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 29 March 2018.
The Bank of England (BoE) and the Financial Conduct Authority (FCA) have each separately provided updates on their respective approaches to preparations for EU withdrawal. Both the BoE update and the FCA update welcome the agreement between the UK and EU27 that there should be an implementation period until the end of 2020 as part of the UK's withdrawal agreement with the EU.
The Exiting the European Union Committee spoke to representatives from the legal, banking and insurance and financial services industries in Leeds on 22 March 2018 as part of its ongoing inquiry looking at the progress of the UK's negotiations on EU withdrawal.
The British Insurance Brokers’ Association (BIBA) reached an agreement with the Worldwide Broker Network (WBN) which will facilitate the introduction of BIBA member firms to a WBN member firm in an EU state so that they can continue to work with EU-based clients. BIBA said the agreement would provide some certainty and continuity to BIBA members and their EU clients in the absence of a trade agreement providing access to the single market.
Following the conclusion of the EU Summit on 23 March 2018, the chief executive of the Association for Financial Markets in Europe (AFME), Simon Lewis, welcomed the steady progress being made towards Phase 2 of the Brexit negotiations and the political agreement on a transition period.
The Treasury Select Committee published a letter to Nicky Morgan, the committee chair, from the chief executive of the FCA, Andrew Bailey, following up on a number of issues that were raised at a hearing on 7 February 2018. These include the FCA's proposals to expand access to the Financial Ombudsman Service (FOS) to small and medium-sized enterprises (SMEs), and whether the 'failure to prevent' offence model should be extended.
The Council of the EU published an 'I/A' item note inviting its Permanent Representatives Committee (COREPER) to approve draft Council conclusions relating to the European Court of Auditors special reports entitled 'Single Resolution Board: Work on a challenging Banking Union task started, but still a long way to go' (No 23/2017) and 'The operational efficiency of the European Central Banks’s (ECB) crisis management for banks' (No 2/2018).
The European Commission hosted a high-level conference on its strategy to reform the financial system in support of the EU's climate and sustainable development agenda. The Commission said the event was an opportunity to maintain the momentum established at the One Planet Summit, cementing the support and commitment of EU leaders and key private players for the changes needed in the financial system and the economy.
The director of supervision—investment, wholesale and specialists at the FCA, Megan Butler, said that diversity is a key supervisory issue for the FCA. Speaking at the Women in Finance Summit in London, she said that firms should consider setting targets to achieve gender diversity.
In September 2017 the government asked leading finance expert and former Mayor of London Sir Roger Gifford to chair an independent taskforce to accelerate the growth of green finance and the UK's low carbon economy. This became the Green Finance Taskforce, which has now set out a series of recommendations in an independent report looking at how the government and the private sector can work together to make green finance an integral part of the UK's financial services.
Sabine Lautenschläger, a member of the executive board of the ECB and vice-chair of the ECB’s supervisory board, said that regulation and supervision need to be aligned in order to make banks safe and sound, and to avoid future crises.
The ECB published its annual report on its supervisory activities in 2017. Introducing the report, the President of the ECB, Mario Draghi, gave a summary of steps taken by the ECB over the last ten years since the financial crisis that have helped to build an integrated banking market across Europe, which has contributed to financial stability over the last five years.
The Basel Committee on Banking Supervision (BCBS) published an outline of discussions at its meeting on 15-16 March 2018 in Basel. At the meeting, the BCBS discussed its current policy work as well as its work programme for the coming year. Priorities include implementation of its standards and initiatives to promote strong supervision. It also announced it will publish summaries of each meeting in future.
The Prudential Regulation Authority (PRA) launched a consultation seeking views on the eligibility of guarantees as unfunded credit protection. The proposed changes aim to clarify what contracts are eligible to be treated as guarantees for credit risk mitigation under the Capital Requirements Regulation (CRR). The consultation ends on 16 May 2018.
The BCBS is consulting on changes to the minimum capital requirements for market risk, in order to address issues that it has identified in the course of monitoring the implementation and impact of the standard, which was issued in January 2016. Feedback is sought by 20 June 2018. The BCBS also updated its frequently asked questions (FAQs) on market risk capital requirements and the Basel III standardised approach for measuring counterparty credit risk exposures.
The BCBS released a technical amendment on additional Pillar 3 disclosure requirements for those jurisdictions implementing an expected credit loss (ECL) accounting model as well as for those adopting transitional arrangements for the regulatory treatment of accounting provisions. The deadline for comments is 4 May 2018.
