comprising the heads of state or government of the euro area countries, the Euro Summit President and the President of the European Commission, issued a statement endorsing all the elements of the Eurogroup report to Leaders on Economic and Monetary Union (EMU) deepening, paving the way for a significant strengthening of the EMU.

FCA and PSR Boards appoint new members to decision-making committees

The FCA and Payment Systems Regulator (PSR) Boards appointed new members to three decision-making committees responsible for taking certain competition law and regulatory decisions when a settlement cannot be reached: the FCA's Competition Decisions Committee (CDC) and the PSR's Competition Decisions Committee and Enforcement Decisions Committee (EDC). Lesley Ainsworth, Simon Polito, David Thomas and Tim Tutton were appointed as members of the PSR's EDC and the FCA and PSR's CDCs. Alasdair Smith was appointed a panel member of the FCA's CDC.

Commission report states €405 billion has been invested in Europe’s real economy under the European Structural and Investment Funds

A report published by the European Commission shows the main results achieved under the five European Structural and Investment Funds, halfway through the 2014-2020 EU budget period, with €405 billion invested in Europe’s real economy. In line with the EU’s commitments under the Paris Agreement, the European Structural and Investment Funds are supporting the shift towards a low-carbon economy; 330,000 households are already benefitting from EU-funded energy efficiency renovation works and more than 3 terawatt/hours of energy, the equivalent to burning around 370.000 tons of coal, are to be saved thanks to EU-funded energy efficiency improvements in public buildings.

 

Authorisation, approval and supervision

 

FCA speech on diversity and inclusion in financial services firms

Christopher Woolard, Executive Director of Strategy and Competition at the FCA gave a speech which set out that while financial services firms are moving in the right direction with regards to diversity and inclusion, progress is slow with the percentage of women at senior management level below the Board having only increased by 1.5% over the last ten years. Mr Woolard said that that how firms approach diversity and inclusion provides an indication of their culture.

Berlusconi and another v Banca d'Italia and another

European Union–Approximation of national laws. Article 263 of the Treaty on the Functioning of the European Union (TFEU) should be interpreted as precluding national courts from reviewing the legality of decisions to initiate procedures, preparatory acts or non-binding proposals adopted by competent national authorities in the procedure provided for in Articles 22 and 23 of the CRD (amending Directive (EC) 2002/87 and repealing Directives (EC) 2006/48 and 2006/49), in Articles 4(1)(c) and 15 of Council Regulation (EU) No 1024/2013 and in Articles 85 to 87 of Regulation (EU) No 468/2014 of the European Central Bank (ECB). The Court of Justice of the European Union (CJEU) so held in a preliminary ruling in proceedings between the applicants and the Bank of Italy and the Institute for the Supervision of Insurance, Italy, relating to scrutiny of the acquisition of a qualifying holding in a credit institution. Click here for the full judgment.

FCA publishes Policy Statement (PS18/23) on new rules for claims management companies

The FCA published PS18/23, setting out the new rules and fees they will apply to claims management companies (CMCs) when the FCA takes over responsibility for regulating CMCs from 1 April 2019. From April, CMCs set up or serving customers in the UK must be authorised by the FCA to continue handling claims. CMCs must show they meet minimum standards to be authorised.

 

Risk management and controls

 

ECB publishes report on crisis communication exercise

The ECB published a report on the market-wide crisis communication exercise carried out on 28 June 2018 by the Eurosystem's Market Infrastructure and Payments Committee. The exercise was conducted in the form of a facilitated discussion around a hypothetical scenario based on a cyber-attack on major financial market infrastructures, market infrastructures and service providers resulting in a loss of data integrity.

ECB publishes TIBER-EU White Team Guidance

The ECB published TIBER-EU White Team Guidance, which sets out the roles and responsibilities of the White Team in the Threat Intelligence-based Ethical Red Teaming (TIBER-EU) Framework. TIBER-EU is an instrument for red team testing (ie testing by an independent, external organisation) designed for use by core financial infrastructures, whether at national or at European level. The team that manages the test within the entity being tested is called the White Team.

EBA consults on ICT risk management

The EBA published a consultation paper on draft guidelines on information and communication technology (ICT) and security risk management. The guidelines establish requirements for credit institutions, investment firms and payment service providers (PSPs) on the mitigation and management of their ICT risks and aim to ensure a consistent and robust approach across the single market. The consultation runs until 13 March 2019.

 

Financial crime

 
Council of the EU agrees anti-money laundering position on reinforced supervision for banks

The Council of the EU issued a press release stating that the EU is enhancing its monitoring of money laundering and terrorist financing threats at EU level by noting that EU ambassadors had agreed the Council's negotiating position on a proposal reinforcing the role of the EBA as regards risks posed to the financial sector by money laundering activities.

Council of EU Presidency endorses agreed text of directive on combating fraud and counterfeiting of non-cash

The Presidency of the Council of the EU invited the Permanent Representatives Committee (COREPER) to approve the final compromise text regarding the proposed directive on combating fraud and counterfeiting of non-cash means of payment and replacing Council Framework Decision 2001/413/JHA. A provisional agreement on the final compromise text was reached at the fourth trilogue on 11 December 2018.

FCA publishes guidance on financial crime systems and controls: insider dealing and market manipulation (FG18/5) and renames and updates the Financial Crime Guide

The FCA published guidance on financial crime systems and controls: insider dealing and market manipulation (FG18/5), which explains the changes the FCA made to the Financial Crime Guide following its March 2018 consultation on proposed guidance on ‘financial crime systems and controls: insider dealing and market manipulation (GC18/1). Part 1 of the Financial Crime Guide was renamed as ‘Financial Crime Guide: A firm's guide to countering financial crime risks’ (FCG). It was updated and includes a new section on insider dealing and market manipulation. Part 2 of the Financial Crime Guide was renamed as ‘Financial Crime Thematic Reviews’.

