Financial Services SpeedRead: 31 March 2021
Welcome to the latest edition of the Financial Services SpeedRead, a collection of bite-sized updates designed to help you keep on top of key regulatory developments in financial services over the preceding fortnight. Please get in touch if you want to explore any of the topics covered in this fortnight's edition of Financial Services SpeedRead.
IN THIS EDITION OF THE FINANCIAL SERVICES SPEEDREAD, WE COVER THE FOLLOWING 33 UPDATES |
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Brexit 1. HM Treasury confirms technical negotiations on UK-EU Memorandum of Understanding have concluded 2. ESMA updates statement on impact of Brexit on the Benchmark Regulation (BMR) 3. FCA confirms it will continue to apply temporary transitional power to the UK's derivatives trading obligation 4. BoE / PRA respond to Treasury Committee's call for evidence on the Future of Financial Services 5. Single Resolution Board publishes its approach to eligibility of UK law instruments without bail-in clauses after Brexit |
Financial Markets 6. FCA issues Primary Market Bulletin 33 7. PRA and FCA: Joint Covering Document on operational resilience 8. FCA publishes Policy Statement – "Building operational resilience: Feedback to CP19/32 and final rules" (PS21/3) 9. PRA publishes Policy Statement - "Operational resilience: Impact tolerances for important business services" (PS6/21) 10. Bank of England (PRA)/FMI: Bank of England policy on operational resilience of FMIs 11. ESMA updates Q&As on MiFID II and MiFIR in relation to inducements 12. Joint FCA and Bank of England statement encouraging market participants in a switch to SONIA in the sterling non-linear derivatives market from 11 May 13. ESMA publishes Final Report on its technical advice to the European Commission on the application of administrative and criminal sanctions under MiFID II/MiFIR 14. Joint PRA and FCA Dear CEO letter on transition from LIBOR to risk free rates 15. Governor Andrew Bailey unveils the design of the new £50 note 16. ESMA issues a public statement regarding its supervisory approach to position limits 17. FCA publishes statement regarding supervisory flexibility on RTS 27 reports and 10% depreciation notification 18. ESMA publishes consultation paper on taxonomy-related sustainability disclosures - draft regulatory technical standards with regard to the content and presentation of sustainability disclosures pursuant to the SFDR |
Banking and Prudential 19. PRA publishes its supervisory statement on outsourcing and third party risk management and related policy statement 20. Bank of England Financial Policy Summary and Record of the Financial Policy Committee Meeting on 11 March 2021 |
Fund Management 21. Bank of England/FCA: Report: Liquidity management in UK open-ended funds 22. ESMA Consultation paper on EU Money Market Fund Regulation - Legislative review |
Senior Managers and Governance 23. FCA publishes Decision Notice against SMF for non-financial misconduct 24. FCA CEO Nikhil Rathi delivers speech on "why diversity and inclusion are regulatory issues" |
Financial Crime 25. HM Treasury updates advisory notice on money laundering controls in higher risk jurisdictions and new Money Laundering Statutory Instrument 26. FATF publishes draft guidance on a risk-based approach to virtual asset service providers |
Retail Investments 27. FCA publishes feedback statement on Open Finance (FS21/7) 28. Financial Conduct Authority v 24Hr Trading Limited, Mohammed Maricar - High Court finds that 24HR Trading Academy unlawfully advised on investments and unlawfully promoted CFD trading 29. FCA warns that young investors are taking on big financial risks 30. Advertising Standards Authority (ASA) publishes its report tracking the number of influencers who abide by social media ad disclosure requirements |
Payments 31. UK Finance publishes Fraud – the Facts 2021 report |
FinTech 32. FMLC responds to HM Treasury's Call for Evidence: Regulatory Approach to Cryptoassets and Stablecoins |
Other 33. HM Treasury announces climate considerations now fully embedded across UK principal regulators |
Brexit |