The ECB published for consultation the first chapter of its guide to internal models. The guide is intended to ensure a common and consistent approach to the most relevant aspects of the applicable regulation on internal models for banks directly supervised by the ECB. The ECB will hold a public hearing on 18 April 2018 as part of this consultation, which ends on 28 May 2018.
The economic secretary to the Treasury, John Glen, wrote to the chair of the Commons European Scrutiny Committee, Sir William Cash, and the chair of the Lords European Union Committee, Lord Boswell of Aynho, outlining the government’s position on the European Commission’s banking risk reduction package.
The European Banking Authority (EBA) updated the list of regional governments and local authorities that may be treated as central governments for the calculation of capital requirements, in accordance with the CRR.
The European Parliament’s Economic and Monetary Affairs Committee (ECON) published a review of the 2017 supervisory review and evaluation process (SREP) results. The report concludes that there is not enough public data to assess the capital market implications of the SREP, but suggests that the information provision could be improved.
The European Parliament published a briefing note for the chair of the supervisory board of the ECB, Danièle Nouy, who is to present the Single Supervisory Mechanism (SSM) annual report 2017. The European Parliament had received an advance copy of the report that was under embargo until 26 March 2018, and as such the briefing note does not refer to the annual report.
The Bank of England (BOE) published a record of the Financial Policy Committee (FPC) meeting held on 12 March 2018.
The chair of the Bank for International Settlements' Financial Stability Institute, Fernando Restoy, calledon the EU to develop a harmonised insolvency regime for financial institutions. Speaking at the International Association of Deposit Insurers' Europe Regional Committee in Naples, he said that such a regime should not just focus on large, complex institutions, but also be able to manage the crises of small and medium-sized institutions to which the common resolution framework does not apply.
The FCA issued final guidance (FG) 18/2 and a policy statement (PS) 18/7 on staff incentives, remuneration and performance management in consumer credit firms.
The chair of the supervisory board of the ECB, Danièle Nouy, called on European banks to improve and adapt their governance frameworks in order to cope with the challenges of low profits, new technologies and competition, and stronger regulation and supervision.
The FCA issued a guidance consultation on Proposed guidance on financial crime systems and controls: insider dealing and market manipulation. The FCA proposes to add a chapter on insider dealing and market manipulation to the Financial Crime Guide and to make miscellaneous changes to reflect recent regulatory changes to ensure the guide remains up to date. The closing date for comments is 28 June 2018.
Following the G20 summit in Buenos Aires on 19-20 March 2018, the finance ministers and central bank governors of the G20 countries issued a communiqué in which they call for crypto-assets to be subject to international standards on anti-money laundering and combating the financing of terrorism and proliferation (AML/CFT). They also commit to implement the Basel III reforms and to address the decline in correspondent banking relationships.
Alex Hope been sentenced to 16 months’ imprisonment for perverting the course of justice. The charge related to his conduct following the imposition of a restraint order in 2012 and a confiscation order in 2016 arising from criminal proceedings brought by the FCA.
The International Chamber of Commerce (ICC) partnered with the Wolfsberg Group and the Bankers Association for Finance Trade (BAFT) to set guidelines and offer recommendations for governments and the private sector to combat trade-based money laundering (TBML) schemes. Describing TBML as ‘one of the least understood financial crimes’, the three organisations have collaborated on a short awareness-raising video, which supplements their 2017 publication on trade finance principles.
The FCA published Handbook Notice No. 53, which includes changes to the FCA Handbook made by the FCA board on 22 February and 22 March 2018, together with feedback on consultations that will not have a separate policy statement. It also describes changes made by the Board of the FOS to its rules and standard terms on 7 March 2018, with the approval of the FCA board.
The EBA launched a consultation on extending the scope of the Joint Committee (JC) Guidelines on complaints-handling to payment initiation service providers (PISPs) and account information service providers (AISPs) under the revised Payment Services Directive (EU) 2015/2366 (PSD2) and credit intermediaries and non-credit institution creditors under the Mortgage Credit Directive 2014/17/EU (MCD). The extension will provide consumers with the same level of protection irrespective of which regulated product or service they are purchasing and which regulated institution they are purchasing it from. The closing date for responses is 27 May 2018.
The FCA won its High Court case against Capital Alternatives Limited and others. The case concerned four unauthorised collective investment schemes (CISs) which were unlawfully promoted to the public by false, misleading and deceptive statements. Capital Alternatives Limited, Renwick Haddow, Marcia Hargous, Robert McKendrick and others were ordered to pay a total of £16.9m in restitution for their roles.
The chief executive of the FCA, Andrew Bailey, wrote to the chair of the Treasury Committee, Nicky Morgan MP, regarding the proposals for the treatment of preference shares that were announced by Aviva plc on 8 March 2018.
