UK: Weekly Financial Services Regulatory Update - Week To 03.05.2013

Update

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. 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.

If you have any comments on the content or format of the update or if you no longer wish to receive it, or have a colleague who would like to receive it, please email publications@clydeco.com.

Consultation papers:

2 May: GC13/2: Dealing fairly with interest-only mortgage customers who risk being unable to repay their loan. The FCA has published a guidance consultation (GC13/12) on dealing fairly with interest-only mortgage customers who risk being unable to repay their loans. The proposed guidance sets out what the FCA expects firms to do to ensure the fair treatment of customers who are unable to repay the capital sum at the end of the term. This includes the FCA's views on how firms can act in line with Principle 6 to achieve a fair outcome for their customers. However, this is not intended as a prescribed course of action and is not the only way firms can act to abide by Principle 6. Responses to the consultation should be received by 3 June 2013.

http://www.fca.org.uk/your-fca/ documents/guidance-consultations/ gc13-02

Discussion papers:

No new developments this week.

Policy statements:

No new developments this week.

Press releases:

3 May: Two arrested in FCA insider dealing investigation. On 30 April, the FCA with the assistance of the City of London Police Economic Crime Directorate executed a search warrant in West London. Two people, a man aged 41 and a woman aged 37, were arrested and questioned in connection with an investigation into insider dealing and market abuse. In Switzerland business and private premises were also searched by the Swiss authorities in connection with the FCA's investigation.

http://www.fca.org.uk/news/two-arrested-in-fca-insider-dealing-investigation

1 May: Updating disclosures to reflect the creation of the FCA and PRA.

The FCA has published a statement explaining that it expects firms to review their documents and other disclosures as a priority, to ensure that they are up-to-date and accurate, to reflect that they are now authorised by the FCA or the PRA. The transition period for doing this does not extend to obligations derived from European law, including obligations in the Payment Services Regulations 2009 and certain provisions in COBS 5, COBS 6, COBS 9 and COBS 13. Whilst the FCA recognises that it may not have been possible to make all the required disclosure updates immediately, firms must be able to demonstrate that they have plans to make these updates at the earliest practicable opportunity.

http://www.fca.org.uk/news/firms/updating-disclosures-to-reflect-the-creation-of-fca-pra

29 April: FCA charges two in relation to an unauthorised investment scheme. The FCA has charged Alex Hope and Raj Von Badlo with a total of ten offences relating to an unauthorised investment scheme they promoted and operated. The scheme purported to carry out FOREX trading for the benefit of investors and is believed to have taken over £5 million from investors. The charges follow searches of addresses occupied by these two men conducted by the FSA with assistance of the City of London Police in April and May 2012.

http://www.fca.org.uk/news/unauthorised-investment-scheme

29 April: Sue Lewis appointed Chair of the Financial Services Consumer Panel. Sue Lewis has been appointed the new Chair of the independent Financial Services Consumer Panel. The Panel advises the FCA on the interests and concerns of consumers providing constructive challenges to its policy-making process. Sue will take over as Consumer Panel Chair on 1 July 2013. Most recently Sue has been working as a non-executive director and independent policy consultant. Sue is currently the Consumer Advocate Member on the Chartered Insurance Institute's Professional Standards Board, and is a Trustee of the Personal Finance Education Group and of Stepchange, a debt advice charity.

http://www.fca.org.uk/news/sue-lewis-chair-fscp

Speeches:

No new developments this week.

Bulletins and newsletters:

No new developments this week.

Final notices:

30 April: FCA publicly censures Horn Express Ltd (formerly known as Qaran Express Money Transfer Limited) for breaches of the Payment Services Regulations. The FCA has published a Final Notice that publicly censures Horn Express Limited (formerly known as Qaran Express Money Transfer Limited, "QEMTL") for failing to safeguard and segregate customer funds between 1 December 2009 and 16 November 2011. QEMTL mixed customer funds with its own monies and failed to properly reconcile the customer funds held in its bank account. In addition to this, QEMTL did not set up and label its bank account correctly, so that in the event of QEMTL's insolvency, customers might have lost their money. The FCA considered QEMTL's failings to be serious because they put customer funds at risk. The FCA would have fined QEMTL £136,687 had there not been verifiable evidence that imposing a fine would have caused serious financial hardship. This is the first time that a public sanction has been imposed on a payment services institution authorised under the Payment Services Regulations 2009.

