Financial Services SpeedRead 29 September 2021
30 September 2021

IN THIS EDITION OF THE FINANCIAL SERVICES SPEEDREAD WE COVER THE FOLLOWING 18 UPDATES: |
---|
Financial Markets 1. ESMA launches consultation on reviewing the MIFID II best execution reporting requirements 2. Chancellor signals review of key areas of UK financial regulation following publication of 'Lessons from Greensill Capital' report |
Banking and Prudential 3. HMT publish regulation updating section 9C of FSMA |
Financial Crime 4. JMLSG publish updated revisions to AML guidance 5. Economic Crime (AML) levy: HM Treasury releases consultation response and draft legislation |
Senior Managers and Governance 10. ECB consults on revised SSM fit and proper guide and new fit and proper questionnaire |
Retail Investments 6. FCA publishes Consumer Investments Strategy And Feedback Statement |
Payments 7. EBA report on the use of digital platforms in the EU banking and payments sector |
FinTech 8. Rise in complaints made to FOS in relation to cryptocurrencies during the pandemic |
Other 9. Sheldon Mills (FCA) delivers speech on culture, D&I and climate change 10. HM Treasury, FCA and Bank of England respond to future framework for regulation of financial services |
Brexit |
---|
No updates for this fortnight's edition of the FSS. |
Financial Markets |
1. ESMA launches consultation on reviewing the MIFID II best execution reporting requirementsOn 24 September 2021, ESMA published a consultation paper on the planned enhancements to the MiFID II best execution reports framework.
The consultation closes on 23 December 2021. ESMA will consider responses during Q4, and, if needed, will send proposals to the EU Commission during the first half of 2022. 2. Chancellor signals review of key areas of UK financial regulation following publication of 'Lessons from Greensill Capital' reportOn 24 September 2021, the Treasury Committee published responses from the Government, the FCA and the BoE to the Treasury Committee's report, on 'Lessons from Greensill Capital'. In a letter to the Chair of the Committee, Chancellor Rishi Sunak called for immediate reviews of the change of control and appointed representative regimes following The Chancellor agreed with the Committee's recommendation to review the change of control regime. The Chancellor confirmed the FCA, PRA and HM Treasury are working together to consider how change of control applications are dealt with and what changes might need to be considered, for example to ensure sufficient relevant information is received from an applicant for a change of control, to ensure Regulators are able to fully assess the risks of the proposal in a timely manner. The Chancellor also welcomed the Committee's recommendation regarding reform of the appointed representative regime so as to limit its scope, increase the supervision of appointed representatives and lessen opportunities for abuse. The Chancellor rejected the Committee's idea of broadening the definition of securitisation to incorporate supply chain finance. However, the Government will consult with the regulators regarding any potential new regulatory requirements for non-tranched loans. |
Banking and Prudential |
3. HMT publish regulation updating section 9C of FSMAOn 15 September 2021 HMT published The Financial Services and Markets Act 2000 (Prudential Regulation of FCA Investment Firms) (Definitions for the purposes of Part 9C) Regulations 2021 (SI 2021/1046) (the "Regulations"). The purpose of the Regulations is to expand on Part 9C Prudential Regulation of FCA Investment Firms of FSMA ("Part 9C"), which was introduced by the Financial Services Act 2021. The Regulations expand on Part 9C by introducing definitions of "parent undertaking" and "group", instead of relying on the pre-existing definitions under FSMA. The introduction of the two definitions, according to the explanatory memorandum, aims to bring the IFPR regime in line with the CRR to align the scope of the relationships taken by both regimes. Under Part 9C, the FCA have the power to introduce rules in relation to parent undertakings of FCA regulated firms. As well as this, Part 9C introduces the IFPR – a new regime for the prudential regulation of non-systemic UK investment firms by the FCA – which is expected to come into force on 1 January 2022. The Regulations will come into force on 6 October 2021. The Regulations can be accessed here. |
Fund Management |
No updates for this fortnight's edition of the FSS. |
Senior Managers and Governance |
No updates for this fortnight's edition of the FSS. |
Financial Crime |
4. JMLSG publish updated revisions to AML guidanceOn 23 September, The Joint Money Laundering Steering Group (JMLSG) published draft revisions to Part I Chapter 5.7 (Monitoring customer activity) of its Guidance. The draft revisions do not materially alter in-scope firms' obligation to monitor their AML customers' activities. However, it does make clear that firms should establish an appropriate governance mechanism for the oversight, review and approval of monitoring processes and parameters, which will include documenting its monitoring arrangements and rationale. This may include consideration of the following, for example:
Comments on the revisions should be received by 30th October 2021. 5. Economic Crime (AML) levy: HM Treasury releases consultation response and draft legislationOn 21 September 2021, HM Treasury issued its response to its consultation on the proposed Economic Crime Levy (ECL) and published the draft legislation to enact it. The Government's responses clarified how the ECL will be spent, quantified, applied and collected:
|
Retail Investments |
11. FCA's Q&A on the proposed consumer dutyIn our previous briefing, we covered the FCA's recent consultation paper (CP21/13) on a new Consumer Duty and the six key takeaways around its proposals. On 10 June 2021, the FCA gave its first seminar and Q&As on the proposed Consumer Duty. During the seminar, there were many questions on what Consumer Duty means and how it will affect financial services firms. For further information, please refer to our newsflash of 11 June 2021 and email us if you would like more information.
