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Key Regulatory Topics: weekly Update 15 October to 21 October 2021

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Of particular note this week, HM Treasury published a policy paper on ‘Greening Finance: A Roadmap to Sustainable Investing’ which sets out the UK government’s ambition to support the financial services sector to align with the UK’s net zero commitment and wider environmental goals.


Please see the Other Developments section for the European Commission’s communication outlining its work programme for 2022 and the FCA Perimeter Report 2020/21.

HM Treasury consultation on the regulation of Buy-Now Pay-Later Credit Products

On 21 October, HM Treasury published a consultation on the regulation of Buy-Now Pay-Later (BNPL) credit products. The paper sets out policy options to achieve a proportionate approach to regulation of BNPL, by (i) ensuring that the scope of the new regulations is defined as closely as possible to target products with potential for consumer detriment; and (ii) calibrating the regulatory controls put in place for BNPL, so that they are focused on those elements of lending practice that are most closely linked to the potential consumer detriment in this market. The deadline for response is 6 January 2022.


Financial crime

Financial Services Act 2021 (Commencement No. 3) Regulations 2021 published

On 21 October, the Financial Services Act 2021 (Commencement No. 3) Regulations 2021 (SI 2021/1173) were published. These Regulations specify that section 31 of the Financial Services Act 2021 (maximum sentences for insider dealing and financial services offences) comes into force on 1 November. This section amends section 61 of the Criminal Justice Act and section 92 of the Financial Services Act 2012, which increases the maximum sentence for conviction on indictment for insider dealing offences from seven to ten years.


AFME paper on AML Transaction Monitoring in the Markets Sector

On 20 October, the Association for Financial Markets in Europe (AFME) published a paper on firms’ monitoring of financial transactions for suspicion of money laundering. This paper considers the effectiveness of the processes that make up a firm’s anti-money laundering (AML) transaction monitoring control framework, and provides a roadmap to support firms in designing and operating the most effective solution. This paper is based on survey results and interviews with banking firms, regulators, law enforcement agencies and financial intelligence units across Europe. AFME's conclusions are that, although current AML transaction monitoring systems are widely considered to offer limited effectiveness in the markets sector, there is much more that can – and should – be done to identify money laundering that may be falling beneath the radar. AFME notes that there is no quick fix solution of implementing a standard set of rules in an automated transaction monitoring system. Rather investments in skills and technology are needed over a sustained period and hybrid approach of multiple techniques is likely to yield the best results. AFME has therefore designed a roadmap to support improved monitoring for firms.



Please see the Other Developments section for the European Commission’s communication outlining its work programme for 2022 and the FCA Perimeter Report 2020/21.

Fund regulation

ESAs Call for Evidence on EC mandate regarding a review of the PRIIPs Regulation

On 21 October, the Joint Committee of the European Supervisory Authorities (ESAs) opened a call for evidence to assist it in providing advice to the EC relating to the EC’s review of the PRIIPs (Packaged retail and insurance-based investment products) Regulation. The responses will feed into the ESAs’ technical advice to the EC on a review, among other things, the key information document (KID) for PRIIPs. The call for evidence will close on 16 December, and the ESAs plan to hold a stakeholder event in Q1 2022 before finalising the advice.

Call for evidence

ECON Draft Report on use of key information documents under PRIIPS Regulation and UCITS Directive

On 18 October, the European Parliament's Economic and Monetary Affairs Committee (ECON) published: (i) a draft report (dated 7 October) on the proposal for a regulation amending the PRIIPs Regulation (1286/2014) as regards the extension of the transitional arrangement for management companies, investment companies and persons advising on, or selling, units of undertakings for collective investment in transferable securities (UCITS) and non-UCITS; and (ii) a draft report (dated 14 October) on the proposal for a Directive amending the UCITS Directive (2009/65/EC) as regards the use of key information documents (KIDs) by management companies of undertakings for collective investment in transferable securities (UCITS). Both draft reports contain draft EP legislative resolutions, which set out suggested amendments to the proposed Directive and Regulation. The EC adopted the proposed Regulation and Directive in July and September 2021 respectively.

