Weekly highlights—9 February 2017

Weekly highlights—9 February 2017

Welcome to the weekly Financial Services highlights from the Lexis®PSL Financial Services team for the week ending 9 February 2017.


FMLC calls for staged transitional arrangements on Brexit

On 3 February 2017, the Financial Markets Law Committee (FMLC) published a letter, dated 31 January 2017, which called for post-Brexit transitional arrangements in the financial services sector to avoid the risk of a ‘hiatus’ between membership and the third country regime. In the letter to the chair of the Treasury Select Committee, Andrew Tyrie MP, the FMLC warns that any such arrangements must be designed with the World Trade Organisation rules in mind.

Regulatory architecture

Collection of Fines etc (Northern Ireland Consequential Amendments) Order 2017

SI 2017/Draft: The Courts Act 2003 is amended so as to enable Her Majesty’s Revenue and Customs (HMRC) to disclose financial information to a court in Northern Ireland or to a collection officer under the Justice Act (Northern Ireland) 2016 (JA(NI) 2016).

FSB releases work plan for 2017

On 6 February 2017, the Financial Stability Board (FSB) prepared a briefing giving an overview of issues on the FSB’s work plan for 2017, ahead of a visit from members of the European Parliament's Committee on Economic and Monetary Affairs (ECON) on 13 February 2017. The briefing says the FSB will continue to focus on macro-financial developments and structural weaknesses in the financial system.

ESCB Legal Conference 2016 proceedings published

On 7 February 2017, the European Central Bank (ECB) made available the 350-page proceedings of its October 2016 European System of Central Banks (ESCB) Legal Conference. The document covers legal developments and challenges related to the activities of the Eurosystem and of the Single Supervisory Mechanism.

ESMA 2017 Risk Assessment Work Programme

On 7 February 2017, the European Securities and Markets Authority (ESMA) published an overview of the analytical, research, data and statistical activities which it proposes to carry out as part of its risk assessment agenda in 2017.

ESMA chair calls for changes to its powers and processes

On 7 February 2017, the chair of ESMA, Steven Maijoor, gave a speech on the organisation’s role, supervisory convergence and the third country regime. Speaking at the ALDE Party Seminar on the Review of the European Supervisory Authorities at the European Parliament in Brussels, Mr Maijoor outlined the changes ESMA has identified to assist it in its role.

Authorisation, approval and supervision

Reminder that PRA is strengthening accountability requirements

On 7 February 2017, the PRA issued a reminder to firms that on 7 March 2017 requirements relating to two aspects of the strengthening accountability regimes take effect.

Prudential requirements

European Commission director general speaks on Basel reform

On 1 February 2017, the European Commission published a keynote speech given by its director general, Olivier Guersent, on ‘The Future of Bank Capital Reform in Europe’. The speech was given at a symposium on the future of bank capital in Europe hosted by the International Swaps and Derivatives Association on 1 February 2017. In the speech, Mr Guersent discusses the reasons why the Basel Committee failed to reach agreement on the finalisation of Basel III in January 2016, and reviews the Banking Reform Package that the Commission tabled in November 2016.

EBA data shows big increase in high earners in EU banks

On 3 February 2017, the European Banking Authority (EBA) released data on high earners earning €1m or more per year in EU banks. The data shows a 33% increase in the number of high earners in 2015 compared to 2014. This was mainly due to changes in the EUR-GBP exchange rate. Most high earners are located in the UK and remunerated in GBP.

Portfolio assessment benchmarking RTS published in the Official Journal

On 3 February 2017, Commission Delegated Regulation (EU) 2017/180 of 24 October 2016 supplementing Directive 2013/36/EU of the European Parliament and of the Council (CRD IV) with regard to regulatory technical standards (RTS) for benchmarking portfolio assessment standards and assessment-sharing procedures was published in the Official Journal of the EU.

White House set sights on financial services post-crisis reforms

On 6 February 2017, the British Bankers’ Association (BBA) drew attention to a letter published in The Times from the Republican vice chairman of the US House Financial Services Committee, Patrick McHenry, to Federal Reserve Board chair Janet Yellen requesting that she terminate US participation in negotiating Basel capital requirements. The letter, dated 31 January 2017, states that ‘Despite the clear message delivered by President Donald Trump in prioritising America’s interest in international negotiations, it appears that the Federal Reserve continues negotiating international regulatory standards for financial institutions among global bureaucrats in foreign lands without transparency, accountability, or the authority to do so. This is unacceptable'.

