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Selected Headlines
General
Brexit
Banking and Finance
Securities and Markets
Asset Management
Insurance
Financial Crime
Enforcement
Financial Regulation
Weekly Bulletin 2 March 2017 / Issue 901
Major UK and European regulatory developments of interest to banks, insurers and reinsurers, asset managers and other market participants
Selected Headlines General
Amending the definition of financial advice – HM Treasury publishes consultation response and FCA publishes explanatory note
3.1
The Bank of England and Financial Services Act 2016 – PRA brought into the Bank of England
4.1
Brexit
The future of Europe – European Commission publishes White Paper 8.1
EU equivalence decisions in financial services policy – European Commission publishes staff working document
8.2
Brexit and financial services – speech by Dr Andreas Dombret, Deutsche Bundesbank
9.1
Brexit and the asset management industry – ECMI produces policy brief
11.1
Banking and Finance
Basel III – Basel Committee publishes results of latest monitoring exercise
13.1
Basel III – BCBS reaffirms commitment to finalising post-crisis Basel III reforms
13.2
Basel III – Basel Committee publishes second set of FAQs on Net Stable Funding Ratio
13.3
CRD IV – CRR / Basel III monitoring exercise – EBA publishes report 14.1
CRR – EBA launches consultation on draft RTS on the specification of an economic downturn
14.2
Recovery planning – EBA launches consultation on Recommendations on the coverage of entities in a group recovery plan
14.3
PRA Consultation Paper CP3/17: Refining the PRA’s Pillar 2A capital framework
18.1
(1) PRA Policy Statement PS5/17: Amendments to the PRA’s rules on loan to income ratios in mortgage lending (2) FCA Finalised Guidance FG17/2: The FPC’s recommendation on loan to income ratios in mortgage lending: General Guidance
19.1
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Financial Regulation / 2 March 2017 / Issue 901 2
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Asset Management Insurance Financial Crime Enforcement
Securities and Markets
Distributed ledger technology in payment, clearing and settlement – CPMI publishes report
24.1
EMIR – Commission Delegated Regulation correcting Regulation on risk mitigation techniques for uncleared OTC derivatives published in the Official Journal
25.1
EMIR – final draft Commission Delegated Regulation adds jurisdictions to list of exempted entities
26.2
MiFID II – ESMA publishes final report on draft RTS regarding the treatment of package orders
27.1
FCA Policy Statement PS17/2: Changes to DTR 2.5: delay in the disclosure of inside information
28.1
FCA Consultation Paper CP17/5: Reforming the availability of information in the UK equity IPO process
28.2
EMIR – FCA publishes statement on variation margin deadline 28.3
Insurance
Solvency II Delegated Regulation – European Commission publishes second request to EIOPA for technical advice
31.1
Colleges of supervisors – EIOPA publishes year-end report and priorities for 2017
32.1
Transposition of the Insurance Distribution Directive – HM Treasury launches consultation
33.1
FCA Policy Statement PS17/3: Payment protection insurance complaints - feedback on CP16/20 and final rules and guidance
34.1
Financial Crime
FATF Plenary Meeting – FATF publishes outcomes and related documents
38.1
Enforcement
Market abuse – FCA publishes two Warning Notices against individuals 40.1
Discreditable conduct – Lloyd’s enforcement proceedings against an individual
41.1
General 1. Financial Stability Board
1.1 International regulatory reform – FSB gives progress update – 28 February 2017 – The Financial
Stability Board (FSB) has published information about discussions at a two day meeting it held in
Cape Town.
The FSB:
reviewed progress on the implementation of post-crisis reforms;
Financial Regulation / 2 March 2017 / Issue 901 3
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discussed the development of a consistent comprehensive framework for evaluating the effect
of the reforms — the framework is to be published before the G20 Summit in July, and will be
subject to a consultation;
discussed financial technology (FinTech), financial sector misconduct and climate-related
financial disclosures; and
held an Emerging Market and Developing Economies Forum.
More details can be found in a press release here.
2. European Commission
2.1 FinTech – speech by Vice President Valdis Dombrovskis – 28 February 2017 – Vice President
Valdis Dombrovskis, European Commissioner for Financial Stability, Financial Services and Capital
Markets Union, has delivered the keynote speech at the FinTech & Digital Innovation Conference.
In the speech, he mentions the work of the Commission’s Task Force on Financial Technology, and
indicates that it will launch a public consultation shortly on the challenges and opportunities that
Fintech offers to consumers, industry and the market. The Commission is also hosting a FinTech
conference on 23 March 2017.
Aside from this, the Commission’s forthcoming Action Plan (to be published “in the coming
weeks”) resulting from its Green Paper consultation on retail financial services, will include
provisions on new methods of remote identification in compliance with anti-money laundering
rules.
The speech is here.
See also the Securities and Markets section below for an item on CPMI publishing a report on distributed
ledger technology in payment, clearing and settlement.
3. HM Treasury
3.1 Amending the definition of financial advice – HM Treasury publishes consultation response and
FCA publishes explanatory note – 27 February 2017 – HM Treasury has published its response to
its 20 September 2016 consultation on amending the definition of “financial advice” in Article 53
of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)
(RAO) to bring it in line with the EU definition in the Markets in Financial Instruments Directive
(2014/65/EU). This comes after the Financial Advice Market Review found that firms are limiting
the amount of guidance they are giving consumers for fear of inadvertently straying into the
provision of regulated advice without meeting the relevant regulatory requirements.
Having considered the responses, the Government has decided to change the definition of
financial advice for regulated firms. With one exception, regulated firms will be giving advice only
where they provide a personal recommendation. The Government will leave the wider RAO
definition of advice as “advising on investments” in place for unregulated firms.
The Government’s consultation response includes:
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more detail on the new definition of financial advice (Chapter 2) — including how the new
definition applies to regulated firms, the boundary that applies to unregulated firms, and how
the new definition mitigates the risks posed to consumers;
a summary of the costs and benefits (Chapter 3) — an impact assessment is to be published
shortly after the statutory instrument is laid;
next steps (Chapter 4) — the FCA has published a short explanatory note explaining how the
legislative changes will affect its rules and guidance; and
a summary of the responses to consultation (Chapter 5).
A statutory instrument amending Article 53 of the RAO is to be published and laid shortly.
The FCA intends to consult on new rules and guidance, and on updating “FG15.1: Retail
Investment Advice: Clarifying the boundaries and exploring the barriers to market development”
in respect of regulated advice and personal recommendations, later in 2017.
The legislative and FCA changes are to take effect on 3 January 2018.
HM Treasury’s “Amending the definition of financial advice: consultation response” is here.
The consultation webpage is here.
The FCA explanatory note is here.