The chief ombudsman and CEO of the FOS, Caroline Wayman, wrote to the chair of the Treasury Committee, Nicky Morgan MP, responding to concerns raised by Channel 4’s Dispatches programme regarding the FOS’s decision-making and governance, and promising to launch an independent review.
The FOS published its latest six-monthly complaints data on individual business and groups. The data features complaint numbers about banks, insurance companies and other financial businesses received by the ombudsman service between 1 July and 31 December 2017.
The European Securities and Markets Authority (ESMA) published its final report on proposed amendments to Commission Delegated Regulation (EU) 2017/587 to clarify that, for equity instruments subject to the minimum tick size regime under Commission Delegated Regulation (EU) 2017/588, systematic internaliser (SI) quotes would only be considered to reflect the prevailing market conditions where those quotes reflect the price increments applicable to EU trading venues trading the same instruments.
The EBA and ESMA published official translations of their joint guidelines on assessing the suitability of members of management bodies and key function holders, in line with the Capital Requirements Directive (CRD IV) and the Markets in Financial Instruments Directive (MiFID II).
ESMA published lists of trading venues and central counterparties (CCPs) that benefit from a transitional exemption from the access provisions under Articles 36(5) and 54(2) of the Markets in Financial Instruments Regulation (MiFIR):
ESMA updated its Q&As on MiFID II and MiFIR regarding commodity derivatives topics. The Q&S cover position limits and position reporting.
ESMA included seven new or updated items in its Q&As on the implementation of investor protection topics under MiFID II and MiFIR. The new Q&As provide guidance on inducements, research, post-sale reporting, costs and charges information, and other issues.
ESMA updated its Q&As regarding transparency and market structures issues under MiFID II and MiFIR.
ESMA published a compliance table indicating which competent authorities comply or intend to comply with ESMA's guidelines on the management body of market operators and data reporting services providers (DRSPs) under MiFID II. The guidelines were published on 28 September 2017 and applied from 3 January 2018.
The Department for Exiting the European Union (DexEU) published an explanatory memorandumprepared by HM Treasury on two EU legislative proposals—a regulation on European crowdfunding service providers (ECSPs) for business and a related amendment to MiFID II.
ESMA published guidelines on how trade repositories (TRs) should calculate derivative positions under Article 80(4) of the European Market Infrastructure Regulation (EU) 648/2012 (EMIR).
ESMA published two consultation papers on draft technical standards implementing the Securitisation Regulation, which were published in the Official Journal of the EU on 28 December 2017:
The consultations are open for feedback until 23 May 2018.
The European Commission adopted a proposal for a decision of the Council of the EU to amend Annex IX (Financial Services) to the Agreement on the EEA Agreement in order to incorporate delegated and implementing regulations related to EMIR.
ESMA updated its Q&As regarding the implementation of the Benchmarks Regulation. The Q&As include one new answer on the requirements applicable to supervised contributors during the transitional period.
ESMA published its final guidelines on how to report internalised settlement under the Central Securities Depositories Regulation (CSDR). ESMA clarifies the scope and process of internalised settlement reporting as well as the exchange of information between ESMA and national competent authorities (NCAs), who will receive the data from reporting entities.
ESMA updated its Q&As on the implementation of the Central Securities Depository Regulation (CSDR). The updated Q&As provide guidance on central securities depository (CSD) links and communication with participants and other market infrastructures.
ESMA updated its Q&As on the implementation of the Market Abuse Regulation. The purpose of the Q&A document is to promote common supervisory approaches and practices in the application of MAR and its implementing measures.
ESMA updated its Q&As on prospectus-related issues, to include a new Q&A on profit forecasts. It clarifies how to identify profit forecasts in the context of prospectuses, notably by explaining the definition included in the Prospectus Regulation No 809/2004 and by providing examples on what may or not constitute a profit forecast.
ESMA published a consultation paper with proposed supplementary guidance on the application of the endorsement regime. This consultation follows on from the updated guidelines on endorsement published in November 2017. The deadline for responses is 25 May 2018.
The Financial Stability Board (FSB) is seeking responses from financial institutions and other reporting entities on issues they may face with legal barriers to the reporting of full transaction information about over-the-counter (OTC) derivatives. The feedback will provide input to the FSB’s ongoing work to evaluate the extent to which its member jurisdictions have met their commitments to remove such legal barriers. Replies are sought by 25 April 2018.
The Futures Industry Association (FIA) published eight sets of contractual indirect clearing terms to help clearing firms document indirect clearing arrangements under MiFIR and EMIR. Developed by FIA with Clifford Chance and member firms, the FIA Indirect Clearing Terms (ICTs) supplement contractual terms based on either the 2011 Professional Client Agreement or the soon-to-be-launched 2018 Terms of Business.
