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:
17 April: FSA statistics show boiler room fraudsters are making greater efforts to con consumers – but having less success. The FSA has published statistics which indicate that there has been a 19% increase in enquiries about share fraud but a 7% decrease in the number of people contacted by and subsequently investing in boiler rooms. The FSA is encouraged by these figures but is continuing its efforts to combat the problem, including having produced a video for consumers that explains what boiler rooms are, how consumers can avoid becoming victims and what to do if they believe they have been scammed.
http://www.fsa.gov.uk/library/communication/pr/2012/038.shtml
Speeches:
19 April: Securitisation, shadow banking and the value of financial innovation. The FSA has published a speech and accompanying slides, given by Lord Turner, FSA Chairman, at the School of Advanced International Studies, John Hopkins University. In his speech, Lord Turner considers how and why the wave of financial innovation in the area of securitised credit ended at the same time as the 2008 financial crash. He also considers what is known about the value of financial innovation and how it can be assessed.
19 April: The new approach to insurance regulation and the implementation of Solvency II. The FSA has published a speech given by Julian Adams, Director of Insurance Supervision at the FSA, at a City & Financial Conference, London. Adams starts by outlining the key upcoming structural changes to the financial regulation system in light of the adoption of the twin peaks model and includes the key features of the new regime and the changes that will be most felt by the insurance sector. Adams says that preparations will also continue for the implementation of Solvency II with the aid of supervisors and goes on to explain the interplay between this and the other regulatory changes, with particular focus on the development of the role of the new Prudential Regulation Authority.
http://www.fsa.gov.uk/library/communication/speeches/2012/0419-ja.shtml
18 April: Conduct supervision and the move towards the FCA. The FSA has published a speech given by Clive Adamson, Director of Supervision at the FSA's Conduct Business Unit, at a Bloomberg Conference. In his speech, Adamson outlines what the new regulatory structure will be and what the effects will be on the industry. His talk focuses primarily on the introduction of the Financial Conduct Authority, in particular the change in approach to supervision. The approach will involve being more forward-looking in respect of assessing potential problems, early intervention, addressing the underlying causes of problems rather than the symptoms, securing redress for customers and continuing and advancing the use of credible deterrence.
http://www.fsa.gov.uk/library/communication/speeches/2012/0418-ca.shtml
17 April: Getting Ready for the Retail Distribution Review. The FSA has published a speech given by Linda Woodall, Head of the FSA's Investments Department, at the FT Intermediary Forum, London, on the Retail Distribution Review (RDR). In her speech, Woodall outlines her take on the purposes of the RDR and how the FSA is assisting firms to get ready in time, which includes a recent series of roadshows and surveys to help keep track of firms' progress and disseminate information. Woodall goes on to outline recent developments, the FSA's professionalism requirements, requirements in relation to the clarity of adviser charges, the difference between independent and restricted advice-giving, and what can be expected in the coming months and years.
http://www.fsa.gov.uk/library/communication/speeches/2012/0417-lw.shtml
Bulletins and newsletters:
No new developments this week.
Final notices:
17 April: Chris John Wilkins trading as Mortgage Resolutions. The FSA has issued a final notice, dated 17 April 2012, cancelling the Part IV permission that had previously been granted to Chris Wilkins (trading as Mortgage Resolutions) for his failure to pay fees and levies of £1,187.43 owed to the FSA, despite their repeated requests that he does so. This behaviour has led the FSA to conclude that Wilkins is not a fit and proper person to carry out Part IV regulated activities.
http://www.fsa.gov.uk/static/pubs/final/chris-wilkins.pdf
17 April: Artif Reyaz trading as Insurepay. The FSA has issued a final notice, dated 17 April 2012, cancelling the Part IV permission that had previously been granted to Artif Reyaz (trading as Insurepay) for his failure to pay fees and levies of £1,016.83 owed to the FSA, despite their repeated requests that he does so. This behaviour has led the FSA to conclude that Reyaz is not a fit and proper person to carry out Part IV regulated activities.
http://www.fsa.gov.uk/static/pubs/final/artif-reyaz.pdf
16 April: P McNulty & Sons. The FSA has issued a final notice, dated 16 April 2012, cancelling the Part IV permission that had been granted to P McNulty & Sons. The reason for the decision was that P McNulty & Sons has been deemed not to be a fit and proper person for failing to ensure that its business is conducted soundly and prudently. Specifically, P McNulty & Sons failed to comply with the requirement to submit its Retail Mediation Activities Return by the appointed deadline and has not co-operated with the FSA in its attempt to rectify the oversight.
