UK: Weekly Financial Services Regulatory Update - Week To 21.02.14

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:

18 February 2014: PRA CP3/14 - Solvency II: recognition of deferred tax. The PRA has published Consultation Paper CP3/14 seeking views on a draft supervisory statement which sets out its expectations of firms in relation to the recognition of:

  • Deferred tax assets (DTA) on the Solvency II (SII) balance sheet
  • The tax effects of the 1 in 200 shock loss on the capital requirement calculation

The Solvency II regime permits a firm to recognise DTA and the tax effect of the 1 in 200 shock loss to the extent that it can demonstrate that it is "probable" that it will be able to benefit from them.

The consultation closes on 19 March 2014.

Discussion papers:

No new developments this week.

Policy statements:

No new developments this week.

Press releases:

17 February 2014: FCA wins case against Capital Alternatives. The FCA launched legal action in July 2013 in respect of two investment schemes, African Land (also known as Agri Capital) and Reforestation Projects (also known as Capital Carbon Credits). The defendants had structured schemes to try to avoid the need to be regulated by the FCA. However, the High Court agreed with the FCA that the schemes were unauthorised collective investment schemes (UCISs) and could not be lawfully operated by the defendants. The Judge has granted leave to appeal on certain aspects of the judgment so the FCA will have to wait until any appeal hearing and its outcome. As the court has ruled that the investment schemes are UCISs it may order the defendants to pay compensation that can be passed on to investors. The FCA has explained to investors in each of the schemes that they do not need to take any action at this stage regarding the FCA's case, as the previous undertakings and freezing orders we obtained in July 2013 remain in place for now.

Press release:

Webpage for consumers:

17 February 2014: Yorkshire Building Society Group to refund GBP 8.4 million in arrears administration fees. Yorkshire Building Society Group (YBS), which includes the Yorkshire Building Society, Chelsea Building Society, Barnsley Building Society and Accord Mortgages has voluntarily agreed to refund all administration fees for mortgage arrears since January 2009, after the FCA raised concerns that some YBS customers had been charged incorrectly as a consequence of its procedures not being robust enough. The total bill is expected to reach GBP 8.4 million with approximately 33,900 current and former customers receiving an average of GBP 247 back in refunded fees. The refund process will include letters to customers with details of the exercise and will commence on 25 February 2014.

Press release:

Webpage for consumers:


No new developments this week.

Bulletins and newsletters:

21 February 2014: Investors with investments linked to Bernard Madoff. The FCA has published a warning that investors with investments linked to Bernard Madoff may have the opportunity to claim compensation. Compensation claims must be submitted by 28 February 2014.

Final notices:

No new developments this week.

Application refusals:

No new developments this week.

Approved person refusals:

No new developments this week.

Research publications:

20 February 2014: MMR readiness tracking survey findings. The FCA has published its second Mortgage Market Review (MMR) readiness survey, in light of changes to the FCA's Mortgages and Home Finance Conduct of Business sourcebook (MCOB) (which come into effect on 26 April 2014), which has shown that:

  • All firms planning to conduct mortgage business say they will implement MMR on time
  • 85% of firms have plans in place that are either complete or partially complete

The FCA is calling on the minority of firms who have not yet planned for MMR to formalise their plans, as there is only a short amount of time left and it is important all firms know the changes they need to make on 26 April.

Consumer research:

No new developments this week.

Other FCA and PRA publications:

18 February 2014: FCA filing manual on CRD IV COREP and FINREP reporting. The FCA has published a filing manual to assist firms and software vendors in creating XBRL instance documents for CRD IV common reporting (COREP) and financial reporting (FINREP). The purpose of the manual is to provide UK-specific guidance and rules that are in addition to the European Banking Authority (EBA) filing rules, which it published in December 2013. The manual states that the EBA rules are the base rules that must be adhered to. The rules in the manual further clarify, emphasise or constrain the EBA rules.

18 February 2014: FCA modifications by consent of CASS, COBS and COLL. The FCA has published new webpages announcing modifications of consent relating to the following:

18 February 2014: PRA Solvency II timetable of key activity. The PRA has issued a timetable of its activity, to early May 2014, relating to the Solvency II Directive. The timetable sets out key activity (based on information available to the PRA at the time of writing), that may be helpful to firms as they prepare for Solvency II.

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.

Legislative updates:

19 February 2014: Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014 published. The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2014 has been published on, together with an explanatory memorandum. The Order relates to the transfer of consumer credit regulation from the OFT to the FCA. It was made on 13 February 2014 and to the extent not already in force, comes into force on 1 April 2014, which is when responsibility for consumer credit transfers to the FCA. Among other things, the draft Order:

  • Amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (RAO) to:

    • Specify additional credit-related activities as regulated activities
    • Provide for exclusions from certain regulated activities
    • Provide that local authorities are only required to be authorised if they undertake a credit-related activity that is within the scope of the Consumer Credit Directive (CCD)
  • Makes consequential amendments to other primary and secondary legislation, including the Financial Services and Markets Act 2000 (FSMA), the Consumer Credit Act 1974 (CCA) and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (FPO)
  • Provides for the FCA to undertake a review of the CCA to consider whether the remaining provisions of the CCA in force after 1 April 2014 could be replaced by rules or guidance made by the FCA under FSMA


Explanatory memorandum:

18 February 2014: Council of EU confirms agreement with European Parliament on text of recast DGSD. The Council of the EU has published a press release announcing that it has approved a political agreement with the European Parliament on the text of the proposed Directive recasting the Deposit Guarantee Schemes Directive (recast DGSD). The proposed Directive will enter into force once it has been signed by both institutions and published in the Official Journal of the EU (OJ) in the weeks following the Parliament's April plenary session. Member states will have one year after entry into force to transpose it into national law.

18 February 2014: Council of EU publishes text for MiFID II legislative proposals and invites COREPER to approve final compromise text. The Council of the EU has published the text for the proposed MiFID II Directive and the text for the proposed MiFID II Regulation (MiFIR). In an accompanying "I" item note, the Presidency of the Council invites the Permanent Representatives Committee (COREPER) to:

  • Approve the final compromise text regarding the MiFID II legislative proposals
  • Confirm that the Presidency can indicate to the European Parliament that, should the Parliament adopt its position at first reading (subject if necessary to revision of the text by legal linguists), the Council would approve the Parliament's position

MiFID II Directive:


"I" item note:

17 February 2014: Financial Services and Markets Act 2000 (Consumer Credit) (Designated Activities) Order 2014 published. The Financial Services and Markets Act 2000 (Consumer Credit) (Designated Activities) Order 2014 has been published on, together with an explanatory memorandum. The Order relates to the transfer of consumer credit regulation from the OFT to the FCA. It was made on 13 February 2014 and comes into force on 1 April 2014, which is when responsibility for consumer credit transfers to the FCA. The Order specifies that debt-collecting and entering into, or exercising rights under, a consumer credit agreement will be specified regulated activities under s.23(1B) of the Financial Services and Markets Act 2000 (FSMA), except where the activity relates to an agreement under which the obligation of the borrower is secured on land.


Explanatory memorandum:

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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