Auteurs

Charlotte Hill

Associé

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Charlotte Witherington

Associé

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Daniel Hirschfield

Senior Counsel – Knowledge

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Auteurs

Charlotte Hill

Associé

Read More

Charlotte Witherington

Associé

Read More

Daniel Hirschfield

Senior Counsel – Knowledge

Read More

10 avril 2024

Financial services update – 2 de 53 Publications

Financial services matters - April 2024

  • In-depth analysis

In this month's update: 

  • FCA publishes its 2024/2025 Business Plan and updates supervisory approach documents.
  • Updates from ESMA and the EBA on MiCA implementation.
  • HMT to publish a National Payments Vision.
  • PRA to launch new Rulebook.
  • Insights on asset managers' TCFD-aligned disclosures.
  • HMT launches review of the MLRs.
General financial services regulation

Data collection: regulators respond to phase two industry recommendations

On 28 March 2024, the Bank of England and the FCA set out their responses to the phase two industry recommendations of the Transforming Data Collection (TDC) project, a joint initiative of the Bank and the FCA, stemming from the 2021 joint data transformation programme, which addressed issues with data collection.

The recommendations were made by two industry-led committees – the Reporting Transformation Committee and the Data Standards Committee – and focused on four use cases.

In their response, the regulators have confirmed that a number of projects are planned over the next 18 months to enhance data collection, which are designed to achieve five outcomes that support the regulators' vision of getting the data they require at the lowest possible cost.

The outcomes are:

  • Data collections meet and are proportionate to regulators' needs.
  • Effective and efficient internal processes for creating data collections.
  • Efficient processes and support for meeting regulatory obligations.
  • Clear and consistent data definitions.
  • Modern systems to underpin data collection.

Workstreams include a Single Firm Portal that will enable firms to interact with a range of systems such as RegData and Connect, and a Firm Communications Portal for reporting queries.

Changes are also being made to the governance of the TDC. With effect from 2 April 2024, the TDC Advisory Board will be the means by which the Bank and FCA updates industry on the TDC and receives feedback. The Board will establish working groups with industry and will work with the new Industry Data Standards Committee.

For further background on the joint data transformation programme, the phase two use cases and the Industry Data Standards Committee, see our special article.

FCA publishes its 2024/25 Business Plan 

On 19 March 2024, the FCA published its 2024/25 business plan, outlining how it will deliver the 13 commitments in its April 2022 Strategy to achieve better outcomes for consumers and markets. Key issues it will prioritise include:

  • Protecting customers: the FCA will continue to test whether firms are meeting the high standards set by the Consumer Duty, support people's long term financial wellbeing through the Advice Guidance Boundary Review and ensure pension products deliver value for money.
  • Ensuring market integrity: the FCA will finalise far-reaching capital markets reforms, continue to lead the debate on how the right form of regulation can support growth for UK markets, and invest in data and technology to support rigorous market oversight. 
  • Promoting effective competition: the FCA will improve the attractiveness and reach of UK wholesale markets, support firms to invest, innovate and expand through its innovation services, and continue to make it quicker and easier for firms to apply for authorisation. 

In the post on the FCA website, Nikhil Rathi, FCA Chief Executive, highlighted that the FCA has already made significant progress in delivering the bold vision set in the 2022 strategy, and remains resolute in supporting the vital role that the financial sector plays in the UK's long-term economic growth. The planned programme of work builds on the progress made in recent years to become a more outcomes-based, assertive and data-led regulator. 

FCA updates material on supervision, consumers, competition

On 19 March 2024, the FCA updated the following webpages:

  • Our approach to supervision sets put the FCA's approach to regulatory oversight of both firms and the individuals who control firms. 
  • Our approach to consumers sets out how the FCA uses its powers and tools protect consumers of financial services, in line with its consumer protection objective. 
  • Our approach to competition sets out how the FCA identifies potential harm caused by a lack of competition, and what actions it can take to protect consumers.
  • Our approach to international firms sets out what the FCA expects from international firms providing financial services in the UK, or firms preparing to apply for full UK authorisation.

FCA to review firms' treatment of customers in vulnerable circumstances 

On 15 March 2024, the FCA published a press release announcing that it will conduct a review into firms' treatment of customers in vulnerable circumstances. The FCA will share the findings by the end of 2024.