FCA vows to retry UBS insider dealing case after hung jury

A London jury failed to reach a verdict Wednesday in the trial of a former UBS AG compliance officer and her day-trader friend accused of making £1.4m ($1.76m) by trading on inside information on potential takeover deals, in a case the British financial watchdog quickly said it planned to retry. Judge Joanna Korner discharged the Southwark Crown Court jury after five days of deliberations. The jurors told the judge they were deadlocked on the charges against former UBS worker Fabiana Abdel-Malek and day trader Walid Choucair, who the FCA accused of five charges of insider trading.

MP says Lloyds Bank must explain role in HBOS fraud

A Conservative Party lawmaker called on Parliament to investigate how executives at Lloyds Banking Group Plc established a compensation scheme for victims of a massive fraud at HBOS Plc, claiming the scheme is a scam to prevent small businesses from being paid out. Kevin Hollinrake, chairman of the All-Party Parliamentary Group for Fair Business Banking, urged fellow party member Nicky Morgan, the chair for the Treasury Select Committee, to haul Lloyds’ CEO António Horta-Osório before lawmakers to explain the bank’s role in a £245m ($310m) loan scam at a branch of HBOS that wrecked vulnerable companies in the run-up to the 2008 financial crisis.

 

FCA conduct requirements

 
FCA publishes Occasional Paper 47 on financial services advertising on social media

The FCA published ‘Occasional Paper 47: Blackbird's alarm call or nightingale's lullaby? The effect of tweet risk warnings on attractiveness, search, and understanding’. The paper considers the impact of FCA rules on firms' marketing on social media. In particular, it considers FCA rules around standalone compliance (SC) of advertisements, including the design and timing of risk warnings, in the context of character-limited social media. The authors found that SC in this context reduces preference ratings, search activity (such as shopping around), and understanding of risks (as evidenced by the choice of less suitable products).

 

Enforcement and redress

 

Financial Guidance and Claims Act 2018 (Commencement No 5) Regulations 2018

SI 2018/1330: Certain provisions of the Financial Guidance and Claims Act 2018 will come into force in the UK on 1 January 2019. The commenced provisions relate to pensions guidance, debt advice and money guidance.

FCA publishes Small Business (Eligible Complainant) Instrument 2018

Following the publication of PS18/21 on 16 October 2018 in which the FCA confirmed plans to extend access to the FOS to more small and medium-sized enterprises (SMEs), the FCA published final rules in the Small Business (Eligible Complainant) Instrument 2018 (the Instrument). The changes introduced by the Instrument mean that SMEs with an annual turnover below £6.5m and fewer than 50 employees, or an annual balance sheet below £5m will now be able to refer unresolved complaints to the FOS.

Prodhan v Financial Conduct Authority

Financial services–FCA–Regulation. It was well established that when considering an application for a matter to be determined as a preliminary ruling, there were certain key principles to be considered. In the light of those principles, the  Upper Tribunal (Tax and Chancery Chamber) (the tribunal) dismissed the applicant's application for a direction that the determination as to whether the FCA's action against him was time-barred should be heard as a preliminary hearing in the course of a reference he made to the tribunal regarding the Decision Notice (the DN) made against him. The tribunal further dismissed the applicant's applications for a direction that publication by the FCA of the DN should be prohibited.

FCA publishes PS18/22 Authorised push payment fraud – extending the jurisdiction of the Financial Ombudsman

The FCA published PS18/22 : Authorised push payment fraud—extending the jurisdiction of the Financial Ombudsman Service. This sets out the FCA's response to feedback received on CP18/16, issued in June 2018, and final rules which aim to provide victims of alleged authorised push payment (APP) fraud with prompt and fair complaints resolution, and access to dispute resolution through the FOS for complaints against PSPs who receive payments relating to the alleged fraud. These final rules will take effect on 31 January 2019.

FCA publishes PPI campaign response data

The FCA published response data to its PPI campaign relating to the period between 29 August 2017 and 30 November 2018. The data provides insight into how many people were prompted by the FCA's campaign to find out more about PPI via FCA channels. It also shows how satisfied they were with the services the FCA provided.

FCA fines Santander £32.8m for serious failings in its probate and bereavement process

The FCA fined Santander UK Plc (Santander) £32,817,800 for failing to effectively process the accounts and investments of deceased customers. The FCA fined Santander for breaches of Principle 3 (management and control), Principle 6 (customers' interests) and Principle 11 (relations with regulators) of the FCA's Principles for Businesses. The FCA found that Santander did not transfer funds totalling over £183m to beneficiaries when it should have done; 40,428 customers were directly affected. Santander also failed to disclose information relating to the issues with the probate and bereavement process to the FCA after it became aware of them. Santander did not contest the FCA's findings and agreed to resolve the case and therefore qualified for a 30% (Stage 1) discount. Were it not for the discount, the FCA would have imposed a financial penalty of £46,882,500 on Santander. The FCA notes that the development of effective probate and bereavement processes is and continues to be an industry-wide challenge.

FCA bans Angela Burns from acting as a NED and imposes fine for failing to declare conflicts of interest

The FCA banned Angela Burns from acting as a non-executive director (NED) and fined her £20,000 for failing to act with integrity at two mutual societies. The FCA published its Final Notice following Ms Burns' referral of the FCA's Decision Notice to the Upper Tribunal on 21 December 2012; her subsequent appeal to the Court of Appeal; and the Supreme Court's denial of her application for permission to appeal on 27 November 2018.