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1. HM Treasury confirms technical negotiations on UK-EU Memorandum of Understanding have concludedOn 26 March 2021, HM Treasury issued a short statement confirming that technical discussions on the text of the Memorandum of Understanding (MoU) on Financial Services have concluded. According to the statement, formal steps need to be undertaken on both sides before the MoU can be signed; HM Treasury expects this can be done expeditiously. Once signed, the MoU will create the framework for voluntary regulatory cooperation in financial services between the UK and the EU. The MoU will establish the Joint UK-EU Financial Regulatory Forum. We covered the early draft of the MoU in a previous edition of the FSS, which can be accessed here. 2. ESMA updates statement on impact of Brexit on the Benchmark Regulation (BMR)On 24 March 2021, ESMA updated its statement on the application of key provisions of the Benchmark Regulation (BMR). The latest update sets out ESMA's approach towards UK-based third country benchmarks as well as UK endorsed and recognised benchmarks. 3. FCA confirms it will continue to apply temporary transitional power to the UK's derivatives trading obligationOn 24 March 2021, the FCA published a statement on its use of the Temporary Transitional Power (TTP) to modify the application of the UK derivatives trading obligation (DTO). The FCA has confirmed that it will continue to use the TTP to modify the application of the DTO as previously set out its statement of 31 December 2020. 4. BoE / PRA respond to Treasury Committee's call for evidence on the Future of Financial ServicesOn 23 March 2021, the House of Commons Treasury Committee published the written evidence response of the BoE and PRA to the Committee's call for evidence on the Future of Financial Services.
5. Single Resolution Board publishes its approach to eligibility of UK law instruments without bail-in clauses after BrexitOn 22 March 2021, the Single Resolution Board (SRB) published a communication on its approach to liabilities governed by UK law without a contractual bail-in recognition clause, following Brexit. |
Financial Markets |
6. FCA issues Primary Market Bulletin 33On 29 March 2021, the FCA issued Edition 33 of its Primary Market Bulletin. Areas covered include:
7. PRA and FCA: Joint Covering Document on operational resilienceOn 29 March 2021, the UK regulators (PRA, the FCA, and the Bank of England in its capacity of supervising financial market infrastructures) issued a joint covering document on operational resilience (Operational Resilience: Impact tolerances for important business services). This follows a joint 2018 Discussion Paper on operational resilience as well as consultation papers issued in 2019 (PRA CP29/19 and FCA CP19/32). The document outlines policy decisions taken in relation to important business services; impact tolerances; and delivering operational resilience. The regulators note that COVID-19 has underscored the importance operational resilience for firms and note that most firms and FMIs have been able to maintain continuity of service during the period and that they had a good degree of resilience to the pandemic. See also our separate entries below covering the FCA and PRA's respective Policy Statements and associated documents on Operational Resilience. 8. FCA publishes Policy Statement – "Building operational resilience: Feedback to CP19/32 and final rules" (PS21/3)On 29 March 2021, the FCA published its Policy Statement (PS21/3) on operational resilience rules. The Policy Statement follows the FCA's 2019 consultation paper (CP19/32). It has also published a Handbook Instrument which implements the changes. The changes primarily consists of amendments to SYSC and SUP sections of the FCA Handbook.
The final rules and guidance come into force on 31 March 2022 and firms must be able to remain within their impact tolerances as soon as reasonably practicably but no later than March 2025. 9. PRA publishes Policy Statement - "Operational resilience: Impact tolerances for important business services" (PS6/21)On 29 March 201, the PRA published Policy Statement PS6/21 on "Operational Resilience: Impact
The rules require that firms identify their important business services by considering how disruption to the business services they provide can have an impact on PRA objectives; set an impact tolerance for disruption for each important business service; and ensure they can continue to deliver their important business services and are able to remain within their impact tolerances during severe but plausible scenarios. Firms are required to have identified their important business services and set impact tolerances by 31 March 2022.