The review will look at:

  • firm's understanding of consumer needs.
  • the skills and capability of staff.
  • product and service design.
  • communications and customer service, and whether these support the fair treatment of customers in vulnerable circumstances. 
  • the outcomes consumers in vulnerable circumstances receive and whether they’re as good as the outcomes of other consumers.

FCA speech on its regulatory approach to deliver for consumers, markets and competitiveness

On 14 March 2024, the FCA published a speech by Nikhil Rathi, FCA Chief Executive. The speech was titled "Investing in outcomes: a regulatory approach to deliver for consumers, markets and competitiveness".

Points of interest include:

  • Consumer Duty: the FCA does not want to trip firms up by going after technical breaches of duty. It looks favourably on firms which take reasonable steps to identify and proactively address concerns even when mistakes are made. The FCA wants to be pragmatic, so it focuses on the greatest harms, which are the cash savings market and insurance products such as premium finance and GAP insurance. 
  • Consumer redress: the FCA is not retrospective; it aims to act proactively and to thoroughly understand the problem. In dealing with motor finance claims, it is working hard to establish the facts and will set out its next steps by the end of September. The more quickly and comprehensive firms cooperate with FCA requests for data, the sooner it can conclude its work. 
  • The FCA's role as a prudential regulator: the FCA is using financial resilience data on a more systematic basis. It wants to strengthen the "polluter pays" principle, so it is consulting on new rules for financial advisers that require them to calculate potential redress liabilities, deduct that from regulatory capital, and if that breaches minimum requirements then an automatic asset retention applies until the issue is resolved.
Fintech and digital assets

Technology Working Group publishes second report on UK fund tokenisation

On 26 March 2024, the Technology Working Group (TWG) published a report on the second phase of its work in considering the possible use cases of fund tokenisation, building on its November 2023 interim report. The TWG was launched in April 2023 and operates alongside the government's Asset Management Taskforce. 

One of the use cases the latest report considers is the role that tokenised funds may play in 'on-chain' investment markets that will enhance back-office functionality. The report also explores how funds may be able to hold tokenised assets in the portfolio. 

Phase three of the TWG will focus on the role of artificial intelligence and other technology in the investment management sector.

ESMA final report on first set of RTS and ITS under MiCA

On 25 March 2024, ESMA published a final report (ESMA18-72330276-1634) on its first set of draft regulatory technical standards (RTS) and implementing technical standards (ITS) under the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA).

The report sets out the feedback statements relating to six of the seven draft RTS and ITS on the following topics:

  • The notification by certain financial entities of their intention to provide cryptoasset services (Article 60(13) and (14) of MiCA).
  • The authorisation of cryptoasset service providers (CASPs) (Article 62(5) and (6) of MiCA).
  • Complaints handling by CASPs (Article 71(5) of MiCA).
  • The proposed acquisition of a qualifying holding in a CASP (Article 84(4) of MiCA).

ESMA consulted on the draft RTS and ITS in July 2023. The comments received mostly supported the proposals, but there was a mixed response to the proposal relating to the information that a proposed acquirer would need to provide to the competent authority of a target CASP.

The final report on the draft RTS on conflicts of interest for CASPs (Article 72(5) of MiCA) will be published at a later stage. This will allow the EBA to finish its consultation process and allow ESMA and the EBA to co-operate and ensure maximum alignment.

EBA final report on RTS complaints handling for issuers of ARTs and MiCA

On 13 March 2024, the EBA published a final report (EBA/RTS/2024/02) on draft regulatory technical standards (RTS) specifying the requirements, templates and procedures for handling complaints under Article 31 of the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA or MICAR).

As required under Article 31 of MiCA, the EBA has drafted RTS that specify effective and transparent procedures for the prompt, fair and consistent handling of complaints by holders of asset referenced tokens (ARTs). 

The draft RTS:

  • Sets out the handling of the complaints and requirements related to complaints management policy and function.
  • Sets out the provision of information to ARTs holders and other interested parties.
  • Specifies the templates and procedures for handling complaints received from ARTs holders and other interested parties.
  • Specifies procedures to facilitate the handling of complaints between ARTs holders and third-party entities. 

