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 Lexis®PSL Financial Services team for the week ending 30 March 2017.
On 21 March 2017, the government responded to the first report of the Exiting the EU Select Committee, which was published on 14 January 2017, saying it is aware of the importance of the financial services sector to the UK economy, and that it aims to maintain the City's leading position as one of the key centres of global finance.
On 22 March 2017, the European Union’s chief negotiator on Brexit, Michel Barnier, gave a speech at the plenary session of the European Committee of the Regions stressing the importance of reaching an agreement with the UK and setting out what he sees as the conditions for success. He expresses solidarity with the British authorities and citizens and says the EU is determined to reach an agreement on an orderly withdrawal for the UK and to prepare the way for a new partnership, and warns that both the UK and the EU would be ‘seriously affected’ in the event of non-agreement: ‘This scenario of a non-agreement, this no-deal scenario, is not ours’.
On 24 March 2017, in an update to its Brexit Papers, the Bar Council Brexit Working Group published a new paper on financial services, in which it has called on the government to aim for a bespoke agreement with the EU, replicating the status quo as far as possible and covering the gaps created by the loss of the passport regime. It warns that other mechanisms used by countries outside the EEA, such as the equivalence regime and the emergent third-country passport, will not fill the gaps created by the loss of the passport, and says WTO terms are not sufficiently developed in relation to financial services to suffice.
On 24 March 2017, the House of Commons Library updated its briefing paper on trade aspects of Brexit, adding in a new chapter covering trade with non-EU countries. Among other things, the new section five sets out which countries the UK has a trade relationship with as a member of the EU. It discusses the UK continuing to benefit from EU trade agreements after Brexit, and asks whether the UK can begin negotiations with non-EU countries pre-Brexit. It also considers the government’s priorities for new trade deals outside the EU.
On 27 March 2017, the chair and vice-chair of the supervisory board of the European Central Bank (ECB), Danièle Nouy and Sabine Lautenschläger, delivered opening addresses at the ECB Annual Report on supervisory activities for 2016 setting out views on banks’ stability, profitability and fragmentation issues.
On 27 March 2017, Price Waterhouse Coopers (PwC)/Confederation of British Industry (CBI) published their latest financial services survey which found that optimism about the overall business situation fell for the fourth consecutive quarter, the longest period of declining sentiment since the global financial crisis of 2008, and the sharpest fall since December 2008. A more pessimistic mood was particularly prevalent among banks, with general insurers and finance houses also less optimistic. However, investment managers, life insurers and insurance brokers were more optimistic than they had been three months earlier.
On 29 March 2017, Theresa May gave formal notification of the UK’s intention to withdraw from the EU under Article 50 of the Lisbon Treaty. On 29 March 2017, Sir Tim Barrow, UK’s permanent representative to the EU in Brussels, handed over a letter from the PM to Donald Tusk, the President of the European Council. Mr Tusk is expected to circulate a draft copy of the EU negotiating guidelines among the remaining 27 Member States over the next 48 hours. The guidelines will not be adopted formally until finalised at a special summit of the EU27 on 29 April 2017. Speaking in Parliament following the delivery of the letter, Ms May said leaving the EU presents the UK with a unique opportunity: 'It is this generation’s chance to build a better future'. Reports show businesses are confident and more optimistic about the long term outlook than initially expected. However, others remind that businesses are facing substantial change, with the UK leaving both the EU Single Market and the Customs Union. Lawyers too stress the importance of being prepared and having in place procedures to stave off any possible ill-effects. With a view to setting out some of the legislative and regulatory changes ahead, the government is due to publish a White Paper on the Great Repeal Bill on 30 March 2017. Several pieces of legislation are expected to follow in due course.
On 23 March 2017, the Financial Conduct Authority (FCA) appointed a new chair of its Smaller Business Practitioner Panel. Craig Errington, group chief executive of specialist financial mutual Wesleyan, becomes chair on 1 April 2017. He has been a member of the Panel since May 2013.
