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Key Regulatory Topics: Weekly Update 1-7 April 2022

This week, the FCA set out its plans for the coming years in both its 2022/23 annual plan and three-year strategy. The EBA has adopted a host of technical standards on sustainability disclosures, while ESMA shares its thoughts on the reviews of the central clearing framework and the Short Selling Regulation. In the world of crypto - HMT sets out its policy for extending the UK regulatory framework to cover certain stablecoins, while in Europe trilogue negotiations began on the Markets in Cryptoassets Regulation.

Please note that there will be no weekly update published next week on account of the public holidays. The next update will be published on 22 April and will cover the period 8 – 21 April.


ESRB response to EC consultation on MCD review

On 1 April, the ESRB published its response to the EC’s November 2021 consultation on its review of the Mortgage Credit Directive (MCD). The ESRB outlines its proposal to include borrower-based measures (BBMs) in EU legislation, including the MCD. The ESRB considers that, given the importance of residential real estate (RRE) markets and their financing for financial stability as well as the strong economic and financial interconnectedness between Member States, there should also be a common minimum basis for BBMs in national legal frameworks. The ESRB explains that BBMs can help to ensure sound lending standards and higher resilience of borrowers. BBMs could be explicitly stated in the MCD as it already mentions aspects of financial stability and also refers to the FSB’s Principles for Sound Residential Mortgage Underwriting Practices. Enshrining BBMs in the MCD could allow authorities to apply macroprudential BBMs to loans granted by all types of lenders. This would not only minimise regulatory arbitrage but also eliminate the possibility of circumventing restrictions that apply to RRE funding due to the imposition of BBMs on banks as lenders.



FCA consults on fee and levy rate proposals for 2022/23

On 7 April, the FCA began consulting on the rates for its regulatory fees and levies for the 2022/23 financial year. The FCA is consulting on its annual funding requirement (AFR), periodic fees, application fees and financial penalties, the FOS general levy, MaPS levy, the devolved authorities debt advice levy and the illegal money lending levy. The FCA proposes an AFR of 640.1m, an increase of 4.3% compared to the previous year. Reasons for the increase include: higher inflation and national insurance rates and that the FCA is now responsible for cryptoasset supervision. The deadline for comments is 12 May.


Consultation webpage

Financial crime and sanctions

EP approves negotiating mandate on proposed Regulation on information accompanying transfers of funds and certain crypto-assets

On 7 April, the EP announced that it had agreed its negotiating mandate on the proposed Regulation on information accompanying transfers of funds and certain cryptoassets. The EP will now commence negotiations with the Council. The EP published the text of the report adopted by ECON on the proposed regulation on 1 April, with the amendments ECON made since publication of the draft report (please see last week’s update for a description of the amendments).

Press release


EBA translations of guidelines on risk-based supervision

On 4 April, the EBA published the translations of the revised guidelines on risk-based supervision. These revised guidelines set out the steps supervisors should take to ensure adequate AML/CFT oversight of their sector and support the adoption, by credit and financial institutions, of effective ML/TF risk management policies and procedures. They aim at helping supervisors choose the most effective tools to meet their supervisory objectives. National authorities now have two months to report whether they comply with the guidelines and the revised guidelines will apply from 4 July 2022.



EC targeted consultation and call for evidence on a digital euro

On 5 April, the EC began a targeted consultation on the digital euro, following its 2020 public consultation, in order to collect  further information on expected impacts on key industries (financial intermediation, payment services, merchants), users (consumer associations, retailers’ associations), chambers of commerce and other stakeholders in international trade. The consultation focuses on: (i) users’ needs and expectations for a digital euro; (ii) the digital euro’s role for the EU’s retail payments and the digital economy; (iii) making the digital euro available for retail use while continuing to safeguard the legal tender status of euro cash; (iv) the digital euro’s impact on the financial sector and the financial stability; (v) application of AML-CFT rules; (vi) privacy and data protection aspects; and (vii) international payments. The EC has also launched an accompanying call for evidence for an impact assessment on the digital euro. The call for evidence notes that EC adoption of a potential Regulation on the digital euro is planned for Q1 2023. The deadline for comments on both the consultation and the call for evidence is 14 June.

