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Key Regulatory Topics: Weekly Update 17 - 23 Mar 2023

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Blog Post: 04 March 2024

FAQs: UK FCA consults on plans to publicise investigations and amend its Enforcement Guide

Publications: 01 March 2024

Regulatory monitoring

Publications: 01 March 2024

Regulatory monitoring: EU version

News: 01 March 2024

A&O cements its position as a leading private capital firm with PDI award wins

This week in the UK, the FCA published its Primary Market Bulletin 44. It also sent a Dear CEO letter to benchmark administrators, setting out the findings of its preliminary ESG benchmarks review. In addition, the PSR confirmed arrangements for publishing data on APP scam performance. In Europe, ESMA sent a letter to the European Parliament and Council of the EU highlighting its concerns with proposed changes to the MAR insider list regime, the ESRB also sent a letter to the European Parliament and the Council of the EU about the EMIR review, and the ELTIF Regulation 2.0 was published in the OJ.

Consumer/retail  

Please see the Payment Services and Payment Systems section for the LSB’s first LSBulletin of 2023, in which the LSB discusses its recent update to the Contingent Reimbursement Model Code for APP scams.

Treasury Committee letter to FCA on competition in retail banking market

On 22 March, the Treasury Committee published a letter (dated 21 March) it sent to the FCA about competition in the retail banking market. Having now received responses from the CEOs of the UK’s four largest retail banks, the Committee writes to the FCA with further questions, including: (i) what recent work has the FCA undertaken to ensure the UK savings market, with regard to easy access savings accounts in particular, is competitive and that banks are not relying on customer inertia to keep their savings rates low; (ii) given that major retail banks have reported increases in their profits and net interest margins, what analysis has the FCA conducted to check whether banks are earning disproportionate profits through increasing the net interest rate margin and increasing rates on mortgages far quicker than rates on savings products; (iii) in light of data that indicates that around two-thirds to three-quarters of customers re-mortgage with their current provider, would the FCA expect a greater proportion of consumers to switch to a different provider in a competitive market; (iv) what additional mortgage forbearance measures does the FCA regard as necessary in response to the cost of living crisis; and (v) what effect does the FCA expect the Consumer Duty to have on how financial institutions sell and price their mortgage and savings products.

Press release

Letter to FCA

FOS individual businesses complaints data H2 2022

On 22 March, the FOS published data on the number of complaints it has received about individual businesses between 1 July and 31 December 2022. In total, the FOS received 79,921 new complaints in H2 2022, compared to almost 72,978 in H1 2022. Product areas where the number of new complaints rose in H2 2022 are identified by the FOS as banking and credit, general insurance and pure protection, and mortgages and home finance. The FOS upheld 34% of complaints in the consumers’ favour, compared to 37% in H1 2022.

Press release

Half-yearly complaints data H2 2022

FCA speech on new simplified advice regime and advice/guidance boundary review

On 21 March, the FCA published a speech by Therese Chambers, FCA Director of Consumer Investments, on its proposed simplified advice regime and the financial advice/guidance boundary review. Points of interest include: (i) FCA consultation on broadening access to mainstream investments (CP22/24) – following the feedback received to its consultation, the FCA is considering the best way to take forward any simplified advice regime as well as the timeline for doing so. The FCA’s proposals seek to make it easier and cheaper for firms to provide streamlined advice for consumers investing in mainstream investments via a Stocks and Shares ISA wrapper. Responses have supported the premise of a core investment advice regime, however, the FCA does recognise from some of the feedback that core investment advice may not work for businesses in the form that the proposals are currently in. The FCA also understands the concerns raised considering the limitations of the target market definition; (ii) advice/guidance boundary review – the FCA and HMT aim to ensure that the advice/guidance boundary review is genuinely holistic. The FCA confirms that accumulation products (including GIAs, ISAs and Pensions wrappers) and decumulating assets, including pensions decumulation, will be within the scope of the review. However, Defined Benefit transfer advice and any other pensions that have safeguarded benefits such as Guaranteed Minimum Pension or a Guaranteed Annuity Rate will be excluded from scope; (iii) discussion paper on future disclosure framework – the FCA is currently in the process of evaluating responses and aims to provide feedback on this in due course. The FCA has seen positive responses towards a principles-based approach and establishing flexibility to allow firms to effectively communicate disclosure to consumers; and (iv) consumer duty – Ms Chambers notes that some firms are nervous about providing support to their customers once they are in possession of personal information, as any support could then be seen as a personal recommendation and therefore regulated advice. The FCA thinks that firms could be doing more within the existing framework to mitigate this risk. Also, considering some elements to the consumer duty, Ms Chambers considers that consumer outcomes may not be most effectively supported by firms taking a conservative approach to managing risks from the boundary.

