FCA Updates & Developments

The FCA has published Handbook Notice No 43, which sets out the recent changes made by the FCA to its Handbook.

The FCA have published a Policy Statement (PS 17/8) which introduces final rules to extend the Code of Conduct sourcebook (COCON) to standard Non-Executive Directors (NEDs) in banks, building societies, credit unions and dual-regulated investment firms (‘banks’) and insurance firms. 

The new rules are part of the Senior Management and Certification Regime.

The FCA has published a Policy Statement (PS 17/10) which outlines rules and guidance to help firms understand the rules that apply to their remuneration policies and practices. The FCA has aligned their provisions with European Banking Authority (EBA) guidelines on sound remuneration policies.

The FCA has published a Policy Statement (PS 17/7) which introduces the final rules on whistleblowing requirements for UK branches of foreign banks.

The FCA has published a Policy Statement (PS 17/9) which sets out guidance in the Decision Procedure and Penalties Manual (DEPP) on how the FCA will enforce the ‘duty of responsibility’.

The guidance in DEPP relates to the new accountability regime – the Senior Managers Regime, the Certification Regime, and the Conduct Rules – which came into force in March 2016.

The ‘duty of responsibility’ came into force on 10 May 2016. It applies to persons performing senior management functions. Under the duty of responsibility, the FCA can take enforcement action against Senior Managers if they are responsible for the management of any activities in their firm in relation to which their firm contravenes a regulatory requirement, and they do not take such steps as a person in their position could reasonably be expected to take, to avoid the contravention occurring or continuing.

The FCA has published its latest policy development update, which contains a timetable of upcoming publications, including:

  • a policy statement to CP16/40 on “Enhancing conduct of business rules for firms providing contract for difference products to retail clients”, due in June 2017
  • a policy statement to CP17/7 on “Insurance Distribution Directive Implementation”, due in September 2017
  • a second consultation paper on “Insurance Distribution Directive Implementation”, expected date to be confirmed
  • a consultation paper on “Implementation of the Benchmarks Regulation”, expected date to be confirmed
  • a consultation paper, “Consultation on new rules for firms running crowdfunding platforms”, expected date to be confirmed
  • a consultation paper on “Creditworthiness and affordability in consumer credit”, expected date to be confirmed

The FCA has published a Policy Statement (PS 17/11) which sets out the final, updated appropriate exam standards (AES) for appropriate qualifications listed in the FCA's training and competence sourcebook.

The FCA has released its latest Handbook Notice (no. 44) which sets out the recent changes made by the FCA to its Handbook.

EU Regulatory Updates

Members of the European Parliament (MEPs) have said that the EU should have an autonomous process for judging whether countries are at high risk of money laundering. The European Commission (EC) is responsible for producing a list of countries thought to be higher risk of money laundering. The list that the EC produced was based on the Financial Action Task Force (FATF) recommendations and was rejected by MEPs for being too limited. MEPs say the Commission should not be bound by FATF standards when drawing up its own blacklist, which they want to be more expansive and wide-ranging. The Commission says this would require more resources than it has.

MEP’s again rejected as inadequate, a list presented by the European Commission of countries at risk of money laundering.

A resolution voted by the European Parliament says that the EU should have an independent and autonomous process for judging whether countries pose a threat of financial criminality rather than relying on the judgement of an external body.

The European Securities and Markets Authority (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).

The AIFMD Q&As include three new questions and answers on:

  • Reporting to National Competent Authorities (NCAs) on the breakdown between retail and professional investors
  • Notification of AIFMs on the AIFs to be managed, if domiciled in another Member State
  • Use by an AIF of the exemption for intragroup transactions under Article 4(2) of Regulation (EU) 648/2012 (EMIR), if subject to the clearing obligation of Article 4(1) of EMIR.

The UCITS Q&As include one new question and answer on:

  • Application to UCITS of the exemption for intragroup transactions under Article 4(2) of Regulation (EU) 648/2012 (EMIR), if subject to the clearing obligation of Article 4(1) of EMIR.

ESMA has published an updated version of its questions and answers (Q&As) on the Market Abuse Regulation (MAR).

Financial Crime

The Wolfsberg Group has published updated guidance as to how financial institutions should handle the money laundering risks posed by Politically Exposed Persons (PEPs).

The updated guidance lays out what the Wolfsberg Group considers to be the most effective way of managing PEP risk.

The Wolfsberg Group emphasise that financial institutions should focus their efforts on PEPs who pose the very highest corruption risk. The definition of a PEP should not be diluted by including those who may hold a public position but are not able to enrich themselves improperly as this leads to “an inefficient allocation of resources, poor customer experience and, in extreme cases, to the denial of financial services to those in public life, their relatives or close associates.”

A risk based approach towards managing risks associated with PEPs is advocated.

The JMLSG has published proposed revisions to parts two and three of its guidance on the prevention of money laundering and terrorist financing. The proposed revisions reflect the provisions of the proposed new Money Laundering Regulations published by HM Treasury on 15 March 2017.

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