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
Welcome to the weekly Financial Services highlights from the Lexis®PSL Financial Services team for the week ending 6 April 2017.
The main purpose of the Brexit negotiations will be to ensure the UK’s 'orderly withdrawal', the Council of the European Union emphasised in draft negotiating guidelines. The guidelines call for a phased approach to negotiations that ensures as much clarity and legal certainty as possible to 'citizens, businesses, stakeholders and international partners'. The Council has confirmed settling the status of EU and UK citizens will be a matter of priority. The guidelines also emphasise that negotiations seek to prevent a 'legal vacuum' for EU businesses trading with the UK. A financial settlement to settle the UK’s legal and budgetary commitments will be sought.
On 31 March 2017, an inquiry into the EU sanctions regime post-Brexit was launched. How co-operation between the EU and UK on sanctions policy will occur following Brexit is one of the key issues in a the new EU External Affairs Sub-Committee inquiry. The inquiry will also look into the advantages of such co-operation and how the current sanctions regime is to be transposed into UK law. The committee will hold oral evidence sessions for the inquiry in April and May 2017.
On 31 March 2017, the House of Lords Library published a briefing note on the World Trade Organisation (WTO), which provides an overview of the WTO and considers how the UK would trade with the EU under WTO terms, if the UK left the EU without a trade deal. According to the note, the UK would need to negotiate a new set of schedules and the government has indicated that it will seek to replicate existing schedules where possible.
On 5 April 2017, following the UK government’s decision to trigger Article 50 at the end of March 2017, the Association for Financial Markets in Europe (AFME) published a new report, ‘Implementing Brexit: practical challenges for wholesale banking and capital markets in adapting to the new environment’. In the report, AFME outlines the implementation issues facing wholesale banks, their clients and supervisory authorities.
On 30 March 2017, the Financial Conduct Authority (FCA) published Handbook Notice 42, listing changes made by the Board on 30 March 2017. It also includes feedback on several consultations, which will not have a separate Policy Statement.
On 31 March 2017, the FCA published the 17th edition of its Primary Market Bulletin (PMB), in which it addresses the feedback received from its 2014 call for views on sponsor conflicts and proposes some changes to its guidance for sponsors on identifying and managing sponsor conflicts of interests. It also discusses some recent consultations and other developments and provides an update on the Debt market forum report.
On 3 April 2017, the Prudential Regulation Authority (PRA) published its regulatory digest for March 2017. It highlights key regulatory news and publications for March 2017, such as the PRA's consultation on its regulated fees and levies rates proposals for 2017/18, and its consultation on its Internal Ratings Based approach.
On 4 April 2017, HM Treasury published a regulatory innovation plan. The innovation plan covers a number of actions financial services regulators are undertaking to create a supportive regulatory and enforcement framework for new business models and disruptive technologies, while breaking down barriers to entry and boosting productivity in financial services.
On 31 March 2017, the Upper Tribunal (Tax and Chancery Chamber) updated its register of financial services hearings and cases. The list shows that a reference concerning third-party rights under Section 393 of the Financial Services and Markets Act 2000 (FSMA 2000) has been withdrawn.
SI 2017/500—The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 has been amended so that a person who is authorised to carry on a regulated activity which is not the activity specified by article 53(1) of the Order and is not the activity of agreeing to carry on that activity as specified by article 64 of the Order will give investment advice only when providing a personal recommendation. The changes come into effect on 3 January 2018.
On 31 March 2017, the PRA published a policy statement with final rules for the Financial Services Compensation Scheme (FSCS) Management Expenses Levy Limit (MELL) for 2017/18.
On 31 March 2017, HM Treasury announced that Bradford & Bingley (B&B) loans, acquired by the taxpayer during the financial crisis, are to be sold for £11.8bn. It marks the latest step in the government’s effort to return taxpayer-owned financial assets to the private sector. B&B’s loans will be sold to Prudential plc and to funds managed by Blackstone. There will be no changes to the terms and conditions of the loans sold and borrowers do not need to take any action.
