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 20 September 2018.
The Investment Association (IA) published 'Asset management in the UK 2017-2018’, its annual survey which captures asset management undertaken by IA members on behalf of domestic and overseas clients. Key findings include an increase of 29% between 2016 and 2017 in the amount of overseas assets from European investors, making Europe the largest source of overseas assets for UK asset managers. The IA concludes that its statistics underline the urgent need for a Brexit deal to safeguard the asset management industry.
The House of Commons Committee for Exiting the European Union has published a progress report on the UK’s negotiations on EU withdrawal, covering the period June to September 2018. The section on financial services discusses the negotiations between the EU and the UK over ‘equivalence’ and ‘mutual recognition’.
The Financial Conduct Authority (FCA) published a direction clarifying how an EEA market operator may make an application to become a recognised overseas investment exchange (ROIE), to enable the participation of the exchange in UK markets, should they no longer be able to rely on MiFID II passport rights once the UK leaves the EU. Overseas investment exchanges which do not carry on regulated activities in the UK need take no action.
The CEO of the International Swaps and Derivatives Association (ISDA), Scott O'Malia, said that he is 'deeply discouraged' by the trajectory of the Brexit negotiations and 'the possibility of a rigid rules-based system' for derivatives markets, though he is encouraged by the 'fresh approach' recently proposed by Christopher Giancarlo, the chair of the Commodity Futures Trading Commission (CFTC).
The European Banking Authority (EBA) has published a speech by its chair, Andrea Enria, on fragmentation in banking markets: crisis legacy and the challenge of Brexit. Mr Enria said that while the health of the EU banking system has ‘unambiguously improved’ since the 2008 crisis, it is still a struggle to restore financial integration. The European context is still ‘fraught with distrust among jurisdictions’ and the temptation to give in to ring-fencing and protectionism is strong.
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.
The FCA's 2018/2019 regional programme of events, 'FCA: Live and Local', starts up again in September 2018 with events taking place across the UK. The programme, traditionally aimed at general insurance, retail investment and mortgage firms, will now include events for non-bank payment services providers and compliance consultants.
SI 2018/1003: Certain provisions of the Financial Guidance and Claims Act 2018 will come into force in the UK fully on 1 January 2019. The commenced provisions relate to the levy under the Financial Services and Markets Act 2000 for debt advice expenses of devolved authorities, and the information about the availability of guidance.
HM Treasury published the government’s response to the Treasury Committee’s 15th Report of session 2017–19, on women in finance, which found the UK still has a problem when it comes to the representation of women in senior management in the financial services sector. The response was delivered by the economic secretary to the Treasury, John Glen MP, and the Minister for Women, Victoria Atkins MP.
HM Treasury and the US Treasury Department have issued a joint statement on the first meeting of the Financial Regulatory Working Group. The Working Group was formed to deepen bilateral regulatory co-operation with a view to the further promotion of financial stability, investor protection, fair, orderly, and efficient markets, and capital formation in both jurisdictions. HM Treasury said the co-operation was especially important given transition in the UK’s regulatory relationships as it withdraws from the EU.
The ECB has published a speech by its president, Mario Draghi, on the benefits of European supervision, arguing that stronger and uniform supervision leads to resilient banks and provides a more coherent policy framework for cross-border banking. Mr Draghi said Euro-wide supervision harmonises supervisory practices, merging 19 national approaches into one single method. It allows for a system-wide perspective when monitoring and mitigating risks, and it reduces fragmentation.
Confidential information—Disclosure. Article 53(1) of Directive (EU) 2013/36 had to be interpreted as not precluding the competent authorities of the member states from disclosing confidential information to a person who so requested, in order to be able to institute civil or commercial proceedings with a view to protecting proprietary interests which were prejudiced as a result of the compulsory liquidation of a credit institution. The Court of Justice of the European Union (CJEU) further held that the request for disclosure had to relate to information in respect of which the applicant had put forward precise and consistent evidence plausibly suggesting that it was relevant for the purposes of civil or commercial proceedings, the subject matter of which had to be specifically identified by the applicant and without which the information in question could not be used. For full judgment see C‑594/16.
The ECB launched a consultation on part 2 of its guide to assessments of license applications. Part 2 complements the guide published in March 2018 and both documents should be read together as one guide (the Licensing Guide). They are intended to support those involved in the process of authorisation and to ensure a smooth and effective procedure and assessment, but are not legally binding in nature. Feedback on the draft part 2 is sought by 25 October 2018.
