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Update of some EU, International and UK regulatory news from March 2017


EC: Consumer financial services action plan/FinTech: a more competitive and innovative European financial sector
23/03/2017: The EC has adopted an action plan which sets out ways in which European consumers can be provided with greater choice and better access to financial services across the EU. Specific areas considered include: reducing legal and regulatory obstacles affecting businesses when seeking to expand abroad; reviewing distance selling practices and reducing fees for cross-border transactions involving non-Euro currencies. As part of this work, the EC has also published a consultation on fintech and its impact on the European financial services sector. Responses are required by 15 June 2017 and the EC intends to build on responses and work of a fintech task force in order to present an EU strategy for fintech. Links to the plan, the consultation, an FAQ and a factsheet appear in the following link. Link 1

EC: Impact assessment on the review of the European Supervisory Authorities and EC/EBA/EIOPA/ESMA: Public consultation on the operations of the ESAs
21/03/2017: The EC has launched a consultation with the aim of identifying evaluating the work of the ESAs and areas where their effectiveness and efficiency can be improved. Responses are required by 16 May 2017. Link 1, Link 2.  Impact assessment on the review of the  ESA: The EC notes that more work must be done to establish supervisory convergence - this includes potential improvements to the current governance structure, more clarity regarding the boundaries of certain tasks and powers, additional powers in certain areas, and sufficient and stable resources.

EC: impact assessment on new prudential framework for investment firms
24/03/2017: The European Commission published an inception impact assessment on its review of the appropriate treatment for investment firms. It notes that given the EBA's consultation on the prudential framework, it does not intend to launch its own public consultation but it does intend to engage in a targeted consultation with industry stakeholders regarding the proposals. Legislative proposal planned in Q4 2017.

EBA: Report on the functioning of supervisory colleges in 2016
22/03/2017 : EBA has published its 2016 annual assessment of EU supervisory colleges, setting out details of work achieved during the year and also identifying areas for improvement and key topics for supervisory attention for 2017. Link 1

ECB: Speech by Sabine Lautenschläger: Caution should be the life of banking
22/03/2017: Text of this speech, given on 22 March 2017 follows, which discusses risk management and passporting issues for the banking sector. Link 1

ESMA: Trends, risks and vulnerabilities/Risk Dashboard Q1 2017
20/03/2017: ESMA has published its latest reports on risk, which identify political and policy uncertainty as the main risk drivers for 2017.  Link 1  Link 2

ESMA: SMSG meeting
17/03/2017: ESMA has now published the minutes of its 19 February 2017 meeting. Topics under discussion included: recent market developments (including Brexit) and ESMA’s 2017 Supervisory Convergence Work Programme. Link 1

ESRB: Mapping the interconnectedness between EU banks and shadow banking entities
This ESRB working paper considers cross-sector and cross-border linkages and considers which are the most relevant for systemic risk monitoring. It finds that many of the EU banks’ exposures are towards non-EU entities, particularly US-domiciled shadow banking entities. Link 1

EBA: Notifications on resolution cases and use of DGS funds
14/03/2017: EBA has set up a dedicated section on its website to centralise information on crisis prevention, management liquidation and resolution of credit institutions in the EU. Link 1

EBA: Opinion on improving decision-making for supervisory reporting requirements
09/03/2017: EBA’s Opinion to the European Parliament, Council and Commission proposes that supervisory reporting requirements are adopted directly through its own implementing technical decisions, rather than via implementing technical standards. It also proposes various mechanisms, intended to ensure that full EU institutional and stakeholder accountability is maintained. Link 1

ESMA: Fintech
07/03/2017: ESMA texts of its opening and closing speeches at its Financial Innovation Day on 10 February 2017, Link 1 Link 2 


FSB: Implementation progress and effects of reforms
01/03/2017: This short note sets out a note of FSB’s meeting on 27/28 February 2017. Topics discussed include: shadow banking; OTC derivatives reform; fin tech; analysis of central clearing interdependencies and governance arrangements for UTIs. Link 1

