Key Regulatory Topics: Weekly Update 22-28 April 2022
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This week was relatively quiet in the UK but the FCA published findings from a multi-firm review into financial crime controls at challenger banks and began consulting on new rules to allow authorised fund managers to create separate unit classes (side pockets) for retail investment funds affected by the invasion of Ukraine. The BoE published a speech on operational resilience, also setting out the next steps on the PRA’s supervisory roadmap. Over on the continent, progress was made on a number of legislative initiatives, with the Council Presidency proposing text for the new consumer directive, the EC adopting RTS on the IFR fixed overheads requirements, the EBA providing its opinion on CRD VI, and the EP and the Council reaching political agreement on the CRR-amending ‘Daisy Chain’ proposal.
Greenwashing update 2022 – Wednesday 18 May, 9.00am-10.00am
As products with an ESG or sustainability “badge” continue to gain more and more traction in the market, so does greenwashing risk move up the regulatory agenda. In part, this is about a concern on the part of regulators to ensure the continued credibility of this nascent market segment, and help steer private capital into “greening” initiatives. But it is also about basic principles of investor protection and making sure products “do what they say on the tin”. In this seminar, we will look at EU and UK regulatory initiatives intended to prevent the risk of greenwashing, and provide practical guidance on how firms can ensure their systems and controls offer robust protection. We will also be joined by Andrew Denny, to talk about litigation risks and emerging cases, as well as our environmental specialist colleagues, to hear their experience.
Treasury Committee call for evidence on venture capital market
On 28 April, the Treasury Committee launched a call for evidence into the venture capital market. The Committee welcome evidence on, amongst other topics: (i) the current state of the venture capital industry in the UK, including opportunities and threats, such as the availability of domestic capital to allow firms to scale up in the UK; (ii) the level of co-operation/integration between start-ups and established industry; (iii) the operation and effectiveness of the current tax incentives; and (iv) the operation and effectiveness of the regulatory regime(s) concerning venture capital. The Committee particularly welcome international comparisons, examples of international best practice, examples of potential change and policy proposals. The deadline for responses is 7 June.
Please see the Fund Regulation section for the FCA’s consultation on new rules to allow Authorised Fund Managers to create separate unit classes (side pockets) for retail investment funds affected by the invasion of Ukraine.
Please see the Other Developments section for the Digital Regulation Cooperation Forum’s 2021/22 Annual report, 2022/23 work plan and two discussion papers on algorithms.
EBA statement on financial inclusion in the context of the invasion of Ukraine
On 27 April, the EBA published a statement addressed to both financial institutions and supervisors to ensure they make every effort to provide access for Ukrainian refugees to at least basic financial products and services. The EBA: (i) sets out how its AML/CFT guidelines apply in the current context, and how financial institutions can adapt their AML/CFT measures to provide a pragmatic and proportionate response to the compliance challenges they face; (ii) clarifies what financial institutions and supervisors can do to protect vulnerable persons from abuse by criminals and calls on financial institutions to ensure that compliance with the EU’s restrictive measures regime does not lead to unwarranted de-risking; and (iii) considers that financial institutions should pay particular attention to apparent attempts by customers to obfuscate relationships with sanctioned persons and those who are at risk of being sanctioned, or to conceal the ultimate beneficial owner, through for example, sudden changes in the customer’s ownership or control structure. However, achieving compliance with the EU’s financial sanctions regime should not lead to the financial exclusion of legitimate and potentially vulnerable customers, including customers with links to Russia or Belarus that are legally resident in the EU. The EBA will continue to monitor the situation and work with competent authorities and the private sector as necessary to share best practices, set common regulatory expectations and facilitate the development of a common approach.
Council Presidency proposed text of new Consumer Credit Directive
On 22 April, the Council of the EU published the Presidency’s compromise text of the proposed Directive on consumer credits, together with accompanying Annexes. The compromise text displays the changes compared to the initial EC proposal and the previous version of the Presidency’s proposed text. The new Directive will revise and replace the current CCD, extending its scope, introducing pricing rules, clarifying information requirements, and revising the creditworthiness assessment in order to address technological and market developments.
Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2022
On 22 April, the Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2022 was published, together with an explanatory memorandum. The Order: (i) allows the FCA to make rules in relation to how the FSCS will operate in the pre-paid funeral plans sector; (ii) makes provision in the RAO to ensure that where a provider agrees to take responsibility for another provider’s funeral plan contracts, that new provider can be deemed to be carrying out those contracts for regulatory purposes; and (iii) provides a transitional regime such that the deadline by which funeral plan providers are required to have obtained FCA authorisation to continue carrying out funeral plan contracts is extended, from 29 July to 31 October, for firms that meet certain conditions on 29 July in relation to the timing and status of their application for authorisation to the FCA. The instrument will come fully into force on 29 July.
Financial Crime and Sanctions
Please see the Consumer/Retail section for a statement from the EBA addressed to both financial institutions and supervisors to ensure they make every effort to provide access for Ukrainian refugees to at least basic financial products and services.
Government response to Treasury Committee’s fraud, scams and economic crime report
On 28 April, the Treasury Committee published the Government’s response to the Committee’s fraud, scams and economic crime report. In response, the Government states, amongst other things, that it: (i) will publish a second Economic Crime Plan later this year. Measures will include reform of Companies House, reforms to prevent abuse of limited partnerships, a new civil forfeiture power to seize and recover illicit cryptoassets, and reforms to give businesses more confidence to share information on suspected money laundering; (ii) will publish its 10-year Fraud Strategy later this year. It will set out how government will work with industry to remove the vulnerabilities that fraudsters exploit, with intelligence agencies to shut down fraudulent infrastructure, with law enforcement to identify and bring the most harmful offenders to justice, and with all partners to ensure that the public have the advice and support they need; and (iii) dismisses the suggestion that anti-fraud enforcement should be the responsibility of a single body or department. A single departmental approach would, in the government’s view, undermine efforts to tackle holistically the challenge that economic crime presents. The size and scope of the new body would likely by unwieldy and ineffective in delivering operational outcomes, whereas collaboration between agencies enables the UK to deploy relevant expertise and resources in a targeted and specific manner. The Committee have also published responses from the FCA and the PSR.
FCA review into financial crime controls at challenger banks
On 22 April, the FCA published findings from a multi-firm review into financial crime controls at challenger banks. Overall, the FCA remains of the view that there are limited differences in the inherent financial crime risks faced by challenger banks, compared with traditional retail banks. The FCA found, among other things: (i) some evidence of good practice, for example innovative use of technology to identify and verify customers at speed; (ii) weaknesses in customer due diligence (CDD), including that most challenger banks did not obtain details about customer income and occupation, resulting in an incomplete assessment of the purpose and intended nature of a customer’s relationship with the bank. Some challenger banks were not consistently applying enhanced due diligence (EDD) and were not documenting it as a formal procedure to apply in higher risk circumstances, for example when managing politically exposed persons; (iii) that some firms had customer risk assessment frameworks that were not well developed and lacked sufficient detail. Some did not even have a customer risk assessment in place; (iv) ineffective management of transaction monitoring alerts; (v) issues with the quality of suspicious activity reports (SARs). The UK Financial Intelligence Unit has also noted a substantial increase in the volume of SARs reported by challenger banks as banks exit customer relationships for financial crime reasons, which raises concerns about the adequacy of these banks’ CDD and EDD checks; and (vi) weaknesses in the effective management of financial crime change programmes. The FCA sets out a series of follow up steps for challenger banks and states they should be prepared to give an update on their financial crime framework as part of monitoring compliance with the MLRs. The FCA expects challenger banks to ensure financial crime control resources, processes and technology are commensurate with a bank’s expansion, by taking a risk-based approach and undertaking continuous monitoring.
Please see the Other Developments section for the Digital Regulation Cooperation Forum’s 2021/22 Annual report, 2022/23 work plan and two discussion papers on algorithms.