Speech

FOS increases award limits

On 20 March, the FOS announced that the FCA has confirmed the increase to its award limits. This limit is adjusted each year in line with inflation, as measured by the Consumer Prices Index. From 1 April, the award limits will go up to: (i) £415,000 for complaints referred on or after 1 April 2023 about acts or omissions by firms on or after 1 April 2019; and (ii) GBP190,000 for complaints referred on or after 1 April 2023 about acts or omissions by firms before 1 April 2019.

Press release

LSB summary report on customer vulnerability

On 17 March, the LSB published a summary report on its thematic review assessing whether vulnerable customers are receiving fair outcomes. In general, the LSB found that the majority of firms have considered vulnerable customers within their overall strategies for achieving good customer outcomes, with these being designed to comply with the requirements of the Standards of Lending Practice and the Contingent Reimbursement Model (CRM) Code for APP Scams. Areas for improvement include: (i) governance, controls and oversight – more pertinent management information needs to be produced to allow vulnerability strategies to be evaluated. Quality assurance was often narrowly focussed on the processes for identification of vulnerability with little consideration of the softer skills needed to engender effective probing and questioning; (ii) identification – firms’ arrangements for identifying vulnerability were limited within digital channels. Overall, the quality of conversations across all channels was inconsistent, with instances of rigid scripting and potential vulnerability triggers being missed or not probed and/or not recorded; and (iii) support – there was conflation between financial difficulties and wider vulnerability, resulting in the focus on addressing financial difficulty rather than supporting from a vulnerability perspective. Once vulnerability was identified, the LSB did not always see regular proactive reviews to understand if the customer’s circumstances had changed and if the support provided required adjustment. The LSB also identifies a number of good practices in these areas in the report.

Report

Financial crime 

Please see the Payment Services and Payment Systems section for the PSR’s confirmation of arrangements for publishing data on APP scam performance, and the LSB’s first LSBulletin of 2023, in which the LSB discusses its recent update to the Contingent Reimbursement Model Code for APP scams.

ESMA letter to EP and Council of the EU highlights concerns with proposed changes to MAR insider list regime

On 20 March, ESMA published a letter it has sent to the EP and the Council of the EU raising concerns about proposed changes to the MAR insider list regime. Overall, ESMA welcomes the EC’s Listing Act proposal. The proposal amends Article 18 of MAR, stipulating that an issuer’s insider list would no longer be event-based and would only need to include those persons that have regular access to inside information (so called “permanent insiders”). ESMA believes that this proposal may have significant detrimental effects, including: (i) the ability of NCAs to quickly identify non-permanent insiders would be limited; (ii) the ability of advisers and consultants to produce their insider list in a timely manner would be affected as they will no longer be added to the issuer’s list and therefore will not receive the relevant notification; and (iii) increasing the risk of unintended insider dealing and weakening the issuers’ control of the flow of inside information. Issuers use insider lists to manage inside information thus protecting both themselves and their staff/third parties. The new regime would diminish awareness by all insiders, as they will no longer be notified that they are in possession of inside information and be informed about the relevant obligations and prohibitions.

Letter

JMLSG publishes amendments to sectors 8 and 9 in Part II of AML and CTF guidance

On 17 March, the JMLSG published finalised amendments to sectors 8 (non-life providers of investment fund products) and 9 (discretionary and advisory investment management) in Part II of its AML and CTF guidance for the financial services sector. The revised guidance has been submitted to HMT for ministerial approval.

Press release

Revised guidance

Fintech 

Please see the Prudential Regulation section for the BCBS work priorities update.

Fees/levies

SSM supervisory fees for 2022

On 21 March, ECB Decision 2023/656 on the total amount of annual supervisory fees under the single supervisory mechanism (SSM) for 2022 was published in the OJ. The total amount of annual supervisory fees for 2022 is EUR 593.7 million. The decision will enter into force on 26 March (five days after publication in the OJ).