4. Prudential Regulation Authority
4.1 The Bank of England and Financial Services Act 2016 – PRA brought into the Bank of England –
1 March 2017 – Pursuant to the Bank of England and Financial Services Act 2016, which introduced
a new section 2A of FSMA 2000, on 1 March 2017, the Prudential Regulation Authority was
absorbed into the Bank of England, acting through the Prudential Regulation Committee (PRC).
The PRC replaces the PRA Board. The PRA has confirmed that there are no changes to the PRA’s
objectives or functions; all of its supervisory and policy decisions will be made by the PRC. The
Governor of the Bank, with the approval of the Chancellor, has appointed Ben Broadbent to the
PRC. The Chancellor has re-appointed all the external members of the previous PRA Board. The
terms of reference for the PRC have been published.
The press release is here.
The webpage is here.
The terms of reference for the PRC are here.
HM Treasury’s press release is here.
5. Financial Conduct Authority
5.1 FCA Handbook Notice No. 41 – February 2017 – The FCA has published Handbook Notice No. 41,
announcing changes to the rules, guidance and standard terms of the Financial Ombudsman
Service, and to the FCA Handbook, approved or made by the FCA Board on 23 February 2017.
Handbook Notice No. 41 advertises the following legal instruments:
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Handbook Administration (No 45) Instrument 2017 (FCA 2017/5 and FOS 2017/1);
Fees (Miscellaneous Amendments) (No 9) Instrument 2017 (FCA 2017/6) — this instrument
introduces an illegal money lending levy;
Disclosure Guidance and Transparency Rules Sourcebook (Delayed Disclosure) Instrument 2017
(FCA 2017/7) — for feedback on consultation, see an item on FCA Policy Statement PS17/2:
Changes to DTR 2.5: delay in the disclosure of inside information, reported in the Securities
and Markets section below;
Enforcement (Money Laundering Regulations 2007) Instrument 2017 (FCA 2017/8) — this
instrument makes changes to provide a decision-making mechanism for proposing or deciding to
cancel a registration of a relevant person or impose a civil penalty under the Money Laundering
Regulations 2007; and
Enforcement (Co-operative and Community Benefit Societies Act 2014) Instrument 2017 (FCA
2017/9) — this instrument provides firms with guidance as to how enforcement investigations
will be carried out, and provides a decision-making mechanism for cancelling or suspending
registrations for registered societies under the Co-operative and Community Benefit Societies
Act 2014.
The relevant Consultation Papers are CP16/33, CP16/38 and CP16/39.
All the instruments came into force on 24 February 2017.
The Handbook Notice is here.
The latest Handbook Instruments are available from here.
6. Financial Ombudsman Service
6.1 Latest complaints data on individual financial businesses – published by FOS – 28 February 2017
– The Financial Ombudsman Service (FOS) has released complaints data relating to banks, insurers
and other financial businesses for the second half of 2016. The figures show a slight overall
decrease compared to the first half of the year. Complaints about package bank accounts and
payment protection insurance (PPI) have fallen, but in respect of PPI this is thought to be the calm
before the storm, and payday lending complaints have increased.
The complaints data is here.
The press release is here.
7. Chartered Insurance Institute and others
7.1 Chartered Body Alliance – CII, CISI and CBI launch alliance – 1 March 2017 – The Chartered
Insurance Institute (CII), the Chartered Institute for Securities & Investment (CISI) and the
Chartered Banker Institute (CBI) have launched the Chartered Body Alliance. Under a common
brand, members of the Alliance intend to embark on a range of initiatives, including jointly
promoting the importance of professional status, establishing a level of qualification that can be
recognised as representing the "gold standard" across the sector, hosting joint events, and seeking
Financial Regulation / 2 March 2017 / Issue 901 6
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to respond with a united voice to sector consultations that affect members across all three
professional bodies.
The Chartered Body Alliance website is here.
The press release from the CII is here.
Brexit 8. European Commission
8.1 The future of Europe – European Commission publishes White Paper – 1 March 2017 – The
European Commission has published a White Paper on the future of Europe. The paper sets out
five scenarios for how the EU might evolve by 2025 depending on the choices made by the
remaining 27 members. The White Paper is the European Commission’s contribution to the Rome
Summit on 25 March 2017. It also intends to publish a series of reflection papers in coming
months, including on Economic and Monetary Union (based on the Five Presidents’ Report of June
2015). In addition, the European Commission, together with the European Parliament and
interested Member States, are to host a series of “Future of Europe Debates” across Europe's cities
and regions.
The five scenarios discussed in the White Paper are:
Scenario 1: carrying on;
Scenario 2: nothing but the Single Market;
Scenario 3: those who want to do more, do so;
Scenario 4: doing less more efficiently; and
Scenario 5: doing much more together.
President Juncker’s State of the Union speech in September 2017 and the December 2017
European Council will progress these ideas, ahead of a course of action to be rolled out in time for
the European Parliament elections in June 2019.
The White Paper webpage is here.
8.2 EU equivalence decisions in financial services policy – European Commission publishes staff
working document – 27 February 2017 – The European Commission has published a staff working
document containing an assessment of EU equivalence decisions in financial services policy.
The document includes sections on:
the purpose of equivalence — objectives and benefits, and alternative regulatory approaches;
how EU equivalence works — what EU financial services legislation says about equivalence,
and how it is determined; and
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taking stock of the Commission’s experience with equivalence — including discussion of
decisions to date, a risk-based approach to assessments and proportionality, the need to assess
both the regulatory and supervisory framework, the role of the European Supervisory
Authorities, monitoring and enforcement of third countries’ on-going compliance, and calls for
greater transparency, predictability and consistency.
The staff working document concludes that continuous work is necessary to enhance the overall
framework in the interest of better effectiveness, but that the reduction of regulatory gaps and
overlaps with non-EU jurisdictions is beneficial to the wider EU economy and is an important
catalyst of jobs and growth.
Annex 1 to the document contains an overview of existing third-country regimes.
The staff working document (SWD (2017) 102 final) is here.
9. Bank for International Settlements
9.1 Brexit and financial services – speech by Dr Andreas Dombret, Deutsche Bundesbank – 24
February 2017 – Dr Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank,
has delivered a speech on the possible impact of Brexit on the financial landscape.
Dr Dombret included discussion of:
market access — he spoke of the drawbacks to equivalence decisions, indicated that a
transitional period could help, but thought it unclear how likely such an agreement might be.