FCA consults on rules protecting investors in authorised funds affected by invasion of Ukraine
On 28 April, the FCA began consulting on new rules to allow Authorised Fund Managers (AFMs) to create separate unit classes (side pockets) for retail investment funds affected by the invasion of Ukraine. The FCA explains that the Russian invasion of Ukraine has resulted in some investments becoming illiquid or untradeable. AFMs may not be able to produce accurate unit prices for some funds holding those investments. Where the affected investments are a significant proportion of a fund’s assets, some funds have suspended dealing. The FCA proposes allowing AFMs to use separate new classes of units (side pockets) to hold affected investments that could allow: (i) new investors to enter the fund without sharing in the exposure to the affected investments; (ii) existing investors to sell the units which relate to assets that are not affected investments; and (iii) some funds to end their current suspension of dealing. The AFM would manage the side pocket class with the aim of terminating it as and when this could be done in the best interests of investors. There is no certainty that the affected investments will ever recover their lost value but, if this happens, investors holding units in the side pocket class would benefit. The proposals apply to investments that are subject to financial sanctions relating to Russia under the applicable regimes in the UK, other G7 countries and the EU. The deadline for comments is 16 May.
Markets and Market Infrastructure
IOSCO report on market data in the secondary equity market
On 28 April, IOSCO published a report on issues and considerations of market data in secondary equity markets. IOSCO provides a summary of the comments received to its December 2020 consultation report on the subject and offers three considerations based on the information gathered to assist regulators: (i) pre-trade data (i.e. information about orders or quotations) and post-trade data (i.e. information about executions) are important in promoting transparency of trading. As appropriate, it is important to consider the elements of market data that are necessary to facilitate the ability of all market participants to effectively and fairly participate in secondary markets and to make informed investment, order routing and trading decisions. The needs of market participants may differ depending on factors such as, participants’ business model, market structure in the particular jurisdiction, or the type of participants in the market (retail, institutional, proprietary); (ii) fair access to market data is important for providing market data to market participants. Fair access may cover issues including market data pricing, connectivity terms and pricing, and contractual arrangements. Market data is not interchangeable in all cases, and where appropriate, helping to ensure fair access across different execution venues is an important consideration. In addition, the extent to which access to free or delayed data can meet the needs of some participants may be a useful consideration; and (iii) where appropriate, consolidation may improve access to market data and may, in some circumstances, be useful in helping to reduce its costs, identify liquidity and compare execution quality in jurisdictions where there may be fragmented liquidity.
Payment Services and Payment Systems
LSB updates Contingent Reimbursement Model Code
On 28 April, the LSB published a series of updates to the Contingent Reimbursement Model (CRM) Code. The LSB updates include activating the Confirmation of Payee requirements for all signatory firms and adjusting the provisions within the CRM Code to allow more firms to sign up. The LSB highlights that the updates will help improve customers’ understanding of how firms are assessing APP scam cases, help prevent scams and, make the Code accessible and relevant to a wider range of firms.
HMT policy on protecting UK wholesale cash infrastructure
On 26 April, HMT published a policy statement on protecting the UK wholesale cash infrastructure. HMT proposes an oversight regime giving the BoE: (i) oversight over, and the ability to regulate, the market activities of the wholesale cash industry to ensure the effectiveness, sustainability, and resilience of the system. Many industry participants are already working closely with, and providing information to, the BoE on these areas. This regime is an extension of the existing practices and codifies this; and (ii) the ability to prudentially regulate a systemic entity in the market, to manage risks to financial stability and maintain confidence in the UK financial system. HMT and the BoE do not currently assess that any current market participants meet the threshold to be designated under the prudential regime. The government intends to legislate for this regime when Parliamentary time allows.