On 30 March 2017, the Basel Committee on Banking Supervision (BCBS) launched a consultation on proposed revisions to the Committee's 2013 methodology for assessing and identifying global systemically important banks (G-SIBs). The deadline for comments is 30 June 2017.
On 31 March 2017, the European Commission adopted a draft Commission Implementing Regulation on the extension of the transitional periods related to own funds requirements for exposures to central counterparties (CCPs) set out in the Capital Requirements Regulation (EU) 575/2013 (CRR) and the European Markets Infrastructure Regulation (EU) 648/2012 (EMIR).
On 31 March 2017, the Bank of England (BoE) published a speech given by Andy Haldane, the bank's chief economist and deputy governor for monetary analysis and statistics, given at the Federal Reserve Bank of San Francisco. In his speech, Mr Haldane explores how central banks could regain the public's trust by changing the way they communicate. He looks at how central bank communications have changed over the years and notes the step changes in transparency that have been broadly mirrored across a range of central banks.
On 31 March 2017, the European Banking Authority (EBA) announced that the Central Bank of Kosovo is now a signatory party to the memorandum of co-operation (MoC) with banking supervisory authorities in several south-eastern European (SEE) countries. The MoC was signed in 2015 to establish a framework for co-operation and information exchange, to strengthen banking regulation and supervision of banks operating in the EU and in the SEE countries.
On 3 April 2017, the EBA published a periodical update of its Risk Dashboard summarising the main risks and vulnerabilities in the EU banking sector by a set of Risk Indicators in Q4 2016. The update shows an increase in EU banks' capital ratios, though low profitability and the high level of non-performing loans (NPLs) remain a concern.
On 4 April 2017, the BCBS published final guidelines on ‘Prudential treatment of problem assets—definitions of non-performing exposures and forbearance’. The guidelines are intended to harmonise the measurement and application of two important measures of asset quality, non-performing exposures and forbearance, thereby fostering consistency in supervisory reporting.
On 4 April 2017, the BoE reported that, at a meeting on 22 March 2017, the Financial Policy Committee (FPC) held the UK countercyclical capital buffer (CCyB) rate at 0% and reaffirmed its support for the clear supervisory expectation of the Prudential Regulation Authority (PRA) that firms should not increase dividends and other distributions as a result of the UK CCyB rate being maintained at this level.
On 5 April 2017, the EBA issued three sets of final guidelines on bail-in under the Bank Recovery and Resolution Directive (BRRD). The guidelines complement existing regulation and guidance to facilitate the use of the bail-in power as a way of absorbing losses and recapitalising banks in resolution. In particular, the guidelines clarify how valuation information should help determine the terms of a bail-in.
On 5 April 2017, the EBA published a letter from the vice president of the European Commission, Valdis Dombrovskis, to the chair of the EBA, Andrea Enria, saying improved quality, scope, transparency and availability of relevant financial information on distressed assets could greatly contribute to a functioning secondary market in non-performing loans, and help shift such assets off banks’ balance sheets.
On 5 April 2017, the Bank for International Settlements published a speech by the Secretary General of the Basel Committee, William Coen, at the 9th Islamic Financial Services Board (IFSB) public lecture on financial policy and stability, in Kuala Lumpur. The speech focused on the Basel Committee’s review of its members’ domestic implementation of global Basel standards. The central impetus for the Committee is the important lessons learned from the global financial crisis.
On 30 March 2017, the European Parliament released a briefing on ‘Fines for misconduct in the banking sector—what is the situation in the EU?’, summarising three external briefing papers on ‘conduct risk’ in the banking sector that were commissioned by the ECON committee and drafted by members of its expert panel on banking supervision.
On 3 April 2017, Amlin Underwriting Ltd (AUL) was fined £630,000 and ordered to pay Lloyd’s costs of £90,500 for detrimental conduct. The charge relates to AUL’s failure to operate effective systems and controls governing the use of the Lloyd’s Premium Trust Fund, which led to payments being incorrectly made from the fund, and to AUL’s failure to appreciate the seriousness of the breach of the premium trust deed and to investigate and report the matter to its Board and to Lloyd’s in a timely manner. It was accepted that the breach was not deliberate or reckless and all funds have been repaid with interest.