FCA update on its position relating to cryptoasset ETNs for professional investors

On 11 March 2024, the FCA published a statement announcing that it will not object to requests from Recognised Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs). These products would be available for professional investors, such as investment firms and credit institutions, which are authorised or regulated to operate in financial markets only.

If an RIE creates a new UK listed market segment, it will consider applications on a case-by-case basis for listing cETNs, based on the criteria set out in the Listing Rules. RIEs will need to make sure sufficient controls are in place, to ensure orderly trading and that professional investors are properly protected. Additionally, cETNs must meet all the requirements of the UK Listing Regime. 

The 2020 ban on the sale of cETNs to retail consumers remains, since the FCA continues to believe they are not suitable for retail consumers due to the harm they pose. However, it believes RIEs and professional investors are now better able to establish whether cETNs meet their risk appetite, considering the increased insight and data as a result of a longer period of trading history.

HM Treasury consultation on improving effectiveness of Money Laundering Regulations

On 11 March 2024, HM Treasury launched a consultation on improving the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLRs).

One of the themes is "providing clarity on the scope of the MLRs", which covers issues that relate to the boundary of the AML/CTF regulation regime. It considers how best to align registration and change in control (CiC) measures for custodial wallet providers and cryptoasset exchange providers between the FSMA and the MLRs.One issue relates to the authorisation/registration and change in control assessments under FSMA, and how they differ to the MLRs in identifying and assessing the risk associated with controllers of crypto firms. FSMA and MLRs use different definitions to identify control and controllers of crypto firms.

The government seeks views on whether it is appropriate to have two different concepts of control for crypto firms under MLR supervision, depending on whether they are FSMA authorised or not. Subject to the responses, the Consultation proposes aligning the current MLR regime for crypto firms more closely with the FSMA model. This would consequently change the classes of persons who are subject to the fit and proper test as well as the threshold definitions for control. The government intends to make it easier for authorised crypto firms to move into the FSMA regime, as relevant controllers will have already been identified. 

The deadline for responses is 9 June 2024.

EBA consults on guidelines on redemption plans under MiCA

On 8 March 2024, the EBA published a consultation paper (EBA/CP/2024/09) on draft guidelines on redemption plans under Articles 47 and 55 of the Regulation on markets in cryptoassets ((EU) 2023/1114) (MiCA)).

MiCA requires each issuer of an asset-referenced token (ART) or of an e-money token (EMT) to develop a redemption plan to ensure the orderly redemption of the tokens when the competent authority assess the issue is unable or likely to be unable to fulfil its obligations.

The draft guidelines set out proposed guidance for issuers when drafting their redemption plan and for competent authorities when assessing redemption plans. The guidelines cover:

  • the principle of proportionality
  • the specification of the main features and objectives of a redemption plan
  • governance requirements
  • triggers of a redemption plan.

The consultation closes to comments on 10 June 2024.

ESG

IAIS consults on part three of climate risk supervisory guidance

On 19 March 2024, the International Association of Insurance Supervisors (IAIS) published its third consultation on climate risk supervisory guidance.

The IAIS is conducting a series of four public consultations on proposed changes to guidance in various Insurance Core Principles (ICPs) and on new supporting material to better incorporate climate risk. The proposed changes are set out in the following documents:

The deadline for response is 19 June 2024. 

Transition Finance Market Review issues call for evidence

On 14 March 2024, the Transition Finance Market Review (TFMR) published a call for evidence in which it invited stakeholders, including banks, insurers, assets managers, exchanges and corporates, to respond to questions on the following topics: 

  • scope of transition finance
  • ensuring the credibility and integrity if transition finance
  • barriers to the application of transition finance
  • investments, products and services to advance transition finance
  • building the UK as a global hub for transition finance

The call for evidence is open for submission until 25 April 2024.

Investment Association publishes report on asset managers' climate-related disclosures

On 8 March 2024, the Investment Associate (IA) published a report on insights and suggested actions on the FCA's Task Force on Climate-related Financial Disclosures (TCFD) rules for asset managers. This follows the commencement of reporting obligations of climate-related disclosures under the ESG sourcebook.

The report reviews the key themes emerging from the first round of asset manager reporting in line with the TCFD framework, and sets out the key findings, including challenges faced by firms for their 2023 reports, and some ideas that firms can take away when producing their 2024 report.