10. Bank of England (PRA)/FMI: Bank of England policy on operational resilience of FMIsOn 26 March 2021, the Bank of England (BoE) issued a raft of documents in relation to operational resilience for financial market infrastructures. The risk management frameworks for FMIs cover both minimising the likelihood of an operational disruption occurring and mitigating and recovering from an operational disruption once such disruption crystallises. Central Counterparties
Central Securities Depositories
Recognised Payment System Operators and Specified Service Providers
11. ESMA updates Q&As on MiFID II and MiFIR in relation to inducementsOn 29 March 2021, ESMA published an updated set of Q&As on MiFID II and MiFIR investor protection and intermediaries topics. The new Q&A is Section 12, Question 8 and concerns the condition to be met for inducements to be considered to enhance the quality of services to clients, as referred to in Article 11(2)(a) of the MiFID II Delegated Directive. ESMA has provided guidance on each element of the condition:
12. Joint FCA and Bank of England statement encouraging market participants in a switch to SONIA in the sterling non-linear derivatives market from 11 MayOn 29 March 2021, the FCA and the Bank of England issued a joint statement, encouraging liquidity providers in the sterling non-linear derivatives market to adopt new quoting conventions for inter-dealer trading based on SONIA instead of LIBOR from 11 May this year. The joint statement explains that this is to facilitate a further shift in market liquidity toward SONIA, bringing benefits for a wide range of users as they move away from LIBOR. 13. ESMA publishes Final Report on its technical advice to the European Commission on the application of administrative and criminal sanctions under MiFID II/MiFIROn 29 March 2021, ESMA published Final Report: ESMA's Technical Advice to the Commission on the application of administrative and criminal sanctions under MiFID II/MiFIR. The technical advice addresses, in particular, the need to further harmonise the administrative sanctions set out for infringements of MiFID II/MiFIR requirements. ESMA's technical advice includes proposals to:
14. Joint PRA and FCA Dear CEO letter on transition from LIBOR to risk free ratesIn our previous FSS update, we covered the FCA's announcement made on 5 March 2021, confirming the dates that the panel bank submissions for all LIBOR settings will cease, after which representative LIBOR rates will no longer be available. Following on from this, on 26 March 2021, the PRA and FCA published a joint Dear CEO letter in relation to transition from LIBOR to risk free rates. The letter sets out a list of priority areas where further actions by firms is necessary to prepare for the cessation of LIBOR. The regulators stressed that the list is not exhaustive and the onus is on firms and responsible Senior Manager Function (SMF) holder(s) to determine the specific actions necessary to mitigate the risks arising from their firm's exposures to LIBOR, to ensure good client outcomes and to preserve market integrity. The responsible SMFs should also satisfy themselves that all appropriate actions are being taken to ensure an orderly transition. As a key regulatory priority, the regulators expect that this transition forms part of the performance criteria for determining SMFs' variable remuneration. All firms are also expected to meet milestones of the Working Group on Sterling Risk Free Reference Rates and the targets of other working groups and relevant supervisory authorities as appropriate. The letter sets out the following priority areas:
15. Governor Andrew Bailey unveils the design of the new £50 noteOn 25 March 2021, Governor Andrew Bailey unveiled the design of the new £50 note featuring the scientist Alan Turing. Turing was a mathematician and a pioneer of early computers. His critical work on codebreaking saved the lives of many people in World War Two. He was also a gay at a time when this was considered a crime. In his speech, Governor Andrew Bailey stated: "By placing him on this new £50 banknote, we celebrate him for his achievements, and the values he symbolises, for which we can all be very proud". The polymer £50 note will join the Churchill £5, the Austen £10 and the Turner £20, meaning all Bank of England banknotes are now available in polymer. 16. ESMA issues a public statement regarding its supervisory approach to position limitsOn 19 March 2021, ESMA issued a public statement on supervisory approach to position limits in light of the MiFID Quick Fix package. ESMA noted that the measures under the MiFID Quick Fix package are expected to be in application in February 2022 and reduce the scope of commodity derivatives subject to position limits. As a result, ESMA confirms that it expects supervisors not to prioritise:
17. FCA publishes statement regarding supervisory flexibility on RTS 27 reports and 10% depreciation notificationOn 19 March 2021, the FCA published a statement regarding temporary measures with respect to RTS 27 reports and 10% depreciation notifications. RTS 27 best execution reports The FCA confirmed, it is currently preparing a consultation looking at the RTS 27 reporting obligation, with a view to abolishing it, given concerns that have been expressed around the value these reports bring to the market and to consumers, and the burdens involved in producing them. Considering the upcoming consultation, the FCA states it will not take action against firms who do not produce RTS 27 reports for the rest of 2021. The FCA expect that by end of 2021 it will have concluded its policy consideration of the future of these reports. 10% depreciation notifications For the past twelve months the FCA has adopted temporary coronavirus measures in relation to the requirement for firms to issue 10% depreciation notifications to investors (per COBS 16A.4.3 UK). However, the FCA has now announced that they will no longer take action for breach of COBS 16A.4.3 for services offered to retail investors provided that the firm meets the criteria set out in the FCA's statement (including having issued at least one notification in the current reporting period and informing clients they may not receive similar notifications in the current reporting period). For services offered to professional investors, the FCA noted that it will not take action for breach of COBS 16A.4.3 provided that firms have allowed professional clients to opt-in to receiving notifications. The FCA reiterated that firms must still pay due regards to the interests of their customers and treat them fairly (Principle 6), pay due regard to the information needs of their clients, and communicate information to them in a way which is clear, fair and not misleading (Principle 7). 18. ESMA publishes consultation paper on taxonomy-related sustainability disclosures - draft regulatory technical standards with regard to the content and presentation of sustainability disclosures pursuant to the SFDROn 17 March 2021, the European Supervisory Authorities (ESAs) issued a consultation paper on draft Regulatory Technical Standards (RTS) in relation to disclosures of financial products investing in economic activities that contribute to an environmental investment objective. These economic activities are defined by the EU Taxonomy Regulation which amends the Regulation on sustainability-related disclosures in the financial services sector (SFDR). |
Banking and Prudential |
19. PRA publishes its supervisory statement on outsourcing and third party risk management and related policy statementOn 29 March 2021, the PRA published its Supervisory Statement (SS2/21) (and associated Policy Statement (PS2/21)) on outsourcing and third party risk management. SS2/21 applies to UK Banks, building societies, PRA-designated investment firms, insurers and reinsurers in scope of Solvency II and UK branches of overseas banks and insurers. SS2/21 comes into effect on 31 March 2022, and for agreements entered into on or after 31 March 2021, firms need to be compliant by 31 March 2022. However, for outsourcing and other in-scope third party agreements entered into prior to 31 March 2021 there is no need to comply until the next appropriate renewal date or revision point of the agreement, even where that falls post-31 March 2022. SS2/21 broadly keeps to the same obligations that are applicable to firms under the EBA Guidelines on Outsourcing. However, the PRA has specifically stated that it expects "material" non-outsourcing third-party agreements be subject to controls which are as robust as the controls that would apply to outsourcing arrangements with an equivalent level of materiality. Additionally, SS2/21 brings some much needed clarification on actions firms can take where a service provider cannot (for legitimate reasons) practically agree to the penetration testing and unlimited access and audit rights which have long been required of firms under the EBA's Outsourcing Guidelines. Whilst firms still need to include these requirements, there is some scope to agree less onerous obligations, depending on the circumstances. 20. Bank of England Financial Policy Summary and Record of the Financial Policy Committee Meeting on 11 March 2021On 26 March 2021, the Bank of England published the summary and record of the meeting of its Financial Policy Committee held on 11 March 2021. Areas covered include:
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Fund Management |
21. Bank of England/FCA: Report: Liquidity management in UK open-ended fundsOn 26 March 2021, the Bank of England and the FCA released the findings of their joint survey on UK-authorised open-ended funds. The survey was launched in the summer of 2020 and covers a reporting period covering Q4 2019 to Q2 2020 (including the market stress period that occurred in the wake of COVID-19 in March 2020 and April 2020). The survey found that the COVID-19-related market stress led to large net outflows across all funds, with UK corporate bond funds particularly affected. Other findings contained in the survey include the following: funds have a wide range of liquidity tools available to them, but predominantly use swing pricing. Almost all surveyed funds had liquidity management tools in place and used them more intensively during the stress period. However, tool selection and trigger points for their usage, and some pricing adjustment calculations, tended not to be fund-specific, but often set for fund families or at fund manager level;
22. ESMA Consultation paper on EU Money Market Fund Regulation - Legislative reviewOn 26 March 2021, ESMA issued a consultation paper on legislative review of the EU Money Market Funds (MMF) Regulation. The MMF requires the European Commission to review, following consultations with ESMA, the EU MMF regime by 21 July 2022. ESMA is consulting on potential reforms of the EU MMF regulatory framework, in light the difficulties faced by MMFs in March 2020. Areas of potential reforms for MMFs:
The deadline for responses is 30 June 2021. ESMA will consider the feedback it received to the consultation in Q2 2021. |
Senior Managers and Governance |
23. FCA publishes Decision Notice against SMF for non-financial misconductOn 29 March 2021, the FCA published a Decision Notice against Jon Frensham, an independent financial adviser and the sole director at Frensham Wealth Limited. The FCA considers that Mr Frensham is not a fit and proper person and has made orders to:
According to the FCA, in March 2017 Mr Frensham was convicted of attempting to meet a child following sexual grooming. He committed this offence whilst he was an approved person. Mr Frensham was sentenced to 22 months' imprisonment, suspended for 18 months. Given the nature and circumstances of his offence, the FCA determined that Mr Frensham is not a fit and proper person to perform any function in relation to any regulated activity as he lacks the necessary integrity and reputation. As Mr Frensham has exercised his right to refer the matter to the Tribunal, the FCA's Decision Notice is provisional and subject to the Tribunal's determination. At this stage, the facts and matters stated in the Decision Notice therefore reflect the FCA's belief as to what happened and how Mr Frensham's behaviour is to be characterised. 24. FCA CEO Nikhil Rathi delivers speech on "why diversity and inclusion are regulatory issues"On 17 March 2021, HM Treasury hosted the 'Launch of the HM Treasury Women in Finance Charter Annual Review'. At the event, FCA CEO Nikhil Rathi delivered a speech on 'why diversity and inclusion are regulatory issues'. According to Mr Rathi:
With respect to vulnerable customers Mr Rathi stated "I would question if any firm can adequately respond to the needs of these consumers if they do not have the diversity of background and experience required to overcome biases and blind spots. Ultimately, improving diversity and inclusion is both a matter of fairness and a crucial way to strengthen consumer outcomes." With respect to conduct and accountability, Mr Rathi reflected on the FCA's introduction of 5 conduct questions to help focus minds of senior managers on conduct risk in the wholesale banking market. Mr Rathi stated he would like to see this expanded, with a sixth question added asking all firms "is your management team diverse enough to provide adequate challenge and do you create the right environment in which people of all backgrounds can speak up?" Mr Rathi also touched on how the FCA may monitor or intervene in this space in the future. In particular, Mr Rathi noted that if the FCA doesn't see improvements in diversity at senior levels and better answers, the FCA will consider how to best use its powers. Mr Rathi noted that were supervisory tools the FCA could draw on, and floated the idea of whether the diversity of management teams could form part of the FCA's consideration of senior manager applications. Mr Rathi closed his speech by reiterating that the FCA cares about diversity "because