SI 2017/488: EU legislation is implemented in the UK to, among other things, ensure that operating an organised trading facility (OTF) is a regulated activity. Provision is also made that structured deposits are within the scope of certain specified activities. These changes come into effect in part on 1 April 2017 and in full on 3 January 2018. (Updated from draft on 29 March 2017).
SI 2017/400: Amendments were made to financial services legislation in consequence of insolvency reforms made by the Deregulation Act 2015 (DA 2015) and the Small Business, Enterprise and Employment Act 2015. Transitional provisions were also made.
On 24 March 2017, Ignazio Angeloni, member of the supervisory board of the ECB, spoke at the Università Bocconi in Milan about promoting European integration in the banking union. In his speech, he reflects on the origins and achievements of ECB banking supervision within the banking union, and outlines three broad challenges, which he says are among the most important ones facing banks and supervisors.
On 27 March 2017, the Consumer Credit Trade Association (CCTA) announced that the new trade association for the UK financial services sector will be named UK Finance.
On 29 March 2017, the European Securities and Markets Authority (ESMA) appointed two new members to its Management Board to replace two out of the three outgoing members whose mandates end on 31 March. ESMA also appointed João Sousa Gião, member of the Board of Administration of the Comissão do Mercado de Valores Mobiliários (CMVM) of Portugal to serve as the chair of the Supervisory Convergence Standing Committee.
On 24 March 2017, the Prudential Regulation Authority (PRA) opened a consultation on its fees and levies for 2017/18. The consultation closes on 24 May 2017. Feedback on the consultation and final rules will be published in a policy statement in June 2017.
On 28 March 2017, Transparency International EU has published a ‘a systematic overview of the European Central Bank’s integrity framework’, saying there is an ‘uneasy balance between independence and accountability’. The report says improvements are needed in how conflicts of interest are managed, and says the chair of its Ethics Committee should not be a former European Central Bank (ECB) President.
On 23 March 2017, the chair of the supervisory board of the ECB, Danièle Nouy, gave a wide-ranging interview to Latvian information agency LETA in which she said national supervisory authorities are co-operating ‘very smoothly’ and that dialogue with other countries outside the euro area is improving, since the Single Supervisory Mechanism benefits from the trust and reputation of the ECB.
On 23 March 2017, the chair of the supervisory board of the ECB, Danièle Nouy, presented the ECB annual report on supervisory activities 2016 to the European Parliament’s Economic and Monetary Affairs Committee. Ms Nouy also told the committee that the ECB’s priorities for 2017 were business models and profitability drivers, credit risk with a focus on non-performing loans and concentrations, and risk management.
On 23 March 2017, the chief economist at the FCA, Peter Andrews, gave a speech at ESMA on how individuals take decisions and what this implies for regulators’ remedies. Mr Andrews highlights that the central task of market regulators is to design remedies that ‘truly correct or, at least, offset market failures’, and that regulation designed to help financial markets allocate capital fairly and efficiently can do far more for economic growth and stability than is generally appreciated. Mr Andrews also spoke on culture and compliance in firms.
On 23 March 2017, following the ‘devastating fire’ of the financial crisis, the regulators have mended, strengthened and expanded banks, a senior ECB official told the Credit Risk 2017 forum in Vienna. Member of the executive board of the ECB and vice-chair of its supervisory board Sabine Lautenschläger said there was still more to do on banking regulation, but it had to be at a global level.
On 24 March 2017, the Basel Committee on Banking Supervision published overviews of actions taken by member jurisdictions following the Committee’s regulatory consistency assessment programme (RCAP) to address deviations from the Basel standards identified in their RCAP assessments. The reports cover those jurisdictions whose RCAP assessment reports were published by December 2015, namely: Australia, Brazil, Canada, China, the EU, Hong Kong SAR, India, Japan, Mexico, Saudi Arabia, Singapore, South Africa, Switzerland and the US.
