UK: Financial Regulatory Developments (FReD) - 28 February 2014

Last Updated: 3 March 2014

UK Government and Parliament


Treasury Committee launches inquiry into SME lending: The Treasury Committee is carrying out an inquiry into access to finance by SMEs, opening up competition in the sector and treatment of SMEs by banks. Andrew Tyrie, the Chair of the Treasury Committee, said that it will be looking at whether the scope and remit of the regulators provide adequate protection. (Source: Evidence Session on SME Lending


Treasury makes CC transitionals order: Treasury has made the FSMA 2000 (Consumer Credit) (Transitional Provisions) Order which takes effect on 1 April. The Order will enable firms whose consumer credit (CC) licence is suspended immediately before 1 April to get interim permission from FCA if they successfully appeal against the suspension. The Order, also makes transitional provisions in relation to disciplinary and enforcement notices served by the Office of Fair Trading. (Source: Treasury Makes CC Transitionals Order)

Treasury makes Banking Reform Act Orders: Treasury has made the first commencement order under the Financial Services (Banking Reform) Act 2013 (the Banking Reform Act). The Order brings various parts of the Banking Reform Act into force on 1 March either generally or for the purpose of making rules or secondary legislation. A transitional provisions order allows the chief executive of the Financial Services Compensation Scheme as at 1 April 2014 to be treated as if that person had been approved by the Treasury under the Banking Reform Act. (Source: Banking Reform Act Commencement Order Number 1 and Banking Reform Act Transitionals Order)

HM Treasury (Treasury)

Treasury updates sanctions: Treasury has updated the sanctions lists in respect of redesignations under terrorist asset freezing regulations and Zimbabwe. (Source: Treasury Updates Sanctions

Treasury extends Help to Buy to home purchase plans: In a speech at Euromoney's Annual Islamic Finance Summit, Sajid Javid MP, the Financial Secretary to Treasury, announced the extension of the Help to Buy scheme to Shariah compliant home purchase plans. He also referred to the reasons for the UK being such a good location for Islamic finance and reminded the audience of the announcements David Cameron made at the World Islamic Economic Forum. (Source: Financial Secretary on Islamic Finance and Help to Buy

UK and Singapore to increase financial services cooperation: Treasury and the Ministry of Finance of Singapore and the Monetary Authority of Singapore have agreed to set up a UK-Singapore Financial Dialogue and a private sector forum on the offshore Renminbi market. (Source: UK and Singapore Agree to Increase Financial Services Cooperation

UK Financial Services and Markets Regulators

Financial Conduct Authority (FCA)

FCA updates MMR readiness: FCA has carried out its second review on readiness for the Mortgage Market Review (MMR). All relevant firms say they will be ready in time although some need still to complete their planning. (Source: FCA Updates MMR Readiness)

FCA publishes arrears management review: FCA has published its thematic review on mortgage lenders' arrears management and forbearance. Its review found firms have improved their practices since the last review, and now wants firms to educate and empower front line staff so they can better make decisions. It also thinks firms could improve their practices to be more flexible and therefore provide more tailored outcomes. (Source: FCA Publishes Arrears Management Review)

FCA updates on CC applications: FCA has updated its website in respect of applications for consumer credit permissions. The website now clarifies that firms with no CC permissions can apply for authorisation from 1 April, while those with interim permissions should wait for FCA to contact them to let them know when to apply. During March, it will publish further information so firms will have an idea of when their application slot is likely to be. Firms that do not apply within the timeframe set by FCA will lose their interim permission. Separately, FCA has set out a summary of how its approved persons rules will apply to CC firms. (Source: FCA Updates on CC Applications)

FCA updates on AIFMD applications: FCA is pleased so many firms have applied early for authorisation under the AIFMD. During January it received 103 full-scope and 95 small authorisation applications. (Source: FCA Updates on AIFMD Applications)

FCA publishes Hobbs final notice: FCA has published its Final Notice banning David Hobbs from performing any function in relation to any regulated activities. Publication follows the Tribunal's agreement that Mr Hobbs was not a fit and proper person, although it had agreed Mr Hobbs' contention that he had not committed market abuse which FCA had originally found. (Source: FCA Publishes Hobbs Final Notice)