On 3 April 2017, the National Cyber Security Centre, alongside PwC, BAE Systems and other organisations, have collaborated to identify a new global cyber-attack campaign. The hacking group—known as ‘APT10’—is believed to have conducted a global espionage campaign by targeting providers of managed outsourced IT services as a way in to their customers’ organisations around the world, gaining unprecedented access to intellectual property and sensitive data.
On 30 March 2017, the Treasury Select Committee published a February letter sent by the chair of the FCA, John Griffith-Jones, to the chair of the Committee, Andrew Tyrie MP, on the issue of contactless payment fraud, following Mr Griffith-Jones’ appearance before the Committee on 18 January 2017. Mr Griffith-Jones discusses the views and work of the FCA and the Payment Systems Regulator (PSR) on the issue of contactless payment fraud. He notes that in 2015 contactless fraud represented around 0.5% of total card fraud. The key risk to customers occurs from merchants who process payments offline (ie store payments in a batch to be processed later). Around 45% of contactless transactions take place offline.
On 31 March 2017, a report published by Natwest found that almost a quarter of UK law firms have been victims to cyber-attack or fraud-related loss in the last year. The bank’s 2017 legal benchmarking report looks at law firms’ profits, fees and finance, as well as lock-up and the challenges firms face.
On 31 March 2017, the City of London Law Society (CLLS) published a response to the MoJ’s call for evidence on corporate liability for economic crime. The response was prepared by the CLLS’s corporate crime and corruption law committee. The committee is of the view that the evidential basis for a wide-ranging change to the identification doctrine in English law is lacking.
On 3 April 2017, the House of Lords further examined the Criminal Finances Bill as it continues its Committee stage. Matters discussed ranged from tax evasion and public registers of beneficial ownership of companies, to bribery and corporate criminal liability for economic crime. A further examination of the Bill is scheduled for 25 April.
On 3 April 2017, HM Treasury’s Office of Financial Sanctions Implementation (OFSI) released guidance on the way it will use it powers under the Policing and Crime Act 2017 (PCA 2017) to impose monetary penalties for breaches of financial sanctions.
On 5 April 2017, the joint committee of the three European Supervisory Authorities (ESAs) launched a public consultation on draft guidelines that set out what payment service providers should do to detect and prevent the abuse of funds transfers for terrorist financing and money laundering purposes. The guidelines have been drafted in accordance with Article 25 of Regulation (EU) 2015/847 (revised Wire Transfer Regulation). The consultation runs until 5 June 2017.
On 30 March 2017, the FCA announced it had fined a former investment banker £37,198.00 for sharing client confidential information over WhatsApp. The FCA found that Christopher Niehaus failed to act with due skill, care and diligence.
On 31 March 2017, the members of the International Organization of Securities Commissions (IOSCO) approved the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU), which offers securities regulators new enforcement powers for responding to the challenges arising from recent developments in global financial markets. For further information see The members of the International Organization of Securities Commissions (IOSCO) have approved the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU), which offers securities regulators new enforcement powers for responding to the challenges arising from recent developments in global financial markets.
On 3 April 2017, the director of enforcement and market oversight at the FCA, Mark Steward, delivered a speech at the New York University Program on Corporate Compliance and Enforcement on the expanding scope of individual accountability for corporate misconduct. Mr Steward said the Senior Managers and Certification Regime marks an important and decisive shift in the right direction in tackling conduct issues.
On 4 April 2017, the Financial Ombudsman Service (FOS) published Ombudsman News 140, containing a number of case studies which the FOS says show the benefits of taking a flexible approach to the kinds of disputes it is called on to assist in. The chief ombudsman, Caroline Wayman, introduces the issue, saying the organisation tries to put people before process.
On 4 April 2017, the Office of the Complaints Commissioner published a letter on the FCA's complaints procedure. While refusing to uphold the complaint, it did recommend that the FCA document its actions.