Key themes found in entity-level reports include differences in the use of quantitative and qualitative reporting and varied reports on transition planning. A lack of FCA guidance may have resulted in the variation of approaches for product-level reporting, which creates a risk of different levels of disclosure.

Future focus areas for asset managers include being consistent with wider sustainability reporting, consumer testing and usability, and data timing. The IA will use the report to evaluate where further guidance from the FCA might be helpful.

Payment services and systems

Annual review of joint-authority memorandum of understanding on payment systems in the UK

On 28 March 2024, the Bank of England issued a statement on the memorandum of understanding (MoU) between the Bank, the FCA, the PSR and PRA, in relation to payment systems in the UK. Under the Financial Services (Banking Reform) Act 2013, the MoU must be reviewed by the authorities annually. The eighth review was undertaken in 2023.

The authorities have concluded that the MoU continues to function well. Areas for future co-operation and co-ordination identified in 2024 and beyond include:

  • revisions to the MoU regarding proposed stablecoin regulation
  • embedding reforms from FSMA 2023
  • further improving information and data sharing.

In addition, the authorities will work, as appropriate, with the Treasury as it prepares a National Payments Vision (see below).

Chris Hemsley's speech at the PAY360 conference

On 20 March 2024, Chris Hemsley, Managing Director of the Payment Systems Regulator (PSR), delivered a speech at the PAY360 conference.

Hemsley discussed the development of payments innovation, and how the UK can unlock change and innovation to deliver good outcomes. Despite the progress that has been achieved over the past 25 years, he emphasised how UK payments systems must continue to modernise and change, and the markets they support must continue to develop, promote competition and drive innovation.

The Payment System Operator (PSO) can bring multiple benefits and plays an important role in innovation and change. It can also move more quickly than Pay.UK, therefore, the PSR thinks the UK should build on the model of an independent PSO for the interbank system. This is a system which has worked across the global. Large transformative change has occurred in payment systems which have a strong central coordinating body - Hemsley pointed to UPI in India and PIX in Brazil as examples.

Focusing on the creation of good, open markets, Hemsley highlighted that markets and competition are powerful forces to deliver innovation, but there is an important role for regulatory oversight so markets can work well. The PSR seeks to create new payment markets by expanding Open Banking, however, it understands that participants feel it is intervening too much. It asks the industry to "get on with it" where there is clear consensus, and is exploring how best to proceed in other areas.

HM Treasury to publish National Payments Vision 

On 8 March 2024, HM Treasury published a statement which provides an update on the National Payments Vision. 

The Future of Payments Review found that the UK payments landscape is congested and would benefit from a clear overall strategy. The Government is committed to maintaining the UK's reputation as a world-leading payments ecosystem, so has accepted the recommendation to publish a National Payments Vision.

The Vision aims to clarify the government's ambition for UK payments. HM Treasury will carry out a comprehensive programme of engagement on key issues, working closely with trade associations and membership bodies to gather views.

The Vision is intended to be published as soon as possible this year, and it will constitute the government's full response to the Review.

ECON publishes report on proposed PSD3 and PSR

On 5 March 2024, the European Parliament's Economic and Monetary Affairs Committee (ECON) published the following reports relating to the legislative proposals for PSD3 and the PSR:

  • A report (dated 22 February 2024) on the proposed Regulation on payment services in the internal market (2023/0210(COD)) (Payment Services Regulation (PSR)).
  • A report (dated 21 February 2024) on the proposed Directive on payment services and electronic money services in the internal marked (2023/0209(COD)) (PSD3)).

The European Parliament is expected to vote on both texts during the first plenary session in April 2024, to be held on 10 and 11 April 2024. ECON voted to adopt reports in February 2024, as reported in our March 2024 update.

Consumer credit and mortgages

FCA response to FSB super-complaint on lenders' demands for personal guarantees on business loans

On 5 March 2024, the FCA published its response to a super-complaint raised by the Federation of Small Businesses (FSB) concerning the use of personal guarantees by lenders to support loans to small businesses.