He did mention the importance of access of European banks to the UK. Dr Dombret went on to
say that negotiating free trade agreements is an arduous and time-consuming task, and that
financial services are an especially tricky area. So far, the EU has never fully integrated
finance in its free trade agreements with third countries. He suggested that financial
institutions might have to accept that we are going to end up with two separate jurisdictions,
and these might diverge over time;
whether and where to move — on outsourcing, Dr Dombret indicated that the German
Federal Financial Supervisory Authority (BaFin) and the Bundesbank “…would not accept any
empty shells or ‘letterbox companies’ where the business effectively continues to be done
out of London. For critical functions such as management, controlling and compliance,
qualified personnel need to be present at the non-UK EU subsidiary at all times. And I urge
banks not to spend their time inventing strategies to circumvent these requirements. This
includes seemingly creative solutions such as ‘fly-and-drive’ banking, where bankers fly in
daily from London, or ‘dual hatting’, where transactions are booked on the EU subsidiary but
in fact executed in London”;
what to expect and how to prepare — he indicated that economic rationale might not be the
main guiding principle in the Brexit negotiations; and
regulation and supervision — Dr Dombret warned of the need to avoid a regulatory race to
the bottom in the wake of Brexit.
The speech is here.
Financial Regulation / 2 March 2017 / Issue 901 8
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10. Financial Markets Law Committee
10.1 The shape of Brexit and its impact on UK financial markets – speech by FMLC Chief Executive,
Joanna Perkins – 31 January 2017 – The Chief Executive of the Financial Markets Law Committee,
Joanna Perkins, has delivered a speech in which she outlines the impact of Brexit on the UK
financial markets. She summarises events since the UK referendum on 23 June 2016, the options
available to the UK, the concept of equivalence, the loss of the EU’s mutual recognition
arrangements with other third countries, transitional arrangements, issues and challenges arising
from the Great Repeal Bill, difficulties in applying for authorisation in EU countries, uncertainties
in the conduct of cross-border business after Brexit, and euro clearing.
The speech is here.
The slides can be accessed here.
11. European Capital Markets Institute
11.1 Brexit and the asset management industry – ECMI produces policy brief – February 2017 – The
European Capital Markets Institute (ECMI) has produced a policy brief setting out the views of
Karel Lannoo, Chief Executive of the Brussels think-tank CEPS, outlining his opinion on the impact
of Brexit on the asset management industry. The brief includes a review of trends in the asset
management industry, an overview of the UK asset management industry from a European
perspective, discussion of the EU rules applicable, the equivalence regime, and the impact of
Brexit.
The paper suggests that Brexit will have a big impact on the asset management industry for three
reasons: (1) the passport will disappear for UK-licensed companies, which will stop or certainly
seriously hinder the trend of concentration towards the UK; (2) the equivalence regime, the basis
for third-country access to the EU, is unevenly developed across the different segments of asset
management; and (3) the value chains in asset management will be affected, with implications for
supporting firms or infrastructures. This will be disruptive for the entire European industry.
It concludes that, given the special status of the UK as a financial centre, it would be advisable to
have a more comprehensive equivalence agreement, covering all the different regulations and
directives, rather than taking the current third-country regime as the base.
The policy brief is here.
The webpage is here.
12. Payments UK
12.1 The UK’s exit from the EU: How could payments be affected? - Payments UK publishes report -
28 February 2017 – Payments UK has published a report that looks at the practical implications for
payments arising from the UK’s exit from the EU. It examines what a future relationship with the
EU could look like. In considers a bespoke agreement for mutual market access, then it considers
three alternatives: (1) remaining in the EEA; (2) re-joining the European Free Trade Area; and (3)
accessing the EU using World Trade Organisation rules. The report then examines what Brexit
could mean for payments, including: UK access to euro payment systems, the Payment Services
Directive (2007/64/EC) and PSD2 (EU) 2015/2366, passporting, the Single Euro Payments Area
(SEPA), passporting, and other relevant European policy areas.
Financial Regulation / 2 March 2017 / Issue 901 9
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The paper is here.
The press release is here.
Banking and Finance 13. Basel Committee on Banking Supervision
13.1 Basel III – Basel Committee publishes results of latest monitoring exercise – 28 February 2017 –
The Basel Committee on Banking Supervision (BCBS) has published the results of its latest Basel III
monitoring exercise, based on data as of 30 June 2016. It states that virtually all participating
banks meet Basel III minimum and target Common Equity Tier 1 capital requirements as agreed up
to end-2015. See also the results of the European Banking Authority’s exercise (reported in an
item below).
The monitoring report is here.
The report webpage is here.
The underlying data is available on the Basel Committee’s current data collection exercises
webpage here.
The press release is here.
13.2 Basel III – BCBS reaffirms commitment to finalising post-crisis Basel III reforms – 2 March 2017 –
Following this week’s meeting, the Chairman of the Basel Committee, Stefan Ingves, has made a
statement on the progress made towards the finalisation of the Basel III reforms. He indicates that
Committee members broadly support the key features of the reforms, including revisions to the
risk-weighted asset framework, the leverage ratio framework and the output floor, and that the
differences have narrowed. The Committee remains determined to reach agreement.
The press release is here.
13.3 Basel III – Basel Committee publishes second set of FAQs on Net Stable Funding Ratio – 24
February 2017 - The BCBS has published a second set of FAQs and answers on the Net Stable
Funding Ratio (NSFR) under Basel III.
The FAQs are here.
The FAQs webpage is here.
The press release is here.
14. European Banking Authority
14.1 CRD IV – CRR / Basel III monitoring exercise – EBA publishes report – 28 February 2017 – The
European Banking Authority (EBA) has published its eleventh report of the Capital Requirements
Directive (2013/36/EU) (CRD IV)-Capital Requirements Regulation (575/2013/EU) (CRR)/Basel III
monitoring exercise on the European banking system, using data as of 30 June 2016. It runs in
parallel to the Basel Committee monitoring exercise conducted at a global level (reported in an
item above). Overall, it states that the results show a further improvement in European banks’
capital positions.
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The report is here.
The press release is here.
14.2 CRR – EBA launches consultation on draft RTS on the specification of an economic downturn – 1
March 2017 – The EBA has launched a consultation on draft regulatory technical standards (RTS)
specifying the nature, severity and duration of an economic downturn according to which
institutions shall estimate the downturn loss given default and conversion factor. These draft RTS
were mandated by Articles 181(3)(a) and 182(4)(a) of the Capital Requirements Regulation
(575/2013/EU) (CRR) and form part of the EBA’s wider work on the review of the internal ratings
based (IRB) approach.
The EBA is to hold a public hearing on 4 April 2017.
The consultation period closes on 29 May 2017.
The Consultation Paper is here.
The consultation webpage is here.
The press release is here.
14.3 Recovery planning – EBA launches consultation on Recommendations on the coverage of
entities in a group recovery plan – 2 March 2017 – The EBA has launched a consultation on its
draft Recommendation on the coverage of entities in banking group recovery plans. The aim is to
define common criteria to identify entities (subsidiaries and branches) that need to be covered in
group recovery plans, and the extent of coverage. This should assist institutions and supervisors.