On 24 March 2017, the European Commission published an inception impact assessment in connection with its review of the appropriate prudential treatment for investment firms. The objective of the review is to evaluate and, where necessary, revise the way in which capital, liquidity and other key prudential requirements apply to investment firms in the EU. Interested parties have four weeks to respond.
On 27 March 2017, the Bank of England (BoE) announced that the stress tests for 2017 will include two scenarios—the 2017 annual cyclical scenario and the 2017 biennial exploratory scenario. Alongside the annual cyclical scenario, the BoE is, for the first time, running an additional exploratory scenario. This represents an important step towards achieving the Bank's vision for stress-testing, which it set out in 2015.
On 27 March 2017, ESMA issued a research piece which provides a stock-take of the multi-trillion euro-large market for securities financing transactions (SFTs) in the EU, and firms' use of collateral haircuts. ESMA's research looks at the level and calculation methodologies of haircuts used in the EU by SFT market participants.
On 24 March 2017, the British Bankers’ Association (BBA) responded to the European Banking Authority’s (EBA) consultation on supervision of significant branches (EBA/CP/2016/24), saying the proposals provide a co-ordinated way to manage supervision of significant branches, better separation of responsibilities between different supervisors, an improvement in how resolution is approached for significant branches, and a rationalisation of reporting and the overall regulatory burden faced by firms operating across borders through branches.
On 28 March 2017, the Prudential Regulation Authority (PRA) issued a consultation paper 'Internal ratings based (IRB) approach: clarifying PRA expectations' (CP5/17), in which the PRA sets out proposed changes to Supervisory Statement (SS) 11/13 'Internal Ratings Based (IRB) approach'. The consultation closes on 28 June 2017.
On 27 March 2017, HM Treasury updated the special resolution regime (SRR) code of practice, which supports the legal framework of the SRR established under the Banking Act 2009 and provides guidance as to how and in what circumstances HM Treasury, the BoE, the PRA and the FCA will use the special resolution tools.
On 27 March 2017, the PRA published guidance for banks to support raising standards in stress test model development and management. The PRA says the board of directors and senior management of banks should not only aim to ‘provide challenge’ to stress test model outputs, but also understand the capabilities of stress test models, model limitations and the impact of model uncertainty on banks’ stress test results.
On 28 March 2017, the BoE published statistics which show the common equity Tier 1 (CET1) capital ratio for the UK banking sector in Q4 2016 was 15.1%. This represents an increase of 0.3 percentage points (pp) on the quarter and an increase of 1.1 pp on Q4 2015. The quarterly increase was due to a small increase in the level of CET1 capital and a small decrease in the level of total risk-weighted assets.
On 29 March 2017, the Basel Committee on Banking Supervision (BCBS) published its Pillar 3 disclosure requirements—consolidated and enhanced framework. This standard represents the second phase of the Committee's review of the Pillar 3 disclosure framework and builds on the revisions to the Pillar 3 disclosure published by the Committee in January 2015.
On 29 March 2017, the BCBS published details of the interim regulatory treatment of accounting provisions and standards for transitional arrangements. These measures are in response to the forthcoming international accounting standards on expected credit loss provisioning.
On 27 March 2017, the Institute of Directors (IOD) and Barclays published a report which found that only 56% of all companies in the UK have a formal strategy in place to protect their devices and data from a cyber attack. The IoD and Barclays have urged business leaders to step up their preparations ahead of the introduction of the new General Data Protection Regulation in May 2018, which will make companies more accountable for their customers’ data.
On 23 March 2017, the European Payments Council (EPC) published a 2016 Payment Threads Trends Report providing an insight to the latest developments on threats affecting payments and cybercrime. The report is designed to raise awareness and to allow stakeholders involved with payments to decide on possible actions they may wish to take. The report highlights a greater degree of professionalism in cybercrime, which increasingly attacks the financial services sector.
On 23 March 2017, the chair of the Treasury Committee, Andrew Tyrie MP, made public a 28 February letterwritten to the Chancellor of the Exchequer, Philip Hammond MP, about cybersecurity in the financial services sector, warning that the lines of responsibility and accountability for reducing cyber threats ‘remain opaque’.