Decision

Fund regulation 

Please see the Financial Crime section for JMLSG’s finalised amendments to sectors 8 (non-life providers of investment fund products) and 9 (discretionary and advisory investment management) in Part II of its AML and CTF guidance for the financial services sector.

ESMA speech on macro-prudential supervision of investment funds

On 21 March, ESMA published a speech by Verena Ross, ESMA Chair, on the macro-prudential supervision of investment funds. Points of interest include: (i) Ms Ross cautions that the risks faced by liability-driven investment funds (LDIs) are not specific or unique to them – any leveraged entity with concentrated directional exposures could be subject to similar stress, especially if large shocks materialise very quickly. An exogeneous event can trigger simultaneous peripheral events, which may become correlated and therefore systemic. It is crucial to identify, monitor and address the remaining vulnerabilities in the asset management sector, and identify the possible channels of contagion to the rest of the financial system; (ii) Ms Ross considers that open-ended funds need particular attention with regard to liquidity and leverage risk. On one side asset managers need to prepare for further and prolonged adverse events. On the other side supervisors need to step up their efforts in assessing risks and to take adequate actions in response to the risks identified. ESMA expects managers to monitor the alignment of their funds’ investment strategy, their liquidity profile and their redemption policy. In addition, managers should put in place accurate assessment and strong controls around the management of liquidity risk. These obligations should also be regularly monitored through the ongoing supervision by NCAs. Ms Ross believes that regulators could consider running formal sector-wide stress tests to identify pockets of vulnerabilities; and (iii) Ms Ross states that the vulnerabilities that surfaced during the pandemic, have demonstrated that legislative changes to enhance the resilience of the money market fund sector are needed sooner rather than later. ESMA also welcomes the review of the UCITS Directive, which foresees the creation of an EU-wide reporting regime for UCITS.

Speech

ELTIF Regulation 2.0 published in OJ

On 20 March, the Regulation amending the European long-term investment funds (ELTIF) Regulation as regards the requirements pertaining to the investment policies and operating conditions of ELTIFs and the scope of eligible investment assets, the portfolio composition and diversification requirements and the borrowing of cash and other fund rules, was published in the OJ. The Amending Regulation aims to make the ELTIF regime more flexible and more attractive by: (i) broadening the scope of eligible assets for ELTIFs; (ii) relaxing investment limits; (iii) relaxing borrowing rules; and (iv) relaxing rules regarding the marketing to retail investors. The Amending Regulation enters into force on 9 April (20 days after publication in the OJ). It applies from 10 January 2024.

ELTIF Regulation 2.0

Markets and markets infrastructure

Please see the Financial Crime section for a letter sent by ESMA to the EP and the Council of the EU highlighting concerns about proposed changes to the MAR insider list regime.

ESRB letter to EP and Council of the EU on EMIR 3.0

On 20 March, the ESRB sent a letter to the EP and the Council of the EU about the EMIR review. The ESRB sets out elements that it recommends incorporating into the EMIR review in order to make the financial system safer, including: (i) active account – the ESRB identifies some gaps in the active account framework that could significantly impair its efficiency; (ii) data – the ESRB sets out several approaches that could make it possible to improve data quality, which it considers would make EU CCPs more attractive and CCP supervision more robust; (iii) collateral – the energy market exemption was originally supposed to be time-limited. The ESRB is in favour of either ensuring that the current temporary extension does not turn into a permanent extension or applying on a permanent basis the same strict cumulative conditions regarding the acceptance of uncollateralised bank guarantees as those currently applied in the adjusted RTS; (iv) the non-objection procedure – the ESRB considers that the non-objection procedure should not be permitted where settlement in a new EU currency would be added to a class of financial instruments already covered by the CCP’s authorisation. In such cases, dedicated liquidity risk management and payment and settlement arrangements should be established, ensuring that these would not constitute non-material changes. In addition, in its current wording the proposal may lead to situations in which material extensions to the scope of services provided by EU CCPs, in particular in respect of the set of currencies in which the cleared transactions are denominated, could be implemented without a thorough risk assessment and without making the necessary adaptations to EU CCPs’ risk management frameworks; and (v) Joint Monitoring Mechanism (JMM) – clarification as to the interaction between the JMM and the existing supervisory framework would help reduce the additional administrative burden on both CCPs and the authorities. The ESRB sets out its proposed amendments to the EMIR text in the Annex. 