PRA aligns risk-based levies calculations

On 7 February 2017, the Prudential Regulation Authority (PRA) updated its Statement of Policy (SoP) ‘Calculating risk-based levies for the Financial Services Compensation Scheme deposits class’ to align with the data item references used in the amended Credit Unions quarterly return and annual return templates, published in Policy Statement 31/16 ‘Credit union regulatory reporting’. The updates are to the​ footnotes in paragraph 3.8.

Commission adopts Delegated Regulation under BRRD

On 7 February 2017, the European Commission adopted a Delegated Regulation on classes of arrangements to be protected in a partial property transfer under Article 76 of the Bank Recovery and Resolution Directive 2014/59/EU (BRRD).

CRR RTS on additional liquidity outflows published in the Official Journal

On 7 February 2017, Commission Delegated Regulation (EU) 2017/208 of 31 October 2016 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council (Capital Requirements Regulation) with regard to regulatory technical standards (RTS) for additional liquidity outflows corresponding to collateral needs resulting from the impact of an adverse market scenario on an institution's derivatives transactions has been published in the Official Journal.

Financial crime

Policing and Crime Act 2017

This Act makes provision for the collaboration between the emergency services, the handling of police complaints and other matters relating to police conduct and about the Independent Police Complaints Commission. It further makes provision for, among several other matters, super-complaints about policing, the investigation of concerns about policing raised by whistle-blowers, and further makes provision about police discipline. It also makes provision about the implementation and enforcement of certain financial sanctions.

Former HBOS manager and associates convicted of corruption and fraudulent trading

On 2 February 2017, the Crown Prosecution Service (CPS) announced that a senior banker, financial consultant and their associates who conspired to enrich themselves while ruining others’ businesses had been jailed for a total of 50-year for corruption, fraudulent trading money laundering. The scheme run by the individuals eventually saw Halifax Bank of Scotland (HBOS) lose around £250m.

Four guilty in £160m fraud against business lenders

On 7 February 2017, four individuals were found guilty of conspiracy to make corrupt payments and conspiracy to commit fraud against two business lenders. Two others were acquitted of the £160m fraud against Barclays Bank and KBC Lease (UK) Limited (KBC), a subsidiary of Belgian banking group KBC.

Six former traders deny Euribor manipulation

On 8 February 2017, six former Deutsche Bank AG and Barclays Bank employees pleaded not guilty to conspiring to manipulate the Euribor interest rate benchmark at Southwark Crown Court. The defendants denied the accusation that between 1 January 2005 and 31 December 2009 they conspired with other employees to procure or make false submissions in relation to the euro interbank offered rate.

EDPS says proposed AML amendments are disproportionate

On 8 February 2017, the European Data Protection Supervisor (EDPS) published an Opinion (1/2017) on a Commission Proposal amending Directive EU 2015/849 and Directive 2009/101/EC on Access to beneficial ownership information and data protection implications. The proposed amendments are aimed at tackling tax evasion and money-laundering, but the EDPS say they extend out into tax collection and are disproportionate.

Enforcement and redress

FCA issues warning notice over compliance failures

On 7 February 2017, the Financial Conduct Authority (FCA) issued a warning notice in respect of an individual’s failure to ‘use due skill, care and diligence in carrying out the compliance oversight function’. The individual was authorised to hold a CF10 role, meaning they oversaw compliance, at two authorised firms which between them provided advice to over 700 members of defined benefit schemes (‘DB schemes’) about the merits of transferring out of their DB schemes to defined contribution schemes (‘DC schemes’) as part of enhanced transfer value pension transfer exercises. Approximately 500 DB scheme members who received advice transferred out of their DB schemes to DC schemes, between them transferring a total of about £12.7m.

Ombudsman News 139 published

On 7 February 2017, the Financial Ombudsman Service (FOS) issued its Ombudsman News for January/February 2017.

Markets and trading

Council endorses EMIR delegated regulations

On 2 February 2017, the General Secretariat of the Council of the EU recommended that the Council confirm that it has no objection to two delegated regulations (C(2016) 8542 and C(2017) 149) adopted by the European Commission in connection with Regulation (EU) 648/2012 (EMIR).

New ESMA guide on EEA major holdings notifications

On 3 February 2017, ESMA published a practical guide to national rules across the European Economic Area (EEA) on major holdings notifications under the Transparency Directive, to help market participants navigate the different requirements.