ECON Draft Report – 7 October

ECON Draft Report – 14 October

Packaged Retail and Insurance-based Investment Products (UCITS Exemption) (Amendment) Regulations 2021 published

On 15 October, the Packaged Retail and Insurance-based Investment Products (UCITS Exemption) (Amendment) Regulations 2021 (SI 2021/1149) were published, alongside an explanatory memorandum. The Regulations amend the retained EU law version of the PRIIPs Regulation ((EU) 1286/2014) to extend an existing exemption for management and investment companies and persons advising on, or selling, UCITS funds from the requirements of the PRIIPs Regulation. The current exemption will now be extended by five years, to 31 December 2026. The Regulations will come into force on 31 December.


Explanatory memorandum

Markets and markets infrastructure

Please see the Financial Crime section for AFME’s paper on AML Transaction Monitoring in the Markets Sector.

Please see the Other Developments section for the European Commission’s communication outlining its work programme for 2022.

ICMA updates its recommendations for reporting under SFTR

On 21 October, the International Capital Market Association (ICMA) published an updated version of its Recommendations for Reporting under SFTR. These Recommendations reflect recent updates to the SFTR validation rules and reporting schemas published by both ESMA and the FCA, together with lessons learned during the first year of SFTR reporting. A blackline version has also been published alongside the updated recommendations, which highlights changes made compared to the February 2021 edition.


Blackline version

Delegated Regulation specifying the criteria for establishing when an activity is to be considered to be ancillary published in the OJ

On 20 October, the Commission Delegated Regulation (EU) 2021/1833 supplementing MiFID II (2014/65/EU) by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level, was published in the OJ. The new Delegated Regulation comes into force on 9 November.

Commission Delegated Regulation

BoE launches first public CCP supervisory stress test

On 19 October, the BoE launched its first public supervisory stress test (SST) of UK central counterparties (CCPs). The SST will take place over 2021-22 with the clearing services of all UK CCPs in scope. This 2021-2022 SST will explore the system-wide credit and liquidity resilience of UK CCPs, including examining the consequences of CCPs’ actions for other parts of the financial system and assessing the systemic effects associated with all UK CCPs responding to the same stress events at the same time. The test will include both: (i) a credit component, testing the sufficiency of CCPs’ resources to withstand a combination of market stress scenarios and clearing member defaults; and (ii) a liquidity component, testing the ability of CCPs to service all relevant cash requirements under a combination of market stress scenarios and the default and non-performance of clearing members and service providers. The SST will include the application of four market risk scenarios that increase in severity and are each linear functions of one another. This exercise will apply to CCP resources, exposures and market prices as at the close of business on 17 September. It will be exploratory in nature, and findings will be used in conjunction with feedback to the BoE’s Discussion Paper on CCP supervisory stress testing to help further develop and refine the BoE’s CCP supervisory stress testing regime. The BoE intends to publish the findings of the 2021-2022 SST exercise in the summer of 2022.

Press release

BoE Policy statement on the 2021/22fees regime for financial market infrastructure supervision

On 18 October, the BoE released a policy statement providing feedback to responses received to its consultation paper on the 2021/22 fees regime for the supervision of financial market infrastructure (FMI). The policy statement also sets out: (i) the final fee rates in relation to the BoE’s 2021/22 funding requirement for its FMI supervisory activity and the policy activity that supports this; and (ii) the outcome of the 2020/21 actual costs incurred and the impact on FMI fees charged for 2021/22, including the BoE’s confirmation of the shortfall/surplus in fees for 2020/21 – as there was no surplus or shortfall in the fee year 2020/21, no FMI will receive a rebate in the 2021/22 invoice. The BoE provides feedback to the three responses received, but has not made any changes to the proposals that were set out in the consultation paper.

Policy statement

FCA Q&As on LIBOR and the FCA's new powers under the UK Benchmarks Regulation

On 15 October, the FCA published a new webpage setting out Q&As for firms relating to the use of its powers under the retained EU law version of the Benchmarks Regulation ((EU) 2016/1011) (UK BMR), to help manage an orderly wind-down of LIBOR. The Q&As relate to: (i) the impact on contract provisions; (ii) the use of synthetic LIBOR after end-2021; and (iii) implementing synthetic LIBOR solution. The FCA also published documents relating to the LIBOR transition on 29 September.