FCA fines for "unfair profits" and lack of openness: FCA has fined two companies within the Forex Capital Markets group a total of £4,000,000 for allowing their US parent to withhold profits that should have been passed to the clients of one of the UK companies. It also found the UK company had not informed FCA that the US authorities were investigating another part of the group for similar conduct. FCA said it expects firms to be transparent and put their customers first. All UK clients of the relevant firms will be fully compensated. FCA noted it is conducting a review of firms' execution practices and will report by the end of June on its findings. (Source: FCA Fines for Unfair Profits and Lack of Openness

FCA sets out EMIR supervisory priorities: FCA has set out its supervisory approach to the implementation of EMIR. It clarifies that, where there is a reason why full compliance with EMIR cannot be achieved, firms should have in place a realistic plan to achieve compliance within the shortest timeframe possible. (Source: FCA Supervisory Priorities Arising from EMIR

FCA publishes notes on completing AIFs Schedule: FCA has published notes to assist managers applying for authorisation under AIFMD to complete the Schedule of Alternative Investment Funds (AIFs) they intend to manage and/or market. (Source: Notes to Assist the Completion of the AIFMD in completing Schedule of AIFs Form

Prudential Regulation Authority (PRA)

PRA publishes Solvency II timetable: PRA has published its timetable of activity in relation to Solvency II up to early May 2014. (Source: PRA Publishes Solvency II Timetable)

PRA consults on branch supervision: PRA has published a consultation paper setting out a draft supervisory statement on how it supervises UK branches of international banks, particularly those from outside the EEA. PRA plans to introduce a new rule to require all deposit taking and designated investment firms that operate through EEA and non-EEA branches to complete a twice-yearly data collection return from 2015. It plans to ask some branches to complete the return as part of the consultation process. Additionally, it wants to require non-EEA firms to take all steps within their control to have adequate provision in resolution plans for UK branches. As part of this exercise it will assess the equivalence of the branch's home state rules on resolution planning and will not authorise branches from home states it does not deem to be equivalent. The paper considers the distinctions for regulatory purposes between subsidiaries and branches and touches also on FCA supervision of the relevant firms. PRA asks for comments by 27 May. (Source: PRA Consults on Branch Supervision

Other Authorities/Regulators/Industry Associations

European Payments Council (EPC)

EPC comments on SEPA's additional transition period: The EPC Chair has written on EPC's website about the uncertainty surrounding the additional transition period for SEPA migration. He warns that the draft text adopted by EP and the Council does not make it mandatory for payment services providers to process payments in non-SEPA formats until 1 August. This could lead to a situation where a payment initiated in a legacy format is rejected by the receiver's payment services provider. EPC calls for guidance to national authorities on whether and until when they will accept the use of non-SEPA formats. (Source: EPC Blog: Don't Count on 1 August 2014 – Different SEPA Migration Deadlines Apply

Legal Entity Identifier Regulatory Oversight Committee (LEIROC)

LEIROC publishes interim common data format: LEIROC has published a common data format to be used by pre-Local Operating Units (pre-LOUs) as a standard for publishing LEI data during the interim global LEI system. The format distinguishes the information required by the relevant ISO standard from additional information important for the interpretation of the data and from other information necessary to accommodate local variations. Technical specifications will follow. Additional reference data, such as on ownership and hierarchical relationships, may be introduced at a later stage in response to regulators' and users' needs. (Source: A Common Data Format for Pre-LOUs to Use for Sharing or Publication of Data, part 1

International Organisation of Securities Commissions (IOSCO)

IOSCO Board meets in Malaysia: The Board of IOSCO has held a meeting in Kuala Lumpur, Malaysia, where it focused on growth and emerging markets, announcing the preparation of a work plan to meet the capacity building priorities of these markets. IOSCO is also setting up a new Task Force on Long Term Finance. (Source: IOSCO Focuses on Deeper Markets, Stronger Regulatory Capacity to Enhance Emerging Market Resilience

Transparency International (TI)

TI issues Ukraine risk alert: TI has issued a risk alert on corrupt assets from Ukraine and asked the UK Government to remind all sectors and their regulators of the need to apply enhanced Know Your Customer investigations where appropriate. TI also says that the freezing of assets during the Arab Spring was slow and therefore, in view of the fact that corruption charges will likely be brought against members of the Ukrainian regime, the UK should act without waiting for a Mutual Legal Assistance request from Ukraine. (Source: Risk Alert

Forthcoming Events and Recent Publications

Forthcoming Events

FReD Live: Capital Resources for Investment Firms: In the first FReD Live breakfast briefing of 2014, Michael Wainwright will highlight the most significant changes CRD IV has brought to the prudential and systems and controls rules and will give practical guidance on how to meet the new requirements.