This is an own-initiative Recommendation. The draft recommendation elaborates on the existing
legal frameworks established by the Capital Requirements Directive (2013/36/EU), the Bank
Recovery and Resolution Directive (2014/59/EU) and the EU Commission Delegated Regulation
1075/2016, and builds on the experience the EBA has gained through thematic reviews of recovery
plans as well as through its regular attendance of several colleges of supervisors.
The consultation deadline is 2 June 2017.
The Consultation Paper is here.
The consultation webpage is here.
The press release is here.
14.4 Recovery planning – EBA publishes report – 1 March 2017 – The EBA has published its fourth
comparative report on recovering planning. The report focuses on recovery options. It finds that
overall, recovery plans in the sample provided a good overview of recovery options, although some
challenges remain. It makes suggestions for improvement.
The report is here.
The press release is here.
Financial Regulation / 2 March 2017 / Issue 901 11
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14.5 2018 EU-wide stress test – EBA agrees tentative timeline – 27 February 2017 – The European
Banking Authority (EBA) has agreed on a tentative timeline for the 2018 EU-wide stress test. It
intends that the exercise be launched at the beginning of 2018 and the results be published mid-
year. The EBA is now preparing the methodology and templates with a view to discussing plans
with the industry in summer 2017. The new methodology will be revised to take into account the
implementation of IFRS 9.
The press announcement is here.
15. European Central Bank
15.1 Targeted review of internal models – ECB publishes current version of the guide for feedback –
February 2017 – The European Central Bank (ECB) has published for feedback the current
(February 2017) version of the guide to the Targeted Review of Internal Models (TRIM). The guide
outlines the ECB’s view of appropriate supervisory practices and how the ECB intends to interpret
relevant EU law on internal models for credit, market and counterparty credit risks and on general
model governance topics.
The ECB asks for feedback by 13 April 2017.
The ECB will launch a formal public consultation on each risk type before the guide is finalised.
The guide is here.
16. European Cards Stakeholders Group
16.1 Cards standardisation – ECSG publishes SEPA Cards Standardisation Volume Version 8.0 – 1
March 2017 – The European Cards Stakeholders Group (ECSG) has published version 8.0 of the
Single Euro Payments Area (SEPA) Cards Standardisation Volume. This document defines a
standard set of requirements to enable an interoperable and scalable card and terminal
infrastructure across SEPA, based on open international card standards. It includes a new annex
providing a simplified overview of a card transaction.
The ECSG has also published consultation responses, and the ECSG response.
The webpage is here.
17. House of Commons European Scrutiny Committee
17.1 Commission proposals to amend CRR II, CRD V and BRRD II – House of Commons European
Scrutiny Committee considers information from Minister – 28 February 2017 – The House of
Commons European Scrutiny Committee has considered the European Commission’s November
2016 reform proposals in relation to the Capital Requirements Regulation (575/2013/EU) (CRR),
the Capital Requirements Directive (2013/36/EU) (CRD), and the Bank Recovery and Resolution
Directive (2014/59/EU) (BRRD II). The Committee has summarised the contents of the
Government’s explanatory memorandum and a letter of the Economic Secretary to the Treasury
(Simon Kirby) of 14 February 2017. These give an outline of the Government’s position on various
issues, the initial position of other Council members, the timetable, and the Government’s
attitude to regulation after Brexit.
On timing, the Minister states that the Maltese Presidency intends to treat the proposals as a
package, and that the Government envisages final legislative adoption of the package to take
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place no earlier than late 2018 or early 2019. Entry into force and implementation vary according
to the measure, for example, the net stable funding ratio proposal has a two year implementation
period.
The consideration of the proposals is in section 6 (pages 27 to 32) of the Committee’s 32nd report
here.
18. Prudential Regulation Authority
18.1 PRA Consultation Paper CP3/17: Refining the PRA’s Pillar 2A capital framework - February 2017
– Following a commitment made in its Annual Competition Report 2016 to address the disparity in
risk weights between firms using the standardised approach (SA) and firms that use the Internal
Ratings Based Approach (IRB), the PRA has published a Consultation Paper (CP3/17) setting out
proposed adjustments to the PRA’s Pillar 2A capital framework. The changes are intended to
ensure that the PRA’s capital standards are not overly prudent for smaller firms, and reduce
incentives for SA lenders to specialise in higher loan-to-value mortgages.
The proposed changes on which the PRA is consulting include:
refining its Pillar 2A approach for firms using the SA for credit risk. In particular, the PRA may
exercise its supervisory judgement to adjust a firm’s Pillar 2A add-ons to ensure that the total
amount of capital required to be held does not exceed the amount necessary to ensure a
sound management and coverage of its risks;
considering, as part of the supervisory review and evaluation process, the extent to which
expected credit losses in International Financial Reporting Standard (IFRS) 9 may already be
covered by the SA Pillar 1 capital charge;
updating its credit risk benchmark (the ‘IRB benchmark’) which is part of the Pillar 2A credit
risk methodology; and
amendments to the Pillar 2 reporting rules.
The consultation period closes on 31 May 2017.
The proposed implementation date for the updated Pillar 2A capital framework is 1 January 2018.
PRA Consultation Paper CP3/17 is here.
The PRA webpage for CP3/17 is here.
The press release is here.
18.2 IRB approach to credit risk – note of seminar for small firms reveals PRA intends to update
SS11/13 – 27 February 2017 – The PRA has published a note of a seminar held on 24 February 2017
for small and mid-tier banks and building societies considering applying for the Internal Ratings
Based (IRB) approach to credit risk. Among other things, it announces an intention to consult on
updating its Supervisory Statement SS11/13: “Internal Ratings Based (IRB) approaches” (November
2015) “in due course”.
The note is here.
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19. Prudential Regulation Authority and Financial Conduct Authority
19.1 (1) PRA Policy Statement PS5/17: Amendments to the PRA’s rules on loan to income ratios in
mortgage lending (2) FCA Finalised Guidance FG17/2: The Financial Policy Committee’s
recommendation on loan to income ratios in mortgage lending: General Guidance – 27 February
2017 – The PRA has published a Policy Statement (PS5/17), and the FCA has published Finalised
Guidance (FG17/2), following the Recommendations of the Bank of England’s Financial Policy
Committee (FPC) on loan to income ratios in mortgage lending.
PRA Policy Statement PS5/17
PS5/17 sets out feedback to responses to Consultation Paper CP44/16 (November 2016) and
contains the PRA’s final rules on loan to income (LTI) ratios in mortgage lending (referred to as
“LTI flow limit”), which is to operate on a four-quarter rolling basis.