Letter

FCA updates webpage on UK list of exempted shares under UK SSR

On 20 March, the FCA updated its webpage on the notification and disclosure of net short positions under the UK SSR. Certain shares are exempt from the requirements if the principal trading venue is located outside the UK. The UK list of exempted shares, valid from 1 January, has been reviewed to include shares admitted to trading on UK trading venues in November and December 2022 that were not considered previously. A revised version of this list will be uploaded on and be valid from 1 April. This will apply to positions reached from that date. The list that was valid until 31 December 2022 is now archived and will not be available. In the meantime, firms can continue to use the existing updated UK list of exempted shares when determining whether they have a reportable position. The FCA shall biannually review whether shares admitted to trading in the UK and in third country jurisdictions have their principal venue for their trading outside the UK. The most recent biannual liquidity assessment has been undertaken in two stages: (a) first review – all shares admitted to trading on UK trading venues until 31 October 2022 were assessed to determine their principal trading venue in the previous two-year period. Exempted shares were included on the updated list valid from 1 January; and (b) second review – shares admitted to trading in November and December 2022 that were not included in the first review have been assessed to determine their principal trading venue. Therefore, a revised list will be published on and be effective from 1 April.

Webpage

Payment services and payment systems 

PSR confirms arrangements for publishing data on APP scam performance – Specific Direction 18

On 23 March, the PSR announced that it has issued Specific Direction 18 (SD18) to direct 14 of the largest UK payment service provider (PSP) groups to collect and provide data to the regulator, which will cover 95% of transactions. They will be required to report on three metrics: (i) the proportion of victims of APP scams who do not get reimbursed; (ii) the rates of APP scams happening at sending payment firms; and (iii) the rates of APP scams happening at receiving payment firms. The 14 directed groups will be required to provide the PSR with the first set of data by 2 May. The first data collection will be split into two separate reporting periods for each half of 2022. The PSR intends to publish this data in October and on a six-monthly basis thereafter. For future data collection cycles, the PSR is also considering the collection and publication of APP scams origination data, such as from social media platforms, telecoms companies and internet-related services.

Press release

Policy statement

Reporting guidance

SD18

PSR conducts first review of Specific Direction 12 (LINK)

On 22 March, the PSR launched its first annual review of Specific Direction 12 (SD12), which aims to ensure that LINK maintains a broad geographic spread of the UK’s free-to-use (FTU) cash machine network and meets service-user needs by having in place and maintaining appropriate and effective policies and measures. The PSR asks for views as to how effective SD12 has been in meeting its aims and therefore whether it should remain in place given some of the wider initiatives that have since been announced including those in the FSM Bill. The deadline for comments is 21 April. The PSR will publish a report summarising comments and setting out its findings later in 2023.

Call for input

LSB March 2023 bulletin

On 17 March, the LSB published its first LSBulletin of 2023. The bulletin covers, among other topics, the LSB’s recent update to the Contingent Reimbursement Model (CRM) Code for APP scams. By no later than 18 December, firms must have in place appropriate processes: (i) to review accounts that are identified as being at higher risk of being used to facilitate APP fraud. Firms must also have policies in place setting out actions they will take to reduce the risk of such accounts being used to facilitate APP fraud and that appropriate actions are taken in a timely manner; and (ii) for "profiling" of inbound payments to allow firms to prevent the onward movement of funds where there is a suspicion that the funds being credited to an account are the proceeds of APP fraud.

Bulletin

Prudential regulation 

Please see the Fund Regulation section for a speech by Verena Ross, ESMA Chair, on the macroprudential supervision of investment funds.

BCBS work priorities update

On 23 March, the BCBS provided an update on a number of its ongoing workstreams, including: (i) risks and vulnerabilities to the global banking system – the BCBS will continue to closely monitor bank and market developments and assess the financial stability risks of higher interest rates to the global banking system. In addition, the BCBS will take stock of the regulatory and supervisory implications stemming from recent events, with a view to learn lessons. Members unanimously reaffirmed their expectation of implementing all aspects of the Basel III framework in a full and consistent manner, and as soon as possible; (ii) climate-related financial risks – the BCBS will consult on the proposed Pillar 3 disclosure framework for climate-related financial risks by the end of 2023; (iii) Basel Core Principles – the BCBS agreed to consult on revisions to the Basel Core Principles by mid-2023; and (iv) cryptoassets – the BCBS will continue to monitor banks' cryptoasset activities and exposures, including their role as potential issuers of stablecoins and tokenised deposits, custodians of cryptoassets and interconnections with other nodes of the cryptoasset ecosystem.