The super-complaint focuses on lending to small and medium-sized enterprises (SMEs), which falls outside of the FCA regulatory perimeter. The FCA's ability to investigate is therefore limited. For lending that falls within its regulatory perimeter, the FCA intends to:

  • Collect data from lenders from April to June 2024 to understand the number of personal guarantees in place for sole traders and small partnerships borrowing less than £25,000.
  • Review a sample of firms' policies and procedures to understand when personal guarantees are required for loans that are regulated by the FCA.
  • Assess the volume of complaints to the Financial Ombudsman Service (FOS) about guarantees for business borrowing and the proportion of these that are upheld.
  • Consider whether lenders need further guidance on applying the rules and guidance within the Consumer Credit sourcebook (CONC) to situations where a personal guarantee is in place.

If its work on lending within the regulatory perimeter identifies areas of potential harm outside the perimeter, the FCA will share any relevant information with the government and parliamentary committees that have an interest in SME finance and business banking.

Banking and insurance

PRA to launch new Rulebook website on 10 April 2024

On 19 March 2024, the PRA published a press release announcing that it will launch the new PRA Rulebook website on 10 April 2024. 

The PRA highlighted the following key changes to the website:

  • Easier access to policy statements, supervisory statements and statements of policy relating to the PRA rules.
  • Improved "time-travel" functionality that will allow users to see the past, as well as future, versions of a rule and provide a timeline of the dates when a Part has changed.
  • The ability to access on a rule-by-rule basis the legal instruments and policy statements that changed a particular rule.

The PRA have migrated all Rulebook content and metadata to the new platform and will finish adding Supervisory Statements (SS) and statements of policy (SoP) by the end of 2024.

Bank of England speech on updating its data and analytics strategy

On 7 March 2024, the Bank of England (BoE) published a speech by James Benford, BoE Executive Director for Data and Analytics Transformation and Chief Data Officer. The speech covers the steps the BoE is taking to update its data and analytics (D&A) strategy. 

The BoE's Independent Evaluation Office (IEO), which was commissioned to evaluate the use of data by the BoE to support its policy objectives, published a report in October 2023 which made ten detailed recommendations. The speech highlights the following as some of the key steps the BoE has taken so far:

  • working to define a governance structure to shape a collective response
  • identifying priority areas of change
  • guiding a common approach
  • connecting the BoE's D&A platform to the cloud
  • agreeing immediate priorities for a data portfolio.

FCA updates government on multi-occupancy building insurance work

On 29 February 2024, the FCA published a letter from Sheldon Mills, FCA Executive Director, Consumers and Competition, to Michael Gove, Secretary of State for Levelling Up, Housing and Communities (DLUHC). The letter provides an update on the FCA's work on its multi-occupancy building insurance (MOBI). 

Points of interest include:

  • New FCA rules on MOBI: in September 2023, the FCA published a policy statement and final rules on MOBI (PS23/14).
  • Insurer risk modelling and pricing: the FCA has revisited the findings of its September 2022 report on MOBI, and will raise concerns with firms that do not appear to be meeting required standards and, where necessary, will use its regulatory tools where progress is insufficient.
  • ABI and BIBI common data code: The FCA's review found that data availability had improved, and the most recent data indicated that firms appear to be largely complying with the code on core risk data for multi-occupancy buildings with fire risk issues that was published by the Association of British Insurers (ABI) and the British Insurance Brokers' Association (BIBA) in February 2023. The FCA believes there is still significant work for many firms to take. 
  • ABI-designed reinsurance scheme: in its September 2022 report, the FCA recommended that the ABI work with the government and industry to create an effective risk pooling arrangement to share the risks of properties affected by flammable cladding and other material fire safety risks.
Securities, investments, and markets

Joint Committee of ESAs updates Q&As on PRIIPs KID

On 15 March 2024, the Joint Committee of the European Supervisory Authorities (ESAs) published an updated version of its Q&As (JC 2023 22) on the key information document (KID) requirements for packaged retail and insurance-based investment products (PRIIPs), as laid down in Commission Delegated Regulation (EU) 2017/653.

Q&As that have been added relate to issues which include: 

  • clarifying the term "PRIIPs open to subscription"
  • the types of product category with regard to material risk assessments
  • summary risk indicators
  • performance scenarios.

Second tranche of UK Listing Rules published

On 7 March 2024, the FCA published the second tranche of the draft UK Listing Rules (UKLR) relating to its reforms to the UK listing regime, which proceeds on the basis set out in CP23/31.

