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.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
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
Printer Friendly Version
Following a request by the European Commission and HM Treasury, the European Central Bank (ECB) and the Bank of England (BoE) are to convene a technical working group on financial services risk management in the period around 30 March 2019. This technical work will be separate from the ongoing negotiations on the withdrawal agreement between the EU and the UK and from the negotiations on the overall understanding of the framework for their future relationship.
The European Commission published a notice to stakeholders on the implications of Brexit for the rules in the field of institutions for occupational retirement provision (IORPs). As of the withdrawal date, IORPs registered or authorised in the UK will no longer benefit from the registration or authorisation under Directive (EU) 2016/2341 to provide services in the EU and will be treated as third-country undertakings, to which Directive (EU) 2016/2341does not apply.
Michel Barnier gave a speech at the Eurofi High-level Seminar 2018, in which he commented on the impact of Brexit on financial services. According to Mr Barnier, the EU has no intention to discriminate against the UK post-Brexit. However, if the UK intends to rely on equivalence to access the Single Market, it should avoid diverging from EU financial regulation.
The Financial Conduct Authority (FCA) published Handbook Notice No. 54, which includes changes to the FCA Handbook made by the FCA board on 22 March and 26 April 2018, together with feedback on consultations that will not have a separate policy statement (PS). It also describes changes made by the board of the Financial Ombudsman Service to the Handbook on 7 March 2018, which were approved by the FCA board on 22 March 2018.
The FCA updated its webpage on the Capital Alternatives litigation, the long-running case against African Land (also known as Agri Capital) and Reforestation Projects (also known as Capital Carbon Credits). The High Court handed down its judgment on 26 March 2018 and the defendants were found to have been responsible for setting up and operating the schemes. The Court also found that they had made false and misleading statements to investors in these four schemes. The defendants have been ordered to pay compensation of £17.9m.
The BoE launched a free educational resource—econoME—which explains how the economy affects people’s lives and aims to equip 11-16 year olds with some of the skills they need to make financial decisions. The materials also explain how the different components of the economy work together and the BoE’s role in the system.
The secretary general of the Financial Stability Board (FSB), Dietrich Domanski, set out a new era for the FSB in a speech on its planned work for 2018. Mr Domanski said that the FSB's work will pivot from its policy development agenda in recent years to 'dynamic implementation' in 2018 and beyond.
The European Parliament published a briefing on third-country equivalence in EU banking and financial regulation. It covers the latest regulatory developments on equivalence, including elements of the ongoing European Supervisory Authorities review, the Investment Firm Review, and EMIR 2.2 that are being discussed at Parliament and Council.
The European Supervisory Authorities (the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA)—ESAs) have concluded a multilateral memorandum of understanding (MoU) on co-operation, information exchange and consultation with the European Free Trade Association (EFTA) Surveillance Authority.
The European Commission and the European Stability Mechanism (ESM) signed a memorandum of understanding (MoU) on the working relationship and principles of co-operation between the two institutions. The MoU spells out the working methods between the Commission and the ESM in the light of experience and in line with their respective roles and mandates. It does not change the rules and the legal framework under which they operate.
The vice-president of the European Commission, Valdis Dombrovskis, made a speech at the press conference at the first informal Economic and Financial Affairs Council (ECOFIN) meeting in Sofia, Bulgaria. Mr Dombrovskis highlighted the discussions which had taken place at the ECOFIN meeting of 27 April 2018, primarily concerning the completion of the banking union and the capital markets union (CMU).
The European Securities and Markets Authority (ESMA) published its first liquidity assessment for bonds subject to the pre- and post-trade requirements of the Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR).
The ECB set the supervisory fees for 2018 at €474.8m. Along with a surplus of €27.7m carried over from 2017, the fees will cover the expected total supervisory expenditure for 2018 of €502.5m. Some 90% of the fees will be paid by significant banks and the remaining 10% by less significant banks.
The Prudential Regulation Authority (PRA) updated its supervisory statements (SS) and statements of policy (SoP) on the setting of Pillar 2 capital and the treatment of groups policy and double leverage. This SoP sets out the methodologies that the PRA uses to inform the setting of Pillar 2 capital for firms to which the Capital Requirements Directive IV applies. It was updated following PS8/18 ‘Pillar 2: Update to reporting requirements’. PS9/18 provides feedback on responses to consultation paper (CP) 19/17, Groups policy and double leverage.
The Prudential Regulation Authority (PRA) published policy statement PS7/18, providing feedback to the responses to consultation paper (CP) 26/17, on model risk management principles for stress testing. It contains the final supervisory statement (SS) 3/18 on the same subject. The PRA says that respondents were supportive of the model risk management principles for stress testing, but that respondents also asked for further clarification, guidance and alternative wording in some areas.