Press release: http://www.fca.org.uk/news/horn-express-qemt

Final Notice: http://www.fca.org.uk/static/documents/final-notices/horn-express-qemt.pdf

29 April: Final Notice: Mr Douglas Jones. The FCA has published a Final Notice fining Mr Douglas Jones £13,300 for breaches of Statements of Principle 1 and 6, and prohibiting him from performing any regulated activities on the basis that he is not a fit and proper person due to a lack of competence, capability, honesty and integrity. During the relevant period, Mr Jones was the chief executive and a mortgage adviser at Which Mortgage. The FCA found that he breached Principle 6 by failing to ensure that the Firm had appropriate controls to verify information submitted by clients in support of mortgage applications which led to the Firm being used to facilitate financial crime. Mr Jones also breached Principle 1 by dishonestly altering certain historic client files after concerns had been raised by a lender. Mr Jones agreed to settle at an early stage and therefore qualified for a 30% discount. Were it not for this discount, the Authority would have imposed a fine of £19,000.

http://www.fca.org.uk/static/documents/final-notices/ douglas-jones.pdf

29 April: Final Notice: Mr Derek Jones. The FCA has published a Final Notice cancelling Mr Derek Jones' approval to perform controlled functions in relation to Which Mortgage. The FCA also imposed a prohibition on Mr Jones from performing any significant influence functions in relation to regulated activities on the basis that he is not a fit and proper person due to a lack of competence and capability. The Authority would have also sought to impose a fine of £11,200 for breaches of Statement of Principle 6 were it not for evidence that it would have caused Mr Jones serious financial hardship. During the relevant period, Mr Jones was CF1 director and a mortgage adviser at Which Mortgage, where he breached Principle 6 by failing to ensure that the Firm had appropriate controls to verify information submitted by clients to support mortgage applications which led to the Firm being used to facilitate financial crime.

"http://www.fca.org.uk/static/documents/final-notices/ derek-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 FCA and PRA publications:

3 May: Responses to the FSA's Discussion Paper on Transparency (FSA DP13/1). The FCA has published non-confidential responses to the FSA's discussion paper on transparency which closed on 26 April 2013. The FCA is currently reviewing these responses and in June 2013 will publish a Feedback Statement summarising the key messages and its response.

http://www.fca.org.uk/news/responses-to-fsa-discussion-paper-on-transparency

2 May: FCA publishes findings of review into interest-only mortgages and reaches agreement with lenders to contact interest-only borrowers. The FCA has published its research into consumers' ability to repay their interest-only mortgages when they mature. The findings show that many people should be in a good position to repay their mortgage when it is due for repayment. However many borrowers, particularly those whose mortgage is due to be repaid before 2020, will need to take control of their mortgage repayment planning now. To this end, the FCA is working to ensure lenders contact borrowers in order to prompt them into checking that their repayment plan is on track. By acting now the FCA is aiming to prevent interest only borrowers defaulting on their loans in the future.

http://www.fca.org.uk/news/interest-only-mortgages

29 April: FCA Handbook Notice No. 1. The FCA has published its Handbook Notice No.1, setting out a number of changes made to the FCA Handbook by the FCA Board on 25 April 2013. These include minor corrections, administrative changes and additions to the FCA Handbook.

http://www.fca.org.uk/static/fca/documents/handbook-notices/fca-hb-notice-01.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):

2 May: FOS consultation paper: Updating the scope of its voluntary jurisdiction. The FOS has published a consultation paper setting out the amendments that it proposes to make to the scope of its voluntary jurisdiction, as set out in the Dispute Resolution: Complaints sourcebook (DISP) of the FCA Handbook. These proposals are to widen the scope of its voluntary jurisdiction to include activities which, if they had been carried out in the UK, would have been covered by the compulsory jurisdiction or consumer credit jurisdiction. Responses to this consultation must be received by 29 May 2013.

http://www.financial-ombudsman.org.uk/publications/ consultations/vj-consultation-may2013.pdf

30 April: Ombudsman News: Issue 109. The FOS has published issue 109 of its ombudsman news. The publication includes:

Discussion of typical problems regarding payday lending, with case studies illustrating some of the more common issues and complaints

An interview with Liz Brackley, the new FOS service development director, where she describes her role, future challenges and how the FOS will adapt to deal with these

Case studies of common complaints about individual savings accounts (ISAs)

http://www.financial-ombudsman.org.uk/publications/ ombudsman-news/109/issue109.pdf

London Stock Exchange (LSE):

No new developments this week.

Legislative updates

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.

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