UK: Financial Services Update - Week To 9 January 2014

Last Updated: 23 January 2014
Article by Dundas & Wilson

PRA Policy Documents (www.bankofengland.co.uk)

PRA confirms Euro-Sterling value for insurance regulatory purposes

The PRA has confirmed that the Sterling value of the Euro for insurance regulatory purposes for 12 months from 31 December 2013 is 85.020 pence.

This value must be used when calculating capital resource requirements and when applying the relevant regulatory returns for insurers to deposit under the PRA rules.

The PRA also states that "no changes have been made this year to the Base Capital Resources Requirement (BCRR) under the EU Insurance Directives."

8 January 2014

PRA Other Publications (www.bankofengland.co.uk)

PRA confirms it is undertaking an enforcement investigation against the Co-operative Bank

The PRA has confirmed that it is undertaking an enforcement investigation against the Co-operative Bank, including an analysis of the roles of previous senior managers.

The PRA shall not provide any more information on the investigation until a decision has been reached.

Furthermore, "the PRA will work with the Treasury to ensure that the enforcement investigation and the independent review are sequenced appropriately."

6 January 2014

PRA updates webpage for credit unions

The PRA has updated its webpage on credit unions stating that "Credit unions are not the same as Banks and Building Societies."

The PRA has noted that some credit unions are currently marketing themselves, especially on their websites as offering services akin to banks or building societies and under similar regulatory regime to them also. The PRA states, "credit unions are misrepresenting their situation and the products and services they can offer their members."

Finally, as a note of advice the PRA states, "Credit unions should consider whether statements on their websites are appropriate and take steps to ensure the description of services offered is accurate."

6 January 2014

PRA Supervisory Notices/Final Notices (www.bankofengland.co.uk)

No information to update.

FCA Policy Documents (www.fca.org.uk)

No information to update.

FCA Other Publications (www.fca.org.uk)

FCA confirms it is undertaking an enforcement investigation against the Co-operative Bank

The FCA has confirmed in a press release that it shall be undertaking an enforcement investigation against the Co-operative Bank. The FCA states that "the investigation will look into decisions and events up to June 2013."

The enforcement investigation shall be sequenced alongside the Treasury's independent review.

6 January 2014

FCA Supervisory Notices/Final Notices/Application Refusals (www.fca.org.uk)

No information to update.

Lending Standards Board (www.lendingstandardsboard.org.uk)

No information to update.

British Bankers' Association (www.bba.org.uk)

BBA responds to BoE Credit Conditions Survey

The BBA has responded to the Bank of England's Credit Conditions Survey regarding Q4 of 2013. The survey indicated that overall the availability of credit in the corporate sector has grown significantly in Q4 of 2013, the cost of lending has fallen and the lending demand of medium-sized firms has grown strongly.

Richard Woolhouse, the BBA Chief Economist commented: "The survey shows that businesses are finding it easier to access bank borrowing and that costs are falling due to competition between lenders... All of which explains why we are seeing rising business demand for finance. This is reinforced by last week's strong increase in new borrowing to SMEs and confirms that banks are playing their part in the recovery as economic indicators continue to surprise on the upside in 2014."

8 January 2014

Council of Mortgage Lenders Updates (www.cml.org.uk)

No information to update.

Treasury Updates (www.hm-treasury.gov.uk)

No information to update.

Treasury Committee Updates (http://www.parliament.uk/business/committees/committees-archive/treasury-committee/)

No information to update.

IMA Updates (www.investmentfunds.org.uk)

IMA publishes monthly authorised investment fund statistics for November 2013

The IMA has published its monthly authorised fund statistics for November 2013 commenting that equity funds continue to be a bestseller for the eighth month running, with net retail sales of £935 million.

The press release also comments that funds under management were £763 million which is a 16% increase in comparison to November 2012 and net retail sales remained resilient at £1.6 billion.

The UK and Europe were reported as the best-selling regions of equity funds in November 2013.

The IMA Chief Executive, Daniel Godfrey commented: "We saw a continuation of strong investment fund sales in November last year – the top five best-selling IMA sectors indicate that investors are favouring equity and mixed asset funds with property funds also doing well."

9 January 2014

IMA launches new Global Emerging Markets Bond sector

The IMA has launched a Global Emerging Markets Bond sector for those who invest at least 80% of their assets in emerging market bonds. The sector currently contains 25 funds.

By classifying similar funds into groups, the IMA provides investors and financial advisers with the opportunity to compare between the funds before making an investment decision.

The Director of Public Policy at IMA, Jonathan Lipkin commented: "The sector classification process responds to the evolution of the funds market. During a review of the IMA Fixed Income sectors, we recognised that there were enough funds within the Global Bonds sector to establish a new bond sector for funds that invest primarily in emerging markets. While emerging markets bond funds have been a feature of the fund market for some time, we have seen particular growth in recent years."

6 January 2014

ISA Bulletins (http://www.hmrc.gov.uk/isa/bullmenu.htm)

No information to update.

CTF Bulletins (http://www.hmrc.gov.uk/ctf/bulletins.htm)

No information to update.

Financial Services New Legislation (http://www.legislation.gov.uk/)

No information to update.

European Commission (www.ec.europa.eu/)

European Commission publishes draft ITS on supervisory reporting of institutions under CRR

The European Commission has published its draft Implementing Technical Standards (ITS) regarding supervisory reporting of institutions under the Capital Requirements Regulation (575/2013) (CRR).

The draft ITS relates to; own funds requirements and financial information (Article 99); losses stemming from lending collateralised by immoveable property (Article 101(4)(a)); large exposures and other largest exposures (Article 394(1)); leverage ratio (Article 430); and liquidity coverage requirements and net stable funding requirements (Article 415).

9 January 2014

Council and European Parliament (www.consilium.europa.eu/ www.europarl.europa.eu/)

No information to update.

European Securities and Markets Authority (ESMA) (http://www.esma.europa.eu/)

ESMA publishes final report on draft technical standards under MiFID on the assessment of acquisitions and increases in qualifying holdings in investment firms

ESMA has published its draft technical standards under Article 10a(8) of the Markets in Financial Instruments Directive (2004/39/EU) (MiFID) on the assessment of acquisitions and increases in qualifying holdings in investment firms.

Under Article 10a(8) of MiFID, Member States are required to publicise necessary information on the assessment process of a proposed acquirer of an investment firm.

At the initial notification stage, the proposed acquirer must provide "adequate and proportionate" information in order for national competent authorities to adequately assess the acquisition.

In order to facilitate this, ESMA must draft Regulatory Technical Standards (RTS) to provide an exhaustive list of the information to be provided under Article 10b(4) of MiFID. ESMA are also required to produce the Implementing Technical Standards (ITS) of the standard forms, templates and procedures for the cooperation and exchange of information between national competent authorities under Article 10(4) of MiFID.

The final report on the draft technical standards provided by ESMA has now been submitted to the European Commission, with a three month deadline for the Commission to decide upon whether it agrees with its contents.

7 January 2014

European Banking Authority (EBA) (http://www.eba.europa.eu/)

No information to update.

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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