On 24 March 2017, the Financial Action Task Force (FATF) published a summary of outcomes from the FATF private sector consultative forum, which was held in Vienna, 20-22 March 2017, including a dialogue on FinTech and RegTech. The Forum is an opportunity for the FATF and its members to engage directly with the private sector on anti-money laundering and counter-terrorist financing (AML/CFT) issues.
On 28 March 2017, HM Treasury published two quarterly reports on the operation of the UK’s Counter-Terrorist Asset Freezing Regime: one for April to June 2016, and one for July to September 2016.
On 27 March 2017, the European Commission adopted a Delegated Regulation (C(2017) 1951 final)amending Delegated Regulation (EU) 2016/1675, which supplemented the Fourth Anti-Money Laundering Directive (EU) 2015/849 (MLD4) by listing high-risk third countries with strategic deficiencies in their anti-money laundering (AML)/counter terrorist financing (CFT) regimes that pose significant threats to the financial system of the EU. Guyana has been deleted from the list and Ethiopia has been added.
On 28 March 2017, an agreement was reached between Tesco PLC and the Serious Fraud Office (SFO) following potential criminal liability for false accounting by Tesco PLC's subsidiary, Tesco Stores Limited. The agreement could result in a deferred prosecution agreement (DPA) becoming effective. Should the agreement be approved at a Crown Court public hearing on 10 April 2017, the company would face a fine of £128,992,500 plus the SFO’s full costs. The SFO said the potential DPA with Tesco Stores Limited does not address whether liability of any sort attaches to Tesco PLC or any employee or agent of Tesco PLC or Tesco Stores Ltd.
On 23 March 2017, the European Parliament’s Internal Market and Consumer Protection Committee (IMCO) approved draft legislation that would give national authorities enforcement powers to detect and halt online breaches of consumers’ rights across the EU. The draft rules would require EU Member States’ authorities to have a number of investigation and enforcement powers, including the ability to request information from banks to help them detect rogue traders.
On 24 March 2017, ESMA said that its recent report on trends, risks and vulnerabilities has revealed a 36% rise in complaints by financial consumers in the first half of 2016 against the previous six-month figure. Order execution generated the most complaints, and bonds and other debt securities were the most complained-about financial instrument.
On 24 March 2017, the Financial Services Compensation Scheme (FSCS) updated its guide to single customer view (SCV). Among other things, the compensation limit has been changed to reflect the increase from £75,000 to £85,000.
Following the issue of corrigenda to Commission Delegated Regulations published on 20 and 21 March 2017, the European Commission issued corrigenda to a further three Commission Delegated Regulations supplementing the Markets in Financial Instruments Directive 201/65/EU (MiFID II) and the Markets in Financial Instruments Regulation 2014/600/EU (MiFIR).
On 23 March 2017, ESMA published the official translations of its final guidelines on the validation and review of Credit Rating Agencies (CRAs) methodologies.
On 22 March 2017, the deputy governor of the Reserve Bank of Australia, Guy Debelle, told the TradeTech FX Asia Conference that the FX global code is on track to be released at the end of May 2017. Mr Debelle said the Code sets out global principles of good practice in the foreign exchange market to provide a common set of guidance to the market, including in areas where there is a degree of uncertainty about what sort of practices are acceptable. ‘This should help to restore confidence and promote the effective functioning of the wholesale FX market'.
On 23 March 2017, ESMA published a final report on participant default rules and procedures under Regulation (EU) 909/2014, containing two sets of guidelines regarding the implementation of Article 41(4) of the Central Securities Depositary Regulation (EU) 909/2014 (CSDR). The CSDR harmonises the settlement of securities by providing a set of common requirements for central securities depositories (CSDs) operating securities settlement systems. The guidelines will enter into force two months after the publication of their translations into all official languages of the EU on ESMA’s website.