Press release

Two ECB Decisions relating to on-site inspections and internal model investigations under SSM published in OJ

On 23 March, two ECB Decisions, relating to the ECB’s role as prudential supervisor under the Single Supervisory Mechanism (SSM), were published in the OJ: (i) Decision (EU) 2023/672 on delegation of the power to adopt decisions relating to on-site inspections and internal model investigations. This specifies the criteria for the delegation of decision-making powers to the heads of work units of the ECB for the adoption of decisions on on-site inspections and decisions on internal model investigations; and (ii) Decision (EU) 2023/673 nominating heads of work units to adopt delegated decisions relating to on-site inspections and internal model investigations. This specifies the individuals that can make delegated decisions made under Decision 2023/672. Both decisions enter into force on 12 April (20 days following publication in the OJ).

Decision 2023/672

Decision 2023/673

EBA consults on expansion of FRTB reporting framework

On 21 March, the EBA began consulting on its draft ITS amending the ITS on specific reporting requirements on market risks. As the full implementation of the Fundamental Review of the Trading Book (FRTB) in the EU approaches, the proposals complement the already existing reporting requirements with a comprehensive set of information on the instruments and positions to which institutions apply related to the FRTB approaches. The proposed amendments will provide the supervisors with the necessary data to monitor institutions’ implementation of the FRTB approaches and their compliance with the own funds requirements for market risk. The amendments mostly affect institutions with significant business subject to market risk, therefore reflecting the proportionality elements embedded in the CRR. The consultation also illustrates a set of possible amendments to the ITS on supervisory reporting, mainly reflecting the trading book boundary framework. The deadline for comments is 21 June. The EBA expects to submit these draft ITS to the EC in the autumn. The revised reporting requirements are expected to apply from the reference date 30 September 2024. 

Press release

Consultation

Recovery and resolution 

Delegated Regulation amending Delegated Regulation on calculation of liabilities arising from derivatives under BRRD published in OJ

On 22 March, Delegated Regulation (EU) 2023/662 (Amending Delegated Regulation) amending Delegated Regulation (EU) 2015/63 as regards the methodology for the calculation of liabilities arising from derivatives under the BRRD, was published in the OJ. Delegated Regulation 2015/63 supplements the BRRD with regard to ex ante contributions to resolution financing arrangements. CRR II obliged institutions to calculate the exposure value of derivative contracts in accordance with the mark-to-market method known as the Standardised Approach Counterparty Credit Risk. However, the application of this method for the purposes of calculating ex ante contributions would, in fact, distort the calculation of liabilities arising from derivative contracts, which would affect some institutions more than others. The Amending Delegated Regulation therefore enables institutions to use the Current Exposure Method for the valuation of liabilities arising from derivative contracts, as previously laid down prior to CRR II. The Amending Delegated Regulation came into force on 23 March (the day after its publication in the OJ). It will apply retroactively from 1 October 2022.

Delegated Regulation 2023/662

BoE and UK Government respond to Treasury Committee on collapse and rescue of SVB UK

On 22 March, the Treasury Committee published responses received from the BoE and the UK Government on the collapse and subsequent purchase by HSBC UK of SVB UK. The BoE, as well as providing an assessment of the UK banking system as a whole, answers the Committee’s questions, including on: how SVB UK was supervised before its collapse, how HSBC was chosen as a purchaser, and what lessons can be learnt about the regulation of the banking sector. The Economic Secretary to the Treasury was asked questions including: what other support options the UK Government was considering at the time of HSBC’s purchase, the extent to which HMT intervened in the resolution process in favour of a sale, and whether HMT sought assurances from HSBC on its approach to the UK tech industry as a condition of the purchase. The Governor of the BoE, the Chief Executive of the PRA, and the BoE’s Deputy Governor for Markets and Banking will give evidence to the Committee on the collapse of SVB UK and wider stresses in the banking sector, including implications for the UK of the failure of Credit Suisse, on 28 March.