Complaints Commissioner partly upholds complaint and recommends FCA provide overview of its AIM oversight and policy approach

The Office of the Complaints Commissioner published the Complaints Commissioner's final report (dated 15 November 2018) in response to a complaint regarding the FCA's awareness of allegations of fraudulent activity at a regulated firm (Beaufort Securities Limited or BSL), the time taken to instigate regulatory action, its awareness of risk to investors from the firm and in the Alternative Investment Market (AIM) more generally. In response, the FCA accepted the criticisms and recommendations made on this complaint and wrote to the complainant to apologise and offered an ex gratia payment of £100.

CMA investigation: ‘Loyalty penalty’ super-complaint—CMA response

On 19 December 2018, the CMA published a package of reforms in response to a super-complaint by Citizens Advice Bureau (CAB), which raised concerns that not enough is being done to tackle the loyalty penalty being paid by longstanding customers in five markets—mobile, broadband, cash savings, home insurance and mortgages. The package of reforms apply across both markets and specifically in relation to the five markets identified by Citizens Advice. The CMA found that there is a total loyalty penalty of around £4bn a year in these markets, and that vulnerable people including the elderly and those on a low income may be more at risk of paying the loyalty penalty. The CMA made several recommendations to regulators and the government, including holding firms to account publicly for charging existing customers much more, as well as recommendations to the FCA and Ofcom. Additionally, the CMA launched investigations into the anti-virus software market as a step in a wider programme of enforcement in this area. The FCA also published a response, highlighting that working to resolve this issue is ‘is a priority for the FCA’.

FOS consults on strategic plans and budget for 2019/2020

The FOS launched a consultation on its strategic plans and budget for 2019/2020. The document sets out FOS's forecasts for the current financial year and its plans and budget for the next financial year, and it looks ahead to the months immediately beyond the deadline set by the FCA for PPI complaints. The consultation closes on 31 January 2019.

PIMFA comments on FCA CP18/31 on proposed changes to FOS award limit

The Personal Investment Management and Financial Advice Association (PIMFA) responded to the FCA's consultation paper regarding the proposed significant changes to FOS award limit (CP18/31). PIMFA expressed its concerns regarding the proposal and the severe potential impact on the Professional Indemnity Insurance market and member firms.

EFDI publishes report on technical considerations for the design of EDIS

The European Forum of Deposit Insurers (EFDI) (the international non-profit association which aims to strengthen the role of deposit guarantee schemes and investor compensation schemes) published a technical report, the purpose of which is to provide a more in-depth discussion of elements of potential frameworks for a European Deposit Insurance Scheme (EDIS). The report discusses technical issues related to an EDIS on the basis of criteria that determine the effectiveness of the system.

NY fines Barclays $15 million over CEO's whistleblower hunt

New York’s top banking regulator hit Barclays with a $15m fine as part of a settlement announced Tuesday resolving claims stemming from the agency’s investigation into a push by the bank’s CEO to smoke out the source of two 2016 whistleblower letters that raised concerns about a recently hired executive. In a consent order with Barclays Bank PLC and its New York branch, the New York State Department of Financial Services said its investigation found shortcomings in governance, controls and corporate culture that culminated in Barclays CEO Jes Staley’s ‘unfortunate effort’ to identify whoever wrote the two anonymous letters, a move that the state agency said went against the bank’s own policies and procedures and could have had a chilling effect on other would-be whistleblowers.

 

Markets and trading

 

Commission adopts RTS on the Transparency Directive's electronic reporting format

The European Commission adopted a delegated regulation supplementing Directive 2004/109/EC (the Transparency Directive) with regard to regulatory technical standards (RTS) on the specification of a single electronic reporting format. Directive 2013/50/EU amending the Transparency Directive calls for all annual financial reports to be prepared in a single electronic reporting format from 1 January 2020.

Commission publishes amendment to EMIR delegated regulations regarding RTS on the clearing obligation to extend the dates of deferred application of the clearing obligation for certain OTC derivative contracts

The European Commission published the final text of a Commission Delegated Regulation amending Delegated Regulation (EU) 2015/2205, Delegated Regulation (EU) 2016/592 and Delegated Regulation (EU) 2016/1178 supplementing EMIR with regard to RTS on the clearing obligation to extend the dates of deferred application of the clearing obligation for certain over-the-counter (OTC) derivative contracts.

Commission proposes to extend equivalence for Swiss equity trading venues

The European Commission proposed to extend for six months its decision to recognise trading venues in Switzerland as eligible for compliance with the trading obligation for shares set out in the MiFID II framework. The Commission is currently consulting EU Member States on the draft decision so that it can be adopted and take effect before the current equivalence expires at the end of 2018. The decision would apply as of 1 January 2019 and expire on 30 June 2019.

ESMA updates Q&A on implementation of CRAR (errors in rating methodologies)

ESMA updated its Questions and Answers (Q&As) on the implementation of Regulation (EU) No 462/2013 on Credit Rating Agencies (CRAR). CRAR requires a CRA to immediately notify errors in its rating methodologies or in their application to ESMA and all affected rated entities. This Q&A clarifies ESMA's view as to what constitutes an error within the meaning of Article 8(7) of CRAR.

ESMA updates Q&As on the Benchmarks Regulation

ESMA published an updated version of its Q&As regarding the Benchmarks Regulation (EU) 2016/1011(BMR). The updated Q&As provide new clarifications on the topic of methodology and input data, in relation to the parameters to be considered as input data. The answer to question 5.12, 'Can the methodology of a benchmark include factors that are not input data?', was amended to include the new clarifications.