On 30 March 2017, the BoE published feedback on its recent consultation regarding its plans to reform the Sterling Overnight Index Average (SONIA) interest rate benchmark. It also sets out how it has responded to this feedback, provides statistical characteristics of reformed SONIA and gives details of the specification of reformed SONIA. The BoE expects its proposals to be implemented in March or April 2018.
On 30 March 2017, the European Securities and Markets Authority (ESMA) updated its list of recognised central counterparties (CCPs) based in third countries. The list concerns the recognition of six non-EU CCPs. EMIR requires third-country CCPs to be recognised by ESMA in order to operate in the European Union.
On 30 March 2017, ESMA published its final report containing the draft regulatory and implementing technical standards (RTS/ITS) under the Benchmarks Regulation. These contain the detailed rules to implement the new European regulatory framework aimed at ensuring the accuracy and integrity of benchmarks across the EU.
On 30 March 2017, ESMA published an update to its Q&A on the application of the Credit Rating Agencies Regulation (EU) 1060/2009 (CRA), adding a new section on disclosure and presentation of credit ratings, which provides clarification to CRAs, users of ratings, rated entities and market participants.
On 30 March 2017, following its acquisition by Scope Ratings AG, Feri EuroRating Services AG had its credit rating agency (CRA) registration withdrawn by ESMA.
On 31 March 2017, 28 Commission Delegated Regulations and one Directive related to the Markets in Financial Instruments Directive 2014/65/EU (MiFID II) and Markets in Financial Instruments Regulation (EU) No 600/2014 (MiFIR) were published in the Official Journal of the EU.
On 31 March 2017, Commission Delegated Regulation (EU) 2017/610 of 20 December 2016 amending EMIR as regards the extension of the transitional periods related to pension scheme arrangements was published in the Official Journal of the EU.
On 31 March 2017, ESMA updated its Q&As on implementation of Regulation (EU) 909/2014 on improving securities settlement in the EU and on central securities depositories (CSD Regulation).
On 31 March 2017, ESMA published a final report with revised draft RTS specifying the scope of the consolidated tape for non-equity financial instruments under MiFID II. The final RTS reflects feedback to ESMA’s consultation paper, which was published on 3 October 2016.
On 31 March 2017, the FCA published its first policy statement with near final rules on the implementation of the recast MiFID II, including changes affecting trading venues, transparency of trading and algorithmic and high frequency trading. It also provides an update on the taping of telephone conversations by retail financial advisers. The FCA has also launched a consultation on new rules for occupational pension scheme (OPS) firms and the extension of the FCA's powers within the Enforcement Guide (EG) and the Decision Procedures and Penalties manual (DEPP).
On 31 March 2017, the European Association of Corporate Treasurers (EACT) published its response to the European Commission's consultation on the Capital Markets Union (CMU) mid-term review. EACT says that it is supportive of the CMU initiative, but warns that increased harmonisation could make conditions worse for corporate bond issuers. It also expresses concerns regarding the impact of clearing and margining requirements for OTC derivative transactions on non-financial counterparties (NFCs).
On 31 March 2017, ESMA issued a final report on technical standards implementing the Securities Financing Transaction Regulation (SFTR) as well as on certain amendments to technical standards under EMIR, in order to take into account legal developments as well as to ensure consistency between the frameworks of both regulations.
On 31 March 2017, ESMA published an updated version of its Q&A on the application of the MiFID to the marketing and sale of financial contracts for difference (CFDs) and other speculative products to retail clients, such as binary options and rolling spot forex.
On 31 March 2017, the Financial Markets Law Committee (FMLC) published a letter sent to the Debt Management Office (DMO) highlighting concerns regarding the short transition period between the provision of end-of-day reference prices for gilts and Treasury bills from the DMO to a joint venture between FTSE Russell and Tradeweb contained in the final report of the Independent Reference Prices Review published in October 2016.
On 3 April 2017, ESMA published updated Q&As on data reporting under MiFID II and MiFIR.
