UK: Weekly Financial Services Regulatory Update - Week To 07.02.14

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:

No new developments this week.

Discussion papers:

No new developments this week.

Policy statements:

31 January 2014: FCA PS14/2: Incoming Statutory Regime for Primary Information Providers (PIPs) - including feedback on CP13/8 and final rules. The FCA has published Policy Statement PS14/2 containing rules on the statutory regime for PIPs. The Statement outlines that the new statutory regime will be based largely on the existing framework for the approval and oversight of Regulated Information Services, set out in the Criteria for Regulated Information.

Press releases:

7 February 2014: The FCA appoints adviser on wholesale banking and investment management. The FCA has appointed James Kelly, former managing director at Goldman Sachs and UBS, as an adviser in the wholesale banking and investment management division within Supervision. Mr Kelly will advise the team on supervisory strategy and bring to bear his in-depth knowledge of the investment banking sector.

3 February 2014: Card Protection Plan Limited (CPP) redress scheme opens - customers have until end of August 2014 to claim. The FCA has issued a press release to announce that the seven million people who bought Card Protection and/or Identity Protection products from CPP or from their bank or card provider can start claiming compensation from mid-February. Claim forms will be sent to eligible customers during February 2014, and must be returned by 30th August 2014, with the first compensation payments expected to be made from late March 2014. The total redress bill could reach GBP 1.3 billion.

Press release:



3 February 2014: FCA speech: Price: the cornerstone of markets. The FCA has published the text of a speech given by David Lawton, Director of Markets of the FCA, at the International Capital Market Association (ICMA) Capital Market Lecture Series 2014 on Monday 3 February 2014, in which he discussed the integrity of the price formation process. Mr Lawton explained that the price formation process is key to achieving the goal of fair, efficient and transparent markets. Fairness in markets requires a reliable price formation process with effective detection and deterrence against improper trading practices. Also, investors need to be given fair access to market facilities, markets and price information.

Final notices:

No new developments this week.

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:

7 February 2014: FCA Handbook Release 145. The FCA has published Handbook Release 145, containing pages to be inserted into paper versions of the Handbook to bring it up to date.

7 February 2014: Guide on claims management companies (CMCs) and financial services complaints. The Ministry of Justice (MoJ), the FCA, the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) published a joint guide on how consumers' complaints should be handled when they use a CMC. The joint guide is intended to assist consumers, financial service providers (FSPs) and CMCs, by:

  • Explaining the role of CMCs in complaints against financial services or products, including PPI complaints
  • Providing information on related topics of concern and answering FAQs
  • Explaining the standard of behaviour expected from FSPs and CMCs during the complaints handling process
  • Explaining the roles of the Claims Management Regulator (CMR), the FCA, the FOS and the FSCS

6 February 2014: European Commission publishes slides from FCA presentation on applying behavioural economics at the FCA. The European Commission has published the slides from a presentation given on 12 December 2013 by the members of the FCA's Chief Economist's Department to the Commission's Internal Market and Services Directorate General (DG MARKT), on the subject of applying behavioural economics at the FCA. The presentation focused on how biases affect retail markets and the dual application by the FCA of behavioural economics, namely:

  • To detect and diagnose problems
  • To design more effective remedies

5 February 2014: FCA forms for Article 26 CRR permissions applications. The FCA has updated its webpage on guidelines for investment firms subject to the Capital Requirements Regulation (CRR) seeking to apply for specific CRR permissions. The webpage has been updated to reflect the following forms:

  • Classification of interim or year-end profits as Common Equity Tier 1 capital application form
  • Common Equity Tier 1 issuance application form

The FCA states that these forms should be submitted alongside, and not instead of, the CRR permissions application form published in December 2013.

5 February 2014: Government and regulators agree to work in partnership to address cyber threats to essential services. The Department for Business, Innovation and Skills (BIS) has published a joint communique on strengthening the cybersecurity of essential services, reflecting discussions at a meeting of ministers, senior representatives from lead government departments and regulators, including the Bank of England and the PRA. Among other things, the communique states that cybersecurity is a "top tier national security priority" for the government. Work is underway across the government and industry to ensure key data and systems continue to be safe and resilient in the UK's critical national infrastructure. v1_FEB_2014.pdf

5 February 2014: ICE Benchmark Administration (IBA) LIBOR code of conduct given confirmed industry guidance status by FCA. The FCA has updated its confirmed industry guidance webpage to add to its table of confirmed industry guidance the LIBOR code of conduct for contributing that has been adopted by IBA, the current LIBOR administrator. The code's confirmed industry guidance status expires on 15 July 2016.