Targeted consultation

Call for evidence

HMT speech sets out plan to make UK a global cryptoasset technology hub

On 4 April, HMT published a speech by John Glen, Economic Secretary to the Treasury, setting out the UK’s vision for being a global hub for cryptoasset technology. Amongst other things, Mr Glen discusses HMT’s response to its stablecoin consultation (we have covered this item below) and its intention to legislate to bring certain stablecoins within the regulatory perimeter. He announces that: (i) the UK will proactively explore the potential benefits of DLT in UK financial markets. HMT will legislate to establish an FMI ’Sandbox’ that will enable firms to experiment and innovate in providing the infrastructure services that underpin markets, in particular by enabling DLT to be tested. HMT also confirmed that it will initiate a research programme to explore the feasibility and potential benefits of using DLT for sovereign debt instruments; (ii) HMT will consult on wider regulation of the cryptoasset sector later this year; (iii) HMT will explore ways of enhancing the competitiveness of the UK tax system to encourage further development of the cryptoasset market in the UK, including a review of how Decentralised Finance loans are treated for tax purposes; (iv) HMT will consult on extending the scope of the Investment Manager Exemption to include cryptoassets; (v) the Chancellor has commissioned the Royal Mint to create a NFT this summer; and (vi) he will establish and chair a Cryptoasset Engagement Group, convening key figures from the regulatory authorities and industry to advise the government on issues facing the cryptoasset sector.


HMT policy paper on terms of reference for CFIT steering committee

On 4 April, HMT published the March 2022 terms of reference for the Centre for Finance, Innovation and Technology (CFIT) steering committee. The Kalifa Review of UK Fintech recommended the establishment of a new private sector-led organisation focused on driving forward financial innovation, which led to the creation of the CFIT. The purpose of the CFIT is to bring together experts from across the ecosystem – including finance and tech – to identify and address barriers and opportunities for UK fintech. The CFIT Steering Committee (SteerCo) is chaired by Ron Kalifa and its membership comprises a range of industry experts, including representatives nominated on behalf of the UK’s regional and national fintech hubs. HMT, the FCA, and the City of London Corporation are also represented. The SteerCo will meet monthly over Spring/ Summer 2022 to develop a comprehensive proposition for CFIT. This will include making non-binding recommendations on key strategic points.  

Policy paper

HMT response to consultation and call for evidence on regulatory approach to cryptoassets, stablecoins, and DLT

On 4 April, HMT published its response to its consultation paper on the UK regulatory approach to cryptoassets and stablecoins, and call for evidence on DLT in financial markets. This response document confirms HMT’s intention to take the necessary legislative steps to bring activities that issue or facilitate the use of stablecoins used as a means of payment into the UK regulatory perimeter, primarily by: (i) amending the framework in the UK for e-money through the EMRs 2011 and PSRs 2017. HMT considers that an amended e-money framework can deliver a consistent framework to regulate stablecoin issuance and the provision of wallets and custody services; (ii) extending the applicability of Part 5 of the Banking Act 2009 to include stablecoin activities, to apply in cases where the risks posed have the potential to be systemic and so the threshold for BoE supervision is met; and (iii) extending the scope of the Financial Services (Banking Reform) Act 2013 in order to ensure relevant stablecoin-based payment systems are subject to appropriate competition regulation by the PSR. HMT intends to consult later in 2022 on its proposed approach to regulating a wider set of cryptoasset activities. Following its call for evidence on the investment and wholesale uses of DLT in financial markets, HMT recognises the substantial benefits and transformative impact that could be delivered by DLT when adopted in FMIs, though the process of adopting these technologies needs to be managed carefully to ensure that any new risks arising are appropriately addressed. HMT also posed broad questions on the role of other forms of cryptoassets used primarily as retail investments and the growth of decentralised finance. HMT’s planned consultation on cryptoasset regulation will set out proposals for these innovations, reflecting feedback received.


Comparison table on positions of EU institutions on MiCA

On 1 April, the Council of the EU published a three-column table comparing the negotiating positions taken by the EC, the Council of the EU and the EP on the proposal for a Regulation on markets in cryptoassets (MiCA), as trilogues commence.