The BoE published its Quarterly Bulletin for 2018 Q1, which includes an article presenting analysis based on the BoE's new Sterling Money Market data collection, as well as a report on a November 2017 conference on the interactions of monetary, financial and prudential policies in a post-crisis world. The BoE also provided an update on the statistical characteristics of the Sterling Overnight Index Average (SONIA) benchmark.
The European Commission is seeking feedback on a roadmap for its proposed communication to the European Parliament and the Council on measures that can be taken to support local and regional capital market development across the EU. The deadline for comments is 18 April 2018.
AFME published its responses to a consultation launched by ESMA on draft regulatory technical standards (RTS) under the new Regulation (EU) 2017/1129 (the Prospectus Regulation).
Commission Delegated Regulation (EU) 2018/480 of 4 December 2017 supplementing Regulation (EU) 2015/760 of the European Parliament and of the Council (European Long-term Investment Funds (ELTIFs) Regulation) with regard to RTS on financial derivative instruments solely serving hedging purposes, sufficient length of the life of the ELTIFs, assessment criteria for the market for potential buyers and valuation of the assets to be divested, and the types and characteristics of the facilities available to retail investors was published in the Official Journal of the EU.
The Competition and Markets Authority (CMA) published a consultative working paper on asset manager product recommendations as part of its ongoing investment consultants market investigation. The CMA said it found no evidence that recommended products outperform their benchmarks net of asset management fees. The deadline for comments is 5 April 2018.
The Council of the EU published an 'I/A' item note inviting COREPER to consult the European Economic and Social Committee on the Commission's 12 March 2018 proposal for a Directive amending Directive 2009/65/EC and Directive 2011/61/EU with regard to cross-border distribution of collective investment funds.
The Islamic Financial Services Board (IFSB) published consultation covering three exposure drafts for a two-month public consultation covering standards in Islamic banking, Islamic capital markets and Islamic insurance. The IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services, academics, and interested members of the public. Feedback is sought by 28 May 2018.
The FCA published a webpage on upcoming changes to audit requirements for registered societies. On 6 April 2018 new legislation comes into effect amending parts of the Co-operative and Community Benefit Societies Act 2014. The changes amend the levels at which a society must appoint a qualified auditor to audit their accounts.
The CMA revoked the directions which it issued to the Co-operative Bank on 2 August 2017 to ensure compliance with Part 7 of the Retail Banking Market Investigation Order 2017, on confirmation by the Co-operative Bank that it has met the requirements of the directions.
In Bankia SA v Juan Carlos Marí Merino and others (Case C-109/17), Advocate General Nils Wahl has given an opinion on the impact of the Unfair Commercial Practices Directive 2005/29/EC (UCPD) on mortgage enforcement proceedings and traders' codes of conduct. The opinion was given in response to a request for a preliminary ruling from the Court of First Instance No 5, Cartagena, Spain.
To mark the fourth anniversary of the FCA taking responsibility for regulation of consumer credit, the FCA posted a video on its website in which CEO Andrew Bailey talks about the changes the regulator has made and its ‘continuing commitment to ensuring that the consumer credit market meets the needs of society’.
The Financial Conduct Authority (FCA) published the findings of a review that it undertook of the non-advised drawdown pension sales market. The FCA assessed a sample of non-advised drawdown pension sales by firms covering approximately 74% of the market by sales volume for the period from April 2015 to April 2017. It looked at all forms of communication with customers, including written, telephone and online.
The FCA launched a consultation paper (CP18/7) on improving the quality of pension transfer advice. Feedback is sought by 25 May 2018. The FCA plans to publish a policy statement in autumn 2018. The FCA also published the feedback it received to CP17/16 in policy statement PS18/6.
In its response to the consultation on overseas pension transfers and the advice requirement, the government says the advice requirement as applied to overseas transfers is largely working and does not require an easement.
The European Insurance and Occupational Pensions Authority (EIOPA) provided new guidance on how it will apply the updated representative portfolios for the calculation of the volatility adjustment to risk-free interest rates in 2018.
EIOPA published a consultation linked to corrections and amendments of the implementing technical standards (ITS) on reporting and disclosure under Solvency II. The aim of the proposed corrections and amendments is to improve the understanding of the current requirements, the consistent application of technical standards and facilitate reporting and disclosure, as well as improve the quality of the information reported and disclosed.
The Vice-President of the European Commission, Valdis Dombrovskis, gave the opening keynote speech at the public hearing on the Solvency II Directive in Brussels. The speech covered progress in building the capital markets union (CMU) and the steps being taken to complete in by 2019, the proposal to make targeted improvements to Solvency II, and the action plan for sustainable finance.
