Posts by: Stephen Hancock

ESMA Publishes Consolidated Guidelines on the Application of the Endorsement Regime Under CRA Regulation

 

On March 20, the European Securities and Markets Authority (ESMA) published the official translations of its consolidated guidelines on the application of the endorsement regime under Article 4(3) of the Credit Rating Agencies Regulation (Regulation 1060/2009) (CRA Regulation) (ESMA33-9-282). READ MORE

Comission Publishes Delegated Regulation Supplementing MLD4

 

On May 14, a Delegated Regulation ((EU) 2019/758) supplementing the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) with regulatory technical standards (RTS) specifying the minimum action and the type of additional measures credit and financial institutions must take to mitigate money laundering and terrorist financing risk in certain third countries was published in the Official Journal of the EU (OJ). READ MORE

FCA Updates Paper on Price Discrimination in Cash Savings Market

 

On May 14, the Financial Conduct Authority (FCA) updated its webpage on its July 2018 discussion paper on price discrimination in the cash savings market (DP18/6).

The FCA states that it is considering the responses to the discussion paper in the context of its broader work on assessing the role and impact of Open Finance and the role of a duty of care in its future approach to regulation, as outlined in its 2019/20 business plan.

In DP18/6, the FCA set out a range of options to address issues faced by longstanding customers in the easy-access cash savings market and stated that it would publish a feedback statement in early 2019. It now intends to publish a consultation paper or feedback statement in the second half of 2019, which will outline the feedback received to the discussion paper and its next steps.

Shareholder Rights Directive: The Proxy Advisors Regulations 2019

 

On May 14, the Proxy Advisors (Shareholders’ Rights) Regulations 2019 (SI 2019/926) were published. The regulations transpose into UK law Article 3j (transparency of proxy advisors) of the Shareholder Rights Directive (as amended by the Shareholder Rights Directive II). The Regulations will enter into force on June 10. READ MORE

European Commission Consults on Effectiveness of DMD

 

The European Commission has launched a consultation relating to its evaluation of the Distance Marketing of Financial Services Directive (2002/65/EC) (DMD).

The DMD provides details on the information that a consumer should receive about a financial service and the financial services provider before concluding a distance contract. Among other things, it also gives consumers a 14-day withdrawal period for certain financial services contracts, and bans services and communications from suppliers that a consumer has not solicited or consented to.

The European Commission published a new webpage announcing a consultation relating to its evaluation of the Distance Marketing of Financial Services Directive (2002/65/EC) (DMD). The Commission explains that, since the DMD came into force, the retail financial sector has gone increasingly digital, with new products and actors available on the market, and new sales channels being used. Also, several EU laws relating to financial services have been adopted or updated. As a result, the Commission has launched an evaluation of the DMD to assess whether it is still fit for purpose.

The aim of the consultation is to ensure that all relevant stakeholders have the opportunity to express their views on the relevance, effectiveness, pertinence and coherence of the DMD. The Commission particularly wants to hear from consumers, retail financial services providers and authorities responsible for supervising and enforcing compliance with the DMD’s provisions.

Responses to the consultation can be made by completing an online questionnaire, which is linked to from the consultation webpage. Comments can be made on the consultation until 2 July 2019. The Commission expects to publish the conclusions of the evaluation exercise by the end of 2019.

Financial Services Trade Associations Urge HM Treasury to Recognize EEA Derivatives Trading Venues in Event of No-deal Brexit

 

A number of key UK, EU and international financial services trade associations published a letter (dated April 5) to HM Treasury on the equivalence of European Economic Area (EEA) derivatives trading venues under the EU retained versions of European Market Infrastructure Regulation (EMIR) (648/2012) (UK EMIR) and the Markets in Financial Instruments Regulation (600/2014) (UK MiFIR) if there is a no-deal Brexit.

The trade associations highlight the disruptive impact on UK market participants and European derivatives markets arising from the absence of HM Treasury equivalence determinations:

  • Under Article 28(4) of UK MiFIR with respect to EEA multilateral trading facilities (MTFs) and organized trading facilities (OTFs). This will mean that UK financial counterparties (FCs) and UK non-financial counterparties (NFCs) over the clearing threshold would cease to be able to execute transactions in over-the-counter (OTC) derivatives subject to the trading obligation under UK MiFIR on those venues in a no-deal Brexit.
  • Under Article 2a of UK EMIR with respect to EEA regulated markets. This will mean that EEA exchange-traded derivatives (EEA ETDs) are considered OTC derivatives under UK EMIR in a no-deal Brexit.

