This weekly update from Clyde & Co's financial services regulatory team summarises new developments as reported by the FCA, the PRA, the UKLA, the Upper Tribunal, the Financial Ombudsman Service and the London Stock Exchange over the past week, with links to the full documents where these are available.
We hope that you will find this update useful.
Consultation papers:
No new developments this week.
Discussion papers:
No new developments this week.
Policy statements:
No new developments this week.
Press releases:
15 January 2014: Three arrested in FCA boiler room investigation. The FCA, with the assistance of the City of London Police, has executed search warrants at six addresses in Kent, Essex, and Bedfordshire. Three individuals were arrested and interviewed in connection with an investigation into boiler room activity.
http://www.fca.org.uk/news/ three-arrested-in-fca-boiler-room-investigation
Speeches:
No new developments this week.
Final notices:
13 January 2014: FCA Final Notice 2014: Residential Facilities Management Limited. The FCA has issued a Final Notice cancelling the permission granted to Residential Facilities Management Limited (Residential Facilities) under the Financial Services and Markets Act 2000 (FSMA). Residential Facilities failed to comply with the regulatory requirement to submit its Retail Mediation Activities Return and has not been open and co-operative in all its dealings with the FCA. It has therefore failed to comply with Principle 11 of the FCA's Principles for Businesses (dealing with regulators in an open and cooperative way), and to satisfy the Threshold Conditions in relation to the regulated activities for which it had permission.
13 January 2014: FCA Final Notice: Usman International UK Limited. The FCA has issued a Final Notice cancelling the registration granted to Usman International UK Limited (Usman) as an Authorised Payment Institution under the Payment Services Regulations. Usman failed to submit the Authorised Payment Institution Capital Adequacy return, and to respond adequately to repeated FCA requests that it submit this. This has led the FCA to conclude that Usman failed to demonstrate a readiness and willingness to comply with its ongoing regulatory obligations and to deal with the FCA in an open and co-operative way.
http://www.fca.org.uk/your-fca/documents/final-notices/2014/usman-international-uk-limited
Application refusals:
No new developments this week.
Approved person refusals:
No new developments this week.
Research publications:
No new developments this week.
Consumer research:
No new developments this week.
Other FCA and PRA publications:
17 January 2014: FCA update on independent review of Royal Bank of Scotland's treatment of business customers in financial difficulty. The FCA has appointed Promontory Financial Group and Mazars to conduct an independent skilled persons report under section 166 of FSMA. The report will examine Royal Bank of Scotland's treatment of business customers in financial difficulty and consider allegations of poor practice set out in the report by Dr Lawrence Tomlinson. The FCA expects to publish the outcomes from the review in the third quarter of 2014.
16 January 2014: FCA FG14/1 - Supervising retail investment advice: inducements and conflicts of interest. The FCA has published finalised guidance on inducements, making it clear that financial advisers and product providers share the responsibility of managing potential conflicts of interests when receiving and making payments under service and distribution agreements. The guidance follows a review that found payments were still being made that could result in advisory firms favouring one product provider over another, undermining the aims of the Retail Distribution Review (RDR).
Finalised guidance: http://www.fca.org.uk/news/fg14-01- supervising-retail-investment-advice-inducements-and-conflicts-of-interest
Press release: http://www.fca.org.uk/news/finalised-guidance-inducements
16 January 2014: ICO finds FCA breached FOIA. The Information Commissioner's Office (ICO) has published a decision notice (dated 7 January 2014) relating to a complaint from an individual about the FCA's refusal to comply with a request for information under the Freedom of Information Act 2000 (FOIA). While investigating the FCA's response to the information request, the ICO became aware of the possibility that the complainant and the FCA shared different interpretations of the scope of the request. In the light of this, and taking other factors into account, the ICO decided that the FCA failed to act on the complainant's intended alternative reading of the request and was in breach of section 1(1) (rights of access) of the FOIA.
http://ico.org.uk/~/media/documents/decisionnotices/2014/ fs_50496791.pdf
15 January 2014: FCA webpage on local authorities and interim permission for consumer credit activities. The FCA has published a new webpage advising local authorities that some of their consumer credit lending activities are to be regulated, and authorities that carry out these activities will have to register with the FCA for interim permission before 1 April 2014 (when consumer credit regulation transfers from the OFT to the FCA). In the past, many local authorities have not been required to hold an OFT consumer credit licence, however, from 1 April 2014, where a local authority carries on certain unsecured lending this will be regulated by the FCA. The FCA will provide further information on the activities requiring permission when the draft secondary legislation has been made.