Global and regional payment, clearing and settlement operators met at a roundtable in Paris on 14 September 2018 to discuss cyber-security and the resilience of financial market infrastructures (FMIs) and the wider market ecosystem. Senior executives, together with financial authorities, discussed continued collaboration and preparation for and responses to cyber-incidents, with a particular focus on cross-border actions.
The House of Commons Library has produced a report on the future of UK anti-money laundering (AML) sanctions. Although not yet in force, the UK has a new Sanctions and Anti-Monday Laundering Act 2018 ready to be implemented when the UK leaves the EU. But the report warns that there is a danger sanctions could become entangled with increasingly competitive and nationalist trade policies and, being less co-ordinated, could lose legitimacy.
The Swiss Financial Market Supervisory Authority (FINMA) has concluded two enforcement procedures against Credit Suisse AG. In the first procedure, FINMA identified deficiencies in Credit Suisse's adherence to AML due diligence obligations in relation to suspected corruption involving the International Federation of Association Football (FIFA), the Brazilian oil corporation Petrobras and the Venezuelan oil corporation Petroleos de Venezuela, S.A. (PDVSA). In the second procedure, which relates to a significant business relationship for Credit Suisse with a politically exposed person (PEP), FINMA also identified deficiencies in the AML process, as well as shortcomings in the bank's control mechanisms and risk management.
The European Union's General Court on Thursday upheld bloc-wide sanctions against Russian banks following Moscow’s military intervention in Ukraine, ruling that Brussels acted proportionately in curbing their business freedoms. For full judgment's see Rosneft and Others v. Council, number T-715/14, Sberbank of Russia v. Council, number T-732/14, VTB Bank v. Council, number T-734/14, Gazprom Neft v. Council, number T-735/14, Vnesheconombank v. Council, number T-737/14, PSC Prominvestbank v. Council, number T-739/14 and, DenizBank v. Council, number T-798/14 in the General Court of the European Union.
Europol has published its fifth annual cybercrime report, in which it sets out 15 creative new methods cybercriminals are using to target victims. Europol urges law enforcement to target cybercriminals offering ‘off-the-shelf’ cyber-attack services or products to make it more difficult for low-level cybercriminals to carry out high-level attacks.
Nicky Morgan MP, chair of the Treasury Committee, said RBS CEO Ross McEwan ‘withheld information’ during evidence given in January 2018 in relation to a former RBS Global Restructuring Group (GRG) employee.
The FCA published a final notice with respect to Christian Bittar, a former Deutsche Bank derivatives trader, and banned him from performing any function in relation to any regulated financial activity. The FCA has found that Mr Bittar lacks integrity and therefore fitness and propriety to carry out such a role.
The Complaints Commissioner has upheld a complaint against the FCA for not responding adequately to information a complainant had provided, and failing to rectify the matter despite the complainant’s attempts to pursue it. The Commissioner acknowledged that it was not its role to second-guess the FCA’s reasonable exercise of its discretion, bearing in mind that it has competing priorities and limited resources, but said the FCA, when initially dealing with the original complaint, seemed to have focused upon finding general reasons for not taking action rather than considering whether in the particular set of circumstances there were good reasons for making further inquiries.
Michael Nascimento has been sentenced to 11 years' imprisonment at Southwark Crown Court for his role in a share fraud carried out through a series of boiler room companies which led to the loss of more than £2.8m of investors' money. The FCA and the Court considered that Mr Nascimento was the controlling mind, instigator and the main beneficiary of the fraud. Mr Nascimento also received an additional sentence of two years for further criminal activity in respect of a separate prosecution by the Crown Prosecution Service and the City of London Police.
Commission Delegated Regulation (EU) 2018/1229 of 25 May 2018 supplementing the Central Securities Depositories Regulation (EU) 909/2014 (CSDR) with regard to RTS on settlement discipline, was published in the Official Journal of the EU.
The European Union’s highest court said Thursday that financial regulators can be forced to disclose confidential information linked to a criminal case, but it is up to national courts to strike a balance between a person’s human rights and professional secrecy requirements before ordering them to do so. For full judgment's see C‑358/16 and C‑594/16.
The FCA and Prudential Regulation Authority (PRA) have published details of letters that the regulators have sent to CEOs of major banks and insurers supervised in the UK asking for the preparations and actions they are taking to manage transition from LIBOR to alternative interest rate benchmarks. The purpose of the letters is to seek assurance that firms' senior managers and boards understand the risks associated with this transition and are taking appropriate action now so that firms can transition to alternative rates ahead of the end of 2021.