Recent Publications

New This WeekTen things to look out for in 2014: a year of change for the financial marketsEmma Radmore wrote an overview of recent and imminent changes affecting UK financial institutions for Financial Regulation International.

Financial Crime

The Bribery Act – Has It Made A Difference?: We have updated our previous overview of the Bribery Act to take into account the Serious Fraud Office's latest guidance. (updated October 2012)

UK authorities move forward on tougher financial crime prevention: Emma Radmore wrote an article for Financial Regulation International on current consultations on sentencing and deferred prosecution agreements. (August 2013)

Sanctions restrictions do not prevent payment of debtsRichard Caird and Tom Rocher comment on the judgement in DVB Bank SE and others v. Shere Shipping Company Limited and others. (August 2013)

Deferred Prosecution AgreementsEmma Radmore has written an article for Financial Regulation International on the introduction of Deferred Prosecution Agreements in the UK. (June 2013)

Anti-Bribery and Corruption Laws in Key Jurisdictions: Lawyers from Dentons offices in six jurisdictions prepared a table comparing key provisions of anti-corruption laws for Thomson Reuters Compliance Complete. (May 2013)

Preventing Financial Crime: Emma Radmore has written an article for Financial Regulation International on recent developments in financial crime prevention. (April 2013)

The Evolving Financial Sanctions Landscape – UK and US Perspectives: Emma Radmore, Thomas Laryea, Michael Zolandz and Peter Feldman have written an article for Financial Regulation International on financial sanctions under the UK and US regimes. (November 2012)

Dealing with Anti-Corruption Laws – the Bribery Act and FCPA in Context: This article summarises the effects of the Bribery Act and US Foreign Corrupt Practices Act. For further information, please contact Emma Radmore or Dominic Sedghi (London), or Michelle Shapiro (New York). (May 2012)

Investment Services and Markets Reform

Regulators respond to roar of crowdfunding: Emma Radmore and Juan Jose Manchado have written an article for Compliance Monitor on the FCA's views on, and proposals for the regulation of, crowdfunding.

Consumer Credit Regulation: Are you ready for the seismic shift?: Please contact Andrew Barber, Emma Radmore or Howard Cohen if you have any questions about what you need to do to prepare for the transfer of consumer credit regulation to FCA.

Are you clear on EMIR: Rosali Pretorius and Emma Radmore have written an article for Compliance Monitor on EMIR's application and recent developments. (October 2013)

Mobile Banking - FCA sets out the risks: Candice Chapman, Andrew Barber and Winston Green comment on FCA's thematic review of mobile banking. (See also FReD 30 August.) (August 2013)

Mobile Network Operator Billing: Andrew Barber and Alex Haffner have written an alert on the effects of the Payment Services Directive on the development of direct-to-phone-bill purchases by mobile network operators. (August 2013)

US Government announces six-month delay in FATCA rules: John Harrington, Jeffrey Koppele, Marc Teitelbaum and Jerome Walker have written an update on the delay in implementing certain elements of FATCA. (July 2013)

Take aim for AIFMD implementation: Emma Radmore and Kam Dhillon have written an article for Compliance Monitor on the final steps towards implementation of the AIFMD. (July 2013)

Taking the Credit - the Transfer of Consumer Credit Regulation: Andrew Barber, Emma Radmore and Juan Jose Manchado have written an article for Compliance Monitor on the transfer of consumer credit regulation to FCA. (April 2013)

Last Lap to Legal Cut-Over: Emma Radmore has written an article for Compliance Monitor on FSA's first two consultations on preparing for the new regulatory regime. (January 2013)

A New Handbook for a New Era?: Emma Radmore has written an article for Thomson Reuters Compliance Complete on FSA's proposals to update the General Provisions Sourcebook for legal cut-over. (October 2012)

Treasury Publishes Banking Reform Bill: Read our summary of the Bill implementing the Vickers reforms into FSMA. (October 2012)

RDR: How Long Can it Last?: Emma Radmore and Andrew Barber have written an article for Compliance Monitor on the future of the Retail Distribution Review. (October 2012)

What's next for LIBOR? Summary of the Wheatley Review Recommendations: We have written a summary of the Wheatley 10-point plan for the reform of the LIBOR process. (September 2012)