Comparison table

Fund regulations

IOSCO consults on market liquidity issues affecting corporate bond markets under stress and good practices concerning ETFs

On 6 April, IOSCO published a consultative report on the drivers of liquidity during Covid-19 induced market stresses in corporate bond markets. IOSCO seeks feedback on possible ways to help improve market functioning and liquidity provision, such as assessing the feasibility, benefits and costs of mitigating shifts in liquidity demand and alleviating supply side market constraints, including the potential unintended consequences from any prospective market changes. The corporate bond analysis provides the broader context on the underlying markets that buyside investors such as ETFs and traditional open-ended funds increasingly invest in. The deadline for comments is 30 June. IOSCO is also consulting on 11 proposed good practices in the operation and trading of ETFs to supplement its related 2013 principles. IOSCO explains that, for ETFs, the 11 proposed good practices: (i) address product structuring (including means of facilitating effective arbitrage and range of assets and strategies for ETF offerings), disclosure, liquidity provision and volatility control mechanisms; (ii)respond to significant recent global ETF market growth, and the increasing number of new products with exposures to novel and less liquid asset classes and more complex investment strategies; and (iii) offer detailed guidance on how best to facilitate effective arbitrage and market-making for ETFs that reference fixed-income assets. IOSCO recognises that the proposed good practices may not be applicable in all jurisdictions or in all circumstances, but they could represent a helpful way of addressing certain issues. The deadline for comments on the good practices is 6 July.

Press release

Consultative report on corporate bond market

Consultation on good practices

Markets and markets infrastructure

EC equivalence decisions for US CCPs and national securities exchanges

On 6 April, two Implementing Decisions on US equivalence were published in the OJ: (i) Commission Implementing Decision (EU) 2022/551 amending Implementing Decision (EU) 2021/85 on the equivalence to the requirements of EMIR of the regulatory framework of the US for CCPs that are authorised and supervised by the US Securities and Exchange Commission (SEC). This entered into force on 7 April, the day following its publication in the OJ; and (ii) Commission Implementing Decision (EU) 2022/552 determining that US national securities exchanges that are registered with the SEC comply with legally binding requirements that are equivalent to the requirements laid down in Title III of the MiFID II and are subject to effective supervision and enforcement. This will enter force on 26 April, 20 days following its publication in the OJ.

Implementing Decision 2022/551

Implementing Decisions 2022/552

FSB statement welcomes smooth transition away from LIBOR

On 5 April, the FSB published a statement welcoming a smooth transition away from LIBOR. The FSB confirms that all GBP, EUR, CHF, and JPY LIBOR panels, as well as the 1-week and 2-month USD LIBOR settings, ceased as of end-2021. The 1, 3 and 6-month GBP and JPY LIBOR settings are being published temporarily on a synthetic basis to support legacy contracts. While key panel-based USD LIBOR settings will continue until end-June 2023, this is intended to support the run-off of a substantial proportion of legacy contracts. US Banking Supervisors as well as many other authorities in FSB jurisdictions have strongly encouraged firms to cease new use of USD LIBOR after end-2021, subject only to some limited exceptional use to support an orderly transition. Given the significant use of USD LIBOR globally, the FSB emphasises that firms must have plans in place to ensure their preparedness for the cessation of the USD LIBOR panel. To ensure financial stability, it is important that market participants transition from LIBOR and other IBORs that are set to be discontinued. The FSB encourages firms to maintain momentum in active transition of legacy LIBOR contracts that reference synthetic GBP and JPY LIBOR settings. The FSB also continues to support engagement with emerging market and developing economies to maintain a smooth transition from LIBOR to RFRs, across all global markets. The FSB plans to conduct a follow-up assessment in H2 2022 to identify any remaining transition and supervisory challenges to support the LIBOR transition effort. The FSB’s Official Sector Steering Group will continue to serve as a forum in 2022 and 2023 for cooperation amongst authorities that have leading roles in interest rate benchmark reforms and transition preparedness.


ESMA response to EC consultation on review of EU central clearing framework

On 5 April, ESMA published its response to the EC’s targeted consultation on the review of the EU central clearing framework. ESMA outlines key considerations regarding the scope and implementation of the clearing obligation, including proposals to: (i) increase the attractiveness of cleared EU markets, for instance by expanding and facilitating entities clearing in the EU; (ii) improve the clearing obligation framework, for example by changing the reference from OTC to non-cleared derivatives in the clearing thresholds; (iii) incentivise EU clearing participants to reduce their exposures to UK CCPs; (iv) enhance the EU supervisory framework for CCPs; and (v) mitigate risks remaining at UK CCPs. ESMA notes that the EC’s consultation does not include proposals to mitigate the outstanding risks resulting from EU exposures to systemically important CCPs, in particular in cases of a CCP recovery and resolution. ESMA therefore makes a number of proposals to enhance ESMA’s powers, in particular with regards to Tier 2 CCPs. The EC, based on the feedback received from stakeholders to its public consultation, is expected to develop a legislative proposal amending the EU central clearing framework.