The International Organization of Securities Commissions (IOSCO) has published its final report on conflicts of interest and associated conduct risks during the equity capital raising process. This sets out guidance for regulators to address conflicts of interests that may occur when intermediaries manage an equity securities offering.
The European Parliament published a briefing on the European Commission's proposed regulation on sovereign bond-backed securities (SBBS), which was adopted on 24 May 2018. The briefing outlines the main purposes of this 'enabling regulatory framework' for the development of SBBS and questions whether, in the absence of a change in the regulatory treatment of sovereign exposures, there will be sufficient demand for SBBS.
The Financial Markets Law Committee (FMLC) published a paper identifying legal uncertainties arising from the European Commission's June 2017 proposal to alter the processes for authorisation and recognition of third-country central counterparties (CCPs) as well as the framework for monitoring and supervising CCPs under the European Market Infrastructure Regulation (EMIR).
ISDA has published the ISDA Benchmarks Supplement, which gives firms the ability to improve the contractual robustness of derivatives that reference interest rate, FX, equity and commodities benchmarks.
The European Securities and Markets Authority (ESMA) has published the responses it received to its consultation paper on Amendment to Commission Delegated Regulation (EU) 2017/588 (RTS 11). The consultation aimed to address issues that have arisen with respect to financial instruments where only a marginal proportion of trading is executed on EU trading venues and the main pool of liquidity is located outside the EU (third-country instruments).
The London Stock Exchange (LSE) has published notice N15/18, which sets out feedback to the consultation on amendments to the Admission and Disclosure Standards (the standards). The outcome of the consultation was in favour of admitting the trading of Chinese A-shares’ depositary receipts (DRs) to the main market and traded through the LSE’s International Order Book trading service.
The Loan Market Association (LMA) and the Association of Corporate Treasurers (ACT) have updated the joint guidance—The future of LIBOR: What you need to know—to reflect developments since the first edition was published in March 2018. New developments include publication of the LMA's revised replacement of screen rate clause, the launch of a consultation on term rates in the sterling market.
The private sector working group on euro risk-free rates recommended the euro short-term rate (ESTER) as the new euro risk-free rate. The working group recommends, in particular, replacing the euro overnight index average (EONIA) with the new euro risk-free rate. This is because the EONIA as it stands will no longer meet the criteria of the EU Benchmarks Regulation and will therefore see its use restricted as of 1 January 2020.
The Financial Stability Board (FSB) published the responses it received to the consultation on incentives to centrally clear over-the-counter (OTC) derivatives. The FSB launched the consultation together with the Basel Committee on Banking Supervision, the Committee on Payments and Market Infrastructures, and the International Organization of Securities Commissions.
The Bank for International Settlements (BIS) has published a report on monitoring of fast-paced electronic markets (FPMs), looking at the wide range of structural changes undergone in recent years by foreign exchange and other FPMs and the relevance of these changes to central banks' market monitoring approaches.
The Bank of England’s Money Markets Committee (MMC) has launched a public register of over 100 market participants’ statements of commitment to the UK Money Markets Code. The Code sets out the standards and best practice expected from participants in the deposit, repo and securities lending markets, and was published in April 2017. It is underpinned by the principle that market participants should always act in a manner to promote the integrity and effective functioning of these markets.
The CEO of ISDA, Scott O'Malia, has written an article in derivatiViews in which he reviews the reforms made to the derivatives market since the 2008 financial crisis, and highlights areas where the rules could be refined and improved to ensure the market remains both safe and efficient. Mr O’Malia highlighted consistency and co-operation in regulatory reporting, and calibrating the rules to ensure they are risk-appropriate as areas for improvement.
European Union—Approximation of national laws. Article 54 of Directive (EC) 2004/39 should be interpreted as meaning that the phrase 'cases covered by criminal law' in paras 1 and 3 of that article did not cover the situation in which the competent authorities adopted a measure consisting in prohibiting a person from holding a post as director or any other post subject to accreditation in an undertaking supervised by that regulator and ordering him to resign from all related posts at the earliest opportunity, on the ground that that person no longer fulfilled the requirement of good repute provided for in Article 9 of that Directive, which was part of the measures that the competent authorities were required to take when exercising the powers attributed to them under Title II of that directive. The Court of Justice of the European Union so held in proceedings concerning the refusal of the Luxembourg financial supervisory authority (the CSSF) to disclose certain documents in proceedings between the first respondent and the CSSF further to its finding of the loss of that respondent's good repute. For full judgment see Case C‑358/16.