FCA Policy statement on LIBOR transition and the derivatives trading obligation

On 15 October, the FCA published a policy statement (PS) on the LIBOR transition and the derivatives trading obligation (DTO) (PS21/13). This PS sets out the FCA’s finalised amendments to the UK regulatory technical standards (RTS) on the derivatives trading obligation (DTO RTS), which are set out in the onshored version of Commission Delegated Regulation (EU) 2017/2417. The changes to the DTO RTS follow the FCA's July consultation (CP21/22), and the final rules can be found in the Technical Standards (Markets in Financial Instruments Regulation) (Derivatives Trading Obligation) Instrument 2021 (FCA 2021/36). Among other things, the FCA’s amendments to the DTO RTS remove derivatives referencing GBP LIBOR and replace them with overnight indexed swaps (OIS) referencing SONIA. The amendments to the DTO RTS will come into force on 20 December. The FCA adds that these finalised amendments take account of the BoE’s changes to the scope of the derivatives clearing obligation (DCO), its updated liquidity analysis covering the period between January and July, and the responses it received to CP21/22. As the liquidity profile of the derivatives market will continue to evolve as the interest rate benchmark reform unfolds, the FCA may propose further amendments to the scope of the DTO in due course.

Policy statement

Technical standards

Payment services and payment systems

Please see the Other Developments section for the European Commission’s communication outlining its work programme for 2022 and the FCA Perimeter Report 2020/21.

PSR publishes a response paper following its Confirmation of Payee consultation paper

On 21 October, the PSR published a response paper, which sets out the findings from the call for views issued in May on Confirmation of Payee (CoP). CoP is a service that aims to prevent certain types of scams and misdirected payments. The PSR’s response paper provides clarity on what the next steps will look like for the wider implementation of CoP through Phase 2, and provides an overview of the actions the PSR expects the industry to take. The response paper also confirms that Phase of 1 of CoP has had a positive impact, both in terms of reducing accidentally misdirected payments and in preventing what would have likely been a larger increase in Authorised Push Payment (APP) scams, in light of Covid-19 and the increased manipulation of victims by fraudsters.

Response paper

Prudential regulation

PRA Policy Statement on non-performing loan securitisations

On 21 October, the PRA released a policy statement (PS24/21) on rules relating to the implementation of prudential standards agreed by the Basel Committee on Banking Supervision (BCBS) for non-performing loan (NPL) securitisations. This statement provides feedback to responses received to its previous consultation paper (CP10/21), and sets out the PRA’s final policy in the new Non-Performing Exposures Securitisation Part of the PRA Rulebook (Appendix 1) and an updated Supervisory Statement (SS) 10/18 ‘Securitisation: General requirements and capital framework’ (Appendix 2). This policy statement is relevant to UK banks, building societies, and PRA-designated investment firms, as well as UK financial holding companies (FHCs) and UK mixed financial holding companies (MFHCs) of certain PRA-authorised firms. Overall, respondents welcomed the PRA’s development of an NPE securitisation framework, but made a number of observations and requests for clarification, which are set out in Chapter 2. The PRA made one change to its draft rules in the CP, by updating the definition for NPE securitisation. The updated SS10/18, and the rules for calculating capital requirements on exposures to NPE securitisations, will take effect from 1 January 2022. The PRA will keep this policy under review and in this regard welcomes additional submission of evidence from firms regarding NPE securitisations.

Policy Statement

Appendix 1

Appendix 2

PRA Policy Statement on credit risk and economic downturns for purposes of Internal Ratings Based models

On 20 October, the PRA published a policy statement on credit risk, and the identification of the nature, severity, and duration of an economic downturn for the purposes of Internal Ratings Based (IRB) models (PS23/21). In the paper, the PRA provides feedback to responses to its consultation paper (CP 7/21) and sets out its final policy. The PRA’s final policy is contained in: (i) a new UK Technical Standards Instrument (Appendix 1); (ii) an updated version of its Supervisory Statement (SS) 11/13 ‘Internal Ratings Based (IRB) approaches’ (Appendix 2); and (iii) versions of the relevant European Banking Authority (EBA) Guidelines as they stood at the end of the transition period. The statement sets out areas where the PRA amended or clarified the proposals to reflect the responses received. The amendments clarify that, in respect of the indicators specified in the Standards Instrument, firms must use levels, absolute changes in levels, or percentage changes of levels of economic indicators, depending on which gives the best indicator of economic conditions. Nevertheless, firms may additionally use other measures of those, or any other relevant indicators, where these are also explanatory variables for the economic cycle. The new technical standards and the amendments to SS11/13 will come into force on 1 January 2022. The PRA still expects firms to continue to submit model change applications in line with the submission timings communicated by their supervisors.

