This weekly update from Clyde & Co's Financial Services Regulatory Team summarises new developments as reported by the FSA, 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.
Consultation papers:
No new developments this week.
Discussion papers:
No new developments this week.
Policy statements:
No new developments this week.
Press releases:
21 February: FSA obtains interim injunction to halt unauthorised deposit-taker. The FSA has obtained an interim injunction against Stuart Carl Mudge and Anthony John Lewis which prevents them from accepting any further investments in the Churchgate Trading Syndicate (Churchgate) and has frozen their assets. Since 2010, it appears that Mudge and Lewis, either personally or trading as Churchgate, have accepted approximately £5 million from UK investors by guaranteeing returns generated by trading in spread betting. The FSA is concerned that this was done without the necessary approval from the FSA which may have put investors' funds at risk of falling outside of the protection of the Financial Services Compensation Scheme and the jurisdiction of the Financial Ombudsman Service.
Speeches:
23 February: An update on the FSA's investigations and enforcement regime by Tracey McDermott. Acting director of the FSA's Enforcement and Financial Crime Division (EFCD), Tracy McDermott made a speech at a recent City and Financial Conference in which she focuses primarily on the changes due in the coming year with the introduction of the Financial Conduct Authority ("FCA") which will take over the FSA's enforcement responsibilities and how the FCA will differ to the current body. Specifically: ––Credible deterrence will remain a key weapon of the FCA and the foundations laid by the FSA will be built upon to ensure results; ––The FCA will respond to the government's expectations of stronger intervention in financial services with an additional focus on early intervention so that action can be taken before risks materialise. In addition, firms doing the bare minimum to comply will find that the FCA has a significantly lower tolerance; and ––In the meantime, the FSA will continue its investigations, and some significant recent examples of the success of these were outlined.
Bulletins and newsletters:
24 February: Policy Development Update Issue No. 144. The FSA has published a Policy Development Update which outlines all of the publications issued since its last update on 27 January 2012. This includes information about recent Handbook-related and other developments, other publications including consumer guidance, guidance consultations and finalised guidance as well as an updated timetable for forthcoming publications.
http://www.fsa.gov.uk/static/pubs/newsletters/pdu-newsletter-feb12.pdf
Final notices:
24 February: Khuram Ayub. The FSA has issued a final notice, dated 24 February 2012, cancelling the registration granted to Khuram Ayub as a small payment institution under the Payment Services Regulations 2009. Mr Ayub failed to submit the Payment Services Directive Transactions return for the year ending 31 December 2010, which was due on 31 January 2011 and failed to respond to the FSA's repeated requests that he do so. My Ayub has not referred this matter to the Upper Tribunal.
http://www.fsa.gov.uk/static/pubs/final/khuram-ayub.pdf
20 February: Stone Futures Limited. The FSA has issued a final notice, dated 20 February 2012, cancelling permission for Stone Futures Limited ("Stone Futures") to carry on regulated activities. Stone Futures failed to pay fees and levies of £6,344.55 owed to the FSA despite repeated requests to do so. This failing has lead the FSA to the conclusion that Stone Futures is no longer conducting its business soundly, prudently or in compliance with proper standards and is therefore failing to satisfy the Threshold Conditions in relation to the regulated activities for which it had Part IV permission.
http://www.fsa.gov.uk/static/pubs/final/stone-futures.pdf
20 February: Duncan Brown & Co LLP. The FSA has issued a final notice, dated 20 February 2012, cancelling permission for Duncan Brown & Co LLP ("Duncan Brown") to carry on regulated activities. Duncan Brown failed to pay fees and levies of £8,663.06 owed to the FSA despite repeated requests to do so. This failing has lead the FSA to the conclusion that Duncan Brown is no longer conducting its business soundly, prudently or in compliance with proper standards and is therefore failing to satisfy the Threshold Conditions in relation to the regulated activities for which it had Part IV permission.
http://www.fsa.gov.uk/static/pubs/final/duncan-brown.pdf
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 FSA publications:
20 February: FSA announcement relating to suspension of shares by CPP Group Ltd. The FSA has announced that it has accepted a request made by CPP Group Ltd ("CPP") to suspend the listing of its shares with immediate effect, following discussions with the FSA around the sale of CPP's card protection and identity protection products in the UK. Due to disclosure obligations, CPP will still be obliged to update the market with material developments whilst suspended. This follows a previous announcement by the firm, in March 2011, that it was the subject of an investigation by the FSA which still had serious concerns about the manner in which customers were being sold identity theft and card protection policies by CPP. The FSA's investigation is ongoing and, as a result, it is likely that CPP will be required to carry out a past business review of the direct sales it made for both of these products and, if appropriate, may be required to pay redress.
The FSA has also published information for CPP's customers advising them that they do not need to take any action but that CPP can be contacted, should they have any concerns.
http://www.fsa.gov.uk/consumerinformation/firmnews/2012/cpp
UKLA publications:
No new developments this week.
Upper Tribunal (Tax and Chancery Chamber) (formerly Financial Services and Markets Tribunal (FSMT)):
No new developments this week.
Financial Ombudsman Service (FOS):
24 February: 100th Issue of "ombudsman news". In honour of the 100th issue of "ombudsman news", four guest editors have chosen their favourite complaints case studies and have written about customer service from a personal perspective.
- Diana Wright (Sunday Times, "A Question of Money") points out that a mistake put right isn't a complaint at all.
- Paul McMillan (Money Marketing) says claims managers aren't the only ones needing to clean up their act.
- Sue Anderson (Council of Mortgage Lenders) suggests joining the dots between the myths and the evidence.
- James Daley (Which?) urges turning a bad complaints experience into a good customer one.
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/100/100.html
22 February: Draft Memorandum of Understanding between FOS and FCA Published. The Financial Ombudsman Service (FOS) has published a draft memorandum of understanding (MOU) between the FOS and the Financial Conduct Authority (FCA). The document outlines the organisations' respective roles and statutory responsibilities, as well as determining how they will co-operate, share information and handle governance issues where appropriate. The MOU is intended to facilitate the Parliamentary progression of the Financial Services Bill by allowing parliamentarians, businesses consumers and other stakeholders to see more clearly what is being proposed.
http://www.financial-ombudsman.org.uk/about/MoUwithFCA-draft-feb-2012.pdf
http://www.financial-ombudsman.org.uk/about/other_bodies.html
London Stock Exchange (LSE):
23 February: Order Book for Retail Bonds celebrates second anniversary. Launched in 2010, in response to private investor demand for greater access to fixed income products, the London Stock Exchange's Order Book for Retail Bonds ("ORB") this week celebrated its second year of operation. In 2011, the ORB raised over £1.2 billion, including a record £282.5 million raised by a single National Grid bond.
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.