BIS: Basel III monitoring report
28/02/2017:  This report sets out the results of the latest Basel III monitoring exercise, which is based on data as of 30 June 2016, covering 210 banks, including all 30 banks that have been designated as global systemically important banks. Link 1

BIS: Speech by Andreas Dombret: The possible impact of Brexit on the financial landscape
28/02/2017: Text of this speech, given on 24 February 2017 follows, in which Andreas Dombret considers the potential impact of the Brexit on the financial sector, the Brexit negotiations and the future of regulation and supervision in the EU and the UK. Link 1


FCA: published impact assessments on range of topics
24/03/2017: The FCA published impact assessments: Accountability regime for banking sector (dated 29 July 2016);Implementation of the Mortgage Credit Directive and consequential changes in second charge mortgage regulation (dated 16 August 2016); Link 1 Link 2

HM Treasury: policy paper regarding ring-fencing information
HM Treasury published a policy paper on ring fencing. From 1 January 2019 the largest UK banks must separate core retail banking from investment banking.

BoE: Fintech Accelerator
17/03/2017: BoE has announced the creation of a new community which brings together fintech-related organisations in order to share knowledge; to ensure BoE is engaging with fintech firms and to provide a networking forum. It also notes the launch of two “fintech proofs of concept”. Link 1

FCA/BOE: Podcasts and speeches:
17/03/2017: David Geale on FinTech Insider: FCA has published a link to the FinTech Insider podcast in which David Geale discussed competition and innovation through Project Innovate. Link 1 and 16/03/2017: FCA: Speech by Andrew Bailey: Culture in financial institutions: it’s everywhere and nowhere Text of this speech, given on 16 March 2017 follows, in which Andrew Bailey discusses the nature of culture in financial institutions; influences on shaping cultural outcomes; SMCR; bankers’ remuneration and FCA’s regulatory role with regard to culture. Link 1; and 21/03/2017:  BoE: Speech by Mark Carney: Worthy of Trust? Law, ethics and culture in banking: Text of Mark Carney’s opening remarks at this Banking Standards Board event of 21 March 2017, in which he discusses aspects of SMR and culture at BoE:; 10/03/2017 FCA: Speech by Mary Starks: The view from the regulator: developing our approach: Text of this speech. Topics include: FCA’s future mission; competition; uncertainty and its effect on consumers’ decision-taking and the asset management market study. Link 1

FCA/PRA: Senior Managers and Certification Regime: one year on
07/03/2017: Implementation of the rules regarding regulatory references for staff in the Certification Regime as of 7 March 2017. Ensure that senior manager responsibilities are properly allocated and understood in firms. In some cases, we have seen evidence of overlapping or unclear allocation of responsibilities. In other cases, firms appear to be sharing responsibility amongst some staff at different levels of management, obscuring who is genuinely responsible. However, we have also seen strong progress in relation to firms adopting a culture of individual accountability through their implementation of the regime”. In Q2 2017 (FCA) or “during 2017” (PRA), a joint consultation will be published on extension of the regime, with implementation expected from 2018. Link 1 Link 2

FCA: Best execution
03/03/2017: Further to its July 2014 thematic review, FCA has reported that it has found that most firms had failed to take on board its findings, noting that many firms had not conducted a robust gap analysis since 2014 and therefore much of the poor practice outlined in the thematic review had not been addressed. The press release contains more detailed findings and a list of issues firms need to address. It is emphasised that firms will need to improve current practices in the light of MiFID and states that FCA will be revisiting best execution in 2017 to see what steps investment management firms have taken to assess gaps in their approach to achieving best execution and how they can evidence that funds and client portfolios are not paying too much for execution. If it finds that firms are still not fulfilling their best execution obligations, FCA will consider further action. Link 1