Rate Setting and Regulation: In Everyone's Interests?: Rosali Pretorius and Katharine Harle wrote an article for Financial Regulation International on the background to LIBOR setting and potential regulatory action. (August 2012)

Money through your mobile – regulation of m-payments: Andrew Barber and Emma Radmore have written an article for Compliance Monitor on the regulatory aspects of mobile payments. (May 2012)

MiFID 2 – Prescription and Change: Emma Radmore wrote an article for Compliance Monitor on the breadth of the proposals to amend the Markets in Financial Instruments Directive (MiFID 2). (January 2012)

Prudential Regulation

UK Treasury Publishes Banking Structure Reform Plans: This article summarises the June 2012 White Paper on implementation of structural change to UK banking (as covered in FReD 15 June). For more information, please contact Rosali Pretorius, Emma Radmore or Andrew Barber. (June 2012)

EU Living Wills Plans – the Key Proposals: This article is the latest in our suite of articles about Living Wills and Recovery and Resolution Plans looks at the European Commission's proposals. For further information, please contact Rosali Pretorius or Andrew Barber. (June 2012)

Living Wills update: We have produced an update on FSA's current plans for Recovery and Resolution Plans. For further information, please contact Rosali Pretorius or Andrew Barber. (May 2012)

Asset management

Cloudy or Clear? The Changeable Outlook for the Use of Derivatives in UCITS Funds: Rosali Pretorius and Josie Day wrote an article for the Global Asset Management and Service Review. (January 2013)

The Alternative Investment Fund Managers Directive – Theory Becomes Reality: Rosali Pretorius and Emma Radmore wrote an article on implementation of the AIFMD for the Global Asset Management & Servicing Review 2013/14 published by Euromoney Yearbooks.

Product Regulation

More Protection for Retail Markets – the EU's PRIPs Package: We have written a detailed summary of the PRIPS, IMD2 and UCITS V proposals. (July 2012)

Another Stable Door?: Emma Radmore and Katharine Harle wrote an article for Thomson Reuters Complinet on IOSCO's proposals for complex product distribution. (April 2012)

Enforcement and Litigation

It is not a misrepresentation to state interest rate swaps carry no premium: Sam Coulthard, Richard Caird and Thomas Rocher have written an article on the summary in another swap mis-selling claim, Nextia Properties Limited v. National Westminster Bank plc and The Royal Bank of Scotland plc. (December 2013)

Court of Appeal dismisses interest rate swap appeal: Richard Caird and Kattalin Truman have written a briefing on the Court of Appeal judgment in the appeal by Mr Green and Mr Rowley against the decision that RBS had not missold an interest rate swap. (October 2013)

Appeal dismissed in first interest swap case: Richard Caird and Kattalin Truman have written an article on the Court of Appeal's decision in the first interest rate swap case in the English courts. (August 2013)

It's all in the detail: a cautionary tale for handling complaints: Richard Caird and Felicity Ewing have written an article on the FCA's fine on Policy Administration Services.

Having Your Cake and Eating It: FOS Award is no Bar to Issuing Proceedings: Katharine Harle has written an article for Compliance Monitor on the High Court award in Clark and another v. In Focus Asset Management & Tax Solutions Ltd. (January 2013)

The Not So Remote Risks of Recommendations: Richard Caird, Sam Coulthard and Kattalin Truman have written an article on the case of Rubenstein v. HSBC Bank plc. (September 2012)

The Long Arm of FSA: Overseas Firms and Senior Management Beware: Emma Radmore and Katharine Harle have written an article for Compliance Monitor on the lessons from recent FSA enforcement cases involving overseas firms and their approved persons. (August 2012)

More Confusion on Client Money: Rosali Pretorius and Josie Day have written an article on the Supreme Court decision in the Lehman client money case. (March 2012)

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Is there such a thing as "energy law"? What do "energy lawyers" do? And why should it be of interest to anyone else?

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On 26 July the FCA published its long-expected consultation paper on the extension of the SMCR to all FCA-authorised firms. The so-called "core regime" introduces the key concepts of regulator-approved senior managers, firm-approved certification staff and conduct rules applicable to virtually all staff.

3 Oct 2017, Conference, Zurich, Switzerland

As the founding Partner of the Europe-Iran Forum, Dentons Europe will once again support this year’s event. This compelling event which explores all Iran-related topics will take place in Zürich on 3rd and 4th October.

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