Weekly highlights—23 August 2018

Weekly highlights—23 August 2018

Welcome to the weekly Financial Services highlights from the Financial Services team for the week ending 23 August 2018.


No deal Brexit: Technical notice on banking, insurance and other financial services

The UK government published a technical notice for the banking, insurance and other financial services sectors setting out guidance in the event the UK leaves the EU without an agreement (a 'no deal' scenario).  This notice is part of a series of notices which aim to offer guidance for businesses and citizens to understand what they need to do in a 'no deal' scenario so that they can make informed plans and preparations.

Department for Exiting the EU issues framework for financial services for the UK-EU partnership

The Department for exiting the European Union published a presentation setting out the government's vision for the future UK-EU partnership in relation to financial services.  The presentation is part of a series produced by the UK negotiating team for discussion with the EU, in order to inform the development of the future relationship between the EU and the UK.

HM Treasury publishes draft SI on capital requirements

HM Treasury published a draft statutory instrument (SI) which will make amendments to retained EU law and existing UK law, relating to capital requirements.  HM Treasury has also published an explanatory note.  HM Treasury intends to lay the draft SI before Parliament during autumn 2018. The SI will make amendments to aspects of the Capital Requirements Regulation (CRR). Welcome to the weekly Financial Services highlights from the Financial Services team for the week ending 23 August 2018.

Regulated activities

FCA consults on fees for regulation of claims management companies

The FCA published consultation paper 18/23 (CP18/23)—Claims management companies: recovering the costs of FCA regulation and the Financial Ombudsman Service. With responsibility for claims management regulation passing to the FCA on 1 April 2019, the FCA has developed a temporary permissions (TP) regime, an authorisations gateway and a new supervisory structure for claims management companies (CMCs). The CP sets out proposals for recovering the costs of setting up these facilities, as well as supervising CMCs going forward. Feedback is sought by 22 October 2018.

Financial Conduct Authority updates

FCA's regulatory round up for August 2018

The Financial Conduct Authority (FCA) published its regulation round up for August 2018. Hot topics include accessible communications for consumers, preparing for Brexit and new functionality in the FCA's Connect system.

Prudential requirements

HM Treasury publishes draft SI on capital requirements

As mentioned above, HM Treasury published a draft statutory instrument, which will make amendments to retained EU law, and existing UK law, relating to capital requirements. HM Treasury has also published an explanatory note. HM Treasury intends to lay this SI before Parliament during autumn 2018.This SI will make amendments to aspects of the Capital Requirements Regulation (EU) 575/2013 (CRR) to ensure that it continues to operate effectively in the UK once the UK has left the EU.

Treasury Committee secures changes to protocol governing (PRA) investigation into Co-op Bank supervision

Nicky Morgan MP, Chair of the Treasury Committee, wrote to the Prudential Regulation Authority (PRA) and John Glen MP, the Economic Secretary to the Treasury, requesting changes to the Protocol for the independent review (by the PRA) into prudential supervision of the Co-operative Bank (Co-op Bank) during the period between 2008–2013. Those changes have now been made.

ESRB issues paper on bank resolution and public backstop in an asymmetric banking union

The European Systemic Risk Board (ESRB) issued a paper on bank resolution and public backstop in an asymmetric banking union. The paper explains that there has been considerable progress towards the completion of the EU banking union and gives some background to this.

ECB issues fines for CET1 breaches

The European Central Bank (ECB) imposed administrative fines on Crédit Agricole Corporate and Investment Bank, Crédit Agricole, S.A., and CA Consumer Finance for breaches of the obligation to obtain prior permission to classify capital instruments as common equity tier 1 (CET1) instruments. The ECB imposed penalties of €0.3m on Crédit Agricole Corporate and Investment Bank, €4.3m on Crédit Agricole, S.A., and €0.2m on CA Consumer Finance. The breaches infringe Article 26(3) of the CRR.

Financial crime

European Commission adopts MLD4 Delegated Regulation adding Pakistan to high-risk third countries list​

The European Commission adopted a Delegated Regulation amending the list of high-risk third countries set out in Delegated Regulation (EU) 2016/1675 to add Pakistan.

Enforcement and redress

FCA launches prosecution for unauthorised investment schemes

The FCA has begun a criminal prosecution against Mark Starling in relation to unauthorised investment schemes alleged to have been operated between 1 August 2008 and 25 April 2017.

FOS issues update on complaints data publication

The Financial Ombudsman Service (FOS) published an update on how it publishes complaints data. This follows on from the publication of a consultation paper in October 2016 and a feedback statement in December 2016. The feedback statement included commitments to work with stakeholders to explore a new measure of cases received per 100 FCA-reportable complaints, and to report some resolved PPI complaints by volume only for a limited period.

FOS issues ombudsman newsletter 145

The FOS published issue 145 of its ombudsman news, which focuses on fraud and scams. It also includes Q1 2018 statistics on the financial products and services people have contacted the FOS about, and Q&As for businesses on the FOS’s new case-handling system.

Markets and trading

ESMA publishes response form for EMIR clearing obligation consultation

ESMA published a response form for its consultation paper on the clearing obligation under EMIR (No. 6) published on 11 July 2018.