Press release

BoE response

Government response

BoE statement on UK creditor hierarchy: SVB UK and Credit Suisse

On 20 March, the BoE published a statement on the UK’s bank resolution framework in response to the recent resolution of SVB UK and the UBS takeover of Credit Suisse. The BoE reaffirms that the UK’s bank resolution framework has a clear statutory order in which shareholders and creditors would bear losses in a resolution or insolvency scenario. This was the approach used for the recent resolution of SVB UK, in which all of SVB UK’s Additional Tier 1 (AT1) and T2 instruments were written down in full and the whole of the firm’s equity was transferred for a nominal sum of £1. AT1 instruments rank ahead of CET1 and behind T2 in the hierarchy. Holders of such instruments should therefore expect to be exposed to losses in resolution or insolvency in the order of their positions in this hierarchy. The BoE welcomes the set of actions taken by the Swiss authorities in order to ensure financial stability in relation to Credit Suisse. The BoE reaffirms that the UK banking system is well capitalised and funded, and remains safe and sound. In a similar statement dated 20 March, the SRB, EBA, and ECB also welcomed the actions by Swiss authorities and reaffirmed the EU resolution framework’s approach to creditor hierarchy.

BoE press release

SRB, EBA and ECB statement

Sustainable finance 

Please see the Prudential Regulation section for the BCBS work priorities update.

Climate Financial Risk Forum session 3 materials

On 22 March, the Climate Financial Risk Forum (CFRF) published a set of materials, which aim to help the financial sector develop its approach to addressing climate-related financial risks and opportunities: (i) Climate Disclosures Dashboard 2.0 – the updated Dashboard incorporates both recent regulatory developments and progress made by industry in preparing climate-related disclosures, most notably guidance from the Taskforce on Climate-related Financial Disclosures and the Glasgow Financial Alliance for Net Zero and draft guidance from the Transition Plan Taskforce; (ii) three webinars on the limitations of portfolio climate data, forward-looking portfolio climate metrics and climate data coverage; (iii) an updated climate scenario analysis narrative tool; (iv) Asset Management Guide – this aims to promote understanding, consistency, and comparability by providing guidance on how to use scenario analysis to assess financial impact and inform strategy/business decisions; and (v) learnings from the 2021/22 Climate Biennial Exploratory Scenario (CBES) – developed together with the UK Centre for Greening Finance and Investment, this research intends to gather and synthesise the learning from the CBES in order to: (a) inform the development of future data, metrics and scenarios; (b) strengthen capability of UK and global financial institutions in scenario-analysis and stress testing; and (c) inform the design of future scenario and stress testing exercises by central banks and supervisors internationally.

CFRF webpage

FCA Dear CEO letter on ESG benchmarks review

On 20 March, the FCA published a Dear CEO letter, sent to benchmark administrators, setting out the findings of its preliminary ESG benchmarks review. Issues highlighted include: (i) little explanation on the ESG factors used in benchmarks and the thresholds benchmark administrators choose to apply when measuring these; (ii) not ensuring that the underlying methodologies for ESG data and ratings products used in benchmarks are accessible, clearly presented and explained to users; (iii) not fully implementing ESG disclosure requirements set out in the UK Low Carbon Benchmarks Regulation; and (iv) failing to implement ESG benchmarks’ methodologies correctly including by using outdated data and ratings or failing to apply ESG exclusion criteria. The FCA expects benchmark administrators, their senior leadership, and their Boards to carefully consider the letter and ensure that they have appropriate strategies in place to address the issues described. Firms should be prepared to explain these strategies at the FCA’s request.

Letter

Press release

Other developments

FCA appoints executive directors to co-lead Enforcement and Market Oversight

On 23 March, the FCA announced that it has appointed Therese Chambers and Steve Smart as joint Executive Directors of Enforcement and Market Oversight. Therese Chambers will take on the role of Executive Director on 1 April. Steve Smart will join on 21 June. Mark Steward, the current Executive Director will leave the FCA on 13 April. The FCA has also announced the creation of a single legal function headed by current General Counsel Stephen Braviner-Roman. This will bring together the General Counsel Division and the legal group, which currently sits within Enforcement and Market Oversight, in a single unified legal division to ensure a joined up legal capability working across the organisation. 