EBA proposes changes to regulation on benchmarking of internal models

The EBA launched a consultation to amend Commission Implementing Regulation (EU) 2016/2070 on benchmarking of internal models to adjust the benchmarking portfolios and reporting requirements in view of the benchmarking exercise it will carry out in 2020. The proposed changes aim at simplifying the portfolio's structure for the credit risk part of the exercise and getting more insights into the model used for pricing for the market risk part of the exercise. The consultation will run until 1 February 2019.

FCA publishes review of Market Abuse Regulation implementation—Market Watch 58

The FCA published the results of a review into industry implementation of the Market Abuse Regulation (MAR) in the latest edition of its newsletter, Market Watch 58. The review included meetings with firms, surveys sent to issuers of financial instruments and asset management firms and analysis of its own data. The application of the MAR was considered broadly with a focus on the market soundings regime and insider lists. Market Watch 58 also includes FCA advice on some of the issues raised.

ISDA raises concerns on derogations from EMIR margin requirements for intra group transactions and equity options and indexes

The International Swaps and Derivatives Association (ISDA) published a letter to the European Commission and the European Supervisory Authorities (ESAs) – the EBA, ESMA and the European Insurance and Occupational Pensions Authority (EIOPA)—in which ISDA raises a concern about the time-limited derogations under Commission Delegated Regulation (EU) 2016/2251 (a Level 2 measure under EMIR) for intragroup transactions and transactions in single-stock equity options or index options. These derogations are currently set to expire on 4 January 2020.

ISDA publishes EMIR best practices in relation to trade reporting​

ISDA published best practices for EMIR trade reporting. The standards were developed by ISDA with ISDA members to establish harmonised reporting standards within the industry. The standards aim to improve reporting effectiveness, address ambiguities and increase matching rates and will be reviewed and updated periodically.

FIA publishes guidance on third-party algorithmic trading system providers

FIA published principles-based guidance for firms working with third-party providers of algorithmic trading systems, and to assist them to meet their requirements for oversight of outsourced services. MiFID II and recent supervisory guidance from the FCA and PRA require firms in scope of the rules to closely supervise their algorithmic trading systems, including the development, testing and deployment of such systems.

ICMA publishes Primary Market Handbook stabilisation amendments

The International Capital Market Association (ICMA) published amendments to its stabilisation materials contained in the ICMA Primary Market Handbook in Chapter 9 and Appendix A15. The stabilisation materials were revised in light of the EU's MAR which came into effect on 3 July 2016.

 

MiFID II

 

Commission amends MiFID II delegated regulation to promote SME growth markets

The European Commission adopted a delegated regulation amending Delegated Regulation (EU) 2017/565 as regards certain registration conditions to promote the use of SME growth markets for the purposes of MiFID II. The new rules are intended to further improve and diversify funding sources for SMEs, an objective at the heart of the Capital Markets Union (CMU).

ESMA publishes final proposal to change MiFID II tick size regime

ESMA published its final report with proposed amendments to the MiFID II tick size regime in Commission Delegated Regulation (EU) 2017/588 (RTS 11). The draft changes will allow national competent authorities (NCAs) of EU trading venues, where third-country shares are traded, to decide on an adjusted average daily number of transactions (ADNT) on a case-by-case basis in order to take into account the liquidity available on third-country venues in the calibration of tick sizes.

 

Regulation of capital markets

 

Commission adopts package of measures under the Securities Financing Transactions Regulation

The European Commission today adopted a package of new measures under the Securities Financing Transactions Regulation (SFTR). The SFTR (Regulation (EU) 2015/2365) requires all securities financing transactions to be reported to a trade repository. The new delegated and implementing acts will specify the details for the authorisation of trade repositories as well as the rules they will be subject to, including reporting requirements.

Commission publishes implementing regulations under the Securities Financing Transactions Regulation

The European Commission published three implementing regulations under the SFTR. The regulations specify the format of applications for registration and extension of registration of trade repositories, the use of reporting codes in the reporting of derivative contracts, and procedures and forms for the exchange of information on sanctions, measures and investigations in accordance with the SFTR.

ESAs publish final draft RTS on treatment of STS securitisations under EMIR

The ESAs—the EBA, ESMA and EIOPA, published final draft Commission Delegated Regulations supplementing EMIR with regard to RTS on the clearing obligation and amending Commission Delegated Regulation (EU) 2016/2251 supplementing EMIR with regard to RTS on risk-mitigation techniques for OTC derivative contracts not cleared by a CCP.

GFMA and ICMA report assesses impact of regulation on repo and securities financing transactions markets

The Global Financial Markets Association (GFMA) and ICMA published a report, The GFMA and ICMA Repo Market Study: Post-Crisis Reforms and the Evolution of the Repo and Broader SFT Markets, which assesses the impact of post-crisis regulation on the functioning of the global repo and securities financing transactions (SFT) markets. The report provides a broad account of the global repo market's operation during the crisis and analyses the subsequent regulatory reforms. It finds that they have had a profound impact on banks' SFT businesses with a significant increase in capital requirements, which could detrimentally impact the securities lending market and the way the repo market functions under stressed scenarios.

 

Investment funds and asset management

 

AIC responds to FCA DP18/10 on Patient Capital and Authorised funds

The Association of Investment Companies (AIC) responded to the FCA’s Discussion Paper (DP) 18/10 on Patient Capital and Authorised Funds. DP18/10 raises the possibility of creating a new kind of authorised fund structure that would be able to offer retail investors exposure to patient capital assets, such as infrastructure, real estate, private equity/debt and venture capital. The AIC believes that consumer protection should be paramount in the design of any new fund structures.