Policy Statement

UK Technical Standards

Supervisory Statement

EC adopted a Delegated Regulation concerning the assessment methodology used to assess credit institutions’ and investment firms’ compliance with the Internal Ratings Based approach under the CRR

On 20 October, the EC adopted a Delegated Regulation containing regulatory technical standards (RTS) for the specification of the assessment methodology that competent authorities are to follow when assessing the compliance of credit institutions and investment firms with the requirements to use the Internal Ratings Based (IRB) approach under the Capital Requirements Regulation (575/2013) (CRR). The Regulation sets out the methodology a competent authority should follow when an institution applies: (i) initially use the IRB approach; (ii) to use the IRB approach for certain types of exposures in accordance with the sequential implementation plan; (iii) for the implementation of material changes to the IRB approach; and (iv) to return to the use of less sophisticated approaches. If the Council of the EU and the EP do not object to the Delegated Regulation, it will enter into force 20 days after its publication in the OJ.

Delegated Regulation

EC adopts Delegated Regulation amending RTS as regards information to be notified when exercising the right of establishment and the freedom to provide services under CRD IV

On 20 October, the EC adopted a Delegated Regulation amending RTS which specify the information to be notified by credit institutions to their home competent authority for the exercise of the right of establishment and the freedom to provide services under CRD IV. The Delegated Regulation introduces amendments which aim to improve the quality and consistency of the information to be provided by credit institutions notifying their home competent authorities of their intention to open a branch or provide services in another Member State or to cease their cross-border activity. If the Council of the EU and the EP do not object to the Delegated Regulation, it will enter into force 20 days after its publication in the OJ.

Delegated regulation

Financial Services Act 2021 (Commencement No. 1) (Amendment) (Savings Provision) Regulations 2021 published

On 19 October, the Financial Services Act 2021 (Commencement No 1) (Amendment) (Savings Provision) Regulations 2021 (SI 2021/1163) were published. The Regulations were made on 18 October and will come into force on 1 January 2022, and amend the Financial Services Act 2021 (Commencement No 1) Regulations 2021 (SI 2021/671) (Commencement Regulations). The Commencement Regulations set out commencement dates for provisions in the Financial Services Act 2021 concerning the prudential regulation of investment firms and credit institutions. This includes provisions revoking the FCA’s powers to make technical standards under the UK Capital Requirements Regulation (575/2013) (UK CRR). Any technical standards in force before 1 January 2022 will still have effect because only the FCA’s power to make, modify, amend or revoke technical standards is being removed; the technical standards themselves are not being revoked. The Amending Regulations save the FCA's power to modify, amend or revoke technical standards made under the UK CRR that were in force before 1 January 2022.


EBA Final Report and draft RTS on disclosure of investment policy by investment firms

On 19 October, the EBA published its final report and draft regulatory technical standards (RTS) on disclosure of investment policy by investment firms under the Investment Firms Regulation ((EU) 2019/2033) (IFR). IFR sets out in Article 52 a requirement for investment firms to publicly disclose information on their investment policy, and the EBA received a mandate under Article 52(3) of IFR to develop draft RTS to specify templates for investment policy disclosure of investment firms. The draft technical standards specify the information that investment firms will have to disclose to show their influence over the companies in which they hold voting rights. A summary of the responses received to the EBA’s consultation on the draft RTS, together with the EBA’s feedback, is set out in section 4 of the report. Annex I to the draft RTS contains templates and tables for the purpose of the disclosure of information on firms' investment policies, whereas Annex II provides instructions on disclosure of investment policy by investment firms. The first disclosure date will be 31 December. These final draft RTS have been submitted to the EC for adoption.