On 23 March 2017, the European Parliament's Committee on Economic and Monetary Affairs (ECON) published correspondence with the European Commission about the potential use of broker crossing networks to circumvent the share trading obligations of MiFID II. In its response to ECON, the Commission says that it will work with ESMA and national regulators to address the issue.
On 23 March 2017, ECON adopted a report on the European Commission’s proposal for a regulation amending Regulation (EU) 345/2013 on European venture capital funds and Regulation (EU) 346/2013 on European social entrepreneurship funds. The report includes amendments to the Commission’s proposal, which is intended to make the original legislation more effective as part of the Capital Markets Union action plan.
On 24 March 2017, the European Commission published a report ‘Accelerating the capital markets union: addressing national barriers to capital flows’, setting out its proposals to further build on its work to create the capital markets union (CMU). The report examines the causes and possible solutions to factors hindering cross-border investment. It highlights areas where action is needed at national level to set up the ‘clear, predictable and stable environment’ that will allow for more investment and a more efficient allocation of capital, to boost financing of business and infrastructure.
On 28 March 2017, the BCBS published its latest progress report on banks’ implementation of the principles for effective risk data aggregation and reporting. The principles, issued in January 2013, aim to strengthen banks’ risk data aggregation and risk reporting practices to improve their risk management, decision-making and resolvability. They are applicable to firms designated as globally systemically important banks (G-SIBs). The report finds that, while some progress has been made, most G-SIBs have not fully implemented the principles and the level of compliance with the principles is unsatisfactory.
On 28 March 2017, the FCA announced that it had, for the first time, used its powers under section 384 of the Financial Services and Markets Act 2000 (FSMA 200) to require a listed company to pay compensation for market abuse. Tesco will compensate shareholders in relation to a trading update published on 29 August 2014, which gave a false or misleading impression about the value of publicly traded Tesco shares and bonds. Total compensation could reach £85m.
On 29 March 2017, the European Commission announced that registration had opened to its public hearing on the CMU mid-term review in Brussels on 11 April 2017.
On 27 March 2017, the Investment Association (IA) launched a public consultation on the standardisation of disclosure for charges and transaction costs. The consultation sets out an industry code, which provides a blueprint for the reporting of charges and transaction costs using a consistent approach across the market and in line with regulatory requirements. The closing date for consultation responses is 19 May 2017.
On 27 March 2017, HMRC updated its guidance notes for managers of individual savings accounts (ISAs). The notes provide general guidance on how to operate the ISA scheme and replace the previous version issued in April 2016.
On 27 March 2017, the FCA announced on its national private placement regime (NPPR) web page that it has updated its NPPR notification forms. The NPPR principally relates to the marketing of non-EEA alternative investment funds (AIFs) and any AIFs managed by non-EEA alternative investment fund managers (AIFMs).
On 23 March 2017, the European Commission published an action plan setting out its strategy to strengthen the EU single market for retail financial services. The action plan seeks in particular to harness the potential of developments in financial technology (FinTech) to improve consumer access to financial services across the EU.
On 25 March 2017, in calling on the FCA and banks to give greater priority to tackling financial exclusion, the Select Committee on Financial Exclusion made several recommendations for combating this issue.
On 25 March 2017, the Lending Standards Board (LSB) made changes to the voluntary code of practicecovering lending to small business customers followed by the main providers of loans, overdrafts, credit cards and charge cards. The new Standards of Lending Practice for business customers, which replace the Lending Code, extend protections beyond micro-enterprise customers to small businesses with a turnover of up to £6.5m.
On 28 March 2017, the Competition and Markets Authority (CMA) published notice of its determination of exceptions to the application of the Retail Banking Market Investigation Order 2017 (the Order). Applications for exceptions under art 5 of the Order were submitted to the CMA by Lloyds Banking Group (Lloyds), RBS Group (RBS) and Santander.
On 23 March 2017, as part of its 21st century trustee initiative, the Pensions Regulator (TPR) clarified its expectations by publishing a revised description of a professional trustee for consultation. The consultation also covers TPR’s draft policy for monetary penalties. Responses should be submitted by 9 May 2017.