4 February 2014: FCA modification by consent of MIPRU 4 and SUP 16.2. The FCA has published a webpage announcing a modification by consent that delays the implementation of the amendments to the rules in Chapter 4 (Capital resources) of the Prudential sourcebook for Mortgage and Home Finance Firms, and Insurance Intermediaries (MIPRU) and Chapter 16.12 (Integrated regulatory reporting) of the Supervision manual, for smaller non-bank lenders. The modification allows extra time for the FCA to consider how to make the rules more accessible for smaller non-bank lenders. The modification is set out in a direction and takes effect on 26 April 2014, which is the date that the changes to the FCA's Mortgages and Home Finance Conduct of Business sourcebook (MCOB) come into effect following the FSA's mortgage market review (MMR). It is valid until 25 April 2015.

4 February 2014: FCA February 2014 update on banks' reviews of sales of interest rate hedging products (IRHPs). The FCA has updated its webpage on certain banks' reviews of sales of IRHPs. The latest figures show that the pace of the banks' review is continuing to increase, and that the banks remain on track to provide redress determination to all customers within 12 months of starting their reviews.

4 February 2014: Treasury Committee writes to the FCA requesting clarification on issues concerning remuneration and sales-based incentives. The House of Commons Treasury Select Committee has published a letter (dated 30 January 2014) from Andrew Tyrie, Committee Chairman, to Martin Wheatley, FCA Chief Executive, raising a number of questions regarding remuneration and sales-based incentives, and a related press release.

The letter has been prompted by the GBP 28,038,800 fine imposed on Lloyds Banking Group by the FCA in December 2013, for serious failings in its controls over sales incentive schemes.


Press release:

3 February 2014: FCA Mortgage Market Review (MMR) workshop webcast. The FCA has published a webcast of the material it presented at the Mortgage Market Review (MMR) workshop in 2013.

3 February 2014: FCA issues first two warning notice statements. The FCA has published its first two warning notice statements in relation to warning notices that the FCA issued to individuals on 28 November 2013:

  • Warning notice statement 14/1: the FCA considers that, over a period of more than two years, the individual (who was a "submitter" at a bank), was knowingly concerned in the breach of Principle 5 of the FCA's Principles for Businesses (PRIN) by the bank for significant failings relating to an interest rate benchmark. Among other things, the FCA considers that this individual colluded directly with traders at another panel bank in an attempt to influence their interest rate benchmark submissions.
  • Warning notice statement 14/2: the FCA considers that, over a period of more than three years, the individual (who was a manager at a bank), was knowingly concerned in the breach of Principles 3 and 5 by the bank for significant failings relating to an interest rate benchmark. Among other things, the FCA considers that this individual was responsible for the oversight and supervision of the bank's submitters, and some of the bank's traders, and failed to appropriately manage the business area for which he was responsible. Instead, he facilitated others' attempts to manipulate interest rate benchmark submissions.

Each individual has the right to make representations to the FCA's Regulatory Decisions Committee (RDC) which, in the light of those representations, will decide on the appropriate action and whether to issue a decision notice. If a decision notice is issued, the individual has the right to refer the matter to the Upper Tribunal (Tax and Chancery Chamber). If either the RDC or the Upper Tribunal decides that no further action should be taken, the FCA will publish a notice of discontinuance, provided it has the individual's consent.

Warning notice statement 14/1:

Warning notice statement 14/2:

UKLA publications:

No new developments this week.