Press release

BoE update on data collection transformation programme

On 23 March, the BoE provided an update on the joint transformation programme, which is being led jointly by the BoE and FCA with industry to transform data collection from the UK financial sector. The BoE provides an update on: (i) a Town Hall event to be held on 29 March to provide more information on the progress of the programme and future plans. There will also be opportunity to ask questions and provide feedback; (ii) the phase two use cases – commercial real estate data, strategic review of prudential data collection from solo regulated firms, retail banking business model data and incident, outsourcing and third-party reporting; and (iii) the progress of the solution development for the phase one recommendations. The BoE and FCA agreed to implement seven solution recommendations by July this year.

Update

FCA authorisations operating service metrics update

On 21 March, the FCA updated its operating service metrics for authorisation timelines. In January/February, 12 were green, 5 amber and 2 red, an improvement from 2021/22 – 8 green, 5 amber and 6 red. The areas not meeting targets are: approved persons, change in control notifications, new firm authorisations, and payment services and e-money authorisations, registrations and notifications. The FCA expects to see further improvement and to be substantially meeting the targets by the end of March. With regards to MLRs, PSRs and EMRs applications, the FCA highlights the delay caused by incomplete and poor-quality applications. The FCA is testing a new digitised form for approved persons applications which, if successful, will be made publicly available in the summer. The FCA has proposed that from Q4 it will report operating service metrics performance quarterly and will include more detailed reporting on the time taken to process applications.

Update

Metrics

BBRS SME Liaison Panel closes

On 20 March, the Business Banking Resolution Service (BBRS) announced that its SME Liaison Panel is closed with immediate effect. In light of the Panel Chair’s resignation and the FCA’s Call for Input on SME access to the FOS, the BBRS has made the decision to bring forward the SME Liaison Panel closure from December. The BBRS board will use the findings of the FCA’s review, as well as any subsequent work undertaken by the FCA, to help inform its options for the future.

Press release

FCA Primary Market Bulletin 44

On 20 March, the FCA published issue 44 of its Primary Market Bulletin. This issue covers: (i) D&I disclosures – the FCA introduced new Listing Rules and amended its disclosure guidance and transparency rules (DTRs) to provide more comparable information on the diversity of companies’ boards and executive management. The FCA sets out which firms are within scope of the new rules, its expectations for the disclosures and its supervisory approach to monitoring and enforcing compliance. It also notes a series of steps that it would expect listed companies to have considered in preparation. The first annual reports subject to the new rules will be published from April; (ii) prospectuses on schemes – having considered the consultation responses, the FCA has decided not to publish a proposed Technical Note relating to the requirement to publish a public offer prospectus where securities are issued pursuant to a scheme of arrangement. Respondents disagreed with the FCA’s view that a prospectus should be produced. They argued that a scheme does not involve acceptance of an offer and therefore cannot result in a bilateral contract to buy or subscribe for securities. In the absence of a bilateral contract, respondents argue that there is no offer to the public within the meaning of the Prospectus Regulation. The FCA recognises that the question of whether a prospectus is required is a question of law and ultimately is for the courts to decide. However, it notes that under the draft FSMA 2000 (Public Offers and Admissions to Trading) Regulations 2023, securities allotted under a scheme of arrangement are excluded from the definition of public offer; and (iii) regulatory news announcements with multimedia content – the FCA sets out its expectations around the use of multimedia content by Primary Information Providers (PIPs), which offer the ability for issuers to include multimedia content, including audio and video content, in regulatory news announcements. The FCA states that multimedia content should not form part of any regulated information submitted for dissemination. It considers that it creates a risk of harm to market users through a potential reduction in clarity, particularly if it makes it less clear what is regulated information, and what is not. The FCA highlights certain requirements in the DTRs and MAR that could be breached.

Primary Market Bulletin 44

FCA call for input on SME access to FOS

On 17 March, the FCA published a call for input survey on the access for SMEs to the FOS. The call for input will feed into the FCA’s post-implementation review of the extension of access to the FOS to more SMEs in April 2019. The FCA’s aim is to understand whether current thresholds for SMEs to be able to refer complaints to the FOS continue to be appropriate. The FCA’s policy objective is to provide access to SMEs that it thinks are likely to have insufficient resources to resolve disputes with financial services firms through the legal system.  The deadline for comments is 28 April.

Call for input