For commercial companies, the second tranche includes: 

  • Transitional provisions in respect of in-flight listing applications (UKLR TP1) and mid-flight transactions (UKLR TP6).
  • Dispensations for commercial companies with a sovereign controlling shareholder in relation to admission to listing (UKLR 5), continuing obligations (UKLR 6) and related party transactions (UKLR 8).

Regarding rules applicable to all listed securities, the second tranche includes:

  • The process for admission to listing, together with rules relating to suspension, cancellation, restoration and transfer between listing categories (UKLR 20 and 21).

Regarding additional listing categories, the second tranche includes rules for:

  • Closed-ended investment funds and open-ended investment companies (UKLR 11 and 12).
  • Shell companies, including SPACs, including rules for suspension and initial transactions by these issuers (UKLR 13).
  • International commercial companies with a secondary UK listing, including rules for reverse takeovers (UKLR 14).

The deadline for responding to CP23/31 and the first tranche of the UKLR was 22 March 2024, but the FCA accepted consultation submissions in relation to the second tranche material and the consequential changes instrument only until 2 April 2024.

FCA and BoE consult on Q&As for derivatives reporting under UK EMIR

On 1 March 2024, the FCA published a consultation paper in which it seeks feedback alongside the BoE on draft guidance in the form of Q&As on the revised reporting requirements under Article 9 of EMIR (648/2012). 

The FCA and BoE published a joint policy statement (PS23/2) on changes to the derivatives reporting framework in February 2023. The new requirements come into effect on 30 September 2024 (subject to a transitional period for certain rules). The FCA and BoE plan to provide Q&As on twelve topics. The first consultation covers the first five:

  • transitional arrangements 
  • reconciliations
  • errors and omissions 
  • derivative identifiers 
  • action and events
  • venues 
  • exchange traded derivatives 
  • margin and collateral 
  • clearing 
  • post trade risk reduction 
  • position level reporting
  • asset class and product specific

The deadline for comments was 28 March 2024. The FCA will consult on the remaining seven topics later in spring 2024.

Funds and asset management

FCA findings from 2023 review of AIFMs using host model to manage AIFs

On 25 March 2024, the FCA published a new webpage which sets out its findings from a 2023 review of alternative investment fund manager (AIFM) hosting.

AIFMs can use the host model to employ staff on secondment from a third party to help manage the AIF, who carry out regulated tasks or administrative jobs. Sometimes, the AIFM may be a principal firm and the person seconded to the AIFM may come from one of its appointed representatives (ARs).

The FCA found potential harm from:

  • a lack of oversight of seconded staff
  • insufficient involvement in investor due diligence
  • inadequacies in capital adequacy calculations.

It also found misleading claims from third parties that had seconded staff to an AIFM. 

The FCA therefore provides guidance for firms operating the AIFM host model on:

  • Supervising and monitoring the actions of all employees, including secondees.
  • Undertaking regular reviews and audits of the files of any third parties they delegate due diligence functions to, to ensure financial crime obligations are complied with.
  • Factoring in the number of AIFs or ARs when calculating their capital requirements.

The FCA has taken action against individual firms where it has seen harm arising from this model, so continues to monitor the secondment arrangement in the AIFM sector closely.

ECON adopts draft reports on proposed retail investment package

On 21 March 2024, the European Parliament's Economic and Monetary Affairs Committee (ECON) published a press release announcing it had adopted its draft report on the proposed Directive on retail investment protection (2023/0167(COD)).

The proposed Directive will amend: 

  • the MiFID II Directive (2014/65/EU)
  • the Insurance Distribution Directive ((EU) 2016/97) (IDD)
  • the Solvency II Directive (2009/138/EC)
  • the UCITS Directive (2009/65/EC)
  • the AIFM Directive (2011/61/EU) (AIFMD).

ECON also announced the adoption of its draft report on the proposed Regulation, which amends the Regulation on key information documents (KIDs) for packaged retail and insurance-based investment products (PRIIPs) (1286/2014) (PRIIPs Regulation) (2023/0166(COD)).

Directive amending AIFMD and UCITS Directive published in the Official Journal

On 26 March 2024, Directive (EU) 2024/927 was published in the Official Journal of the European Union. 