diversity reduces conduct risk and those firms that fail to reflect society run the risk of poorly serving diverse communities. And, at that point, diversity and inclusion become regulatory issues." Mr Rathi's speech follows FCA Senior Advisor Georgina Philippou's speech of On 16 March 2021 at the 'Building Ethnic Diversity and Inclusion in Investment Management - Report Launch'. The speech highlighted the FCA's approach to firm culture, and the need to ensure that cultures are purposeful and safe, and support environments which are diverse and inclusive. Ms. Philippou highlighted D&I is relevant to much of what the FCA does and noted that although there is no rule in the FCA Handbook which says regulated firms have to be diverse or even have a diversity policy, it does not mean the FCA is silent or powerless. Ms. Philippou stated that the FCA has a range of tools at its disposal, from formal to informal, including a unique power to influence and convene. |
Financial Crime |
25. HM Treasury updates advisory notice on money laundering controls in higher risk jurisdictions and new Money Laundering Statutory InstrumentOn 24 March 2021, HM Treasury updated its advisory notice on money laundering and terrorist financing controls in higher risk jurisdictions. This notice replaces all previously notices issued by HM Treasury on the subject. On the same day HM Treasury made The Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021 (SI 2021/392), which amends the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). The effect of the statutory instrument (SI) is to replace references to the European Commission's list of high-risk third countries (in respect of which extra customer due diligence measures must be taken by relevant persons under the MLRs) with a list of such countries identified instead in a new Schedule 3ZA to the MLRs. The new list of high-risk third countries replicates FATF's list of 'Jurisdictions under Increased Monitoring' and the list of 'High-Risk Jurisdictions subject to a Call for Action'. The SI came into force on 26 March 2021. The schedule will be periodically updated by way of further regulations, for example to reflect changes made by FATF to their relevant lists after each Plenary. The new Schedule 3ZA lists the following High-Risk Third Countries: Albania, Barbados, Botswana, Burkina Faso, Cambodia, The Cayman Islands, Democratic People's Republic of Korea (DPRK), Ghana, Iran, Jamaica, Mauritius, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Senegal, Syria, Uganda, Yemen and Zimbabwe. 26. FATF publishes draft guidance on a risk-based approach to virtual asset service providersOn 19 March 2021, FATF published its Guidance on the risk-based approach to virtual assets (VAs) and virtual asset service providers (VASPs). The FATF originally issued Guidance in June 2019 when the FATF finalised changes to its standards to place anti-money laundering and countering the financing of terrorism (AML/CFT) obligations on VAs and VASPs. The FATF noted that the new revised Guidance aims to: clarify the definitions of VA and VASP to make clear that these definitions are expansive and there should not be a case where a relevant financial asset is not covered by the FATF Standards (either as a VA or as a traditional financial asset);
The FATF clarified that these changes to the pre-existing Guidance aim to maintain a level playing field for VASPs, based on the financial services they provide in line with existing standards applicable to financial institutions and other AML/CFT obliged entities, as well as minimizing the opportunity for regulatory arbitrage between sectors and countries. The FATF confirmed that it will consult private sector stakeholders before finalising the revisions to the Guidance. |
Retail Investments |
27. FCA publishes feedback statement on Open Finance (FS21/7)On 26 March 2021, the FCA published its feedback statement on open finance (FS21/7). Open Finance refers to the extension of open banking-like data sharing to a wider range of financial products, such as savings, investments, pensions and insurance. In its 2019/20 business plan, the FCA committed to exploring the issue in greater detail, and in December 2019, published a Call for Input. For a detailed over of the main issues raised in FS21/7, please see our briefing. 28. Financial Conduct Authority v 24Hr Trading Limited, Mohammed Maricar - High Court finds that 24HR Trading Academy unlawfully advised on investments and unlawfully promoted CFD tradingOn 25 March 2021, the High Court delivered a summary judgement in proceedings initiated by the FCA against 24HR Trading Academy Limited (Company) a firm run by Mohammed Maricar.