 

Banks and mutuals

 

ECB will directly supervise Barclays Bank Ireland and Irish subsidiary of BAML in 2019

The ECB announced the 119 significant institutions that it will directly supervise from 1 January 2019, following the annual review of significance and ad hoc assessments. Barclays Bank Ireland and the Irish subsidiary of Bank of America Merrill Lynch (BAML) were newly classified as significant due to anticipated increases in size following Brexit. Other changes in significance statuses are the result of new group structures, license withdrawals, mergers and other developments. Several large banking groups also relocated their activities to the euro area. This increased the overall complexity and size of directly supervised banks.

EBA publishes annual report on risks and vulnerabilities in the EU banking sector

The EBA published its annual  report on risks and vulnerabilities in the EU banking sector. Overall, the EU banking sector continued to benefit from the positive macroeconomic developments in most European countries, which contributed to the increase in lending, further strengthening of banks' capital ratios and improvements in asset quality. Profitability remains low on average and is not yet at sustainable levels.

BoE and PRA issue consultations on resolvability assessment framework

The BoE and the PRA published consultations on a proposed resolvability assessment framework (RAF) package, comprising a BoE CP on the BoE's approach to assessing resolvability and PRA CP31/18 on resolution assessment and public disclosure by firms. The proposed RAF package is designed to ensure that banks are accountable for their own resolvability by demonstrating how they are prepared for resolution and requiring certain banks to publicly disclose their own assessment of their resolvability.

 

Consumer credit, mortgage and home finance

 

FCA publishes Consultation Papers (CP18/42 and CP18/43) on high-cost credit products

The FCA published CP18/42 on overdraft charges and CP18/43 on buy now pay later offers. The measures proposed in the CPs form the latest part of the FCA's high-cost credit review and are intended to change the way banks charge for overdrafts and to strengthen protections for consumers using other high-cost credit products.

FCA and PRA publish joint CP on changes to mortgage reporting requirements (PRA CP30/18; FCA CP 18/41)

The PRA and FCA published a  joint consultation paper (PRA CP30/18; FCA CP 18/41) on proposals for new reporting requirements that would apply to mortgage lenders and home finance administrators. The PRA and FCA seek to address gaps they have identified in the data mortgage lenders and administrators are required to submit via Product Sales Data and Mortgage Lending and Administration Return. Feedback is due by 22 March 2019.

 

Insurance and pensions

IDD: EIOPA evaluates the European Insurance Intermediaries Markets

EIOPA published a report on the Evaluation of the Structure of Insurance Intermediaries Markets in Europe in accordance with Article 41(5) of the Insurance Distribution Directive (IDD). The report provides an overview of the status of the European intermediaries markets up to 31 December 2017, relating to data for the period from 2013 to 2017.

EIOPA 2018 Annual Report on LTG Measures and Measures on Equity Risk

EIOPA published its third annual analysis on the use and impact of long-term guarantees (LTG) measures and measures on equity risk. EIOPA submitted the report to the European Parliament, the Council of the European Union and the European Commission.

EIOPA announces results of 2018 insurance stress test

EIOPA announced the results of its 2018 and fourth stress test for the European insurance sector, which assessed resilience to three severe but plausible scenarios. 42 European (re)insurance groups participated representing a market coverage of around 75% based on total consolidated assets. The reference date was 31 December 2017. Overall, the exercise confirmed the significant sensitivity to market shocks combined with specific shocks relevant for the European insurance sector. On aggregate, the sector is adequately capitalised to absorb the prescribed shocks.

EIOPA reports on group supervision, capital management and passporting under Solvency II

EIOPA published a  report on group supervision and capital management of (re)insurance undertakings and on specific topics related to freedom to provide services and freedom of establishment under Directive 2009/138/EC (Solvency II). Based on the findings presented in the report, EIOPA concluded that the tools it developed to strengthen group supervision and supervision of cross-border issues contributed to substantial progress in the convergence of practices of NCAs, but significant challenges remain.

EIOPA updates representative portfolios for VA calculations under Solvency II

EIOPA published updated representative portfolios to be used for calculating the volatility adjustments (VA) to the relevant risk-free interest rate term structures for Solvency II. EIOPA will start using these updated representative portfolios in three months' time, to calculate the end of March VA which will be published at the start of April 2019.

IAIS publishes report on identifying global systemically important insurers

The International Association of Insurance Supervisors (IAIS) published a report on its 2018 process for identifying global systemically important insurers (G-SIIs). The report sets out the methodology and data templates used by the IAIS in the identification process, along with an overview of changes observed between the 2017 data and the 2018 data received from insurers. The IAIS's analysis to identify G-SIIs is part of a global initiative, along with other standard setters, central banks and financial sector supervisors and under the purview of the Financial Stability Board (FSB) and the G20, to identify global systemically important financial institutions (G-SIFIs).

Insurance Europe provides feedback on the roadmap for the evaluation of the Distance Marketing of Financial Services Directive

The European Commission published the feedback provided by Insurance Europe (IE) on the roadmap for the evaluation of the Distance Marketing of Financial Services Directive 2002/65/EC (DMD). The Commission launched this evaluation on 7 December 2018 to assess whether the DMD is relevant, effective, efficient and in line with other EU legislation. IE welcomes the Commission's initiative to evaluate the DMD, and supports the approach taken in the roadmap. In particular, IE agrees that the DMD should be evaluated to assess whether it responds to the evolution of the digital market for financial services.