The directive amends the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD) and the UCITS Directive (2009/65/EC) relating to delegation arrangements, liquidity risk management, supervisory reporting, provision of depositary and custody services, and loan origination by alternative investment funds (AIFs). It enters into force on 15 April 2024.

FCA portfolio letter to asset management and alternative firms

On 1 March 2024, the FCA published a portfolio letter which provides an interim update on its supervisory strategy for the asset management and alternative portfolios. 

The update reflects changes in the external risk environment and work that has been completed since its February 2023 portfolio letter, which was reported on in our March 2023 update. The update sets out the FCA's forward areas of focus for this sector over the next year, which are consistent with the multi-year plan set out previously and are intended to provide clarity on the FCA's areas of regulatory focus for the year ahead. 

The following are the FCA's supervisory priorities:

  • setting and testing higher standards
  • reducing and preventing serious harm
  • supporting innovation
  • promoting competition and positive change. 

Next steps are for CEOs to discuss the letter with their board and executive committee, consider how it applies to their business, and, where necessary, take action.

Enforcement

Bank of England and PRA consult on their approach to enforcement

On 28 March 2024, the Bank of England published a consultation paper, in which it set out the Bank's and the PRA's approach to enforcement and proposed changes to statements of policy and procedure.

The Bank's current approach to enforcement (including the PRA's approach) is found in the Bank of England's approach to enforcement: statements of policy and procedure, which was published in January 2024 (see our March 2024 update).

The proposed changes arise out of FSMA 2023 and Securitisation Regulations 2024. Where possible, the proposed approaches to using these additional enforcement powers follow the Bank’s and the PRA’s approaches in the other contexts in which each has enforcement powers.

The deadline for responses to the proposals is 28 June 2024, and the proposed implementation date for the suggested changes is Q4 2024.

FCA decision notice relating to cum-ex trading 

On 18 March 2024, the FCA published the decision notice it issued to Nailesh Teraiya, Chief Executive of Indigo Global Partners Ltd, a brokerage firm.

The FCA states that Mr Teraiya managed Indigo's participation in an equities trading strategy, which took place December 2013 and January 2015, that resulted in claims on the Danish tax authority totalling EUR 91 million. Mr Teraiya was the sole controller and chief executive of Indigo during this period.

The FCA concluded that Mr Teraiya breached Principle 1 of the Statements of Principle for Approved Persons, which requires an approved person to act with integrity, since his conduct was dishonest and lacked integrity. He has also been fined £5.95 million (£5.1 million of which reflects what the FCA considers Mr Teraiya received through third parties for his part in the scheme) and has been banned from carrying out any regulated activity. Mr Teraiya has referred the decision to the Upper Tribunal; therefore, any findings are provisional. 

FCA published 43rd quarterly consultation paper

On 1 March 2024, the FCA published its 43rd annual quarterly consultation paper (CP24/3).

The Financial Services and Markets Act 2023 (FSMA 2023) created a new regime for the oversight of critical third parties (CTPs), including new enforcement powers for the FCA, PRA and BoE. The FCA proposes a new Statement of Policy (SoP) which sets out its approach to using its enforcement powers under FSMA 2023. The proposals related to the FCA only and it expects the PRA and BoE to consult on their own enforcement proposals in due course.

The deadline for response was 8 April 2024. 

FCA application to stay civil case for 12-month period granted 

On 1 March 2024, the High Court granted the FCA's application to stay proceedings in a civil case against WealthTek LLP and an individual (together, the defendants) for 12 months.

WealthTek LLP is an FCA-authorised wealth management firm in special administration. The FCA has been carrying out a dual regulatory and criminal investigation into the defendants' affairs since investigators were appointed in March 2023.

The court considered that the FCA's criminal investigation should take priority over the High Court proceedings. This will allow the FCA to make a decision in the 12-month period on whether to bring criminal charges. In a statement, the FCA said it will focus on investigating suspected criminal offences, however the option to restart the civil case remains open.

Economic crime

Wolfsberg Group statement on countering terrorist financing

On 20 March 2024, the Wolfsberg Group published a statement on countering terrorist financing (CTF). It replaces the group's first statement on the suppression of the financing of terrorism, which was published in January 2002. 

The statement considers:

  • the role of financial institutions in the fight against terrorism
  • risk-based controls framework (the importance of a risk-based approach, customer due diligence, and monitoring and screening by financial institutions)
  • the importance of global co-operation.