FCA: PS17/3: Payment protection insurance complaints: feedback on CP16/20 and final rules and guidance
02/03/2017: The PS announces that the final deadline for making a new PPI complaint will be 29 August 2019 (but complaints about PPI policies sold after 29 August 2017 will not be subject to this deadline). To encourage consumers to decide whether to act about PPI before the deadline, FCA will run a two-year consumer communications campaign, to be launched in August 2017. The PS also makes final rules and guidance related to how firms should handle complaints in light of the Supreme Court judgment in Plevin v Paragon Personal Finance Ltd which means that consumers may have new grounds to complain about PPI regarding the amount of money that the providers received for the sale if the failure to disclose that commission made the relationship unfair. As proposed, FCA’s approach includes a 50% commission “tipping point” at which firms should presume, for handling PPI complaints, that the failure to disclose commission gave rise to an unfair relationship, and that profit share should be included in firms’ calculation of commission. Redress will be calculated as the excess commission over the 50% tipping point. FCA will also require all firms to write to previously rejected complainants who are eligible to complain in light of Plevin in order to explain the new basis for complaining to them. Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to the sale. The complaint must be related to the reason the claim was rejected. FCA states that, in order to give both firms and the regulator time to prepare/supervise, the rules surrounding Plevin will come into effect at the same time as the deadline rule – not three months before as originally planned. Link 1, Link 2, Link 3

FCA: Inside the mind of a scammer
01/03/2017: This press release sets out the findings of a survey commissioned by FCA which focuses on the tactics investment fraudsters use to deceive individuals, particularly those in the over 55 bracket. Link 1

HMT/FCA: Amending the definition of financial advice
28/02/2017: Further to the September 2016 consultation, HMT has now published a response document, noting that the Government has decided to change the definition of financial advice for regulated firms. Regulated firms will give advice only where they provide a personal recommendation. The Government will leave the wider RAO definition of advice as “advising on investments” in place for unregulated firms. This means that regulated firms will be able to provide more advanced guidance services, that would previously have been caught by the RAO definition of advice as “advising on investments”, without being subject to the higher regulatory requirements associated with regulated advice. However, unregulated firms will not be able to provide these more detailed and tailored guidance services. This is intended to mitigate the risk of consumers being scammed. The new definition will come into effect on 3 January 2018 in order to allow FCA to consult on and publish new guidance and will also align the change with the implementation of MiFID II. FCA has published a webpage which sets out a synopsis of the changes for regulated and unregulated firms, noting that firms do not need to take any action now and stating that firms will not have to re-apply for existing permissions for advising on investments or agreeing to do so. and

PRA: PS5/17: Amendments to the PRA’s rules on loan to income ratios in mortgage lending
Further to CP44/16, PRA has published feedback and final rules. Changes are implemented with immediate effect, so that the loan to income flow limit is applied on a four-quarter rolling basis from the current quarter onwards. From Q1 2017, PRA would monitor the LTI flow limit on a four-quarter rolling basis, which for Q1 2017 will be incorporating data on flows from Q2 2016, Q3 2016, Q4 2016 and Q1 2017. It is emphasised that compliance under a fixed quarterly limit (which was the expectation before this change was introduced) automatically implies compliance with the limit under a four-quarter rolling basis. FCA has also published final guidance in relation to this. Link 1

FSCP: Position paper on Brexit
24/02/2017: FSCP has published a position paper on the implications of Brexit for financial services consumers. Link 1

FCA: IDD consultation: FCA has published the first of two consultation papers on implementing the Insurance Distribution Directive (IDD, implementation date February 2018). The consultation set out proposals for applying the directive and covers the following areas: professional and organisational requirements, complaints handling and out-of-court redress, professional indemnity insurance, changes to conduct of business rules (for non-investment insurance contracts), the regulatory regime for ancillary insurance intermediaries.

ID: 49128
Publication date: 25/03/17

Created: 25/03/17. Last changed: 25/03/17.
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