The Council of the EU published two 'I/A' item notes from the General Secretariat recommending that the Council confirm that it has no objection to delegated acts adopted by the European Commission with regard to the safekeeping duties of depositaries under AIFMD and UCITS V.
Commission Delegated Regulation (EU) …/... of 12.7.2018 amending Delegated Regulation (EU) 2016/438 as regards safe-keeping duties of depositaries—intention not to raise objections to a delegated act
PwC and the Alternative Investment Management Association (AIMA) have published the results of a survey of alternative fund managers in Europe, North America and Asia. According to the results, investors are increasingly tuned into overall outcomes as opposed to simply raw performance and are demanding better and customised strategies. The survey found that investors are expecting considerably more from their alternative fund providers than in the past.
The IA has appointed four new directors to its board, in the process nearly doubling the female representation from just over 20% to almost 40%. IA says the move reflects its commitment to increase diversity throughout the industry. CEO Chris Cummings said ‘We know that firms with diverse management teams make better decisions, so I am particularly pleased that we have been able to increase the diversity of our Board with these four new appointments’.
The Lending Standards Board (LSB) has published its first summary report on banks' application of the Access to Banking Standard, which came into effect on 1 May 2017 following an independent review commissioned by the industry and applies to all branch closures announced after 1 May 2017, together with those announced prior to this date but not taking place until after 1 August 2017.
The Competition and Markets Authority (CMA) has published a letter it sent Northern Bank Limited t/a Danske Bank about its non-compliance with the Northern Ireland Personal Current Account (NI PCA) Banking Market Investigation Order 2008. The CMA says Danske Bank has breached the Order on two occasions, by failing to supply over 43,000 of its customers with information on switching accounts between January 2017 and August 2018.
ECB Banking Supervision has published the findings of the thematic review of EU banks’ profitability and business models conducted from 2016 to the end of the first quarter of 2018. The review shows that although the economic situation of banks in the euro area has generally improved, profitability and business models remain under pressure.
HM Treasury is seeking views on the government's approach to transposing the Bank Creditor Hierarchy Directive into UK law before the transposition deadline of 29 December 2018. The directive will amend Article 108 of the Bank Recovery and Resolution Directive (BRRD), establishing a new class of non-preferred senior debt to be inserted in the creditor hierarchy. The consultation closes on 10 October 2018.
The EBA has published two reports on EU banks' funding plans and asset encumbrance respectively. The reports aim to provide important information for EU supervisors to assess the sustainability of banks' main sources of funding. The two reports are based on banks' data submissions in accordance with the EBA's guidelines on funding plans and technical standards on asset encumbrance. The EBA intends to provide yearly updates of the two reports.
The European Central Bank (ECB) has published a speech by the chair of its supervisory board, Danièle Nouy, on financial supervision and the role of national authorities in Europe. Ms Nouy called for further progress in making the banking union and the single supervisory mechanism (SSM) a single jurisdiction, saying to do so will require ‘harmonisation, co-operation and solidarity’.
The FCA obtained an urgent High Court order appointing a provisional liquidator in respect of Total Debt Relief Limited (TDR), to protect its customers’ money. The FCA is also petitioning for TDR to be wound-up, the petition for which will be heard at a later date.
The CMA updated its guidance to say that the directions issued by the CMA to RBS Group to ensure compliance with Part 6 of the Retail Banking Market Investigation Order 2017 have been revoked.
The Advertising Standards Authority (ASA) concluded that a TV advert for Elevate Credit International Ltd t/a sunny.co.uk breached rule 14.11 of the British Code of Advertising Practice (BCAP) because the representative annual percentage rate (RAPR) was given less prominence than the incentive to apply for credit.
The PRA has launched consultation paper (CP) 20/18, setting out its proposed rules for some consequential changes, and minor administrative amendments, related to the extension of the Senior Managers and Certification Regime (SM&CR) to insurers. Feedback is sought by 17 October 2018.
The European Insurance and Occupational Pensions Authority (EIOPA) is carrying out an online survey on the integration of sustainability risks and sustainability factors in the delegated acts under the Insurance Distribution Directive (IDD) and the Solvency II Directive. The survey follows the European Commission’s request for technical advice from EIOPA supplementing the Commission's package of measures on sustainable finance, adopted by the Commission on 24 May 2018. Feedback is sought by 3 October 2018.
Insurance Europe (IE) published a position paper entitled 'Insurance Europe response to the OECD discussion draft on the transfer pricing aspects of financial transactions', requesting additional clarity on the application of guidance to intra-group reinsurance and rejecting the need for introducing special guidance for captive insurance.