Final report

Annex I

Annex II

PRA letters to directors of credit unions

On 18 October, the PRA updated its webpage on credit unions to reflect letters sent to directors of category 5 credit unions, which set out the findings of its 2021 assessment of these firms. Category 5 firms are those that the PRA assessed as having almost no capacity to cause disruption to the UK financial system by failing or by carrying on their business in an unsafe manner. In addition to an individual assessment by a supervisor once every two years, the PRA also conducts an annual assessment of these credit unions as part of a larger peer group. The PRA subdivides category 5 credit unions into two groups, either with total assets below £15 million and fewer than 10,000 members, or with total assets above £15 million and/or with more than 10,000 members. The PRA sent a letter tailored to each group, where it sets out its findings relating to various matters, including the Covid-19 pandemic, the Single Customer View, credit risk, operational risk and resilience, prudential management and governance.

Large credit unions letter

Small credit unions letter

Sustainable finance

Climate Financial Risk Forum publishes its second set of guides

On 21 October, the Climate Financial Risk Forum (CFRF) published its second set of guides to help financial services firms approach and address climate-related financial risks. These guides incorporate best practice and are written by industry, for industry. The Session 2 guides focus on risk management, scenario analysis, disclosure, innovation, and climate data and metrics and build on the previous guide published on 29 June 2020.

Risk Management – Risk appetite statements

Risk Management – Use cases

Risk Management – Climate risk training

Scenario Analysis – Implementation guide

Scenario Analysis – Data and tools providers spreadsheet

Disclosure – Case studies

Disclosure – Managing legal risk

Innovation – Commentary report

Innovation – Case study videos

Climate Data and Metrics – Guide

ECB speech on requiring banks to translate 2050 targets into milestones

On 20 October, the ECB published a speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB, on requiring banks to translate 2050 targets into milestones. In his speech, Mr Elderson notes, among other things, that: (i) banks now need to start thinking about the next important step in risk management, which will require them to look at the thirty years ahead and devise intermediate targets for their risk exposures that can render them fit for a carbon-neutral economy by 2050; (ii) the ECB will soon publish the results and the good practices of banks’ self-assessments against its supervisory expectations; (iii) both the legislative initiatives under way and the industry’s own acknowledgement of the importance of moving to transition-robust business models, imply that banks need transition plans compatible with EU policies implementing the Paris Agreement, with concrete intermediate milestones, to enhance their long-term strategies and decision-making; and (iv)these transition plans should highlight bank’s alignment and potential divergences with the relevant policy objectives through which the EU implements the Paris Agreement. They should be part of a bank’s strategy-setting and be closely linked to its business model and business plan, and contain concrete intermediate milestones from now until 2050 and the associated key and performance indicators so that the bank’s management and the competent authorities can at all times understand the risks arising from a possible misalignment with the transition path. Mr Elderson notes that if banks fail to meet these milestones, competent authorities will have to take appropriate measures to ensure that this failure does not result in financial risks.


Network for Greening the Financial System’s (NGFS) progress report on global supervisory and central bank climate scenario exercises

On 19 October, the Network for Greening the Financial System (NGFS) published a progress report on global supervisory and central bank climate scenario exercises. This progress report sets out how a growing number of NGFS members, across all continents, are using climate scenarios to identify, assess and understand climate risks in their economies and financial systems.

Progress report

HM Treasury Policy paper on Greening Finance

On 18 October, HM Treasury published a policy paper entitled ‘Greening Finance: A Roadmap to Sustainable Investing’. This paper sets out the government’s ambition to ‘green’ the financial system and align it with the UK's net zero commitment. Greening the financial system will happen in three phases: (i) informing investors and consumers - addressing the information gap for market participants, and ensuring a flow of information on environmental sustainability from corporates to financial market participants; (ii) acting on the information - creating expectations and requirements that sustainability information is mainstreamed into business and financial decisions, for example in risk management and investor stewardship; and (iii)shifting financial flows to align them with the UK’s net zero commitment and wider environmental goals. This paper sets out a roadmap which represents the government's strategy to deliver the first phase. New Sustainability Disclosure Requirements (SDR) will require companies, some financial institutions and occupational pension schemes to disclose sustainability-related information. Three types of disclosure are covered: (i) corporate disclosures - there will be new requirements for companies to make sustainability disclosures; (ii) asset manager and asset owner disclosure - there will be new requirements for asset managers and asset owners that manage or administer assets on behalf of clients and consumers (including occupational pension schemes) to disclose how they take sustainability into account; and (iii) investment product disclosure - there will be new requirements for creators of investment products to report on the products' sustainability impact and relevant financial risks and opportunities. The FCA intends to publish a discussion paper in autumn 2021 on a sustainable investment labelling regime, and set up an advisory forum.