Insurance Europe (IE) updated its country fact sheets for Argentina, Brazil, India, Indonesia and Turkey, which highlight what IE perceives as protectionist measures in these jurisdictions. IE says the measures involved not only represent market access barriers for European (re)insurers, but can also adversely affect economic development in local markets, diminish the possibility of diversifying risk, and create significant local concentration risks in the event of a major loss event, such as a natural disaster.
IE published a briefing on the European Commission’s 2018 Solvency II review. The briefing sets out changes IE believes the Commission should make now, aspects that should not be changed, and aspects that should be addressed in the 2020 review. IE says the 2018 review provides the opportunity to remove disincentives for long-term investment from Solvency II and ‘enhance the ability of insurers to support the EU’s growth objectives’.
The Payment Systems Regulator (PSR) issued a statement on card schemes subject to domestic interchange fee caps in the UK in 2018. The PSR said American Express’s card transaction value had exceeded the 3% annual value of all card-based transactions made in the UK, taking it out of the Interchange Fee Regulation (IFR) exemption bracket.
The New Payment System Operator (NPSO) responded to the PSR’s January 2018 letter, in which the PSR set out its expectations for the outcomes and delivery of the NPSO's work on several key strategic payments initiatives. The letter includes a table with timelines for various projects it has been tasked with.
The PSR has published five compliance reports for 2017. The compliance reports cover:
The PSR has published two additional reports for 2017. The compliance reports cover Mastercard and VISA Europe.
The UK government is to form a new crypto-assets task force, take the next steps in ‘robo-regulation’, and form a UK-Australia ‘FinTech bridge', according to its first FinTech sector strategy. The plans were announced at the second International FinTech Conference, a day-long programme of talks and pitches promoting the opportunities for global investment in the UK FinTech sector.
The Chancellor of the Exchequer, Philip Hammond, launched the new UK FinTech sector strategy with a speech given at the second International FinTech Conference on 22 March 2018. Also speaking at the conference, the deputy governor for markets and banking at the BoE, Dave Ramsden, said that the BoE is 'open to FinTech'.
The ECB published two new guides explaining the application process and licensing requirements for banks in general and for FinTech credit institutions in particular. The publication follows the completion of a public consultation.
The Bank of England is undertaking a proof of concept (PoC) to understand how a renewed RTGS service could be capable of supporting settlement in systems operating on innovative payment technologies, such as those built on distributed ledger technology (DLT).
The ECB and the Bank of Japan (BoJ) published a joint report on Securities settlement systems: Delivery versus payment in a distributed ledger environment. The report is the outcome of the second phase of Project Stella, the joint study on distributed ledger technology (DLT) by the ECB and BoJ.
Sir Geoffrey Vos, chancellor of the High Court of England and Wales, said that the integrity of the UK's legal and financial system is essential to its success in the digital world. In a lecture delivered to the Banking Standards Board, Vos said that judges, lawyers and regulators need to work more closely with the financial services industry to ensure that there is adequate vigilance in the context of a rapidly changing financial environment.
The Future Industries Association (FIA) wrote to the Commodity Futures Trading Commission (CFTC) responding to the CFTC's proposed interpretation of how its rules apply to retail trading in bitcoin and other virtual currencies. FIA said any interpretation adopted by the CFTC should not inhibit innovation in new cash commodity markets or call into question customary practices in other cash commodity markets.
Free trials are only available to individuals based in the UK
* denotes a required field
Chris is a member of the New York Bar with more than two decades of experience as a financial services and capital markets lawyer in London. Before joining LexisNexis in 2016, Chris worked as a Senior Professional Support Lawyer at Linklaters LLP, supporting the firm’s market-leading Financial Regulation Group, with a particular focus on MiFID II. Chris also worked as Legal Analyst at Bloomberg, where he drafted analytical articles on EU, UK and US financial services law and regulation for Bloomberg journals and developed practical guidance content for the award-winning Bloomberg LAW legal research platform. Prior to that, Chris was a partner in the U.S. law group at Allen & Overy, advising issuers and underwriters on a wide range of capital markets and corporate finance transactions including SEC-registered and Rule 144A debt and equity offerings and mergers and acquisitions, as well as providing general U.S. securities law advice. He also co-founded the firm’s Microfinance Working Group and advised on a variety of matters including two landmark securitisations of loans to microfinance institutions.
Chris has written extensively on legal and regulatory issues for numerous publications and lectured on financial regulation, microfinance and capital markets.
0330 161 1234