Financial Conduct Authority

Indication of Regulatory Expectations for Banks Currently Making LIBOR Submissions

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On October 17, the FSA published a speech by Martin Wheatley (the FSA Managing Director and Chief-Executive Designate of the Financial Conduct Authority), which indicated the regulatory expectations for banks making LIBOR submissions until the new LIBOR regime is put into place.  Mr Wheatley was clear that, in the long term, there will be high-level rules and a code of conduct to govern LIBOR submissions.

LIBOR submitters should have regard to the submission guidelines set out in the Wheatley Report, and use a combination of their judgment and transaction data.

The UK government announced in a written ministerial statement that it has accepted all the recommendations made in the Wheatley Report.

Tracey McDermott Appointed as FSA’s Permanent Director of Enforcement

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The FSA has confirmed that Tracey McDermott, the FSA’s acting head of enforcement, will become the permanent director of enforcement and financial crime.

McDermott joined the FSA as an associate in enforcement 2001, and has been acting as director since April 2011.  During her time as acting head of enforcement, she has secured 10 convictions for insider dealing and imposed the largest FSA fine to date of £59.5 million on Barclays Bank plc for attempting to manipulate the LIBOR rate.

The FSA will divide into the Prudential Regulation Authority and the Financial Conduct Authority in 2013.  McDermott’s role will transfer over to the Financial Conduct Authority.

Q&As Published on FSA’s Transition to the FCA

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On July 31, the FSA published a set of questions and answers on the transition to the new Financial Conduct Authority (“FCA”). Q&As.

The Q&As confirmed that:

  • Firms will not need to reapply for authorisation under the new regime.
  • There were be a six month transition period following confirmation of the new disclosure wording concerning firms’ regulatory status.
  • There will be little change to existing financial crime oversight and the approach to allocating fees.
  • The FCA will retain the FSA’s online notifications and applications and online regulatory reporting systems.
  • The FSA plans to publish an FCA approach document in October.

Speech by Tracey McDermott on FCA’s Approach to Enforcement

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On July 2, the FSA published a speech by Tracey McDermott, acting director of the FSA’s Enforcement and Financial Crime Division. The speech focused on credible deterrence and the approach that the Financial Conduct Authority (FCA) will take to enforcement. Speech.

Ms. McDermott commented on the FCA that:

  • thematic and firm-specific supervisors will work in a more integrated way;
  • the focus will increasingly be on senior management who fail to recognise and manage risks and fail to control the way products are sold; and
  • it will have a low tolerance for repeat offenders.

The FSA also published a speech by Martin Wheatley, chief executive designate of the FCA. His speech emphasised that the FCA will continue the FSA’s policy of credible deterrence. Speech.

Memoranda of Understanding Between FSCS, PRA and FCA Published

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On June 26, the FSA published a draft memorandum of understanding (“MoU”) between the Financial Services Compensation Scheme (“FSCS”) and the new Prudential Regulation Authority (“PRA”) and a second MoU between the FSCS and the new Financial Conduct Authority (“FCA”). MoU between FSCS and PRA. MoU between FSCS and FCA.

In particular the MoUs cover:

  • The roles of the FSCS, PRA and FCA;
  • Information sharing between the FSCS and the new regulators and confidentiality issues;
  • Policy making;
  • Funding the FSCS;
  • Co-ordination between the PRA and FCA on the oversight of the FSCS; and
  • Reporting obligations on the FSCS to the new regulators.