Joint statement from UK regulation authorities on LME and LME Clear

On 4 April, the FCA, BoE and PRA published a joint statement on the London Metal Exchange (LME) and LME Clear. The LME suspended nickel trading on 8 March, having concluded that a disorderly market had arisen amid challenging commodity market conditions following Russia’s invasion of Ukraine. Nickel trading resumed on the LME on 16 March. The FCA intends to review the LME’s approach to managing the suspension and resumption of the market in nickel to determine what lessons might be learned in relation to the LME’s governance and market oversight arrangements. The BoE will similarly undertake a review into the operation of LME Clear during the period to determine whether any lessons might be learned in relation to its governance and risk management. Both the FCA and the BoE intend that these reviews will be assisted by the appointment of skilled persons to report on the matter, under section 166 of FSMA. The FCA and the BoE will consider these reports in determining whether further action should be taken and will announce next steps in due course. The PRA and FCA will also be engaging further, through their supervisory processes, with firms who held significant positions in the market to assess the effectiveness of their risk management and governance during the period.

Joint statement

ESMA final report on review of SSR

On 4 April, ESMA finalised its report on its review of the Short Selling Regulation (SSR). The report focuses on three main areas: (i) an empirical analysis of the impacts of the short selling bans adopted during the COVID-19 crisis. ESMA proposes amendments to the current legislative provisions which govern emergency measures (i.e. long term bans, short term bans and ESMA powers to issue emergency measures). Such amendments aim to clarify the interpretation of certain provisions and overall ensuring that the procedure for the issuance of short and long-term bans is sufficiently flexible for relevant competent authorities to tackle emergency situations; (ii) a review of the current framework for the calculation of net short positions (NSPs), the so-called “locate rule” and the list of exempted shares. ESMA, in light of the episodes of high volatility which took place in the US markets and elsewhere in respect of the so-called “meme stocks”, has considered the possibility of similar phenomena developing in European markets and has re-assessed in light of such occurrences the relevant SSR provisions. ESMA proposes to enhance the existing rules about uncovered short sales by introducing record keeping requirements and a degree of harmonisation of sanctions; and (iii) a review of the framework for transparency and publication of NSPs, also in light of recent market turmoil events and proposes the introduction of a centralised system for publication and disclosure to the public of NSPs. ESMA has submitted the report to the EC and is ready to provide technical guidance should the EC decide to proceed with a review of the SSR.

Final report

ESMA new Q&As on BMR, APMs, MiFIR and SFTR data reporting

On 1 April, ESMA updated its Q&As on the BMR, on alternative performance measures (APMs), on data reporting under MiFIR and on data reporting under SFTR. These changes include: (i) BMR - ESMA updated Q&A 10.6 on the benchmark statement reflecting ESG factors; (ii) Guidelines on APMs - ESMA added two new Q&As and: (a) explains that where issuers include financial measures using ESG labels in regulated information or in prospectuses, and those measures are not determined in accordance with applicable legislation, issuers should comply with the principles included in the APM guidelines. ESMA encourages issuers to provide reconciliations between APMs related to ESG measures and KPIs or measures required by the Taxonomy Regulation and the SFDR; and (b) calls on issuers to use caution when they present APMs using ESG labels as these may be misperceived by users as compliant with the Taxonomy Regulation or SFDR; (iii) MiFIR data reporting - ESMA updated Q&A 2 on the legal entity identifier of the issuer, Q&A 4 on instrument identification codes and underlying instrument code and Q&A 21 on the reporting of nominal value per unit and minimum traded value; and (iv) SFTR data reporting – ESMA updated Q&A 12 on the currency of the overview and margin reports.