Iranian insurer denied compensation over EU nuclear sanctions (Iran Insurance Co v Council of the European Union)

The European Union’s General Court refused to grant millions of euros in damages to a state-owned Iranian insurer after its assets were frozen under nuclear sanctions against Tehran, handing victory to the European Council. The court dismissed an application by Iran Insurance Co which sued the European Council after it placed the company on a sanctions list in July 2010. The EU's political leadership accused the insurer of insuring helicopter parts and computers used to navigate Iranian aircraft and missiles.The court finally rejected the company’s demand for €3.49m (US$ 3.94m), nearly £85,000 (US$ 106,800), more than US$ 1.5m and almost 34bn Iranian rials (US$ 807,500). The company first filed for damages in September 2015.

Pension schemes warned to stay ahead of master trust law

The UK's pensions watchdog on Thursday warned pension scheme trustees they must check whether they fall under new master trust legislation to avoid running afoul of the law once the March deadline to apply for authorization passes. Multiemployer pension schemes, known as master trusts, have until March 31 to either apply to The Pensions Regulator for approval—demonstrating they meet the tough new criteria designed to offer enhanced protection, or else exit the market altogether.

 

Payment services and systems

 

Council of EU approves agreement on cross-border payments regulation

The Council of the EU endorsed the provisional agreement that was reached between the Austrian Presidency and the European Parliament on the European Commission's 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 changes will align the costs of cross-border payments in euros between euro and non-euro countries and increase the transparency of charges related to currency conversion services across the EU.

Council of the EU reports on Proposal for a Directive amending the VAT Directive as regards introducing certain requirements for payment service providers

The Council of the EU published a report on a European Commission Proposal for a Directive amending the VAT Directive (Directive 2006/112/EC) as regards introducing certain requirements for PSPs. The Proposal seeks to fight e-commerce VAT fraud and complements and paves the ground for a smooth application of the new measures introduced with the VAT E-commerce Directive (Directive (EU) 2017/2455) in the context of the Commission's Digital Single Market Strategy.

FCA releases Policy Statement (PS18/24) and Consultation Paper (CP18/44) on implementing SCA-RTS and EBA guidelines under PSD2

The FCA released PS18/24 setting out its approach to implementing the final RTS for strong customer authentication and common and secure open standards of communication (SCA-RTS) and related EBA guidelines under the revised Payment Services Directive (PSD2). PS18/24 confirms the changes the FCA will make to the Handbook and to its Payment Services and Electronic Money Approach Document to implement the RTS and the EBA guidelines, following feedback to its CP18/25 on the topic earlier this year. The FCA also published CP18/44 on its contingency planning in this area in case of a no-deal Brexit.

PSR responds to the interim Access to Cash Review

The PSR issued a press release in response to interim report from the Access to Cash Review, 'Is Britain ready to go cashless?'. The independent Access to Cash Review (the Review), chaired by Natalie Ceeney CBE, was established to consider consumer requirements for cash over the next five to fifteen years. The PSR notes that it's clear that cash is being used by fewer people and for fewer transactions. But the Report also highlights the importance of cash to consumers generally and that it remains a necessity for many. This reinforces the PSR's view that cash will continue to be important for years to come.

ECSG consults on SEPA SCS Volume version 8.5 and tokenisation considerations

The European Cards Stakeholders Group (ECSG) published a consultation on version 8.5 of the Single Euro Payments Area (SEPA) cards standardisation (SCS) volume (the Volume). The Volume is considered a key document for the cards industry, with a goal of achieving cards standardisation, interoperability, and security in Europe. In addition, the ECSG is consulting on tokenization considerations for SEPA Card Payments.

EPC announces re-election of its chair, Javier Santamaría

The European Payments Council (EPC) General Assembly re-elected Javier Santamaría as its chair and Narinda You as its vice-chair. Their mandates take effect immediately and will run for the next two years. The central role of the chair is to lead the two main governance bodies of the EPC (its board and general assembly) and to represent it externally, in particular in talks with European institutions. Javier Santamaría chaired the EPC since June 2012 and was involved in the EPC since its creation in 2002.

EPC publishes results of poll on biometric authentication

The EPC published the results of a poll on biometric authentication technology adoption for payments in the coming 5 years. The EPC asked professionals working in the payments industry which biometric authentication technology they considered to offer the greatest potential for customer adoption for payments in the coming 5 years. Most of the voters (60%) agreed that multiple and fingerprint scanning technologies have the greatest potential in the coming five years. Facial and eye recognition represented a fifth of the total votes and only 5% of respondents voted for no biometric authentication technology being in widespread use within 5 years.

EPC publishes SEPA Direct Debit Core Scheme implementation Guidelines 2019

The EPC published updated implementation guidelines (Guidelines) which set out the SEPA rules for implementing SEPA Direct Debit (SDD) Core Rulebook standards and SDD business-to-business (B2B) Rulebook standards. The Guidelines take effect on 17 November 2019. The guidelines published include:

 

Fintech and virtual currencies

 

UK Finance: digitisation of financial services has the potential to increase financial inclusion

UK Finance published a report on Financial Inclusion in a Digital Age, which explores how digitisation and a collaborative approach to understanding consumer benefits can help to attain and deliver enhanced financial inclusiveness in both the short, medium and long-term. UK Finance notes that the advent and continuous evolution of digital as a communication and engagement model across both the private and public sectors transformed both consumer engagement with technology and consumer engagement with financial service providers.

 

Sustainable finance

 

Council of the EU compromise text on a proposal for a regulation on disclosures relating to sustainable investments and sustainability risks

The Council of the EU published a note from the General Secretariat of the Council forwarding the Presidency compromise text (published by the Presidency on 20 November 2018) to the COREPER on a proposal for a regulation on disclosures relating to sustainable investments and sustainability risks. The compromise text highlights in red the modifications made to the text in light of the Working Group meeting of COREPER on 12 December 2018.