The Appendix contains a link to The PRA Rulebook: CRR forms, non-CRR forms: Housing Instrument
2017. The rules came into force on 27 February 2017.
FCA Finalised Guidance FG17/2
Following Guidance Consultation GC16/8 (November 2016), Finalised Guidance FG17/2 updates
FG14/8 (October 2014) to mirror PRA rules on LTI flow limit reported above.
PRA Policy Statement PS5/17 is here.
The PRA Rulebook: CRR forms, non-CRR forms: Housing Instrument 2017 is here.
The webpage for PS5/17 is here.
FCA Finalised Guidance FG17/2 is here.
FCA Guidance Consultation GC16/8 is here.
20. Financial Conduct Authority
20.1 Loan-based crowdfunding platforms – FCA publishes “Dear CEO” letter expressing regulatory
perimeter concerns – 28 February 2017 – The FCA has published a “Dear CEO” letter to firms
operating a loan-based crowdfunding platform which facilitates loans to lending businesses,
highlighting that they may be “accepting deposits” within the meaning of Article 5 of the Financial
Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO). If that
lender does not have regulatory permission to accept deposits, this would involve a breach of
FSMA and may be a criminal offence.
The letter sets out when a lending business requires permission to accept deposits, and outlines
the action firms should take. The FCA requests that firms forward details of the actions taken by
14 March 2017.
The letter is here.
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21. Banking Standards Board
21.1 Certification regime – Banking Standards Board publishes Statement of Good Practice and
supporting guidance – 28 February 2017 – The Banking Standards Board (BSB) has published a
Statement of Good Practice, and supporting guidance on implementation, for banks and building
societies putting in place procedures to assess the fitness and propriety of staff under the new
certification regime. As part of the certification regime, firms are required to certify that all
individuals, in roles which pose a risk of significant harm, are “fit and proper” by 7 March 2017
and on an ongoing basis.
This is the BSB’s first Statement of Good Practice.
The Statement of Good Practice is here.
The supporting guidance on implementation is here.
The press release is here.
22. Payment Systems Regulator
22.1 Authorised push payment scams – PSR publishes draft Terms of Reference – 28 February 2017 –
The Payment Systems Regulator (PSR) has published for consultation draft Terms of Reference
explaining how it intends to consider the potential for payment system operators (such as Faster
Payments Service or CHAPS) to play a role in minimising consumer harm caused by authorised push
payment (APP) scams in the UK. This follows its December 2016 response to a super-complaint
from Which?, where the PSR committed to a package of measures aimed at reducing this fraud,
and making it harder to commit.
The consultation period closes on 21 March 2017.
The draft Terms of Reference are here.
The webpage for the draft Terms of Reference is here.
The press release is here.
See also the General section above for an item on the launch of Chartered Body Alliance, an alliance of
three chartered bodies across the banking, securities and insurance sectors.
See also the Brexit section above for an item on a speech by Dr Andreas Dombret, Deutsche Bundesbank.
See further the Brexit section above for an item on Payments UK publishing a report on the UK’s exit from
the EU: How could payments be affected?
See also the Securities and Markets section below for an item on CPMI publishing a report on distributed
ledger technology in relation to payment, clearing and settlement.
See also the Insurance section below for an item on FCA Policy Statement PS17/3: Payment protection
insurance complaints - feedback on CP16/20 and final rules and guidance.
See also the Enforcement section below for an item on two banks appealing a European Commission fine
in connection with a EURIBOR cartel.
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Securities and Markets 23. International Organization of Securities Commissions and Committee on Payments and Market
Infrastructures
23.1 Harmonisation of the UTI – IOSCO and CPMI publish technical guidance – 28 February 2017 – The
International Organization of Securities Commissions (IOSCO) and the Committee on Payments and
Market Infrastructures (CPMI) have published technical guidance to authorities to enable them to
set rules on assigning unique transaction identifiers (UTIs) to over-the-counter derivatives
transactions.
The technical guidance covers:
the circumstances in which a UTI should be used;
the impact life cycle events should have on the UTI;
which entity (or entities) should be responsible for generating UTIs;
when UTIs should be generated; and
the UTI’s structure and format.
The report is here.
The webpage is here.
The press release is here.
24. Committee on Payments and Market Infrastructures
24.1 Distributed ledger technology in payment, clearing and settlement – CPMI publishes report – 27
February 2017 – The CPMI has published a report setting out an analytical framework for central
banks and other authorities to review and analyse the use of blockchain and other distributed
ledger technology in payment, clearing and settlement activities.
The report is here.
The webpage is here.
The press release is here.
25. Official Journal of the European Union
25.1 EMIR – Commission Delegated Regulation correcting Regulation on risk mitigation techniques
for uncleared OTC derivatives published in the Official Journal – 25 February 2017 – Commission
Delegated Regulation (EU) 2017/323 of 20 January 2017 has been published in the Official Journal
of the European Union. The Regulation corrects Delegated Regulation (EU) 2016/2251 of 4 October
2016 which supplements EMIR (648/2012/EU) with regard to regulatory technical standards for
risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty.
The Regulation applied from 4 January 2017.
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Commission Delegated Regulation (EU) 2017/323 is here.
26. European Commission
26.1 Capital Markets Union – European Commission publishes report on addressing national barriers
to capital flows – 27 February 2017 – As part of its capital markets union initiative, the European
Commission has published a report on addressing national barriers to capital flows. The report
discusses a number of barriers, and proposes a roadmap of actions in areas of national
competence for member states.
Barriers examined include:
barriers to the cross-border distribution of investment funds — these include marketing
requirements, administrative arrangements, and regulatory fees for cross-border marketing;
requirements on investment by pension funds;
differing national approaches to crowdfunding;
residence requirements imposed on the managers of financial market players;
insufficient financial literacy;
differences in national insolvency regimes;
discriminatory and burdensome procedures for withholding tax relief; and
other issues.
Possible barriers that might be examined in the future include: national reporting requirements
imposed on top of existing EU legislation; barriers to the online distribution of investment funds;
barriers faced by smaller institutional investors which are not eligible for a MiFID passport; or
barriers related to the distribution of retail financial products.
The report is here.
26.2 EMIR – final draft Commission Delegated Regulation adds jurisdictions to list of exempted
entities – 2 March 2017 – The European Commission has published the final draft of a Commission
Delegated Regulation (C(2017) 1324) amending the European Market Infrastructure Regulation
(648/2012/EU) (EMIR) to add central banks and public bodies charged with or intervening in the
management of the public debt from Australia, Canada, Hong Kong, Mexico, Singapore, and
Switzerland to the list of exempted entities.
The draft Delegated Regulation is here.
