FCA Updates & Developments

The FCA has published a policy development update, containing a timetable of upcoming publications.

The FCA has published Handbook Notice No 42, which sets out the recent changes made by the FCA to its Handbook. The following instruments are included:

  • FCA 2017/15: Financial services compensation scheme (Management expenses levy limit 2017/2018) instrument 2017
  • FCA 2017/16: Fees (Payment Systems Regulators) instrument (no3) 2017
  • FCA 2017/20: Fees (MiFID 2 application fees) instrument 2017
  • FCA 2017/17: Supervision manual (Reporting no 4) instrument 2017
  • FCA 2017/14: Fees (Miscellaneous amendments) (no 10) instrument 2017

The FCA has today published its mission which gives firms and consumers clarity around how the FCA prioritises its interventions in financial markets. The FCA has also published its Business Plan and Fees consultation  as well as having published its sector views for the first time, which highlights the issues and developments the FCA sees in the sectors it regulates.

The FCA’s Mission is to serve the public interest through the objectives given to it by Parliament and its mission document sets out a framework for the way the FCA will make decisions to serve the public interest.

The Business Plan gives details of the specific area of work the FCA is prioritising for the upcoming year. Key pieces of work identified in the Business Plan include:

  • supporting UK Government to prepare for the UK’s withdrawal from the EU
  • launching a campaign to encourage consumers to make a decision about Payment Protection Insurance (PPI) ahead of the August 2019 deadline
  • examining the issue of vulnerable consumers
  • continuing work on high-cost credit
  • considering the issue of long term savings and retirement outcomes

The Sector Views document brings together the FCA’s collective intelligence to give an overall view of how each sector is performing. The Sector Views covers all the markets regulated by the FCA divided into seven sectors:

  • retail banking
  • retail lending
  • general insurance and protection
  • pensions and retirement income
  • retail investments
  • investment management
  • wholesale financial markets
EU Regulatory Updates

The following measures, amongst others, under Markets in Financial Instruments Directive II and Markets in Financial Instruments Regulation have been published in the Official Journal of the EU:

  • Commission Delegated Regulation (EU) 2017/565 supplementing MiFID 2 as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of that Directive
  • Commission Delegated Regulation (EU) 2017/566 supplementing MiFID 2 on markets in financial instruments with regard to regulatory technical standards for the ratio of unexecuted orders to transactions in order to prevent disorderly trading conditions
  • Commission Delegated Regulation (EU) 2017/567 supplementing MiFIR with regard to definitions, transparency, portfolio compression and supervisory measures on product intervention and positions
  • Commission Delegated Regulation (EU) 2017/568 supplementing MiFID 2 with regard to regulatory technical standards (RTS) for the admission of financial instruments to trading on regulated markets

ESMA has published today the updated Q&A documents regarding data reporting and investor protection under MiFID II and MiFIR.

The MiFID II Q&A covering investor protection provides clarifications on the following topics:

  • Best execution
  • Suitability
  • Post sale reporting
  • Inducements (research)
  • Information on charges and costs
  • Underwriting and placement of a financial instrument

The MiFID II Q&A covering data reporting provides clarifications on the following topics:

  • Seniority of the bond;
  • Inflation Indexed bonds;
  • Transaction reporting obligation;
  • National client identifiers for natural persons.

ESMA published a Q&A document which provides further detail on how to implement certain regulatory provisions on market structure topics. The Q&A aims to promote common supervisory approaches and practices thus ensuring a harmonised implementation. Amongst other issues, the Q&A provides answers regarding Organised Trading Facilities (OTFs) and Systematic Internaliser (SI). ESMA also published Q&As on commodity derivatives, market data and transparency issues.

ESMA has published updated questions and answers documents (Q&A) on the application of the Alternative Investment Fund Managers Directive (AIFMD) and the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS).

In the case of National Crime Agency (NCA) v N and Royal Bank of Scotland plc [2017] the Court of Appeal (CA) granted an appeal made by the NCA against orders by a bank to execute customer transactions.

 RBS froze one of its customer’s account due to suspicions of the account holding the proceeds of crime. RBS also submitted a Suspicious Activity Report to the NCA and requested permission to terminate the relationship with the customer. During this time, the customer successfully applied for an order requiring RBS to execute a number of customer transactions which were subsequently executed. The NCA appealed against these orders to clarify the legal position in circumstances where a financial institution has acted in response to an order made by a court before the NCA has responded to a SAR and associated request to terminate the business relationship. The CA upheld the NCA’s appeal and the orders were deemed to be unjustified.

It was deemed that the NCA has a 7-day notice period and 31-day moratorium period when dealing with requests and that ordinarily the court should not intervene during this period. It was commented by Lord Justice Simon that despite this, the courts do have the authority to issue injunctive relief as there is no legislation in place depriving them of the right to do so.

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