Upper Tribunal (Tax and Chancery Chamber):

6 February 2014: Upper Tribunal refuses to suspend FCA supervisory notice withdrawing sole trader's Part 4A permissions. The Upper Tribunal (Tax and Chancery Chamber) has published its decision (of 13 January 2013) in the case of Noel Norbert Walker trading as Walkers Financial Planning v FCA. The case concerns an application by Mr Walker, a sole trader, for a direction that a supervisory notice from the FCA, which removed all the regulated activities from his Part 4A permission with immediate effect, be suspended pending the determination of a reference to the tribunal. The FCA had issued the supervisory notice because, inter alia, it had found that Mr Walker had conducted pensions business without the relevant qualification, and that three of Mr Walker's customers had not consented to pension fund transfers.

The FCA justified withdrawing Mr Walker's permissions due to the risk of loss or other adverse effect on consumers. Mr Walker challenged a number of the findings and evidence, and argued that as he no longer carried out designated investment business, the business he would carry on if the notice was suspended would be confined to mortgage and general insurance business (which posed a lower level of risk to consumers as he did not hold client money). The tribunal found that Mr Walker had a serious case to answer, and that there would be equal concerns if the behaviour complained about related to any type of regulated activity and therefore did not accept that mortgage and general insurance consumers would be any better protected. The tribunal concluded in favour of the FCA and refused to suspend the effect of the supervisory notice.

Financial Ombudsman Service (FOS):

6 February 2014: FOS Chief Ombudsman speech on new challenges for insurance sector and FOS. The FOS has published a speech given in January 2014 to the Insurance Institute of London by Tony Boorman, Chief Ombudsman and interim CEO at the FOS, on new challenges for the insurance sector and the FOS. Mr Boorman focused on the ways in which the internet has fundamentally changed the way consumers interact with insurance. The FOS is starting to see the impact of these structural developments in the cases it handles and Mr Boorman is concerned that the initial cases the FOS is seeing could be evidence of wider-ranging challenges for the insurance industry and its customers.

London Stock Exchange (LSE):

No new developments this week.

Legislative updates:

7 February 2014: Council of EU publishes adopted text of Mortgage Credit Directive (MCD). The Council of the EU has published the revised text of the MCD (also referred to as the Directive on credit agreements relating to residential property (CARRP)). The revised text reflects the version of the MCD that was adopted by the Council of the EU at first reading on 28 January 2014. The MCD is now awaiting publication in the Official Journal of the EU (OJ) and will take effect twenty days following publication.

5 February 2014: Investment Management (Fiduciary Duties) Bill 2013-14: first reading in House of Commons. The Investment Management (Fiduciary Duties) Bill 2013- 14 has received its first reading in the House of Commons. The Bill, which is a Private Member's Bill, sponsored by Phil Wilson MP, is intended to place a fiduciary duty on those involved in managing an investment to act in the best interest of investors, including pension savers, in a transparent and accountable way (and for connected purposes). The text of the Bill has not yet been made available.

5 February 2014: Two statutory instruments relating to transfer of consumer credit regulation published. The following have been published on

  • The Financial Services and Markets Act 2000 (Consumer Credit) (Miscellaneous Provisions) Order 2014: the Order makes provisions relating to the regulation of consumer credit under the Financial Services and Markets Act 2000 (FSMA). Among other things, the Order amends the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, the Financial Services (Distance Marketing) Regulations 2004 and the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No 2) Order 2013.
  • The Financial Services and Markets Act 2000 (Appointed Representatives) (Amendment) Regulations 2014: the Regulations amend the Financial Services and Markets Act 2000 (Appointed Representatives) Regulations 2001. Among other things, the Regulations prescribe descriptions of business and kinds of regulated activities that are related to consumer credit for the purposes of the appointed representative exemption in section 39 of FSMA. They also allow an authorised person who does not have permission to carry on certain consumer credit-related regulated activities to act as an appointed representative and make use of the section 39 exemption.


Explanatory memorandum:


Explanatory memorandum:

Final impact assessment:

4 February 2014: European Parliament votes in plenary to adopt CSMAD. The European Parliament has published a press release reporting that it has voted to adopt the proposed Directive on criminal sanctions for insider dealing and market manipulation (CSMAD). The Council of the EU will now formally adopt the text of the CSMAD proposal at a future meeting. The Directive is expected to be published in the Official Journal of the EU (OJ) in June 2014, after which member states will have two years to implement it. /20140203IPR34503/20140203IPR34503_en.pdf

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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