27. European Securities and Markets Authority
27.1 MiFID II – ESMA publishes final report on draft RTS regarding the treatment of package orders –
28 February 2017 – The European Securities and Markets Authority (ESMA) has published its final
report on draft regulatory technical standards (RTS) on package orders for which there is a liquid
market under the Markets in Financial Instruments Regulation (600/2014/EU).
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ESMA submitted the final report to the European Commission on 27 February 2017. The
Commission has three months to decide whether to endorse the draft RTS.
The Final Report is here.
The draft Commission Delegated Regulation is here.
The press release is here.
28. Financial Conduct Authority
28.1 FCA Policy Statement PS17/2: Changes to DTR 2.5: delay in the disclosure of inside
information - February 2017 - The FCA has published a Policy Statement (PS17/2) summarising the
feedback received to its Consultation Paper (CP16/38) of November 2016. PS17/2 also contains
final rules amending the Disclosure Guidance and Transparency Rules (DTR 2.5) to ensure that the
FCA complies with ESMA’s 20 October 2016 Guidelines on delay in the disclosure of inside
information under the Market Abuse Regulation (596/2014/EU) (MAR).
The revised Handbook text in DTR 2.5 came into force on 24 February 2017.
PS17/2 is here.
The Policy Statement webpage is here.
28.2 FCA Consultation Paper CP17/5: Reforming the availability of information in the UK equity IPO
process – March 2017 - Following on from Discussion Paper CP16/3: Availability of information in
the UK Equity IPO process (April 2016), the FCA has published a Consultation Paper (CP17/5)
proposing a package of measures intended to improve the availability and quality of information
available in the IPO process. CP17/5 also considers whether it is appropriate to apply the
proposals to IPOs on MTFs, notably the AIM and NEX Exchange growth markets.
The FCA has also published a speech by its Executive Director of Strategy and Competition,
Christopher Woolard, in which he talks about the FCA’s proposals to reform the IPO process in the
context of the FCA’s wider objectives and strategy in relation to primary markets.
The consultation period closes on 1 June 2017.
Depending on the nature of feedback, the FCA expects to publish a Policy Statement outlining any
Handbook changes later in 2017.
CP17/5 is here.
The consultation webpage is here.
The speech is here.
The press release is here.
28.3 EMIR – FCA publishes statement on variation margin deadline – 23 February 2017 – Following the
statements made by the European Supervisory Authorities (ESAs) and IOSCO, reported in this
Bulletin last week, the FCA has published a statement regarding the 1 March 2017 deadline for
exchanging variation margin under EMIR. As suggested by the ESAs, the regulator intends to adopt
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a risk-based approach and use judgment as to the adequacy of firms’ progress, taking into account
the specific circumstances of particular firms, and the credibility of the plans they have made.
Where a firm has not been able to comply fully, the FCA expects it to demonstrate best efforts to
achieve full compliance, and be ready to explain (with detailed and realistic plans) how it will
achieve compliance for all in-scope transactions entered into from 1 March 2017.
The statement is here.
See also the General section above for an item on a speech by Commission Vice President Valdis
Dombrovskis on FinTech.
See further the General section above for an item on the launch of Chartered Body Alliance, an alliance of
three chartered bodies across the banking, securities and insurance sectors.
See also the Enforcement section below for an item on two banks appealing a European Commission fine
in connection with a EURIBOR cartel.
See further the Enforcement section below for an item on the FCA publishing two Warning Notices against
individuals for market abuse.
Asset Management
See the Brexit section above for an item on an ECMI policy brief on Brexit and the asset management
industry.
Insurance 29. International Association of Insurance Supervisors
29.1 Systemic risk assessment and policy – IAIS announces workplan – 28 February 2017 – The
International Association of Insurance Supervisors (IAIS) is developing an activities-based approach
to assessment of potential systemically risky activities in the insurance sector. Accordingly, it has
adopted a systemic risk assessment and policy workplan.
The webpage for the press release is here.
30. Official Journal of the European Union
30.1 Solvency II – Commission Implementing Regulation on calculation of technical provisions and
basic own funds published in Official Journal – 28 February 2017 – Commission Implementing
Regulation (EU) 2017/309 of 23 February 2017 laying down technical information for the
calculation of technical provisions and basic own funds for reporting with reference dates from 31
December 2016 until 30 March 2017 in accordance with Solvency II (2009/138/EC) has been
published in the Official Journal of the European Union.
The Regulation applies from 31 December 2016.
Commission Implementing Regulation (EU) 2017/309 is here.
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31. European Commission
31.1 Solvency II Delegated Regulation – European Commission publishes second request to EIOPA for
technical advice – February 2017 – The European Commission has published a second request for
the European Insurance and Occupational Pensions Authority (EIOPA) to provide technical advice
on the review of specified items in the Solvency II Delegated Regulation (EU) 2015/35. This
additional request for technical advice concerns unjustified constraints to financing, with a view
to removing barriers to investments in unrated bonds and loans and in unlisted equity, in order to
improve insurers' ability to invest in private placement offerings and in private equity. The specific
items on which advice is sought are set out in section 3 of the request.
The Commission calls for the technical advice by 28 February 2018.
The first call for technical advice (dated 18 July 2016) is here.
The second call for technical advice (dated 22 February 2017) is here.
32. European Insurance and Occupational Pensions Authority
32.1 Colleges of supervisors – EIOPA publishes year-end report and priorities for 2017 – 1 March
2017 – The European Insurance and Occupational Pensions Authority (EIOPA) has published a year-
end report for 2016 on the functioning of colleges of supervisors, and priorities for 2017.
The report is here.
33. HM Treasury
33.1 Transposition of the Insurance Distribution Directive – HM Treasury launches consultation – 27
February 2017 – HM Treasury has launched a consultation on the transposition of the Insurance
Distribution Directive (EU) 2016/97 (IDD). In accordance with its policy on EU legislation coming
into force before Brexit, the UK Government intends to transpose and implement the IDD to
schedule. The IDD is to be transposed through a combination of legislation and FCA rules. This
consultation is on policy and proposed legislation. The FCA is to consult separately on changes to
its rules.