The PRA has published a letter to general insurance firms’ chief actuaries from its own chief actuary for general insurance, James Orr. The letter sets out areas of focus for the PRA’s ongoing supervisory approach, shares insights from meetings and discussions between the PRA and the actuarial sector, highlights the PRA’s ‘continuing focus on realism in firms’ business planning and underwriting policies’, and shares detailed findings from the PRA’s targeted reviews of firms’ reserving.
An increasing number of workplace pension schemes will come under greater scrutiny from The Pensions Regulator (TPR) from October 2018 as part of a significant shift in its approach to protect savers. TPR will be working proactively with more pension schemes through a new range of interventions to address risks sooner, clearly set out its expectations and take action where necessary.
The chief executive of the FCA, Andrew Bailey, has given a speech about pensions at Gleneagles. He stresses that a large proportion of people are not saving enough, if at all for their retirement. The FCA is looking at competition in the retirement income market as it wants to ensure that products are available that meet the needs of consumers. He explained that the FCA is not convinced about charge capping in the pensions market but that it remains an option.
The FCA has announced that following its thematic review into the fair treatment of longstanding customers in the life insurance sector, its remaining investigations into firms have each been closed.
EIOPA has published new Q&As on regulatory matters.
The FCA has updated its webpage on general insurance (GI) value measures. Following the March 2018 publication of the second set of data in its general insurance value measures pilot, the FCA says it is now collecting a third set of value measures data across three measures: claims frequency; claims acceptance rates; and average claims payout. The FCA says it intends to publish the data in early 2019 alongside a consultation on the reporting of GI value measures.
The FCA has published consultation paper (CP) 18/25: Approach to final regulatory technical standards (RTS) and EBA guidelines under the revised Payment Services Directive (PSD2). The FCA is also proposing new complaints reporting rules about authorised push payment (APP) fraud. The proposed changes reflect final RTS on security and new fraud reporting requirements published by the EBA. Following calls from stakeholders to provide clarity as soon as possible, feedback is sought by 12 October 2018, so that the FCA can publish its final position in early 2019.
The Payment Systems Regulator (PSR) has published details of the information notices which it issued to Mastercard Europe SA and Visa Europe Ltd in July 2018. The information notices are intended to help the PSR monitor compliance with the caps on interchange fees on payment card transactions imposed by the Interchange Fee Regulation (EU) 2015/751 (IFR). Although the PSR does not usually publish details of information notices issued to regulated persons, it has published details of these notices as they asked for information on payments received or paid by individual issuers and acquirers.
The PSR has published its annual monitoring for 2018 on the Current Account Switch Service (CASS)'s compliance with the Payment Account Regulations 2015 (PARs). The PSR says that, following a review of information and evidence submitted by Bacs on behalf of CASS for the annual assessment, it is satisfied that CASS continues to meet the criteria for designation as an alternative switching scheme.
The European Payments Council (EPC) has published new and updated guidance and other materials on the Single European Payments Area (SEPA).
The chair of the Treasury Select Committee, Nicky Morgan MP, expressed concern over figures published by LINK, the UK's ATM network operator, which show that one protected ATM closes every other day. She noted that the PSR is taking action by requiring LINK to set out more explicitly how it will maintain the broad geographic spread of free-to-use (FTU) ATMs across the UK. In what she has described as the first major test of the PSR, she is concerned that the intervention is too late to prevent ATM closures.
The New Payment System Operator (NPSO) is seeking applicants to join specialist advisory groups that will influence the design and delivery of the New Payments Architecture (NPA)—the conceptual model for the future development of the UK’s shared retail payment infrastructure. The advisory groups will offer expert opinion to the NPA programme in relation to their area of focus.
The Treasury Committee has published a unanimously-agreed report on crypto-assets for its Digital Currencies inquiry. While crypto-assets, and most initial coin offerings (ICO), are currently not within the scope of Financial Conduct Authority (FCA) regulation, the report finds that regulation is needed for ‘wild west’ crypto-asset markets by extending the scope of the Financial Services and Markets Act (Regulated Activities) Order 2001 (SI 2001/544) (RAO).
The Association for Financial Markets in Europe (AFME) and PwC published a report on current trends in technology and innovation and their potential impact on European investment banks in the future. ‘Technology and innovation in Europe’s capital markets’ identifies four core technologies—data & analytics, cloud computing, artificial intelligence and distributed ledger technology (DLT)—and examines the implications for the industry and for future policymaking.
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234