UK: Financial Services Industry Update - 27 March 2014

Last Updated: 8 April 2014
Article by Philip Mackay, Aidan Campbell, Karagh Gilliatt and Kyle Abrey


No information to update.


BoE announces FPC leverage ratio review terms of reference

The Bank of England (BoE) has published the terms of reference of the leverage ratio review to be carried out by the Financial Policy Committee (FPC) to make sure that the UK banking system is adequately robust. Amongst other things, the terms of reference deal with matters such as the roles of and relationship between the leverage ratio and risk-weighted measures and the advantages and disadvantages of varying the leverage ratio in light of variations in the corresponding risk-weighted standards. They also provide details on the FPC's macroprudential toolkit, including the criteria to be used by the FPC when varying the leverage ratio. The review is intended to be published by the FPC in November 2014.

27 March 2014


No information to update.


No information to update.


FCA communication on using GABRIEL for COREP and FINREP

The FCA has issued a communication for firms on using the GABRIEL reporting system for common reporting (COREP) and financial reporting (FINREP). According to the communication, GABRIEL will be able to receive submissions for COREP and FINREP from 1 April 2014. The FCA also provides information on COREP and FINREP reporting schedules, changes to firms' reporting schedules and the FCA's approach to validation errors that are built into the current taxonomy.

27 March 2014

Developments in Ukraine lead to FCA reminder to authorised firms in dealings with PEPs

The FCA has published a reminder to FCA-regulated firms, warning that developments in Ukraine have served to highlight the importance of resilient systems and controls in dealing with actual or potential politically exposed persons (PEPs). This is particularly crucial when financial institutions are evaluating the risks related to particular customers and flows of funds. The FCA expects authorised firms to have adequate procedures and controls in place to counter the risk that they might be used to further financial crime. In addition, the reminder also highlights Regulations 14(4) and 20(2) relating to PEPs and Regulations 8 and 20 relating to transaction reporting of the Money Laundering Regulations 2007 (SI 2007/2157) (MLRs) as being particularly relevant.

25 March 2014

FCA occasional paper on how selling insurance as an add-on affects consumer decisions

The FCA has published its third occasional paper examining how consumer behaviour is affected when general insurance is sold as an add-on product to a primary purchase. Apparently the research suggests that the "add-on mechanism" weakens consumers ability to discipline firms by shopping around and comparing products effectively. In addition, the FCA has also published a webpage, key results graphic and speech by Martin Wheatley.

See also: webpage; key results graphic and speech

25 March 2011

FCA reports on hedge fund survey: March 2014

The FCA has published a report setting out the findings from its hedge fund survey, which is based on data reported as at September 2013 and intended to help the FCA to inform its supervisory activity in the UK industry. Focusing on data from 49 management firms which collectively manage USD 481 billion of hedge fund assets globally, of which USD 206 billion is managed in the UK, the survey includes information on the size and scale of the hedge fund industry and portfolio characteristics of hedge funds. The FCA expects that there will be at least two more versions of the survey with data reported as at March 2014 and September 2014.

24 March 2014

FCA updated direction of modification by consent of COBS and COLL

The FCA has updated its webpage relating to the modification by consent of the Conduct of Business sourcebook (COBS) and the Collective Investment Schemes sourcebook (COLL). The modification will allow alternative fund managers (AFMs) of a non-UCITS retail scheme (NURS) to choose to produce an equivalent document to the UCITS Directive key investor information document (KIID). This document can then be used by the AFM and all other firms selling or advising on the NURS, instead of the key features document or the simplified prospectus. It is referred to as the "NURS-KII" document. Accordingly, firms which previously held the modification will need to re-apply to the Central Waivers team for a new modification to replace the modification that expires on 30 June 2014.

24 March 2014


FCA bans and fines director of insurance intermediary

The FCA has published the final notice it has issued to Philip Eley for falsifying no claims discount (NCD) letters when he was director of Eley Insurance Services Limited. A periodic audit of the firm's customer files unearthed that Mr Eley had deliberately falsified ten NCD letters in relation to ten customer policies. He then submitted the letters to the insurer in an attempt to cover a gap in the NCD bonus audit trail, so that the firm would not fail the audit. This behaviour was found to be in breach of his duty to act with integrity in contravention of Statement of Principle 1 of the Statements of Principle, set out in the Statements of Principle and Codes of Practice for Approved Persons sourcebook (APER). As a result, the FCA has withdrawn Mr Eley's approval to perform the CF1 (director) controlled function, fined him £7,200 and banned him from performing any function in relation to any regulated activity.

27 March 2014

Santander fined over £12.3 million for widespread investment advice failings

The FCA has published the final notice issued to Santander UK plc imposing a fine of £12,377,800 for widespread investment advice failings. During the thematic review of retail investment advice, the FCA discovered that Santander had breached Principle 7 (Communications with clients) and Principle 9 (Customers: relationships of trust) of the FSA's Principles for Businesses (PRIN). For example, Santander did not ensure that new advisers were properly trained before being allowed to give investment advice or that customers were given concise and accurate information about financial products and services. These failings were regarded by the FCA as particularly serious because they were systematic and related to a large number of customers.

It is promising that as part of the settlement, Santander has agreed to conduct a redress exercise, design and implement a new annual review process and conduct a customer contact exercise writing to all affected customers highlighting the risks and objectives of their investments.

26 March 2014


No information to update.


BBA response to Budget announcement on Deeds of Priority

The BBA has issued a press release following their agreement with the four main high street lenders: Barclays, HSBC, Lloyds Banking Group and Royal Bank of Scotland on a common protocol that will enable alternative lenders to more readily agree with banks standard forms of Deeds of Priority or Waivers to small businesses seeking other finance options. Irene Graham, BBA Executive Director commented: "We want to make sure businesses trying to get a loan have certainty on security arrangements as quickly as possible so we are really pleased that these banks have agreed this new protocol. Businesses should ensure all necessary information is provided to support these requests. With all information present, the banks are committed to respond to all but the most complex of requests within seven working days which should allow businesses to get certainty on their new finance arrangements as quickly as possible."

Overall, the standard forms of Deeds of Priority or Waivers should allow lenders to efficiently agree an order of priority of security to support the business loan.

20 March 2014

BBA statement on OECD agreement for information exchange between tax authorities

The BBA has commented on the agreement on the OECD's Common Reporting Standard between international tax authorities. Anthony Browne, BBA Chief Executive stated: "The BBA has long called for a global solution to the problem of tax evasion. Today we are pleased to see that so many governments have responded to that call and committed to the early and uniform adoption of the OECD's Common Reporting Standard (CRS). But to ensure the effectiveness of the regime and a level playing field, we need to see many more countries commit to this global objective and lay out a common timetable for adoption. The statement sets out a very ambitious and challenging timetable to implement the regime and BBA member banks are committed to doing their part to help governments achieve it. There is a lot of work to do, particularly for the many small institutions that will be new to such requirements. Working together closely we will endeavour to make it work."

20 March 2014

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