Policy paper

ECB Letter on Methodology for its 2022 Climate Risk Stress Test

On 18 October, the ECB published a letter it sent to banks announcing important information regarding participation in the 2022 ECB Climate Risk Stress Test (2022 CST). The output of this exercise will be integrated into the Supervisory Review and Evaluation Process (SREP) using a qualitative approach. The stress test comprises three distinct modules: (i) an overarching questionnaire to assess how banks are building their climate stress test capabilities for use as a risk management tool; (ii) a peer benchmark analysis to compare banks across a common set of climate risk metrics; and (iii) a bottom-up stress test targeting transition and physical risks. The ECB will conduct the CST 2022 alongside other ECB supervisory initiatives on climate-related and environmental risk in 2022, including a Thematic Review of banks’ climate-related and environmental risk management practices – results will be included in the SREP.


Other developments

FCA Perimeter Report 2020/21

On 21 October, the FCA released its perimeter report for 2020/21. The report explains the regulatory and legislative basis for the perimeter, how the development of products and services outside the perimeter can result in harm to consumers, and the steps that can be taken to reduce such harm. The FCA calls for legislative change to address concerns beyond its remit, and focuses on specific areas relating to the perimeter. Highlights from the report include: (i) Financial promotion - the FCA’s focus on enabling consumers to make effective financial decisions includes ensuring that rules on financial promotions are fit for purpose. The FCA is concerned that unauthorised persons are increasingly relying on exemptions in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) relating to high net worth and sophisticated investors in order to market high risk investments to them. The FCA is concerned that these exemptions are no longer fit for purpose; (ii) Business models - the FCA has concerns about the activities of unregulated debt advice lead generators; (iii) Cryptoassets – the FCA notes that the development of more complex business models that present themselves as ways for customers to generate returns from their cryptoasset holdings are creating perimeter issues that are challenging for the FCA and other regulatory bodies; (iv) Fraud - in Chapter 4, the FCA discusses action that it is taking to prevent such harm where it is linked to the perimeter. Chapter 7 (‘Technological changes’) includes details on how the FCA believes the Government’s Online Safety Bill (OSB) could be altered to help protect consumers from illegal online scams. The FCA also recommends that duties on internet companies in the OSB should extend to paid-for advertising, as well as user-generated content; and (v) Senior managers and certification regime (SM&CR) - the FCA is considering the scope of the SM&CR, given that it does not currently apply to all regulated entities.

Perimeter Report

FSB Report on Cyber Incident Reporting

On 19 October, the FSB published a report on existing approaches to cyber incident reporting and the next steps for broader convergence. In light of increasing financial stability concerns, especially given the digitalisation of financial services and increased use of third-party service providers, the FSB explored whether harmonisation in cyber incident reporting could be achieved. The FSB found fragmentation across sectors and jurisdictions: (i) in the scope of what should be reported for a cyber incident; (ii) methodologies to measure severity and impact of an incident; (iii) timeframes for reporting cyber incidents; and (iv) how cyber incident information is used. Recognising that information on cyber incidents is crucial for effective actions and promoting financial stability, the FSB identified three ways to take work forward to achieve greater convergence in cyber incident reporting. These are: (i) developing best practices - the FSB intends to identify a minimum set of types of information authorities may require related to cyber incidents to fulfil a common objective (for example, financial stability, risk assessment, risk monitoring) that authorities could consider when developing their cyber incident reporting regime; (ii) identifying common types of information to share - the FSB will identify key information that should be shared across sectors and jurisdictions, and consider any legal and operational impediments to sharing such information; and (iii) creating common terminologies for cyber incident reporting - indeed, harmonised cyber incident reporting schemes necessitate a ‘common language’. In particular, a common definition for "cyber incident" is needed that avoids the reporting of incidents that are not significant for a financial institution or financial stability. The FSB intends to develop detailed timelines and modalities for taking this work forward by the end of 2021.