On 27 March 2017, Insurance Europe released financial education recommendations on how best to boost financial literacy in Europe. The publication, launched as part of the annual global financial awareness campaign for children and young people, 'global money week', suggests practical steps that can be taken. For example, it calls on the European Commission to promote the adoption of national financial education strategies in EU Member States, as well as for the incorporation of financial literacy components into school curricula.
On 27 March 2017, TPR published its innovation and regulation plan, which sets out how it is working to support innovation and disruptive business models, and how it is using innovation to deliver its work more effectively.
On 28 March 2017, the Association of British Insurers (ABI) published a speech given by its director general, Huw Evans, at the FCA Project Innovate: InsurTech Forum. Mr Evans said he felt positive about the opportunities posed by InsurTech for customers, the insurance sector’s reputation and the sector’s ability to meet its wider social and economic purpose.
On 23 March 2017, the Payment Systems Regulator (PSR) announced that American Express and the payment service providers participating in its scheme will be subject to interchange fee caps on UK domestic transactions from 1 April 2017 to 31 March 2018. The interchange fee caps do not apply to transactions where American Express is both the card-issuer and the acquirer.
On 23 March 2017, the European Commission published a consultation paper which seeks stakeholders’ perspectives on the impact of new technologies on the European financial services sector, both from the perspective of providers of financial services and consumers. The consultation, ‘FinTech: a more competitive and innovative European financial sector’ and its accompanying privacy statement, seek input to further develop the Commission’s policy approach to technological innovation in financial services. Responses are invited by the 15 June 2017.
On 24 March 2017, following its November 2016 consultation, the PSR published a decision confirming that it will adopt its proposed approach to the allocation of the money retained from financial penalty receipts. The PSR will use the money to reduce the amount it collects from payment service providers (PSPs) who pay regulatory fees in the following fees year.
On 27 March 2017, Sabine Lautenschläger, member of the executive board of the ECB and vice-chair of the supervisory board of the ECB, made a statement at the ECB Fintech Workshop in Frankfurt. Ms Lautenschläger discusses how fintechs are on the rise but still only account for a small share of the markets for banking, payment services and asset management. Despite this, they are competing with banks in some parts of the value chain.
On 27 March 2017, the PSR released minutes of two meetings (7 March 2017 and 14 March 2017)of the Payment System Operator (PSO) Delivery Group. The group is working on the design of the National Payments System Operator (NPSO).
On 29 March 2017, the PSR published its annual plan and budget for 2017/18, setting out its aims with a summary of anticipated activities and expected costs for the next twelve months. The PSR says the past year has seen progress in competition and innovation in payment systems, and in the year ahead it aims to build on that success.
 UKSC 24
The Supreme Court dismissed an appeal by Capita Insurance Services Ltd (Capita), which concerned the true construction of an indemnity clause in a sale and purchase agreement (SPA), entered into by the parties for the purchase of the shares in a company by Capita. Capita had claimed, under the indemnity clause, in respect of compensation paid to customers who had allegedly been mis-sold insurance products or services by the company. The court held that, on the approach to contractual interpretation, Rainy Sky SA v Kookmin Bank  1 All ER 1137 and Arnold v Britton  1 All ER 1 were saying the same thing and that, on the true construction of the clause, and in circumstances where the indemnity clause fell to be assessed in the context of time-limited warranties, the Court of Appeal, Civil Division, had been correct in declaring that the indemnity, under the clause, was confined to loss that arose out of a claim or complaint that had been registered with the Financial Services Authority.
TP 2 2.3
In summary, this instrument makes changes to create rules in the Handbook that will enable the FCA to cap early exit pension charges in new and existing stakeholder personal pensions. Feedback to this consultation was published in a separate Policy Statement (PS16/24) in November 2016.
technical advice for fees for registration, recognition and supervision of Trade Repositories under the SFTR
the review of the technical standards on authorities accessing Trade Repository data
Free trials are only available to individuals based in the UK
* denotes a required field
0330 161 1234