MiFIR data reporting Q&As

SFTR data reporting Q&As

FCA update on the reporting of LEIs under UK SFTR

On 1 April, the FCA updated its webpage on the UK SFTR. In April 2021, the FCA extended a period of forbearance for the reporting of legal entity identifiers (LEIs) of non-EEA third country issuers under the UK SFTR. This was put in place to reduce potential market disruption resulting from the large number of non-EEA third country issuers without an LEI. This forbearance is due to expire on 13 April. The FCA explains that, while industry made further progress in wider LEI coverage, it is aware that many non-EEA third country issuers have still not acquired an LEI which may impact reporting under UK SFTR after 13 April. In recognition of this, the FCA is extending the period during which reports under UK SFTR without the LEI of a non-EEA third country issuer will be accepted until 13 October. It advises that reporting counterparties should report an LEI for non-EEA third country issuers where one is available, and continue engaging with non-EEA third country issuers to encourage them to acquire an LEI if not.


ESMA postpones MiFIR RTS 2 annual review

On 1 April, ESMA postponed the annual review of the RTS on non-equity transparency due to be carried out under MiFIR. RTS 2 requires that ESMA performs an annual review by 30 July, assessing whether it is appropriate to move to the next stage of the phase-in for the liquidity determination of bonds, and the trade percentiles determining the pre-trade sizes specific to the financial instrument (SSTI) threshold for bonds and derivatives. ESMA considers that the on-going MiFIR review is likely to make part of the review redundant due to the proposed removal of the SSTI threshold, and might impact other provisions related to the instruments subject to this report. Moreover, since the previous step of the phase-in is still being implemented, it would not be possible to assess the impact of moving to the next stage based on transaction data. ESMA will resume the submission of the annual RTS 2 report in 2023.

Press release

ESMA 2021 data quality report under EMIR and SFTR

On 1 April, ESMA published the second edition of its data quality report, based on data gathered under the EMIR and SFTR reporting regimes. The report provides a holistic view of state of play of both reporting regimes as regards the quality of the reported data and the actions that the NCAs and ESMA are taking to improve the quality of the data. The report finds that the coordinated supervisory actions by ESMA and the NCAs have significantly enhanced data quality in 2021. Nevertheless certain aspects related to data reconciliation will require more efforts by reporting entities. In particular, the report suggests that data quality could be enhanced if counterparties used the same data set and the same identifiers for the reported data in their internal risk management processes. Key points include: (i) EMIR data quality - ESMA highlights the positive results of its targeted actions which led to a significant reduction in reporting errors. Compared to the previous year, misreporting of valuations was reduced by around 50% of the reporting firms subject to the review. ESMA also carried out several projects demonstrating that the supervised trade repositories (TRs), to a large extent, comply with their obligations under EMIR. Despite this, the analysis identified some shortcomings in the data provided to the authorities which require TRs to redouble their efforts in this area; and (ii) SFTR data quality - 2021 was the first year of the coordinated supervisory actions between ESMA and the NCAs for SFTR. For this reason, ESMA’s analysis focused on fundamental aspects of data quality, such as the timeliness of reporting, data rejection rates and pairing. Since its start on 13 July 2020, the SFTR reporting regime has shown comparable results to EMIR across all data quality metrics. The report also identified several prerequisites for further enhancing data quality for both TRs and counterparties: (a) TRs -  timely and complete reporting of regulatory information to the users of TR data, accuracy and confidentiality of data reported by counterparties to and stored by TRs, and accuracy of regulatory reports submitted to the users of TR data; and (b) counterparties -  completeness and accuracy of the reported information, in particular with regards to the reporting of valuation and collateral data, timely submission of the reports, and consistency of reported information reflected in the reconciliation of data submitted by the two counterparties of the same derivative/transaction.  