Corrigendum to Commission Delegated Regulation on EMIR RTS published in the Official Journal

On 3 February 2017, a Corrigendum to Commission Delegated Regulation (EU) 2016/2251 of 4 October 2016 supplementing EMIR with regard to RTS for risk-mitigation techniques for over-the-counter (OTC) derivative contracts not cleared by a central counterparty has been published in the Official Journal.

FCA updates webpage on EMIR margin requirements for uncleared derivatives

On 6 February 2017, the FCA updated a webage on the new EMIR margin requirements for uncleared derivatives that took effect from 4 February 2017, subject to phase-ins that are based on firms’ categorisation and derivatives volumes. The margin requirements under EMIR require counterparties who are in scope to exchange margin on their OTC derivatives contracts that are not cleared through a CCP.

WFE calls for international co-operation on CCP regulation

On 7 February 2017, the World Federation of Exchanges (WFE) urged national authorities to design regulation of central counterparties (CCPs) that sticks as closely as possible to international standards, in order to promote cross-border co-operation and maintain resilience.

IOSCO review of benchmarks principles implementation

On 7 February 2017, the International Organisation of Securities Commissions (IOSCO) published its second review of the implementation by the administrator of the WM/Reuters 4pm London closing spot rate of IOSCO’s Principles for Financial Benchmarks (the Principles).

Consumer credit

CMA market investigation: Payday lending—Guide for payday lenders published

On 3 February 2017, the Competition and Markets Authority (CMA) published a guide for payday lenders to a number of the rights and obligations created by the Payday Lending Market Investigation Order 2015 (the Order). The in-depth phase 2 investigation into the payday lending market investigation, referred to the Competition Commission (CC) by the Office of Fair Trading (OFT) in June 2013, found that a lack of price competition between lenders led to higher costs for borrowers. The Order, made under the market investigations provisions of the Enterprise Act 2002, is part of a package of remedies designed to tackle these problems. It requires online payday lenders to publish, by 26 May 2017, details of their products on at least one price comparison website (PCW) which is authorised by the FCA; and online and high street payday lenders to provide existing customers with a summary of their cost of borrowing. The new guide provides payday lenders with, among other things, the definition of cost of borrowing and information on compliance reporting.

Economic Secretary to the Treasury confirms reform of Bills of Sale Acts

On 7 February 2017, Parliament published a statement from Simon Kirby, Economic Secretary to the Treasury, announcing that the government agreed with the Law Commission’s conclusion in its report on the reform of the Bills of Sale Acts that consumers and unincorporated businesses should continue to be able to use their existing goods as security while retaining possession of them, but that the Acts themselves no longer provide an appropriate legal framework and should be reformed.

Investment funds and asset management

FCA consults on illiquid assets regulation

On 8 February 2017, the FCA published discussion paper DP1/01 concerning some of the risks created when consumers use open-ended funds to gain exposure to illiquid assets, ie ones that may be difficult for the fund manager to buy, sell or value quickly, such as land and buildings, infrastructure, and financial assets like unlisted securities. The FCA wants to find out what problems stakeholders think exist, how well the current rules address those problems, and what further regulatory intervention might be needed. Feedback is sought by 8 May 2017.

Insurance and pensions

EIOPA guidelines on dialogue between insurance supervisors and statutory auditors enter ‘comply or explain’ phase

On 2 February 2017, the European Insurance and Occupational Pensions Authority (EIOPA) published the final Guidelines on Fa​​cilitating an Effective Dialogue between Insurance Supervisors and Statutory Auditors, translated into all official languages of the European Union, which begins the two-month ‘comply or explain’ reporting process. During this period each competent authority needs to confirm whether it complies or intends to comply with the Guidelines. The Guidelines will apply from 31 May 2017.

Motor insurance premiums higher than ever

On 3 February 2017, the Motor Premium Tracker, published by the Association of British Insurers (ABI), showed the last quarter of 2016 saw motor insurance levels hit their highest recorded levels as tax increases, increased repair costs and the rising costs of whiplash style injury claims puts pressure on premiums. the tracker also shows that premiums rose more than five times the rate of inflation in 2016.

Savers to be able to access £1,500 tax-free for pension advice

On 3 February 2017, it was announced that people planning their retirement will be able to withdraw up to £1,500 from their defined contribution pension pots tax-free to pay for financial advice. The new Pension Advice Allowance will enable people to withdraw £500 on up to three occasions, but only once in a tax year, to put towards the cost of pensions and retirement advice from April 2017.