Judgement:
29. FCA warns that young investors are taking on big financial risksOn 23 March 2021, the FCA published research findings into better understanding self-directed investors who engage in high-risk investments like cryptocurrencies and foreign exchange. According to the FCA, there is a new, younger, more diverse group of consumers getting involved in higher risk investments, potentially prompted in part by the accessibility offered by new investment apps. The FCA's research found that higher risk products may not be suitable for these consumers' needs as 59% claim that a significant investment loss would have a fundamental impact on their current or future lifestyle. Moreover, some investors are being tempted - often through online adverts or high-pressure sales tactics - into buying higher-risk products that are very unlikely to be suitable for them. In addition, this newer audience has a more diverse set of characteristics than traditional investors. According to the FCA data, these investors tend to skew more towards being female, under 40 and from a BAME background. This newer group of self-investors are more reliant on contemporary media (e.g. YouTube, social media) for tips and news. This trend appears to be prompted by the accessibility offered by new investment apps. The FCA advises consumers to consider five important questions before they invest:
30. Advertising Standards Authority (ASA) publishes its report tracking the number of influencers who abide by social media ad disclosure requirementsOn 18 March 2021, ASA published its 'influencer Ad Disclosure on Social Media' report. The report reveals that the proportion of influencers sticking to the rules is far below what the ASA would expect. Last year September, the ASA undertook a three week monitoring exercise to review the Instagram accounts of 122 UK-based influencers to assess whether advertising content was being properly disclosed. That involved assessing over 24,000 Instagram "Stories" including posts, "IGTV" and "Reels" to check compliance rates. The advertising rules apply across all platforms and non-broadcast media but this monitoring exercise focused on posts on Instagram because complaints to the ASA about Influencer ad disclosure tend to relate to this particular platform. Extensive advice, training and easy-to-understand resources have been provided to help the influencer marketing community and brands understand their responsibilities under the ad rules. ASA found that nearly one in four of the Stories it assessed was advertising, but only 35% of them were clearly labelled and obviously identifiable as such. The level of non-compliance is unacceptable. In summary, the ASA found:
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Payments |
31. UK Finance publishes Fraud – the Facts 2021 reportOn 25 March 2021, UK Finance published its Fraud – the Facts 2021 report, highlighting that criminals used the Covid-19 pandemic to target victims online, through impersonation scams, romance fraud and investment scams. Digital platforms were used to target victims and trick them into giving away money, thereby evading banks' advanced security measures. UK Finance is calling for new legislation to make online platforms responsible for taking down fraudulent content and better protect consumers from these scams. |
Fintech |
32. FMLC responds to HM Treasury's Call for Evidence: Regulatory Approach to Cryptoassets and StablecoinsOn 19 March 2021, the FMLC raised a number of legal uncertainties presented in HM Treasury's consultation published in January 2021. According to HM Treasury, the January consultation aimed to create a balance between challenges posed by new technologies, including risks to consumers and stability, while also supporting innovation, competition and providing a sound regulatory environment for stablecoins. According to the FMLC the legal uncertainties include definitional questions, such as identifying what a "token" is, as well as the difficulties arising from interpreting definitions under existing financial regulation in the context of token arrangements. The FMLC has also drawn attention to the possible overlap of the new regime for stablecoins with the existing regime under the E-Money Regulations. The FMLC notes the difficulties arising from the application of concepts present in financial services regulation which reflect the traditional market infrastructure of intermediated securities, most, if not all, of which cannot readily be applied to a DLT context. |
Others |
33. HM Treasury announces climate considerations now fully embedded across UK principal regulatorsOn 24 March 2021, HM Treasury announced that had fully embedded climate considerations by requiring its principal financial regulators to consider climate change. In its announcement, HM Treasury stated that building on their existing body of climate change-related work, the FCA and Prudential Regulation Committee (PRC) should now take into account the Government's legally binding commitment to transaction to a net zero economy by 2020. On the same date, the Chancellor released remit letters issued to the FCA and PRC, updating their respective remits. The remit letters set out the Government's ambition to deliver a financial system which supports and enables a net zero economy, and mobilises private finance behind sustainable and resilient growth. These follow the publication of the updated remits for the Bank of England's Monetary Policy Committee (MPC) and Financial Policy Committee (FPC) at Budget 2021. For further information see: the remit letter for the FPC; the remit letter for the MPC; the remit letter for the PRC; and the remit letter for the FCA. |
Authors: Emma Tran & Vidhi Mahajan
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