Data quality report

Payment services and payment systems

EBA final report on RTS amendment on SCA and CSC

On 5 April, the EBA finalised its report on the amendment of its RTS on the exemption to strong customer authentication and secure communication (SCA&CSC) for account access under PSD2. The changes: (i) introduce a new mandatory exemption to SCA that will require account providers not to apply SCA when customers use an account information service providers (AISP) to access their payment account information, provided certain conditions are met. The amendment aims to reduce frictions for customers using such services and to mitigate the impact that the frequent application of SCA and the inconsistent application of the current exemption have on AISPs’ services; (ii) limit the scope of the voluntary exemption in Article 10 RTS to instances where the customer accesses the account information directly; and (iii) extend the timeline for the renewal of SCA from every 90 days to every 180 days, both when the information is accessed through an AISP or directly by the customer. In light of comments received, the EBA introduced some changes to the draft amending RTS. In particular, the EBA extended the timeline for ASPSPs to make available to AISPs the changes to their interfaces from 1 month to 2 months before the implementation of these changes and extended the overall implementation period from 6 months to 7 months after the publication of the amending RTS in the OJ. The EBA also introduced some additional clarifications on the application of the mandatory exemption. The draft amending RTS will be submitted to the EC for endorsement following which it will be scrutinised by the EP and the Council before being published in the OJ.

Final report

Prudential regulation

EBA survey for banks on application of infrastructure supporting factor

On 5 April, the EBA launched a survey for banks on their experiences with the application of the so-called infrastructure supporting factor in accordance with CRR II. Article 501a of CRR II introduces a reduction by 25% of the own fund requirements for specific corporate exposures, the so-called infrastructure supporting factor. The eligible exposures must be to entities that were created specifically to finance or operate physical structures or facilities, systems and networks that provide or support essential public services. They must also meet additional conditions, which imply a certain minimum level of quality or maximum riskiness of the exposures. Besides assessing the application of the supporting factor, the survey aims at providing valuable information on the materiality of infrastructure project loans across EU banks, irrespective of whether credit institutions specialise in infrastructure lending or not. National competent authorities will also disseminate the survey directly to the largest banks. The survey runs until 27 May.


Sustainable finance

HMT recommendations to FPC, PRC and FCA on energy security strategy and net-zero  

On 7 April, Rishi Sunak, Chancellor of the Exchequer sent letters to the FCA, PRC and FPC setting out recommendations in relation to the government’s recent energy security strategy. He explains that these recommendations supplement rather than replace those made in March 2021 that the FCA, PRC and FPC should have regard to the government’s commitment to achieve a net-zero economy by 2050.  Mr Sunak notes that to reduce the UK’s reliance on imported fossil fuels, UK sources of oil and gas have a critical role, both to keep the economy supplied and in supporting the transition to net-zero. Where practical and relevant, the PRC, FPC and FCA should have regard to the Government’s energy security strategy and the important role that the financial system will play in supporting the UK’s energy security - including through investment in transitional hydrocarbons like gas - as part of the UK’s pathway to net zero.

Letter to FCA

Letter to FPC

Letter to PRC

EC adopts RTS on content and presentation of sustainability disclosures under the SFDR

On 6 April, the EC adopted a Delegated Regulation supplementing the SFDR with regard to RTS: specifying: (i) the details of the content and presentation of the information in relation to the principle of ‘do no significant harm’; (ii) the content, methodologies and presentation of information in relation to sustainability indicators and adverse sustainability impacts; and (iii) the content and presentation of the information in relation to the promotion of environmental or social characteristics and sustainable investment objectives in precontractual documents, on websites and in periodic reports. The EC has bundled 13 separate RTS into this one Delegated Regulation in view of their interconnectedness and for ease of use. The EC sets out the relevant reporting templates and aggregate statistical data in the Annexes. The Delegated Regulation will enter into force 20 days following its publication in the OJ and will apply from 1 January 2023.

Delegated Regulation

Delegated Regulation webpage (with links to Annexes)

EC targeted consultation and call for evidence ESG ratings market and ESG factors in credit ratings

On 4 April, the EC began a targeted consultation on ESG ratings and sustainability factors in credit ratings. The EC hopes to gain a better insight on the functioning of the market for ESG ratings, as well as better understand how credit rating agencies (CRAs) incorporate ESG risks in their creditworthiness assessment. Responses from market participants will feed into an impact assessment to be prepared later this year that will evaluate whether a possible policy initiative on ESG ratings and on sustainability factors in credit ratings is needed. The consultation also seeks views from market participants on the use of other types of tools that can be offered by sustainability-related providers, including research, controversy alerts, rankings, etc. The EC has also launched a call for evidence for an impact assessment on the potential policy initiative. The policy initiative, whether legislative or not, will focus on the authorisation of ESG rating providers, their operations and transparency of their methodologies, rules on conflicts of interests and separation of departments, a sanctioning regime, and an EU supervisory regime. Both the call for evidence and the consultation close to responses on 6 June, with the EC planning to propose an initiative to foster the reliability, trust and comparability of ESG ratings by early 2023.


