UK: Weekly Financial Services Regulatory Update (Week To 14.06.13)

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:

14 June: Paul Tucker to leave the Bank of England. The Bank of England has published a press release announcing that Mr Paul Tucker is intending to leave the Bank of England. The exact date of his departure is yet to be confirmed, but it is expected to be in the autumn after Mr Tucker has provided support to the new Governor, Mark Carney, through the first months in his term of office. Until he leaves the Bank, Mr Tucker will also continue to be an active member of the G20's Financial Stability Board (FSB) and of other international committees.

14 June: Ex-mortgage broker pleads guilty to 12 criminal offences. In a case brought by the FCA, Michael Joseph James Lewis pleaded guilty to ten counts of breaching the general prohibition under Section 19 of the Financial Services and Markets Act 2000. The offences concerned Mr Lewis giving mortgage advice to clients despite being prohibited by the FCA from doing so on 9 August 2011. Mr Lewis also pleaded guilty to two counts of supplying/making an article for use in fraud under Section 7 of the Fraud Act 2006 as a result of providing false employment details for two of his clients in order to inflate their incomes. Mr Lewis, 65, was originally arrested on 24 October 2012 in a joint operation between the FCA and Kent Police and he was charged by the FCA on 7 February 2013. Mr Lewis operated as 'The Lewis Partnership' or 'The Medway Partnership' from premises in Gillingham, Kent and at the time of his arrest was working at Lovetts Property Services, estate agents in Broadstairs, Kent.


No new developments this week.

Final notices:

11 June: FCA fines Xcap Securities Plc GBP 120,900 for client asset failings and applies new penalty regime. The FCA has fined Xcap Securities Plc (Xcap) GBP 120,900 for failing to adequately protect client money and client assets. This is the first client asset case the FCA has brought under the new penalty regime, which applies to breaches committed from 6 March 2010, and introduces new penalty levels in such cases. In this case, the fine represents 2% of Xcap's average client money balance plus 0.2% of its average client asset balance over the period of the breaches. The new percentage levels were applied based on the seriousness of the breaches, including consideration of the duration of the breaches and other relevant factors. Under this new approach, it is expected that cases involving breaches of the client asset rules will result in increased penalties compared to similar cases dealt with under the previous penalty regime. The FCA found that between 29 June 2010 and 31 August 2011, Xcap breached Principle 3 (Management and Control) and Principle 10 (Clients' Assets). The breaches included:

  • Failing to properly segregate client money from its own
  • Failing to maintain accurate records and accounts of client money and assets
  • Not carrying out accurate client money reconciliations
  • Failing to report without delay its failures to comply with CASS requirements

Xcap received a 20% discount on its fine for agreeing to settle at Stage 2 of the FCA's executive settlement procedure; otherwise Xcap would have been fined GBP 151,136.

Press release:

Final Notice:

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:

12 June: FCA agreement from AXA Insurance UK Plc (as underwriter to Lloyds Banking Group). AXA Insurance UK Plc (AXA) has agreed to change some of the terms in the Worldwide Travel Insurance policy offered by Lloyds Banking Group (Lloyds). The agreement follows the FCA's assessment that two clauses in that policy were not expressed in plain intelligible language. The FCA believed that two clauses in AXA's policy were contradictory, with one indicating that losses arising from the failure of the transport provider were covered, while another indicated that they were not. AXA has therefore agreed to amend the original clauses to make it clear that losses due to the failure of the transport provider are covered where the customer first attempts to claim form third parties (e.g. the airline company) and is unsuccessful in their attempt. AXA has confirmed that it will treat all existing customers as though the new wording applies to them.

11 June: PRA/FCA Mortgage Lenders and Administrators Statistics published. The Bank of England and the FCA have published the latest Mortgage Market Lenders and Administrators Statistics for the UK covering Q1 2013 which are now jointly owned by the two current regulators. Key Statistics for Q1 2013 include:

  • A 0.1% decrease to GBP 1,228 billion in the overall residential loan amounts outstanding compared with Q4 2012
  • Lending for house purchase accounted for 63.4% of new advances – 2.6% lower than in Q4 2012. The proportion of advances for re-mortgages increased to 29.4%
  • The number of new arrears cases was 5.8% higher than in Q4 2012 at 36,700
  • The proportion of the residential loan book in arrears remained unchanged at 2.4%
  • New cases taken into possession were 3.9% higher compared to Q4 2012 but 15.1% lower than Q1 last year

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.

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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