Regulation must support innovation in insurtech, says Insurance Europe

On 3 February 2017, Insurance Europe issued a report saying regulators and supervisors have a crucial role to play to ensure that consumers and industry reap the benefits of digitalisation. They must find the right balance between safeguarding high standards in consumer protection and fair competition on the one hand, and removing regulatory obstacles and actively encouraging innovation on the other.

EIOPA new Q&As on Solvency II implementing regulations

On 6 February 2017, EIOPA published new sets of Q&A on Commission Implementing Regulation (EU) 2015-2450 with regard to the templates for the submission of information to the supervisory authorities, and Commission Implementing Regulation (EU) 2015-2452 with regard to the procedures, formats and templates of the solvency and financial condition report.

EIOPA monthly update on the equity capital charge for Solvency II

On 7 February 2017, EIOPA published the technical information on the symmetric adjustment of the equity capital charge for Solvency II with reference to the end of January 2017.

EIOPA monthly technical information for Solvency II relevant risk free interest rate term structures

On 7 February 2017, EIOPA published technical information for Solvency II relevant risk free interest rate (RFR) term structures with reference to the end of January 2017.

EIOPA draft ITS on Insurance Product Information Document

On 7 February 2017, EIOPA published draft Implementing Technical Standards (ITS) on the Insurance Product Information Document (IPID), as part of EIOPA’s work on the detailed rules for the Insurance Distribution Directive 2016/97/EU (IDD).

Payments and fintech

ESMA report on DLT in securities markets

On 7 February 2017, ESMA published a report on ‘Distributed Ledger Technology Applied to Securities Markets’. The report reflects ESMA’s analysis of the key benefits and risks of Distributed Ledger Technology (DLT) applied to securities markets, and looks at how DLT interacts with the existing EU regulatory framework.

IOSCO calls for consistency and cooperation in Fintech securities regulation

On 7 February 2017, IOSCO issued a report on Fintech and securities market regulation, saying the global nature of the phenomenon creates challenges that regulators should address through international cooperation and the exchange of information. IOSCO calls for regulatory consistency across jurisdictions to reduce the potential for regulatory arbitrage.

International—financial services and related sectors

Trump Executive Order signals financial services regulatory rollback

On 3 February 2017, US President Donald Trump signed an Executive Order which lays the groundwork for sweeping change for Dodd-Frank Act post-crisis reforms of the financial services industry in the US. The executive order sets out broad principles to foster economic growth and enable US corporations to compete with foreign counterparts. It singles out public accountability within federal regulatory agencies and the prevention of taxpayer bailouts as key priorities. Mr Trump has directed his Treasury Secretary nominee to draft a report within 120 days identifying laws, treaties and regulations that conflict with his principles.


The Court of Justice of the European Union
BAWAG PSK Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse AG v Verein für Konsumenteninformation


The Court of Justice of the European Union gave a preliminary ruling, deciding that Articles 41(1) and 44(1) of the Payment Services Directive (Directive (EC) 2007/64) of the European Parliament and of the Council, read in conjunction with Article 4(25) of that Directive, had to be interpreted as meaning that changes to the information and conditions, provided for under Article 42 of that Directive, and the changes to the framework contract as well, which were transmitted by a payment service provider to the user of those services through the electronic mailbox of an online internet banking website, might not be considered to have been provided on a durable medium within the meaning of those provisions unless the following two conditions were met: (i) that website allowed the user to store information addressed to him personally in such a way that he might access it and reproduce it unchanged for an adequate period, without any unilateral alteration of its content by that service provider or by another professional being possible; and (ii) if the payment service user was obliged to consult that website in order to become aware of that information, the transmission of that information had to be accompanied by active behaviour on the part of the provider aimed at drawing the user's attention to the existence and availability of that information on that website. In the event of the payment service user being obliged to consult such a website in order to become aware of the relevant information, that information was merely made available to that user within the meaning of the first sentence of Article 36(1) of the Directive, when the transmission of that information was not accompanied by such active behaviour on the part of the payment service provider.