Call for evidence

Other develoments

FCA 2022/23 business plan and three-year strategy

On 7 April, the FCA published its 2022/23 business plan together with a three-year strategy. Both the plan and the strategy are focused on a set of 13 commitments, which the FCA has grouped into three areas. In the business plan, the FCA sets out in more detail the actions the FCA will take to deliver in these areas: (i) reducing and preventing serious harm – focusing on protecting consumers from the harm that authorised firms can cause, including tackling fraud and poor treatment. Activities include improving the redress framework, improving oversight of appointed representatives and action on market abuse; (ii) setting and testing higher standards –focusing on the impact that authorised firms’ actions have on consumers and markets. The FCA expects all firms it regulates to adopt the same high standards, and have an open and cooperative approach. Activities include the upcoming new consumer duty and delivering on the FCA’s ESG commitment; and (iii) promoting competition and positive change – the FCA wants to use competition as a force for better consumer and market outcomes. The FCA will support UK growth and innovation that serves society, underpinned by high standards. Activities include working with HMT to set rules and standards under the Future Regulatory Framework and developing the pro-competitive regime for digital markets. In the three-year strategy the FCA sets out, at a higher level, what the FCA aims to deliver by 2025. The FCA will keep this under review. In a drive to improve accountability, the FCA also sets out its outcomes, metrics and targets for the three-year strategy. The FCA distinguishes between two levels of outcomes: (a) consistent topline outcomes the FCA expects financial services markets to deliver - these stay the same from year to year and enable the FCA to measure how it delivers statutory objectives over time. The FCA sets out the topline outcomes and metrics for Consumers and Wholesale markets with an initial baseline; and (b) commitment outcomes, which the FCA set over a 3-year period and review each year – the FCA set out its proposed metrics related to the 13 commitments. These metrics will be further developed and updated throughout 2022/23. The FCA intends to report on metrics regularly to monitor changes and over time, to include targets that the FCA is aiming to reach.

Press release

Three-year strategy

2022/23 business plan

Outcomes, metrics and targets

CMA investigation into suspected anti-competitive arrangements to continue to September

On 6 April, the CMA announced that its ongoing investigation into suspected anti-competitive arrangements in the financial services sector is continuing and will do so through to September. The CMA is specifically looking into suspected breaches of the Chapter I prohibition of the Competition Act 1998. The investigation began in November 2018.

Case webpage

Council of EU conclusions on strategic autonomy of European economic and financial sector

On 5 April, the Council of the EU published its conclusions, dated 29 March, on the strategic autonomy of the European economic and financial sector. In its conclusions, the Council of the EU focuses on: (i) strengthening the international role of the euro; (ii) a strong, competitive and resilient European financial sector servicing the real economy, avoiding risks arising from excessive reliance on third-country financial institutions and infrastructures; (iii) shielding and strengthening the resilience of financial-market infrastructure; (iv) developing an effective mechanism for managing sanctions; and (v) cooperation with partners.


FCA speech on building a digital regulator

On 4 April, the FCA published a speech given by Jessica Rusu, Chief Data, Information and Intelligence Officer, on building a digital regulator. Key points include that the FCA: (i) launched a new unified firm support service, 'Innovation Pathways’ that combines and enhances its Direct Support and Advice Unit Services and which will provide bespoke regulatory support to firms with innovative business models; (ii) is currently reviewing the findings of the pilots of its "early oversight" and "high-growth oversight" initiatives, and will be announcing its next steps soon. These initiatives extend supervision support to firms that are scaling at speed as well as those that are new to regulation; (iii) is continuing to explore the concepts of ethics and bias in algorithms and artificial intelligence; (iv) will, in May, publish its evaluation report on the learnings from the sustainability cohort; (v) will, also in May, host its first ever CryptoSprint, engaging with the industry to seek ideas to inform its regulatory policy thinking; and (vi) will, in September, hold a joint TechSprint with the PSR on Authorised Push Payment (APP) fraud, which increased dramatically during the pandemic. The TechSprint will be focused on exploring solutions to identify and prevent APP fraud, for example through identification of suspicious social media advertising and scam promotions.