The European Banking Authority (EBA) launched a consultation on its guidelines on disclosure by credit institutions of information on non-performing exposures (NPEs) and forborne exposures. The guidelines specify the information related to NPEs and forborne exposures and foreclosed assets that banks should disclose, and provide uniform disclosure formats. Feedback is sought by 27 July 2018.
The General Court of the EU ruled that a person cannot at the same time be both chair of a board of directors and hold the position of ‘effective director’ in credit institutions which are subject to prudential supervision under the Capital Requirements Directive IV (2013/36/EU)(CRD IV).
The Single Resolution Board (SRB) said that the minimum requirement for own funds and eligible liabilities (MREL) will continue to be one of its key areas of work in 2018. In an update published on its website, the SRB said that it will develop its approach based on the current legislative framework, and strive to implement internal MREL for banking groups with resolution colleges during the 2018 planning cycle.
Mauro Grande, a board member of the Single Resolution Board (SRB), spoke to a special committee of the European Parliament about the recent failure of ABLV Bank, the impact that money laundering and related allegations can have on a bank's viability, and lessons learned for the SRB and bank supervisors.
The Single Resolution Board (SRB) welcomed the European Commission's proposals to reduce risks and make further progress towards completing the banking union. In a statement, however, the SRB identifies additional steps that will need to be taken before a fully-fledged banking union can be achieved.
The European Systemic Risk Board (ESRB) published a review of macroprudential policy in the EU in 2017. The review includes a broad outline of the national macroprudential measures that were adopted, or planned, in 2017, and three special features looking at specific structural developments in the banking sector and the implications for macroprudential policy, as well as the use of specific macroprudential instruments addressing both cyclical and structural risks.
The executive director of financial stability, strategy and risk at the Bank of England, Alex Brazier, gave a speech on hidden risks in financial markets, at the London Business School Asset Management Conference 2018.
HM Treasury published an update on the alternative remedies package (ARP), which has been agreed between the UK government and the European Commission to replace the original state aid commitment on the Royal Bank of Scotland (RBS) to divest its Williams & Glyn business. The Treasury has named the independent body which will implement and oversee the package.
Trade association UK Finance published FAQs on the General Data Protection Regulation (GDPR), which comes into force on 25 May 2018 and will replace the 1995 EU Data Protection Directive, which formed the basis for the 1998 Data Protection Act in the UK.
The ECB published the European Framework for Threat Intelligence-based Ethical Red Teaming (TIBER-EU). The TIBER-EU framework is the first Europe-wide framework for controlled and bespoke tests against cyber-attacks in the financial sector.
The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) was amended by the Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2018 to substitute the definition of ‘insurance distribution’ for ‘insurance mediation’.
The Foreign and Commonwealth Office (FCO) issued a policy note on exceptions and licences under the Sanctions and Anti-Money Laundering Bill. This sets out the policy that the government intends to adopt to exceptions to activities prohibited by sanctions, and the grounds for issuing licences, and demonstrates how this is likely to be used in relation to different types of sanctions.
The FCA published details of the number of skilled persons reports commissioned in Q4 2017. Of the five commissioned in Q4, none were commissioned under the FCA's power to contract directly with a skilled person. Four of the reports concerned financial crime and one concerned conduct of business.
The National Crime Agency (NCA) is to lead a pre-investigative evidential review into allegations of fraud concerning the then HBOS Impaired Assets Division, London and South East Region. The review will consider allegations that fell outside the scope of Operation Hornet, a Thames Valley Police investigation into allegations of fraud by former employees of this division of HBOS, which resulted in a number of convictions in 2017.
The FCA published policy statement PS18/9, on recovering the costs of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) from the bodies it supervises. The policy statement also contains feedback on the responses the FCA received to its consultation paper on the proposals (CP17/35). The paper applies to the professional body supervisors listed in Schedule 1 of the Money Laundering Regulations and bodies considering applying to be listed. It will also be of interest to designated professional bodies.
The FCA published the form and explanatory notes for applications to become a professional body anti-money laundering supervisor under the rules of the Office for Professional Body Anti-Money Laundering Supervision (OPBAS).
The Council of the EU published an information note (8058/18) from the General Secretariat of the Council of the EU to the Permanent Representatives Committee (COREPER) and the Council regarding the outcome of the European Parliament's first reading of the proposed Fifth Money Laundering Directive (2016/0208 (COD)) (MLD5), which occurred in Strasbourg from 16 to 19 April 2018.
The Council of the EU published the text of MLD5, which was adopted by the European Parliament on 19 April 2018. The text reflects the December 2017 agreement between the Council and the Parliament.