Banco Primus SA v Gutiérrez García


The Court of Justice of the European Union gave a preliminary ruling, deciding, among other things, that Articles 3(1) and 4 of Council Directive (EEC) 93/13 had to be interpreted as meaning that: (i) the examination of the potential unfairness of a term of a contract concluded between a seller or supplier and a consumer required it to be determined whether that term caused a significant imbalance in the parties' rights and obligations under a contract to the detriment of the consumer. That examination had to be carried out in the light of national rules which, in the absence of an agreement between the parties, were applicable, the means which the consumer had at his disposal under national law to bring an end to the use of that type of term, the nature of the goods or services covered by the contract at issue and all the circumstances surrounding the conclusion of the contract; (ii) where the national court considered that a contractual term relating to the calculation of ordinary interest was not in plain intelligible language, within the meaning of Article 4(2) of the Directive, it was required to examine whether that term was unfair within the meaning of Article 3(1) of the Directive. In the context of that examination, it was the duty of the referring court, among other things, to compare the method of calculation of the rate of ordinary interest laid down in that term and the actual sum resulting from that rate with the methods of calculation generally used, the statutory interest rate and the interest rates applied on the market at the date of conclusion of the agreement at issue in the main proceedings for a loan of a comparable sum and term to those of the loan agreement under consideration; and (iii) as regards the assessment by a national court of the potential unfairness of the term relating to accelerated repayment resulting from a failure on the part of the debtor to comply with his obligations during a limited specific period, it was for the referring court to examine whether the right of the seller or supplier to call in the totality of the loan was conditional upon the non-compliance by the consumer with an obligation which was of essential importance in the context of the contractual relationship in question, whether that right was provided for in cases in which such non-compliance was sufficiently serious in the light of the term and amount of the loan, whether that right derogated from the applicable common law rules, where specific contractual provisions were lacking, and whether national law provided for adequate and effective means enabling the consumer subject to such a term to remedy the effects of the loan being called in.

Dates for your diary

Key Date Subject Event
9 February 2017 Markets and trading The clearing obligation for RTS on interest rate derivatives will take effect for Category 1 counterparties from this date.
9 February 2017 Markets and trading The clearing obligation RTS for credit default swaps will take effect for Category 1 counterparties from this date.
9 February 2017 Payment Services Directive 2 The EBA will hold a public hearing regarding 'Consultation Paper: on draft Guidelines on major incidents reporting under the Payment Services Directive 2 (EBA/CP/2016/23)'.
10 February 2017 Prudential requirements—recovery and resolution Deadline for responses to FSB consultations on its:

  1. guidance on Continuity of Access to Financial Market Infrastructures (FMIs) for a Firm in Resolution, and
  2. guiding Principles on the Internal Total Loss-Absorbing Capacity of G-SIBs

12 February 2017 European Market Infrastructure Regulation Deadline for backloaded reporting—reporting by this date of derivatives no longer outstanding on 12 February 2014 but which were outstanding on 16 August 2012 or were entered into on or after 16 August 2012. Note: An amendment to extend this date to February 12, 2019 has been proposed in revised technical standards for Article 9 (reporting) of EMIR (ESMA/2015/1645).
13 February 2017 Pensions Deadline for responses to HM Treasury and Department of Work and Pensions (DWP) consultation—pension scams.
13 February 2017 Regulatory architecture Deadline for responses to HM Treasury consultation on a new financial guidance body.
13 February 2017 Regulatory architecture Deadline for responses to FCA and PRA consultation 'FCA CP17/1—PRA CP1/17: Financial Services Compensation Scheme—Management Expenses Levy Limit (MELL) 2017/18'.
14 February 2017 Prudential requirements Deadline for responses to ECB consultation on the draft ECB guide on materiality assessment for changes or extensions to counterparty credit risk models.
14 February 2017 Insurance Deadline for responses to PRA Consultation Paper: Cyber insurance underwriting risk CP39/16.
15 February 2017 Markets and trading Deadline for responses to ICE Benchmark Administration's consultation in relation to the LIBOR evolution.
15 February 2017 Consumer Credit Deadline for responses to FCA 'Call for Input: High-cost credit Including review of the high-cost short-term credit price cap'.
15 February 2017 Markets and trading Deadline for responses to ESMA 'Consultation paper Draft technical standards on data to be made publicly available by TRs under Article 81 of EMIR (ESMA/2016/1661)'.

Related Articles:
Latest Articles:
About the author:
Prior to joining LexisNexis in 2016 as a paralegal, Lauren was an adjudicator at the Financial Ombudsman Service. There she resolved consumers’ complaints, and gained knowledge about a wide variety of financial products. Before this she studied Law at Nottingham Trent University.