European Commission 2022 Work Programme

On 19 October, the EC published a communication (COM(2021) 645) outlining its work programme for 2022 and setting out the next steps in its agenda towards a greener, fairer, more digital and more resilient post-Covid-19 Europe. Additionally, the EC published the annexes to the 2022 work programme and two factsheets. The annexes include: (i) new policy and legislative initiatives - Annex I contains 42 new Commission initiatives across all six political prioritiesof President von der Leyen's Political Guidelines. Importantly, the EC intends to deliver an initiative on instant payments within the EU. A legislative proposal is expected in Q2 2022; (ii) the priority pending proposals in 76 areas where the EC requests that the co-legislators take rapid actions. Important proposals include: proposal for a Regulation on digital operational resilience for the EU financial sector (DORA); proposal for a Regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT); proposal for a Regulation on markets in cryptoassets (MICA); proposals designed to strengthen and modernise the EU anti-money laundering (AML) and counter-terrorist financing (CTF) framework; proposal for a Directive on credit servicers, credit purchasers and the recovery of collateral; proposal for a Regulation amending the Single Resolution Mechanism Regulation (806/2014) to establish a European Deposit Insurance Scheme; and proposal for a Directive on consumer credits. The first factsheet briefly outlines the 2022 Commission Work Programme’s timeline and structure, while the second factsheet summarises Annex I.



Factsheet explaining the Work Programme

Factsheet summarising Annex I

ESAs publish sectoral reports the on supervisory independence of national competent authorities

On 18 October, the three European Supervisory Authorities (ESAs) – the EBA, EIOPA and ESMA – published their individual reports on the supervisory independence of national competent authorities (NCAs) in their sectors. These include: (i) the EBA report on the supervisory independence of NCAs (EBA/REP/2021/29); (ii) the EIOPA report on the independence of NCAs (EIOPA-BoS-21/278); and (iii) the ESMA report on the independence of NCAs (ESMA42-110-3265). The reports’ findings are based on self-assessment by the NCAs, and highlight that their independence is multi-faceted and dependent on a number of legal, institutional, operational and cultural factors. The three ESAs seek to factually represent the arrangements and practices reported by NCAs without assessing the independence of individual NCAs. The ESAs consider that the reports can support NCAs in assessing whether it might be desirable to seek any legislative or regulatory amendment to further improve the framework underpinning their independence, while providing the ESAs themselves with helpful information that may be considered for any future work regarding supervisory independence.

EBA Report

EIOPA Report

ESMA Report

FSB Speech on Financial Stability and Coordination in times of crisis

On 18 October, the FSB published a speech by Randal K. Quarles, Chair of the FSB, on financial stability and coordination in times of crisis. Within the speech, Mr Quarles reflected on the role that the FSB played during the Covid-19 crisis. Points of interest in the speech include: (i) the reaction and response to the crisis - Mr Quarles underlined how the FSB was able to leverage cooperation to ensure stability and contain spillovers. This was mainly due to the openness of information sharing, allowing FSB members to quickly identify areas of concern that required action, the several FSB expert groups who examined and assessed specific issues as they unfolded, and the broad stakeholder input; (ii) the Covid-19 crisis showed that non-bank financial intermediation is a critical area for action due to “liquidity transformation”. Mr Quarles noted in the speech that “liquidity transformation” creates incentives for money market fund investors to redeem when market liquidity becomes scarce; (iii) the key lessons learned from Covid-19 - Mr Quarles highlighted that the global financial system entered the latest crisis more resilient than the last, the importance of policy flexibility for each of the jurisdictions, and that there are instances where policy may fail to have the desired effect; and (iv) Mr K. Quarles mentioned refreshing the FSB workplan, with a particular focus on non-bank financial intermediation, climate-related financial risk, cryptoassets and stablecoins.


Charles Randell to step down as FCA and PSR Chair

On 15 October, the FCA announced that Charles Randell will step down as FCA and PSR Chair in spring 2022. The FCA also published a letter from Mr Randell to Rishi Sunak, Chancellor of the Exchequer, requesting him to commence the process to appoint his successor as Chair of the FCA and PSR, as well as the Chancellor’s response.

Press release



Verena Ross appointed chair of ESMA

On 15 October, the Council of the EU published its decision to appoint Verena Ross as the Chair of ESMA. Ms Ross will take up this role on 1 November. ESMA published a separate press release to announce the appointment.

ESMA Press Release

Council of the EU Press Release