The Council of the EU published an I/A item note (8215/18) from the General Secretariat of the Council to the Permanent Representatives Committee (COREPER) on the adoption of the final compromise text of the proposed MLD5. The Secretariat also issued an additional I/A item note (8215/18 ADD 1) to COREPER and the Council commenting on Austria’s concerns about the proposed text of the Directive concerning the enhancement of transparency on beneficial ownership.
Members of the European Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) accused regulatory authorities of failing in their responsibilities after findings that banks in their charge have been involved in money laundering. During a public hearing on 26 April 2018, MEPs heard of instances of alleged money laundering at European banks, prompting calls for greater co-ordination between member states to combat the problem.
The House of Commons Library published a committee stage report on the Sanctions and Anti-Money Laundering Bill 2017-19. The Bill is now progressing to its final stages on 1 May 2018.
The president of the Financial Action Task Force (FATF), Santiago Otamendi, urged every jurisdiction to fully and effectively implement the FATF recommendations in order to counter terrorist financing. Speaking at an international conference on combating the financing of Daesh and Al-Qaeda, he said that many countries have laws and regulations in place but are not using them.
The FCA published a report containing feedback for 2017 from larger wholesale firms about their conduct risk programmes. The feedback forms part of the '5 Conduct Questions' programme which the FCA introduced in 2015 as a key part of its strategy for supervising wholesale banks.
At a meetingon 25 April 2018, the European Scrutiny Committee discussed included the proposed Covered Bonds Directive and related amendment to the Capital Requirements Regulation (CRR), and the proposed European Crowdfunding Service Providers (ECSP) Regulation and related amendment to MiFID II.
In response to a request under the Freedom of Information Act 2000, the FCA released data showing that the number of enforcement investigations opened by the FCA into company directors doubled between 2015 and 2017. The biggest increases were in the areas of culture and governance, as well as financial crime.
The Complaints Commissioner issued the final report on Complaint FCA00442, which related to the FCA's response to a report submitted by the complainant, at the request of the FCA, on professional indemnity insurance. The Commissioner found that the complainant's case was 'an example of the FCA's tendency—on which [the Commissioner has] had to comment before—of justifying the individual actions of its staff rather than placing itself in the shoes of the complainant and considering the cumulative effect of its actions'.
The BoE published feedback on the responses it received to its consultation on a new rule formalising the requirement for central counterparties (CCPs) to notify the BoE of certain incidents having an impact on their information technology systems. The BoE has decided to proceed as proposed, with the rule effective and binding on CCPs from 7 May 2018.
The Financial Stability Board (FSB) published a second consultation on the proposed governance arrangements for the unique product identifier (UPI). This second consultation, which follows an initial consultation in October 2017, sets out proposals for the governance arrangements for a global UPI, as a key harmonised identifier designed to facilitate effective aggregation of transaction reports from over-the-counter (OTC) derivatives markets. Feedback is sought by 28 May 2018.
The European Securities and Markets Authority (ESMA) asked the European Commission to clarify whether central counterparties (CCPs) can exempt certain clearing members (typically public entities such as governmental entities, central banks and supranational entities) from the obligations under Articles 41 and 42 of the European Market Infrastructure Regulation (EMIR) to provide the CCP with initial margins and default fund contributions.
The International Swaps and Derivatives Association (ISDA) has published an academic paper which analyses the regulatory initial margin (IM) framework for the non-cleared derivatives market. The academic paper, sponsored by ISDA, was written by the chair of mathematical finance at Imperial College London, Rama Cont.
The International Swaps and Derivatives Association (ISDA) published its latest Margin Survey, which shows a strong increase in the amount of initial margin (IM) held by the largest 20 market participants for their non-cleared derivatives trades. IM for those firms increased by 22% to US$130.6bn at the end of 2017, compared with US$107.1bn at the end of March 2017.
ICE Benchmark Administration Limited (IBA) has been authorised as a regulated benchmark administrator under the EU Benchmarks Regulation (Regulation (EU) 2016/1011) (BMR). The Financial Conduct Authority (FCA) granted authorisation on 27 April 2018.
ESMA issued the official translations of its guidelines on transfer of data between trade repositories (TRs). National competent authorities now have two months to notify ESMA whether they comply or intend to comply with the guidelines.
The European Central Bank (ECB) published the results of the March 2018 survey on credit terms and conditions in euro-denominated securities financing and over-the-counter (OTC) derivatives markets (SESFOD). The findings indicate that credit terms appear to be stabilising following the significant tightening observed in the past years. There was little change in the liquidity and functioning of markets.