Council of the EU publishes Presidency compromise proposal on the proposed Regulation amending the Benchmarks Regulation on low carbon benchmarks and positive carbon impact benchmarks

The Council of the EU published a Presidency compromise proposal (dated 14 December 2018) on the Commission's proposal for a Regulation amending the BMR to make provision for low carbon benchmarks and positive carbon impact benchmarks. The Commission's proposal was published on 24 May 2018 and forms an integral part of the EU's efforts, under its Capital Market Union project, to connect finance with needs of the economy and the EU's sustainable development agenda.

Council of the EU agrees position on low carbon benchmarks and disclosure requirements

The Council of the EU issued a press release stating that the EU is taking steps to encourage financial companies to be more aware of the impact of their investments on the environment by noting that EU ambassadors today endorsed the Council's position on two proposals aiming at making finance greener and more in line with the objectives of the Paris agreement on climate change.

ESMA consults on sustainability measures for MiFID II, AIFMD, UCITS and credit ratings agencies

ESMA launched three public consultations on sustainable finance initiatives which relate to securities trading, investment funds and CRAs. Two of the consultations concern draft technical advice for integrating sustainability risks and factors into MiFID II, the Alternative Investment Fund Managers Directive (AIFMD) and the UCITS Directive. The third relates to guidelines to improve the consistency and quality of disclosures of environmental, social and governance (ESG) factors by CRAs.

ECON adopts report on proposed regulation amending BMR on low carbon benchmarks and positive carbon impact benchmarks

The European Parliament's Committee on Economic and Monetary Affairs (ECON) adopted its report on the proposal of the European Commission for a regulation amending the BMR on low carbon benchmarks and positive carbon impact benchmarks. The proposed regulation aims to enhance transparency in sustainable financing by establishing clear criteria on sustainability and by fighting 'greenwashing'.

UN Environment publishes Sustainable Finance Progress Report and consultation

The United Nations Environment Programme (UN Environment) published its sustainable finance progress report which is open for consultation. The focus of the report is on developments in G20 members, while also recognising work done by non-G20 countries. It also focusses on examples of innovation from international organisations and international cooperation. The deadline for responses is 20 December 2018.

 

Useful information

 

This is our final weekly highlights for 2018. The first weekly highlights of 2019 will be published on 10 January. 

 

Dates for your diary

 

DateSubjectEvent
21 December 2018Financial Ombudsman Service

Deadline for responses to FCA consultation paper, CP18/31, in which it proposes raising the maximum amount of compensation the FOS can require financial services firms to pay out from £150,000–£350,000 is on this date.

 

21 December 2018Markets and trading

Under Regulation (EU) No 648/2012 (EMIR), both the current derogation from the clearing obligation for certain intragroup transactions concluded with a third country group entity, and the phase-in for counterparties in Category 4 (broadly speaking NFCs+), expire on 21 December 2018. 


21 December 2018Brexit

The deadline for comments on FCA ‘CP18/36: Brexit: proposed changes to the Handbook and Binding Technical Standards – second consultation’ is 21 December 2018.

 

26 December 2018Regulation of capital markets

The deadline for feedback to the European Commission’s consultation on its draft delegated regulation in relation to finalising its initiative for a simplified prospectus for companies and investors in Europe is 26 December 2018.

 

27 December 2018Competition and markets authority

The CMA’s updated administrative timetable for its investigation into claims that consumers, typically those who stay with their provider on default or roll over contracts, are paying more than new customers, following a super-complaint from Citizens Advice, sets out that the statutory deadline for the CMA’s response is 27 December 2018.

 

29 December 2018Prudential requirements

The deadline for transposition of Directive (EU) 2017/2399 of the European Parliament and of the Council of 12 December 2017 amending Directive 2014/59/EU as regards the ranking of unsecured debt instruments in insolvency hierarchy is 29 December 2018.

 

31 December 2018Insurance

The PRAs ‘PS24/18: Updates to internal model output reporting’ policy will take effect for all financial year-ends on, or after, 31 December 2018.

 

31 December 2018

Packaged Retail and Insurance based Investment Products Regulation

European Commission to review PRIIPs Regulation by this date.

 

31 December 2018Authorisation and supervision

Feedback to the ESAs’ public consultation to amend Commission Implementing Regulation (EU) 2016/1799 (on the mapping of credit assessments of external credit assessment institutions for credit risk) is sought by 31 December 2018.

 

31 December 2018Bank recovery and resolution

The reporting requirements under Commission Implementing Regulation on procedures, standards forms and templates for the provision of information for the purposes of resolution plans for credit institutions and investment firms, and repealing Implementing Regulation (EU) 2016/1066 will apply as of 31 December 2018.

 

31 December 2018Insurance and pensions

The FCA will consult (see page 9) on changes to its permitted links framework to allow unit-linked pension funds to invest in an appropriate range of patient capital assets before the end of 2018.

 

31 December 2018Regulatory requirements

Compliance officers should respond by 31 December 2018 to confirm whether or not their firms will be captured by the upcoming obligation to report settlement internalisation.

 

January 2019Consumer credit

The FCA will aim to publish a policy statement and finalised rules in relation to ‘CP18/33: Regular premium PPI complaints and recurring non-disclosure of commission – feedback on CP18/18, final guidance, and consultation on proposed mailing requirements’ in January 2019.

 

January 2019Money laundering

The FCA will publish feedback and its proposed rules from ‘CP18/32: Recovering the costs of the Office for Professional Body Anti-Money-laundering Supervision (OPBAS): proposed fee rates for 2018/19’ in January 2019.

