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.
We hope that you will find this update useful. If you have any queries about any of the information in this update or financial services regulatory matters generally, please contact one of the individuals listed in the 'Contacts' section of this publication.
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Consultation papers:
14 November: Implementation of the Alternative Investment Fund Managers Directive.
The FSA has issued a Consultation Paper (CP/12/32) (the first of two) on rules and guidance to transpose the requirements of the Alternative Investment Fund Managers Directive (AIFMD) into UK law. The AIFMD must be implemented by 22 July 2013. In this paper, the FSA addresses:
- the prudential regime for all types of alternative investment fund manager (AIFM)
- the regime for depositaries
- the Level 1 Directive requirements on AIFMs
The paper also provides feedback to the responses to DP12/1. The deadline for responses is 1 February 2013. The FSA intends to publish the second consultation paper in February 2013 and a Policy Statement relating to both parts of the consultation in June 2013.
http://www.fsa.gov.uk/library/policy/cp/2012/12-32.shtml
Discussion papers:
No new developments this week.
Policy statements:
No new developments this week.
Press releases:
15 November: Investment Banker Guilty of Insider Dealing.
The FSA has published a press release on Thomas Ammann, a former investment banker at Mizuho International plc, who has pleaded guilty to two counts of insider dealing and two counts of encouraging insider dealing. Two others, Jessica Mang and Christina Weckwerth, were each acquitted of one count of insider dealing. Mr Ammann had been advising Canon on its acquisition of Océ and had access to price sensitive information which he then passed on to Weckworth and Mang and encouraged them to trade in Océ shares before the acquisition was announced. Mr Amman will be sentenced at a later date.
http://www.fsa.gov.uk/library/communication/pr/2012/103.shtml
Speeches:
15 November: Combating Financial Crime: Key themes and Priorities for 2013.
The FSA has published a speech by Tracey McDermott, FSA Director of Enforcement and Financial Crime at the APCIMS Financial Crime Conference hosted by Clyde & Co on key themes and priorities for the FSA and the FCA in financial crime. The speech describes how the FCA will differ from the FSA, and the tougher attitude to financial crime the new regulator intends to take. Ms McDermott highlights details of the FSA's upcoming thematic review of asset managers which will cover firms' anti-money laundering, bribery and corruption systems and controls. The findings of this review are expected to be published in the third quarter of 2013.
http://www.fsa.gov.uk/library/communication/speeches/2012/1115-tm.shtml
Bulletins and newsletters:
No new developments this week.
Final notices:
15 November: Argentum-Lex Wealth Management Limited.
The FSA has published a final notice to Argentum-Lex Wealth Management Limited (Argentum) cancelling its Part IV permission under FSMA. Argentum failed to satisfy the FSA's threshold conditions and failed to satisfy the FSA that it was conducting its business soundly and prudently. Amongst other things, Argentum failed to uphold an undertaking given to the FSA in July 2010 that it would pay any FOS awards made against Argentum's predecessor business, Wynyard Asset Management Limited (Dissolved). Argentum did not therefore pay due regard to the interests of its customers or treat them fairly, in breach of Principle 6 of the FSA's Principles for Businesses.
http://www.fsa.gov.uk/static/pubs/final/argentum.pdf
14 November: Card Protection Plan Limited fined £10.5 million for widespread mis-selling and agrees to pay redress.
The Financial Services Authority (FSA) has issued its joint largest retail fine of £10.5 million to Card Protection Plan Limited (CPP) for mis-selling insurance products. CPP has also agreed to pay redress. The redress payments are estimated at around £14.5 million, depending on how many customers respond to CPP's contact exercise. The FSA fine is for all types of sale made by CPP while the focus of the redress exercise is CPP's direct sales. The FSA found widespread mis-selling of CPP's two main UK products between January 2005 and March 2011:
- CPP sold its Card Protection product by emphasising that customers would benefit from insurance cover which was not needed as customers were already covered by their banks
- CPP overstated the risks and consequences of identity theft during sales of its Identity Protection product
The FSA's investigation revealed that CPP's sales process focussed on revenue and commercial objectives at the expense of customers, such as providing incentives and targets for persuading customers to purchase products even after they had made it clear they did not wish to buy them.
Press Release: http://www.fsa.gov.uk/library/communication/pr/2012/102.shtml
Final Notice: http://www.fsa.gov.uk/static/pubs/final/card-protection-plan.pdf
13 November: FSA fines Savoy Investment Management Limited £412,000 for wealth management failings.
The FSA has fined Savoy Investment Management Limited (Savoy) £412,000 for failing to ensure the suitability of investment portfolios for its clients. Failings in front office controls and recording of client information and compliance monitoring processes led to 23% of a sample of files showing a high risk of unsuitability. Savoy agreed to settle at an early stage and qualified for a 30% discount, without which the fine would have been £590,000. Savoy has now taken steps to change its management structure and processes. Without these changes and the past business review which is being undertaken, the financial penalty would have been higher.
Press Release: http://www.fsa.gov.uk/library/communication/pr/2012/101.shtml
Final Notice: http://www.fsa.gov.uk/static/pubs/final/savoy-investment-management.pdf
12 November: FSA publicly censures London credit union.
The FSA has issued a press release detailing a final notice it issued to The Pentecostal Credit Union Limited (TPCU) and one of its directors, Reverend Jones. TPCU made twenty unlawful loans to the Church Organisation; none of the members were issued with the full terms and conditions of the loans; and, TPCU has been unable to prove that any of the loans were approved by its credit committee. TPCU's failings exposed its members to an excessive risk of financial loss. Jones signed and approved 14 of the 20 loans in question, and in 12 cases signed the cheques for the loan money, none of which were made out to the individuals purportedly taking out the loans.
Press release: http://www.fsa.gov.uk/library/communication/pr/2012/100.shtml
TPCU Final Notice: http://www.fsa.gov.uk/static/pubs/final/tpcu.pdf
Reverend Carmel Jones Final Notice: http://www.fsa.gov.uk/static/pubs/final/reverend-jones.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:
No new developments this week.
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):
No new developments this week.
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.