CPMI/IOSCO consult on governance of OTC derivatives data elements

The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a consultative report on governance arrangements for over-the-counter (OTC) derivatives data elements.

FSB launches thematic peer review on implementation of LEI and invites feedback from stakeholders

The Financial Stability Board (FSB) is seeking feedback from stakeholders as part of its thematic peer review on implementation of the Legal Entity Identifier (LEI). The objective of the review is to evaluate the progress made by FSB members in adopting the LEI. A peer review report will be published in the first half of 2019.

AFME publishes guidance on providing unconnected analysts issuer access under revised UK IPO process

The Association for Financial Markets in Europe’s (AFME) Equity Capital Markets Division and the European Association for Independent Research Providers (Euro IRP) published guidance for unconnected research analysts who require information relating to prospective issuers under the UK Financial Conduct Authority’s (FCA) new rules, which came into force on 1 July 2018, governing UK initial public offerings (IPOs). The guidance outlines how syndicate banks can facilitate access for unconnected analysts to prospective issuers, and sets out market standard research guidelines unconnected analysts gaining access to companies undertaking an IPO are expected to sign.

BoE Money Markets Committee discusses progress to date on the risk-free rates transition

The Bank of England (BoE) published the minutes of a meeting of the Money Markets Committee (MMC) which took place on 6 July 2018. Following the successful reform to SONIA and equivalent exercises in other jurisdictions, the focus of work on interest rate benchmark reform was shifting to achieving an orderly transition away from LIBOR.

Regulation of capital markets

ESMA issues draft RTS/ITS setting out disclosure standards under the Securitisation Regulation

ESMA published a final report providing an overview of the feedback received on the consultation paper on draft technical standards on disclosure requirements issued on 19 December 2017, operational draft regulatory standards (RTS) and implementing technical standards (ITS), and access conditions under the Securitisation Regulation, which is intended to promote simple, transparent and standardised (STS) securitisations.

Investment funds and wealth management

ECON issues draft report on proposal for a directive on covered bonds

The Committee on Economic and Monetary Affairs (ECON) issued a draft report on the European Commission's proposal for a directive on the issue of covered bonds and covered bond public supervision and amending the UCITS Directive (2009/65/EC) and the Bank Recovery and Resolution Directive (2014/59/EU).

Insurance and pensions

PRA publishes Solvency II supervisory disclosures

The PRA published supervisory disclosures under Article 31(2) of the Solvency II Directive 2009/138/EC (Solvency II) for year-end 2017. The disclosures include aggregate statistical data on key aspects of the application of the prudential framework, a table covering the manner of exercise of the options provided for in Solvency II, links to the texts of insurance regulations applicable in the UK and links to documents detailing the PRA's supervisory approach.

TPR using more powers to improve protection for pension holders

The latest quarterly compliance and enforcement bulletin from The Pensions Regulator (TPR) shows how fraudsters, poorly performing trustees and rogue employers are being tackled through the use of a wider range of TPR’s powers.

Payments services and systems

ECB issues guideline amending guideline on TARGET2

The European Central Bank (ECB) issued a guideline amending Guideline ECB/2012/27 on a Trans-European Automated Real-time Gross settlement Express Transfer system (TARGET2) (ECB/2018/20).

ESMA publishes list of SFD designated payment and securities settlement systems

The European Securities and Markets Authority (ESMA) has published the list of Member States’ designated payment and securities settlement systems. Article 10(1) of the Settlement Finality Directive 98/26/EC requires Member States to supply the information.

Fintech and virtual currencies

The Commodity Futures Trading Commission (CFTC) has issued a statementby CFTC commissioner Brian Quintenz on the Virtual Commodity Association (VCA), a working group that will work towards establishing an industry-sponsored self-regulatory organisation (SRO) for the US virtual currency industry and specifically virtual commodity marketplaces. Mr Quintenz said that an independent and empowered SRO-like entity could have a meaningful impact on the integrity and credibility of the crypto platform community.

Dates for your diary

Date Subject Event
24 August 2018 Insurance Deadline for responses to PRA public working draft (PWD) of the standalone National Specific Templates (NSTs) and standard formula reporting for firms with an approved internal model (SF.01) taxonomy, alongside related technical artefacts, that will make up part of the Bank’s insurance XBRL taxonomy.
28 August 2018 Insurance Deadline for responses to IAIS consultation on revised ICP 6 and 20.
28 August 2018 Authorisation, approval and supervision The FCA will hold an open demonstration and Q&A session to provide attendees with an opportunity to understand the technological, governance and legal decisions made throughout the pilot on digital regulatory reporting, and allow an opportunity to critique and review the work. Email regtech@fca.org.uk if you would like to attend.
29 August 2018 Markets and trading Deadline for responses to IOSCO’s call for feedback on proposed good or sound practices to assist relevant storage infrastructures and their oversight bodies to identify and address issues that could affect commodity derivatives’ pricing and in turn affect market integrity and efficiency.
30 August 2018 European Market Infrastructure Regulation Deadline for responses to ESMA ‘Consultation Paper Clearing Obligation under EMIR (no. 6) (ESMA70-151-1530)’.
30 August 2018 Insurance technology Deadline for responses to IAIS consultation of draft Issues Paper on the Increasing Use of Digital Technology in Insurance and its Potential Impact on Consumer Outcomes

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