The European Money Markets Institute (EMMI) published an update on the hybrid methodology for Euribor, which has entered a three-month testing period running from 2 May 2018 to 31 July 2018. EMMI will conduct an in-depth data analysis under a number of scenarios, and assess all methodological parameters, in order to ensure that the parametrical choices made by EMMI when developing the hybrid methodology for Euribor yield a robust and representative benchmark.
The Competition and Markets Authority (CMA) published three working papers as part of its investment consultants market investigation. The papers cover barriers to entry and expansion, financial performance and profitability, and the competitive landscape.
The chief executive of the FCA, Andrew Bailey, delivered a speech at the London Business School Annual Asset Management Conference in which he outlined some of the challenges facing the UK asset management sector, including Brexit and demographic changes. He also noted the impact of recent regulatory developments such as the FCA's asset management market study, MiFID II and the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPS), as well as technological advances.
The chief executive of the FCA, Andrew Bailey, delivered a speech on high-cost credit, saying the FCA has a responsibility to ensure there is a framework of rules that firms comply with which reduces the risk of consumer harm but allows the provision of credit where it is appropriate and affordable.
The Pensions Management Institute (PMI) republished an article by its president, Robert Branagh, on the possibility of a single UK pensions regulator. Mr Branagh said the February 2018 announcement by the FCA and the Pensions Regulator (TPR) that the two bodies would seek ways to collaborate ‘might one day be seen as a first step towards a single regulatory body’.
The European Insurance and Occupational Pensions Authority (EIOPA) published its Risk Dashboard for Q4 2017. It shows the risk exposure of the insurance sector in the EU remained stable, but despite positive macroeconomic developments, low interest rates are still a major source of risk for European insurers. Credit and market risks continued at a medium level.
Insurance Europe (IE) published a position paper in response to the European Commission consultation launched in February 2018 on the definition of small and medium-sized enterprises (SMEs). While acknowledging the value of having a common definition for genuine SMEs, IE said that, due to the specific nature of insurance products and the business model of insurers, the current definition does not achieve its aims for insurers.
The FCA made final rules to change how the Financial Services Compensation Scheme (FSCS) is funded. The FCA has merged the Life and Pensions and Investment Intermediation funding classes, and moved pure protection intermediation from the Life and Pensions funding class to the General Insurance Distribution class. It will also require product providers to contribute around 25% of the compensation costs which fall to the intermediation classes. The FSCS also announced its levy for 2018/19.
The Office for National Statistics (ONS) published an article on ‘Experimental financial statistics for insurance using Solvency II regulatory data: enhanced financial accounts (UK flow of funds)’. It provides the first set of experimental statistics on the financial assets and liabilities of the UK insurance sector based on data collected under Solvency II (SII).
The Association of British Insurers (ABI) released a new report with a five-point plan aimed at engaging consumers with their retirement options far earlier in their life than is currently the case.
The ABI published figures showing that the insurance industry paid out a record £5bn in protection claims in 2017, totalling 97.8% of all protection insurance claims. This amounts to nearly £14m a day paid out through products such as income protection, critical illness or life insurance.
The executive director of insurance supervision at the BoE, David Rule, gave a speech which considered the growth in large annuity transfers from back books, and from pension schemes.
The FCA published the final list of the most representative services linked to a payment account and subject to a fee within the meaning of Regulation 3 of the Payment Accounts Regulations. The move is part of the EU Payment Accounts Directive’s goal to improve the transparency and comparability of fee information in relation to payment accounts for consumers. Firms will be required to use the terminology in this list from 31 October 2018.
The Payment Systems Regulator (PSR) notified LINK of its reporting requirements, which includes the information it requires LINK to provide on a monthly basis. The PSR is monitoring the impact of LINK’s 31 January 2018 decision on ATM interchange fees, to ensure communities maintain access to free cash withdrawals.
Operational responsibility for the Bacs and Faster Payments systems, which process a combined £6.3 trillion worth of payments annually, has transferred to the New Payment System Operator (NPSO). This is intended to ensure the continuity of operations of the UK's main payment systems, which are relied on every day for thousands of salaries, benefits, bills, mortgage and other internet and mobile banking payments. Users of these payment systems will not have to do anything differently, as all payments are being processed as usual.
The ECB published the 2017 annual report on the TARGET2—Securities (T2S) system, covering the conclusion of the T2S migration phase, and setting out operational activity, financial matters and next steps. The report says the T2S migration was ‘one of the largest infrastructure projects ever launched by the Eurosystem’.
The director of competition at the FCA, Mary Starks, sitting on the panel at the Authority for Consumers and Markets Conference in the Netherlands, made a speech regarding blockchain technology and the potential risks it poses to competition and consumers.
0330 161 1234