http://www.fca.org.uk/firms/firm-types/consumer-credit/ consumer-credit-interim/local-authorities
14 January 2014: FCA Board appoints three new members to the Regulatory Decisions Committee. The FCA Board has appointed three new members to the Regulatory Decisions Committee (RDC): Dame Elizabeth Neville (the former chief constable of Wiltshire Police), Pauline Wallace (a former senior partner at PwC), and Peter Craddock (former Group Operations Director at Perspective Financial Group Limited).
http://www.fca.org.uk/news/fca-board-appoints-three-new-rdc-members
14 January 2014: PRA Solvency II Q&As. The PRA has published Q&As relating to the Solvency II Directive. The Q&As were collated at the PRA's Solvency II industry briefings held on 12 December 2013 and cover:
- Proportionality
- PRA's supervisory statement on preparing for Solvency II (SS4/13)
- Standard formula
- Early warning indicators
- Trialogue discussions during the fourth quarter of 2012
- PRA's approach for third country branches
http://www.bankofengland.co.uk/pra/Documents/ solvency2/qadecember2013.pdf
13 January 2014: FCA policy development update no 9. The FCA has published its policy development update for December 2013 (PDU no 9), which summarises the publications that the FCA proposes to publish. The update also indicates the changes to the publishing schedule set out in the FCA's PDU no 7, published on 5 November 2013.
http://www.fca.org.uk/static/documents/handbook/pdu- 009.pdf
UKLA publications:
No new developments this week.
Upper Tribunal (Tax and Chancery Chamber):
No new developments this week.
Financial Ombudsman Service (FOS):
No new developments this week.
London Stock Exchange (LSE):
No new developments this week.
Legislative updates:
17 January 2014: Council of EU publishes revised text of MCD. The Council of the EU has published the revised text of the proposed Mortgage Credit Directive (MCD). The European Parliament adopted the provisional text of the proposed MCD at first reading at its plenary session on 10 December 2013.
http://register.consilium.europa.eu/pd/en/13/pe00/pe00025. en13.pdf
17 January 2014: European Parliament to consider CSMAD proposal at 3 to 6 February 2014 plenary session. The European Parliament has updated its procedure file on the proposed Directive on criminal sanctions for insider dealing and market manipulation (CSMAD). The procedure file now indicates that Parliament will consider the CSMAD at its 3 to 6 February 2014 plenary session. The CSMAD, together with the proposed Regulation on insider dealing and market manipulation (MAR), make up the MAD II legislative proposals that will replace the Market Abuse Directive (MAD).
http://www.europarl.europa.eu/oeil/popups/ ficheprocedure.do?type=PROC&year=2011&number=0297
17 January 2014: European Parliament to consider MLD4 at 2 to 3 April 2014 plenary session. The European Parliament has updated its procedure file on the proposed Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing (known as the Fourth Money Laundering Directive or MLD4). The procedure file now indicates that Parliament will consider MLD4 at its 2 to 3 April 2014 plenary session.
http://www.europarl.europa.eu/oeil/popups/ ficheprocedure.do?reference=2013/0025(COD)&l=en
15 January 2014: Draft statutory instruments on FCA consumer credit regulation published. Draft versions of the following statutory instruments have been published on legislation.gov.uk:
The Financial Services and Markets Act 2000 (Consumer Credit) (Designated Activities) Order 2014: specifies the circumstances under which an authorised person will be guilty of a criminal offence if they carry on certain consumer credit regulated activities
The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014: specifies additional credit-related activities that should be treated as regulated activities for the purposes of the Financial Services and Markets Act 2000 (FSMA)
These Orders have been laid before Parliament and must be approved by a resolution of each House of Parliament before they can be made. The Orders relate to the transfer of consumer credit regulation from the OFT to the FCA, which will take place on 1 April 2014.
The Financial Services and Markets Act 2000 (Consumer Credit) (Designated Activities) Order 2014: http://www. legislation.gov.uk/ukdsi/2014/9780111108352/pdfs/ ukdsi_9780111108352_en.pdf
The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014: http://www. legislation.gov.uk/ukdsi/2014/9780111108376/pdfs/ ukdsi_9780111108376_en.pdf
14 January 2014: Trialogue agreement on MiFID II. The European Parliament has published a press release announcing that informal political agreement in trialogue has been reached on the proposed MiFID II Directive and the proposed Markets in Financial Instruments Regulation (MiFIR) (the MiFID II legislative proposals). The MiFID II legislative proposals will replace and recast the Markets in Financial Instruments Directive (MiFID).
http://www.europarl.europa.eu/pdfs/news/expert/
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