On 3 April 2017, ESMA updated its Q&A on practical questions regarding EMIR, following the publication of revised technical standards (TS) in Commission Delegated Regulation (EU) 2017/104 amending Delegated Regulation (EU) 148/2013 supplementing EMIR with regard to RTS on the minimum details of the data to be reported to trade repositories under Article 9(5) of EMIR and Commission Implementing Regulation (EU) 2017/105 amending Implementing Regulation (EU) 1247/2012 laying down ITS with regard to the format and frequency of trade reports to trade repositories according to Article 9(6) of EMIR.
On 3 April 2017, the FCA issued guidance on how firms can notify it that they want to sell or advise on structured deposits under MiFID II after 3 January 2018.
On 4 April 2017, ESMA published a consultation ‘Update of the guidelines on the application of the endorsement regime under Article 4(3) of the Credit Rating Agencies Regulation’ (ESMA33-9-159). The proposals reflect the changes to Articles 6-12 and Annex I of the Credit Rating Agencies Regulation (EC) 1060/2009 (CRA Regulation) introduced by Regulation (EU) 462/2013 (CRA III Regulation), which will enter into force for the purposes of equivalence and endorsement on 1 June 2018. The consultation period will close on 3 July 2017 and the revised guidelines are expected to be published in Q4 2017.
On 4 April 2017, ESMA added ten new Q&As to its Q&A document on the implementation of investor protection topics under MiFID II and MiFIR.
On 5 April 2017, ESMA issued an opinion on the European Commission’s proposal for the EU Regulation on central counterparty (CCP) recovery and resolution.
On 5 April 2017, ESMA published the results of its study of the investment chain and, in particular, the functioning of shareholder identification and transmission of information between issuers and shareholders. The report presents a general assessment of the level of harmonisation of national regulatory frameworks, across the European Economic Area.
On 5 April 2017, ESMA published 22 new Q&As which provide further detail on how to implement certain regulatory provisions of MiFID II and MiFIR.
On 5 April 2017, ESMA published a Financial Instrument Reference Data System (FIRDS) transparency non-equity conditional completeness table. In October 2016, ESMA published reporting instructions for FIRDS (ESMA/2016/1522). The intended audience of the table is national competent authorities (NCAs), trading venues (TVs), systematic internalisers (SIs) and data reporting service providers (including approved publication arrangement and consolidated tape providers), who are going to implement system interfaces for the uploading of data to the FIRDS.
On 5 April 2017, ESMA published responses to its public consultation on future guidelines on the transfer of data between trade repositories (TRs) authorised in the EU under the European Market Infrastructure Regulation (EMIR). ESMA will use the feedback to finalise its draft guidelines with a view to publishing these by Q3 2017.
On 30 March 2017, the European Parliament confirmed it has no objections to the revised Commission Delegated Regulation (C(2017)01473) of 8 March 2017 supplementing Regulation ((EU) 1286/2014 on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs Regulation) by laying down regulatory technical standards (RTS) with regard to the presentation, content, review and revision of KIDs and the conditions for fulfilling the requirement to provide such documents.
On 5 April 2017, the European Parliament approved new uniform rules on the information given in investor prospectuses, aiming to protect investors, create a more efficient single capital market and ease small firms’ access to finance.
On 30 March 2017, the FCA’s director of supervision—retail and authorisations, Jonathan Davidson, spoke on the FCA’s view of the consumer credit market at the Credit Summit in London, saying it was crucial for the industry to keep ‘building and rebuilding our understanding of consumer behaviour in order to understand how best to work in their interests’. Mr Davidson said this means not just looking at the next set of projects and problems to solve, but also maintaining a model of credit regulation that can adapt to the challenges of the future.
On 31 March 2017, the National Audit Office (NAO) urged regulators in the water, energy, telecommunications and financial services sectors to do more to support the increasing number of vulnerable consumers. A report by the NAO has set out an overview of the role the regulated sectors have in supporting vulnerable consumers, and a baseline against which to measure future progress.
On 30 March 2017, the board of supervisors of the European Insurance and Occupational Pensions Authority (EIOPA) announced it had extended by two-and-a-half years the terms of office of three management board members.