The consultation paper includes discussion of:
which insurance contracts will be in scope of regulation (Chapter 2) — this discusses changes
to the specifics of the exemptions, and also seeks views on those add-on products which the
Government previously decided to bring into regulation which were not required by the
Insurance Mediation Directive (2002/92/EC) (namely travel insurance and extended warranties
for motor vehicles);
which activities will be regulated (Chapter 3) — the Government is minded not to legislate for
a broad exemption for introducers, but to amend the FSMA 2000 (Regulated Activities) Order
(SI 2001/544) so that arrangements which involve only the provision of information are out of
the scope of regulation; and
how firms will be regulated (Chapter 4) — the Government intends to amend FSMA 2000,
including:
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to require the appropriate UK regulator to determine applications for authorisation to carry
out insurance distribution activities within 3 months rather than the current 6 months;
to require the appropriate UK regulator to publish the details of any sanctions or other
measures it has taken;
to require the appropriate UK regulator to inform the European Insurance and Occupational
Pensions Authority (EIOPA) of any supervisory action (sanctions or other measures) it has
taken, and any appeal against those actions;
to amend the processes for UK firms intending to exercise passporting rights in the EEA;
to set out the circumstances where the appropriate UK regulator, as the host state
regulator, can intervene in the event of a breach, and the conditions that must be met and
steps that must be taken to do so;
to set out the UK regulator’s powers to intervene with respect to an EEA firm, operating in
the UK under the freedom of establishment, contravening the IDD; and
to give the appropriate UK regulator powers to enter into (and publish details of) an
agreement with a firm’s home state regulator in an EEA member state, to act as if it were
the home state regulator.
The draft Insurance Distribution (Regulated Activities and Miscellaneous Amendments) Order 2017
has been published as Annex B to the consultation paper.
An impact assessment has been published as Annex C to the consultation paper.
The consultation period closes on 22 May 2017.
The Government intends to make the legislation “in the later stages of this year”.
The IDD must be transposed into national law by 23 February 2018.
The consultation paper is here.
Annex B (the draft legislation) is here.
Annex C (the impact assessment) is here.
The consultation webpage is here.
34. Financial Conduct Authority
34.1 FCA Policy Statement PS17/3: Payment protection insurance complaints - feedback on
CP16/20 and final rules and guidance – 2 March 2017 – The FCA has published Policy Statement
PS17/3 containing its response to the feedback it received on its consultation “CP16/20: Rules and
guidance on payment protection insurance complaints: feedback on CP15/39 and further
consultation” (August 2016), and final rules and guidance (which contain some amendments from
its original proposals).
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The FCA has adopted a new rule setting a deadline of 29 August 2019 for consumers to complain
about the way they were sold PPI. There is to be an FCA-led consumer communications campaign
to be launched in August 2017, designed to inform consumers of this deadline, funded by a new
fee from eighteen firms. There are also new rules and guidance on the handling of PPI complaints
in light of the Supreme Court’s decision in Plevin v Paragon Personal Finance Limited.
The new rules and guidance in the Dispute Resolution: Complaints sourcebook (DISP) will come
into effect on 29 August 2017.
When the final rules and guidance on PPI complaints in light of Plevin come into force, the FCA
will expect firms to provide fair and prompt final responses to complaints they have put on hold.
The new fee rule will come into effect on 31 March 2017, with the first half of the fee to be
collected in April 2017.
PS17/3 is here.
The holding page is here.
The instruments amending the Handbook are here and here.
A flowchart outlining the new basis for making a PPI complaint is here.
The press release is here.
35. City of London Law Society
35.1 Insurance special purpose vehicles – CLLS responds to the PRA and FCA’s consultation – 28
February 2017 – The Insurance Law Committee of the City of London Law Society (CLLS) has
responded to the PRA (CP42/16) and FCA’s (CP16/34) November 2016 consultation on the
authorisation and supervision of insurance special purpose vehicles, which are intended to
facilitate insurance linked securities business. The comments relate to the draft PRA supervisory
statement "Authorisation and supervision of insurance special purpose vehicles" which is contained
in Appendix 1 to the CP.
The response is here.
The consultation paper is here.
36. Investment & Life Assurance Group
36.1 Investment and life assurance - ILAG publishes note of meeting with PRA – 1 March 2017 – The
Investment & Life Assurance Group (ILAG) has published a note of its meeting with the PRA on 3
November 2016. In this meeting, various topics were discussed, including whether there was still a
rule requirement for insurers to submit financial statements to the PRA as it is no longer in the
rulebook, EIOPA’s use of information from firms, infrastructure project entity funding, Solvency II
matching adjustments and the future for cash flow matching and risk-based capital.
The note is here.
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37. Information Commissioner’s Office and Financial Conduct Authority
37.1 Big data and the insurance sector – ICO publishes summary of joint forum with FCA – 1 March
2017 – The Information Commissioner’s Office (ICO) has published a summary of views expressed
at a forum held jointly with the FCA on 16 January 2017 on the use of data in retail general
insurance. The forum followed the FCA’s Feedback Statement FS16/5: Call for Inputs on Big Data
in retail general insurance (September 2016). The document provides an overview of three areas
discussed at the forum: social media; obtaining consent and transparency of data; and data
protection risks.
In the coming months, the ICO is planning to issue an updated review of Big Data, and further
guidance on the General Data Protection Regulation (EU) 2016/679.
An ICO blog, which contains a link to the document, is here.
See also the General section above for an item on the launch of Chartered Body Alliance, an alliance of
three chartered bodies across the banking, securities and insurance sectors.
See also the Enforcement section below for an item on Lloyd’s enforcement proceedings against an
individual for discreditable conduct.
Financial Crime 38. Financial Action Task Force
38.1 FATF Plenary Meeting – FATF publishes outcomes and related documents - 24 February 2017 -
The Financial Action Task Force (FATF) has published the outcomes of its plenary meeting held in
Paris on 22-24 February 2017. These include:
a revised Methodology (specifically Recommendation 5 and Immediate Outcome 9) for
assessing how countries criminalise terrorist financing;
discussion of FATF work on improving transparency and beneficial ownership;
discussion of the impact of recent FATF work on de-risking;
discussion of the mutual evaluation report of Sweden — expected to be published at the end of
April 2017;
a statement on Brazil’s progress in addressing deficiencies identified in its mutual evaluation
reports since FATF’s statement of October 2016;
a statement identifying countries or jurisdictions with strategic AML/CFT deficiencies for
which they have identified an action plan; and
a statement identifying countries or jurisdictions subject to a FATF call.
The outcomes of the plenary meeting are here.
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39. European Parliament
39.1 5MLD – European Parliament Committees vote to adopt report – 28 February 2017 – The
Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE)
Committees of the European Parliament have voted to adopt an amended version of their draft
report on the proposed Fifth Money Laundering Directive (5MLD) which will amend the Fourth
Money Laundering Directive (EU) 2015/849 (4MLD). They also decided to open interinstitutional
negotiations. Parliament as a whole must now give this the go-ahead in the March plenary session.
The press release is here.
The procedure file is here.
See also the General section above for an item on a speech by Commission Vice President Valdis
Dombrovskis on FinTech.
See also the Banking and Finance section above for an item on an FCA “Dear CEO” letter to loan-based
crowdfunding platforms expressing regulatory perimeter concerns.
See further the Banking and Finance section above for an item on the PSR publishing draft Terms of
Reference relating to authorised push payment scams.