|
Payments |
7. EBA report on the use of digital platforms in the EU banking and payments sectorOn 21 September 2021, the EBA published a report on the use of digital platforms. The EBA identifies a rapid growth in the use of digital platforms in the EU’s banking and payments sector and states that "platformisation" is resulting in new dependencies between financial and non-financial firms, but that supervisors are facing challenges in monitoring developments. The report defines a digital platform as a technical infrastructure that enables at least one financial institution directly (or indirectly using a regulated or unregulated intermediary) to market to customers, and/or conclude with customers’ contracts for financial products. The report is informed by a number of sources, including the responses to the EBA’s November 2020 competent authority survey on financial institution dependencies on digital platforms and regulatory and supervisory issues.
|
Fintech |
8. Rise in complaints made to FOS in relation to cryptocurrencies during the pandemicOn 24 September 2021, the Financial Ombudsman's news update, "Ombudsman News" noted that the Ombudsman Service has seen an increase in complaints about cryptocurrencies during the Covid-19 pandemic. Despite the fact that cryptocurrencies are unregulated investments, the Ombudsman Service has the power to investigate complaints made against providers who refuse to reimburse consumers that allege to be victims of cryptocurrency fraud. |
Others |
9. Sheldon Mills (FCA) delivers speech on culture, D&I and climate changeOn 24 September 2021, the FCA published a speech given by Sheldon Mills, Executive Director, Consumers and Competition, that was delivered on 22 September 2021 at the IA Culture in Investment Management Forum. The speech, "A regulatory perspective: measuring and assessing culture, now and in the future, the role of purpose and the importance of D&I", focussed on three main topics:
Culture and purpose Discussing the topic of culture and purpose, Sheldon Mills noted that this remained as "important as ever". He highlighted that the FCA assesses a firm's culture against four key pillars: "purpose, people, leadership and governance". He provided a non-exhaustive list of examples that come under these four pillars which included: "significant business model restructures, the approach to remuneration, speak-up culture, Board and ExCo composition, diversity, succession planning, the application of the SMCR, the effectiveness of a firm’s controls environment or its governance structures." Further, Mr Mills explained that a key part of culture and purpose is how employees are incentivised by their employers. He stated that the FCA pay attention to how renumeration is awarded in terms of both financial and non-financial measures and those awarding renumeration should be questioning whether "bonuses reflect the firms purpose". Diversity and Inclusion Mr Mills addressed the fact that diversity issues continue to be prevalent in the investment management sector. He first discussed the gender-pay gap and the underrepresentation of women in senior management positions. The FCA published a Discussion Paper on this topic in July which can be accessed here. For further information please see our update note here. The FCA "expect firms to collect data, actively monitor it with interest and take bold action where needed." In his speech, Mr Mills commented that the FCA expect firms to drive meaningful progress in relation to climate change and sustainability and not simply use it as a marketing tool. Mr Mills noted that this means first must step up and be "active stewards" by "setting incentives for their boards and management". 10. HM Treasury, FCA and Bank of England respond to future framework for regulation of financial servicesOn 20 September 2021, the Treasury Committee received responses from HM Treasury, the FCA, and the Bank of England regarding their report, The Future Framework for Regulation of Financial Services. Each party's responses are summarised below: HM Treasury
HM Treasury will provide more detailed responses later in the autumn 2021. FCA
Bank of England
|
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.