On 30 March 2017, investment guidance for trustees and advisers running occupational pension schemes that offer defined benefits (DB) has been published by the Pensions Regulator (TPR). It includes examples of approaches and factors to consider when investing scheme assets to fund DB.
On 31 March 2017, EIOPA published new sets of questions and answers with regard to Solvency II.
On 31 March 2017, the Insurance Block Exemption Regulation (Regulation 267/2010) expired and was not replaced by the European Commission. Therefore, there is now no specific block exemption or guidance available for agreements in the insurance sector. Instead, all agreements will now need to be self-assessed under the general antitrust rules, namely Article 101 TFEU and the Commission’s Horizontal Cooperation Guidelines. This follows the Commission concluding, after a study and consultation, that, first, in relation to joint compilations, tables and studies, the insurance sector no longer requires a specific block exemption as sufficient guidance is contained in the Horizontal Cooperation Guidelines, and, second, in relation to pools, the IBER is of limited use and relevance.
On 3 April 2017, the Personal Finance Society (PFS) called for a joint solution to what it describes as the flaws in the Financial Services Compensation Scheme (FSCS) and professional indemnity insurance (PII) market as part of its submission to a Financial Conduct Authority (FCA) consultation.
On 3 April 2017, the Insurance Fraud Bureau (IFB) extended its membership categories to cover the entire insurance sector, including defendant solicitors, investigators, loss adjustors and third-party administrators. The creation of the affiliate category has allowed ten new firms to join the anti-fraud group.
On 4 April 2017, the European Commission published proposals for Council Decisions on the signing, provisional application and conclusion of a bilateral agreement between the EU and the US on prudential measures regarding insurance and reinsurance. It covers group supervision, reinsurance and exchange of information between supervisors.
On 30 March 2017, the Payment Systems Regulator (PSR) published its final terms of reference setting out how it will consider the role payment system operators (PSOs) could play in minimising consumer harm caused by authorised push payment (APP) scams in the UK. An APP scam involves tricking someone into instructing their bank to transfer money to a fraudster.
On 31 March 2017, the PSR published a consultation paper setting out how fees for the financial year 2017/18 will be allocated for its functions under the Financial Services (Banking Reform) Act 2013 (FSBRA 2013 ) and the EU Interchange Fee Regulation (IFR). It also provides its decision on how its fees will be calculated and collected and confirms that the PSR is consulting on its proposed fee rates. The deadline for comments is 12 May 2017.
On 31 March, the Payment System Operator Delivery Group (PSODG) submitted to the BoE and the PSR its recommendations and implementation plan for the new Payment System Operator (PSO) which will potentially replace Bacs Payment Schemes Ltd, Cheque and Credit Clearing Company Ltd and the Faster Payments Scheme Ltd (the existing PSOs). A further announcement is expected near the end of April or start of May 2017.
On 3 April 2017, the European Payments Council (EPC) announced two new members: the bank J.P. Morgan AG (based in Germany), and the payment institution Conotoxia (based in Poland).
On 4 April 2017, the European Central Bank (ECB) published an explanatory note on the coexistence of the TARGET Instant Payment Settlement (TIPS) service with other instant payment services. The note addresses questions raised during the consultation on TIPS user requirements launched on 9 January 2017.
On 5 April 2017, the PSR published minutes from its 19 January 2017 board meeting. The meeting covered: Payments Strategy Forum—milestones, risks and mitigations; the annual plan and budget 2017/18; the Second Payment Services Directive (PSD2)—approach to monitoring and enforcement and; payment system resilience.
On 4 April 2017, the secretary-general of the Islamic Financial Services Board (IFSB), Mr Jaseem Ahmed delivered a speech on Islamic finance and global regulation: moving targets and new horizons at the IFSB annual meeting, in Kuala Lumpur. Mr Ahmed said Islamic finance still had ‘much to do’ in the areas of macroprudential supervision, cross-sector and consolidated supervision, and stress testing, to bring it into line with international practices.
0330 161 1234