The group supports the following recommendations of the Financial Action Task Force as measures conducive to countering terrorist financing:

  • recommendation 5 (the criminalisation of terrorist financing)
  • recommendation 6 (targeted financial sanctions related to terrorism and terrorist financing)
  • recommendation 8 (measures to prevent the misuse of nonprofit organisations). 

European Commission adopts Delegated Regulation amending list of high-risk third countries under MLD4

On 14 March 2024, the European Commission adopted a Delegated Regulation (C(2024) 1754), which amends the list of high-risk third countries with strategic anti-money laundering (AML) and counter-terrorist financing (CTF) deficiencies produced under Article 9(2) of the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4).

Under Article 9(2) of MLD4, the Commission can adopt delegated acts identifying high-risk third countries. Delegated Regulation (EU) 2016/1675 identifies third countries that have strategic deficiencies in their AML/CTF regimes that pose significant threats to the financial system of the EU. The annex will be amended to:

  • Delete Barbados, Gibraltar, Panama, Uganda and the UAE from the list of third countries that have been identified as having strategic AML and CTF deficiencies.
  • Add Kenya and Namibia to the table in point I of the annex, as they are considered third countries with strategic deficiencies in their AML/CTF regimes, which pose significant threats to the financial system of the EU.

Improving effectiveness of Money Laundering Regulations consultation opens

On 11 March 2024, HM Treasury launched a consultation which aims to improve the effectiveness of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLRs).

The four core themes covered are:

  • making customer due diligence more proportionate and effective
  • strengthening system co-ordination
  • providing clarity on the scope of the MLRs (which is covered above in our Fintech and digital assets section)
  • reforming registration requirements for the Trust Registration Service.

The deadline for responses is 9 June 2024.

This month's question

The answer to last month's question: in Q4 2023, the FCA reviewed 407 financial promotions. 31% were from its proactive monitoring approach.

According to the FCA's 2024/25 Business Plan, how much is the FCA planning to invest in its regulatory work relating to Open Banking/Open Finance:

  • £2 million
  • £1.2 million
  • £1.9 million
  • £35.1 million.

Dans cette série

Réglementation des services financiers

Financial services matters - May 2024

9 May 2024

par plusieurs auteurs

Réglementation des services financiers

Financial services matters - April 2024

10 April 2024

par plusieurs auteurs

Réglementation des services financiers

Financial services matters - March 2024

13 March 2024

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - February 2024

7 February 2024

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - January 2024

11 January 2024

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - December 2023

7 December 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - November 2023

2 November 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - October 2023

5 October 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - September 2023

4 September 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - August 2023

3 August 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - July 2023

6 July 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - June 2023

8 June 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - May 2023

4 May 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - April 2023

6 April 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - March 2023

6 March 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - February 2023

2 February 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services matters - January 2023

13 January 2023

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - December 2022

1 December 2022

par Daniel Hirschfield, Charlotte Hill

Réglementation des services financiers

Financial services regulatory update - November 2022

2 November 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - October 2022

7 October 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - September 2022

1 September 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - August 2022

4 August 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - July 2022

11 July 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - June 2022

9 June 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - May 2022

12 May 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - April 2022

7 April 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - March 2022

3 March 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - February 2022

3 February 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - January 2022

13 January 2022

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - December 2021

2 December 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - November 2021

4 November 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - October 2021

7 October 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - September 2021

20 September 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - August 2021

5 August 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - July 2021

1 July 2021

par Daniel Hirschfield, Charlotte Hill

Réglementation des services financiers

Financial services regulatory update - June 2021

3 June 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - May 2021

6 May 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - April 2021

1 April 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services regulatory update - March 2021

4 March 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - February 2021

4 February 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - January 2021

14 January 2021

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - December 2020

3 December 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - November 2020

5 November 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - October 2020

1 October 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - September 2020

3 September 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - August 2020

6 August 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - July 2020

2 July 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - June 2020

4 June 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - May 2020

7 May 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - April 2020

2 April 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - March 2020

5 March 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update – February 2020

6 February 2020

par Charlotte Hill, Daniel Hirschfield

Réglementation des services financiers

Financial services update - January 2020

8 January 2020

par Charlotte Hill, Daniel Hirschfield

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