The trade associations urge HM Treasury to prepare the necessary measures to recognise the equivalence of EEA derivative trading venues under UK EMIR and UK MiFIR, with a view to those measures taking effect on or very shortly after a no-deal Brexit. They suggest that HM Treasury could make an equivalence direction under the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/541) or, alternatively, the FCA could grant transitional relief for this purpose using its temporary transitional powers under Part 7 of the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019 (SI 2019/632). They urge HM Treasury and the FCA to indicate the approach that they intend to take as soon as possible.

 

Newly Launched MAPS Consults on National Strategy for Money and Pensions

 

On April 8, the Money and Pensions Service (MAPS) published a press release announcing its official launch, and a listening document on a national strategy for money and pensions and MAPS’ three-year corporate plan (together with an executive summary).

MAPS is consulting on the listening document until June 30. Written comments are invited and input will be obtained during a UK-wide program of “listening events.” Input from interested parties will influence MAPS’ strategy to collectively address building blocks to managing money and pensions well. MAPS will publish a national strategy and its corporate plan for 2020-2023 (setting out how MAPS will organize, encourage and monitor the national strategy) in autumn 2019.

MAPS has also published its business plan for 2019-2020 setting out the key performance indicators for the organization’s “transition year” during which it will continue the three services provided by Pension Wise, Money Advice Service (MAS) and the Pensions Advisory Service (TPAS). Among other things, MAPS expects to publish by the end of 2019/2020 the results of tests on different approaches for defaulting pension holders into guidance at the point they seek to access or transfer their pension savings. This will contribute to the evidence base for making the rules on referring pension scheme members to financial guidance required by sections 18 and 19 of the Financial Guidance and Claims Act 2018.

The new MAPS customer website will go live towards the end of 2019. Until then, guidance will continue to be available through the existing websites of MAS, TPAS and Pension Wise.

 

PRA Consults on Revisions to Branch Returns for International Banks

 

On April 8, the Prudential Regulation Authority (PRA) published a consultation paper (CP8/19) on the revision of the branch return for international banks.

The PRA’s proposals relate to PRA-supervised branches of deposit-takers and designated investment firms that are not UK-headquartered firms.

The PRA proposes to change the format and the content of the branch return form for these firms and to provide additional guidance for completing the form. The changes are intended to improve the quality of the information provided by firms and to enhance the return’s ability to assist the PRA in its supervision of international banks. The changes include aligning the concepts used in the return with concepts used in the PRA’s wider reporting framework, clarifying that firms must report within 30 business days and replacing the current Excel reporting format with the XBRL reporting format.

The PRA Rulebook instrument containing the relevant changes to the Third Country Firms and Regulatory Reporting Parts (the CRR Firms: Non CRR Firms: Branch Rules Instrument 2019) is set out in Appendix 1 to CP8/19. An alternative version of the instrument, which will apply if there is a no-deal Brexit, is set out in Appendix 2. Appendixes 3 to 5 of CP8/19 contain proposals for the revisions to the branch return form and to the PRA’s supervisory statement on guidelines for completing regulatory returns (SS34/15), as well as draft reporting guidance for the branch return form.

The deadline for responses is July 7.

Draft Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019 Laid Before Parliament

 

A draft version of the Electronic Commerce and Solvency 2 (Amendment etc.) (EU Exit) Regulations 2019 has been laid before Parliament, alongside a draft explanatory memorandum.

The draft Regulations revoke the exclusion that applies to EEA firms providing information society services (ISS) of a financial services nature in the UK, which reflects the UK’s implementation of the E-Commerce Directive (2000/31/EC) (ECD). The Regulations also make minor amendments to the UK-retained Solvency II Delegated Regulation ((EU) 2015/35). The Regulations also implement a run-off regime (the ECD run-off) for EEA ISS providers to service financial services contracts taken out before exit day under the ECD.

FCA Publishes Findings of Its Multi-Firm Review into MiFID II Costs and Charges Disclosures

 

The FCA has published a new webpage setting out the key findings of its multi-firm supervisory review of MiFID II costs and charges disclosure.

The review examined disclosures on firms’ websites and their communications to retail clients. The review involved a sample of 50 firms, identified from a number of MiFID investment firms operating in the retail investments sector, whose costs and charges disclosures did not appear to fully comply with the disclosure requirements introduced under the MiFID II Directive (2014/65/EU).

The review’s findings suggest that whilst improving over 2018, overall, the industry has been slow to comply with the updated costs and disclosure requirements.

The webpage includes sections on:

  • Information on the interaction between the costs and charges disclosure requirements in the MiFID II Directive, the PRIIPs Regulation ((EU) 1286/2014) and the UCITS Directive (2009/65/EC).
  • Areas of improvement, detailing examples of practices the FCA expects firms to address.
  • Examples of good practice, detailing examples of compliance that go beyond the requirements for transparency of costs and charges.
  • Suggested next steps for firms to take.