 

January 2019Payment services

The FCA will publish a policy statement on its proposed general standards and communication rules for the payment services and e-money sectors (CP18/21), which is expected in January 2019.

 

January 2019Money markets

As confirmed by the Bank of England’s Money Markets Committee EU Money Market Fund Reform will come into effect for existing money market funds in January 2019.

 

January 2019Brexit

The FCA is expected to launch a consultation on recovering the costs of regulating securitisation repositories after the UK leaves the European Union, in January 2019.

 

1 January 2019Financial Guidance and Claims Act

The provisions of the Financial Guidance and Claims Act 2018 (Commencement No. 5) Regulations 2018 will come into force on 1 January 2019.

 

1 January 2019Securitisation regulation

The FCA will receive new enforcement powers as part of the implementation of the EU Securitisation Regulation (EU) 2017/2402 which comes into force on 1 January 2019. For further information see: ‘CP18/30: EU Securitisation Regulation Implementation (DEPP and EG)’.

 

1 January 2019Prudential requirements

The amendments to the Regulatory Reporting Part of the PRA Rulebook in relation to operational continuity and updates to SS34/15 will take effect from this date.

 

1 January 2019Regulatory architecture

The final standards on the regulatory capital treatment of banks' investments in instruments that comprise total loss-absorbing capacity (TLAC) for G-SIBs takes effect from this date.

 

1 January 2019Prudential requirements

The UK ring-fencing regime (FCA/PRA) will come into effect on this date for large UK banks.

 

1 January 2019Insurance

Lloyd's Insurance Company S.A., known as Lloyd's Brussels, will underwrite non-life insurance and facultative reinsurance risks located in EEA countries with effect from 1 January 2019.

 

1 January 2019Pensions

Following FCA ‘PS18/20: Improving the quality of pension transfer advice’ changes to perimeter guidance on triage services come into force on this date.

 

1 January 2019Prudential requirements

The 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.

 

1 January 2019Prudential requirements

The changes to the rules, expectations, template and accompanying instructions set out in PRA PS28/18SS45/15and SS46/15 will take effect from 1 January 2019. ​

 

1 January 2019Regulation of capital markets

PRA SS10/18 ‘Securitisation: General requirements and capital framework’ (Appendix 1) and PRA updated SS31/15 ‘The ICAAP and the Supervisory Review and Evaluation Process (SREP)’ (Appendix 3) will take their effect from January 2019.

 

1 January 2019Payment services

The European Payments Council’s updated the 2017 SEPA scheme rulebook versions for the SEPA Credit Transfer scheme, the SEPA Instant Credit Transfer scheme, the SEPA Direct Debit Core scheme and the SDD Business-to-Business scheme. The new versions will take effect on 1 January 2019.

 

1 January 2019Securitisation regulation

SI 2018/1288: The Securitisation Regulations 2018 which give effect to  Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 come into force on 1 January 2019.

 

1 January 2019Regulatory reporting requirements

The PRA’s proposed changes to regulatory reporting requirements set out in PS 30/18SS 32/15 and SS 34/15 will come into effect on 1 January 2019.

 

1 January 2019Banks and mutuals

The following provisions of the Financial Services (Banking Reform) Act 2013 (Commencement No 12) Order 2018( FS(BR)A 2013) come into force on 1 January 2019:

 

1 January 2019Regulatory architecture

Andrea Enria will take up the role of Head of the Supervisory Board of the ECB on this date.

 

2 January 2019Markets and trading

ESMA will renew the prohibition of the marketing, distribution or sale of binary options to retail clients, for a further three-month period from 2 January 2019.

 

2 January 2019Solvency II

The deadline for responses to PRA CP27/18: on Solvency II: Adjusting for the reduction of loss absorbency where own fund instruments are taxed on write down is 2 January 2019.

 

2 January 2019Brexit

The deadline for responses to:

is 2 January 2019.

 

4 January 2019Sustainable finance

The deadline to register for the European Commission’s Technical Expert Group on Sustainable Finance workshop on taxonomy approach is 4 January 2019.

 

4 January 2019Payment services

The deadline for comments to be made to the European Commission on commitments offered separately by Visa and Mastercard to address competition concerns relating to inter-regional interchange fees for payment card transactions is 4 January 2019.

 

4 January 2019Payment Services

The deadline for feedback to PSR Consultation ‘General directions for the implementation of Confirmation of Payee’ is 4 January 2019.

 

4 January 2019Regulatory architecture

The deadline for applications to EIOPA’s call for experts to join it's new Technical Expert Network on Catastrophe Risks is 4 January 2019.

 

4 January 2019Consumer finance

The deadline for feedback to the European Commission’s review of the Distance Marketing Directive is 4 January 2019.

 

7 January 2019Insurance

The deadline for feedback to the IAIS application paper on draft supervisory material related to recovery planning in the Insurance Core Principles and the Common Framework for the Supervision of Internationally Active Insurance Groups is 7 January 2019.

 

7 January 2019Brexit

Draft registration and conversion forms for credit rating agencies in advance of the FCA becoming the UK regulator of CRAs when the UK leaves the EU may be submitted from 7 January 2019.

 

7 January 2019Brexit

Under a PRA Direction made on 7 November 2018, firms may notify the PRA of their intention to enter the temporary permissions regime by submitting the temporary permission notification form, available on the FCA Connect system, between 7 January 2019 and 28 March 2019.

 

7 January 2019PRA

The deadline for feedback to CP28/18: PRA fees and levies: Changes to periodic and transaction fees is 7 January 2019.

 

7 January 2019BrexitThe Sanctions Review Procedure (EU Exit) Regulations 2018 come into force on 7 January 2019.

 

Area of Interest