http://www.fsa.gov.uk/static/pubs/final/p-mcnulty-sons.pdf
16 April: Michael Patrick Powley. The FSA has issued a final notice, dated 16 April 2012, cancelling the Part IV permission that had been granted to Michael Patrick Powley. Powley has been deemed not to be a fit and proper person for failing to ensure that his business is conducted soundly and prudently. Specifically, Powley failed to comply with the requirement to submit his Retail Mediation Activities Return by the appointed deadline and has not co-operated with the FSA in its attempt to rectify the oversight.
http://www.fsa.gov.uk/static/pubs/final/michael-powley.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 April: ESMA Guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities. ESMA has published (and made available on the FSA's website) guidelines on systems and controls in an automated trading environment for trading platforms, investment firms and competent authorities. These guidelines cover:
- The operation of electronic trading systems by a regulated market or a multilateral trading facility
- The use of electronic trading systems by investment firms for dealing on their own account or on behalf of clients
- The provision of direct market or sponsored access by investment firms
These guidelines intend to ensure the common, uniform and consistent application of the MIFID and MAD legislation. Market participants are required to comply with these guidelines from 1 May 2012.
http://www.fsa.gov.uk/static/pubs/other/esma-guidelines.pdf
18 April: Hector Sants letter published about MF Global and the special administration regime. The FSA has published a letter, dated 19 March 2012, from Hector Sants, FSA Chief Executive, to Andrew Tyrie MP, about MF Global UK Ltd (MFGUK) and the special administration regime (SAR). Sants acknowledges that, following legal principles, MFGUK will have to divide all client money amongst those entitled to have their money segregated (whether or not that money had been segregated prior to administration). He also explains why there is a difference between the speed of return of client's assets in the UK and US and concludes that the SAR established in this case (MFGUK being the first to enter the scheme) appeared to work effectively.
http://www.parliament.uk/documents/commons-committees/treasury/MF%20Global%204.pdf
16 April: Handbook Release 124. The FSA has released pages to insert into your FSA handbook in order to bring it up to date. An upgraded handbook can also be accessed online.
http://www.fsa.gov.uk/library/policy/handbook/releases/2012/124
16 April: First-tier Tribunal (Information Rights) partially allows appeal of IC's decision on FOIA request made to FSA. The First-tier Tribunal (Information Rights) has partially allowed the appeal in the case of Efifiom Edem v Information Commissioner and FSA (EA/2011/0132). Mr Edem appealed against a decision notice issued by the Information Commissioner (IC) which allowed the FSA to withhold information requested by him on the basis that:
- It was Mr Edem's own personal data and was therefore exempt under s.40(1) Freedom of Information Act (FOIA)
- The information requested included the personal data (i.e. the names) of some of the FSA's employees and was therefore exempt under s.40(2)
The IC in its decision notice had allowed that the names of FSA employees did constitute personal data and dismissed Mr Edem's complaint. The First-tier Tribunal, however, by applying the principle established by the Court of Appeal in Durant v Financial Services Authority [2003] EWCA Civ 1746 that to be excluded under s.40(2) the personal information must also affect the person's privacy (either in his personal or family life, business or professional capacity) and concluded that providing employees' names would not adversely affect their privacy. The Tribunal dismissed Mr Edem's appeal in respect of s.40(1).
http://www.informationtribunal.gov.uk/DBFiles/Decision/i733/20120416%20Decision%20EA20110132.pdf
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):
No new developments this week.
London Stock Exchange (LSE):
17 April: London Stock Exchange Group raises £529,400 in first ever Charity Trading Day. The London Stock Exchange Group ("LSEG") exceeded its half-million pound target by raising £529,400 on its first ever Charity Trading Day, assisted by customers and a strong trade day. The money raised will be donated directly to the nominated charities, including "Friendship Works" (a UK mentoring charity), "In-Presa" (an Italian youth charity) and "Habitat for Humanity" in Sri Lanka.
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Michael Tang - Global Financial Services Digital Transformation Leader, Aug 2017 (Video)
