UK: What To Expect In 2014

2013 was a significant year for the UK regulatory landscape. National and international regulators continued to address the issues identified by the financial crisis in addition to responding to the LIBOR scandal with record-breaking penalties. In April 2013 a new regulatory regime was introduced in the UK which divided the Financial Services Authority into two new departments, the Financial Conduct Authority (FCA) and Prudential Regulatory Authority (PRA).

Keeping abreast of regulatory issues has never been more important for financial firms who are likely to face further scrutiny and change in 2014 as the FCA and PRA settle into their new roles.

Set out below are some of the key areas to watch in 2014.

Benchmark manipulation

2014 will see preparation for the first criminal trials for the manipulation of benchmarks. In 2013 the Serious Fraud Office (SFO) brought criminal charges against three individuals. The SFO is expected to bring further charges in early 2014, with the first trials scheduled for January 2015.

Tougher FCA enforcement and fines

In 2013 the FCA fined firms a record £472.3 million, up 52% from 2012. Whilst this figure was significantly affected by the substantial LIBOR fines levied against banks last year, it clearly demonstrates that the new FCA is a regulator willing to use its teeth.

In addition, approved persons within regulated entities are vulnerable to fines. The FCA and PRA acknowledge that fining firms alone does not result in a sufficient change in approach, and the targeting of individuals (senior managers) has become the norm when enforcement action is taken against a firm. Approved persons at regulated entities need to keep abreast of the increasingly prescriptive expectations and skill set requirements, including in respect of boards, relevant to their position. They should also keep abreast of the potential risks related to their positions. Even a fine can make it difficult for an approved person to work again in a similar role at a different firm.

The best protection for regulated entities and approved persons is management information in an understandable, transparent form, clearly related to the risk.


Culture was a recurring theme in FCA speeches throughout 2013 and is likely to remain an important issue in the year to come. FCA Chief Executive Martin Wheatley listed culture as one of his two key priorities for 2014.

Although culture is an elusive concept, being client focused is frequently cited as an integral part of a good culture. FCA speeches have provided some guidance on how the FCA intends to explore the area including investigating customer experience, incentive structures, regulatory responses, governance and decision making.

Regulated firms should generally review the speeches of the FCA and the PRA (if relevant). They are an important educational tool providing important information regarding their expectations and areas of focus.

Restrictions on the promotion of structured products

The FCA's ban on the promotion of unregulated collective investment schemes and equivalent pooled vehicles to retail investors came into effect on 1 January 2014. Over the next year the FCA will consult on the introduction of new marketing restrictions in relation to non-pooled investments whilst continuing to monitor the effectiveness of the existing restrictions.

Temporary product intervention powers

In 2014 the FCA will continue to scrutinise financial products to determine whether they are causing consumer detriment. On making such a determination the FCA is entitled to temporarily intervene or ban a financial product without consultation. Short selling and certain aspects of credit default swaps were banned for 12 months in July 2013.

Consumer credit

On 1 April 2014 the FCA will take over responsibility from the OFT for all consumer credit regulation. The FCA revealed at the end of 2013 that it plans to introduce new rules for reporting, consumer complaints, financial promotions, approved persons and prudential resources. The FCA's new regulations will replace the Consumer Credit Act 1974, although many existing provisions will be transferred to the FCA Handbook.


When the FCA was created last year, Parliament conferred on it a new competition mandate. The FCA conducted its first competition-related market studies in 2013 in areas such as annuities and the cash savings market. In 2014 the FCA is expected to make statements on the appropriate next steps whilst considering whether competition market studies are required in other areas, including asset management for major institutional clients.

Technical reform

Martin Wheatley's second key priority for 2014 concerns international technical regulatory reform. The publication of MiFID II, the Markets in Financial Instruments Directive aimed at increasing market efficiency and transparency, is expected shortly. This year will also see the implementation of some of EMIR's more onerous requirements. Clarifying new EU legislation and ensuring a smooth transition will be crucial for the FCA in 2014.

Financial Services (Banking Reform) Act 2013

The Financial Services (Banking Reform) Act 2013 (the "Banking Reform Act") received royal assent on 18 December 2013. The Banking Reform Act introduces reforms on a wide range of issues, some of which are outlined below.


Banks which accept deposits as a core activity ("RFBs") will no longer be permitted to carry out certain activities. Secondary legislation to clarify which activities will be caught is to be developed throughout 2014. It is anticipated that such activities will include dealing in investments as principal and certain commodities trading activities.

RFBs will be prohibited from other conduct, including having non-EEA branches or subsidiaries carrying on regulated activities.

Changes to approved persons and accountability

The Banking Reform Act introduced a new senior persons framework which includes:

  • Reverse (civil) burdens of proof for senior persons accused of misconduct
  • Extended time limits for disciplinary action against senior persons
  • Pre-approval of all senior persons by regulators
  • A new criminal offence for senior persons guilty of reckless misconduct in the management of a bank

During 2014 the FCA will consult on the implementation of the new regime.

Payment Systems Regulator

The Banking Reform Act provided for a Payments Systems Regulator (PSR) to be established by the FCA. The PSR will be a competition-focused regulator with power to investigate and impose sanctions, including fines. Amongst other things, the new regulator will have the power to amend agreements relating to payment systems and require banks to enter into agreement with smaller institutions to process transactions on their behalf.

The PSR's powers will come into force in late 2014.

Primary loss-absorbing capacity requirements

Requirements for systemically important banks to hold loss-absorbing capacity to satisfy their capital requirements were implemented by the Banking Reform Act. 2014 will see secondary legislation developed in this area.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.