See also the Enforcement section below for an item on the FCA publishing two Warning Notices against
individuals for market abuse.
Enforcement 40. Financial Conduct Authority
40.1 Market abuse – FCA publishes two Warning Notices against individuals – 26 January 2017 – The
FCA has published two Warning Notice Statements (17/3 and 17/4) against bank employees who
were approved persons, alleging market abuse in breach of sections 118(2) (insider trading) and
(3) (disclosure of inside information) respectively of the Financial Services and Markets Act 2000.
The FCA makes clear that this is not its final decision; the individual has the right to make
representations to the Regulatory Decisions Committee which, in the light of those
representations, will decide on the appropriate action and whether to issue a decision notice. If a
decision notice is subsequently issued by the FCA, the individual has the right to refer the matter
to the Upper Tribunal.
Warning Notice Statement 17/3 is here.
Warning Notice Statement 17/4 is here.
41. Lloyd’s of London
41.1 Discreditable conduct – Lloyd’s enforcement proceedings against an individual – 1 March 2017 –
The Society of Lloyd’s has published a market bulletin on enforcement proceedings taken against
Mr Charles Christopher O’Sullivan, which attaches a notice of censure. Mr O’Sullivan was found
guilty of three charges of disreputable conduct at a Lloyd’s Enforcement Tribunal. Among other
things, his permission to transact insurance business at Lloyd’s has been permanently revoked. The
Lloyd’s Appeal Tribunal upheld the decision, but made a reduction to the amount of costs
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payable. Following a request under the Enforcement Byelaw, the Council confirmed the sanctions
imposed, but clarified that one charge of misconduct was abandoned by Lloyd’s, and one
allegation was found not proved.
The market bulletin is here.
42. Recent cases
42.1 EURIBOR cartel – two banks appeal European Commission fine – 17 February 2017 - HSBC
Holdings (and others) and JPMorgan Chase (and others) have lodged actions for annulment against
the European Commission decision of 7 December 2016 to impose fines totalling €485 million on
three banks that did not settle an investigation into a cartel in the euro interest rate derivatives
market. Four other banks reached a settlement with the Commission in December 2013. No case
documents have yet been published.
The case file for HSBC Holdings and Others v Commission, Case T-105/17, is here.
The case file for JPMorgan Chase and Others v Commission, Case T-106/17 here.
42.2 R (Aviva Life & Pensions (UK) Ltd) v Financial Ombudsman Service and others, [2017] EWHC
352 (Admin), 27 February 2017
Judicial review of FOS decision — need to give adequate reasons when departing from the
relevant law — section 228 FSMA 2000
In judicial review proceedings, the High Court has quashed a decision of the Financial Ombudsman
Service (FOS). The FOS conceded that the decision of its Ombudsman should be quashed on the
basis that it did not give sufficient reasons for the decision to depart from the relevant law, as
required by R (Heather Moor & Edgecomb) v FOS [2008] EWCA Civ 642. Mr Justice Jay, after
reviewing the authorities, expressed personal concerns about a jurisdiction that is based on what
is fair and reasonable, rather than the law.
The decision is here.
42.3 Full Circle Asset Management Ltd v Financial Ombudsman Service Ltd and others, [2017]
EWHC 323 (Admin), 24 February 2017
Judicial review of FOS decision — findings of skilled persons report on level of risk did not dispose
of complaint about suitability
The High Court (Mr Justice Nicol) has dismissed an investment manager’s application for judicial
review of a decision of the Financial Ombudsman Service (FOS).
The firm provided a model portfolio discretionary investment service. The Ombudsman had upheld
a complaint from one of the firm’s customers, even though she was a medium risk investor, a
skilled person’s report had confirmed that the portfolio was properly described as medium risk,
and the FCA had accepted the findings of the report.
The Court found that the Ombudsman had made a finding of fact that the firm had made a
personal recommendation to her. Accordingly, the fact that a skilled person had determined that
the portfolio was medium risk did not dispose of the complaint. The Ombudsman concluded that
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the portfolio was not suitable for her. In so doing, he was not departing from the standard the FCA
had approved without explanation.
The decision is here.
43. Law Society
43.1 Legal Professional Privilege – Law Society publishes practice note defending justifiable claims –
24 February 2017 – Following consultation, the Law Society has published a practice note on legal
professional privilege (LPP). The note seeks to clarify the status and main principles of LPP, and
summarise practitioners’ duties. It comes after certain regulatory bodies and enforcement
authorities have voiced concerns that they sometimes see LPP being used to frustrate their efforts
to undertake fully informed investigations.
The practice note includes that statement:
“If … clients justifiably assert their privilege, then, in accordance with long-standing
common law principles, they should not in any way be criticised or penalised for doing so,
nor regarded as being uncooperative…”
The practice note is here.
The press release is here.
See also the General section above for an item on FCA Handbook Notice No. 41.
See also the Banking and Finance section above for an item on an FCA “Dear CEO” letter to loan-based
crowdfunding platforms expressing regulatory perimeter concerns.
See also the Securities and Markets section above for an item on the FCA publishing a statement on the 1
March 2017 variation margin deadline under EMIR.
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This Bulletin is prepared by the Financial Regulation Group of Slaughter and May in London.
The Group comprises a team of lawyers with expertise and experience across all sectors in which
financial institutions operate.
We advise on regulatory issues affecting firms across the financial services sector, including
banks, investment firms, insurers and reinsurers, brokers, asset managers and funds, non-bank
lenders, payment service providers, e-money issuers, exchanges and clearing systems. We also
advise non-regulated businesses involved in financial regulatory matters. In addition, our leading
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requiring specialist knowledge of financial services regulation together with experience in high
profile and complex investigations and contentious regulatory matters.
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Our Financial Regulation Group also produces occasional briefing papers and other client
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The Group’s recent work includes advising:
A number of banking groups in relation to banking structural reforms, including the
ring-fencing regime;
UK Asset Resolution on the sale of a £13bn asset portfolio, and of NRAM plc, to Cerberus Capital
Management;
Värde Partners on the sale of NewDay to Cinven and CVC Capital Partners;
esure Group plc and Gocompare.com Group plc in relation to a demerger of Gocompare.com
through a separate listing on the main market of the London Stock Exchange;
Deutsche Bank in relation to several simultaneous investigations in multiple jurisdictions
relating to LIBOR and a global financial services institution on the investigation by a number
of regulators into foreign exchange trading;
Funds advised by Pollen Street Capital on the sale of Target Group to a wholly-owned subsidiary
of Tech Mahindra Limited;
A range of financial services clients on responding to the legal and structural implications of the
UK’s exit from the EU; and
A number of multi-national clients in relation to the UK, EU, and US economic and trade
sanctions regimes.
If you would like to find out more about our Financial Regulation Group or require advice on a
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