ECB opinion on CRD VI proposal
On 28 April, the ECB published an opinion on the EC’s proposal for a Directive amending CRD IV as regards supervisory powers, sanctions, third-country branches, environmental, social and governance risk (CRD VI). The ECB strongly supports the EC’s banking reform package, of which CRD VI is a part, and considers that it will strengthen the regulatory framework. The opinion discusses the ECB’s support in particular for: (i) enhancing how ESG risks are addressed by imposing stricter requirements and by broadening the supervisory toolkit. This will help to ensure that institutions proactively develop enhanced risk management frameworks; (ii) the faithful implementation of the output floor to reduce unwarranted risk weight variability and the ECB welcome that there will be no double-counting of risks with respect to other requirements, while operational complexities should be avoided. The ECB does, however, express strong concerns with regard to the proposed requirement for a mandatory review of the calibration of both the SyRB and O-SII buffer; (iii) harmonised provisions for the assessment of banks’ directors and key staff to facilitate supervisory effectiveness and enhance sound governance. The ECB is, however, concerned that the appointment of members of the management body, in urgent contexts, without any kind of suitability assessment, may lead to the appointment of unsuitable candidates, also due to the ambiguity underlying the interpretation of the terms ‘strictly necessary’ and ‘immediately’ used in that context; (iv) a common set of rules for branches of third-country banking groups operating in Member States to replace heterogeneous national approaches. The ECB would like the scope of the proposed new Article 21c clarifying, taking into consideration existing requirements in other EU law that regulates particular services. The ECB also propose that assets originated by a branch but booked remotely to another location should be included when assessing the size and systemic importance of a branch and that the scope of the reporting requirement be enhanced to capture direct provision of cross border services provided by the group; (v) further harmonising national powers related to the acquisition of qualifying holdings, transfers of assets or liabilities, mergers or divisions, as well as the sanctioning regime, to ensure the consistency and robustness of the framework; and (vi) allowing supervisors to withdraw the authorisation of credit institutions that have been declared failing or likely to fail, but do not qualify for resolution because the public interest criterion is not met, to facilitate the orderly exit of these banks from the market. The ECB also calls for consistency between CRD IV and the Single Supervisory Mechanism Regulation, on matters relating to supervisory independence in general and conflicts of interest in particular. The ECB sets out its proposed amendments to the text proposed by the EC.
Political agreement reached on ‘Daisy Chain’ proposal amending CRR
On 28 April, the Council of the EU announced that it had reached political agreement with the EP on the ‘Daisy Chain’ proposal, which amends the EU bank resolution framework by: (i) incorporating a dedicated treatment for the indirect subscription of instruments eligible for internal minimum requirement for own funds and eligible liabilities (MREL); (ii) further aligning the treatment of global systemically important institution groups with a Multiple Point of Entry (MPE) resolution strategy with the treatment outlined in the FSB’s international Total Loss-absorbing Capacity (TLAC) Term Sheet; and (iii) clarifying the eligibility of instruments in the context of the internal TLAC. The Council explains that the co-legislators managed to bridge their divergences on two key points concerning: (a) the deduction regime for own funds and eligible liabilities meeting the requirements for loss-absorption in resolution that are channelled through an intermediate entity in the context of their upstreaming within complex resolution groups. The provisional agreement introduces a revised deduction regime, to avoid in particular double-counting of MREL elements at the level of intermediate entities. It adds a review clause to take into account the impact on different types of banking group structures. Such potential improvements will be assessed by the EC services, with a view to possible inclusion within the future BRRD review proposal, expected this year; and (b) the treatment of MPE resolution strategy groups, especially as regards aligning such treatment on the regime foreseen under TLAC international standards and taking into account third-country entities within such groups. The issue arises especially in cases where the resolution regime of a third country is not equivalent to the EU. Under the provisional agreement, a transitional regime until end 2024 is introduced for these groups, subject to an assessment by EU resolution authorities. The provisional agreement is subject to approval by the Council and the EP before going through the formal adoption procedure.
PRA speech on alternative approach to bank capital requirements
On 26 April, the BoE published a speech given by Sam Woods, BoE Deputy Governor for Prudential Regulation and PRA CEO, discussing an alternative conceptual approach to ensuring that banks have enough capital put aside to withstand economic shocks. This “radical, alternative approach” is painted as a fun reflection on the way bank capital standards could be set, rather than any reflection of current policy thinking. The key elements of Mr Wood’s concept are: (i) a single, releasable buffer of common equity, calibrated to reflect both microprudential and macroprudential risks and replacing the entirety of the current set of buffers; (ii) replacing all thresholds, triggers and cliff-edges with a judgement-based ‘ladder of intervention’. There would be no automatic consequences for using the buffer, but if that happened the firm would be expected to have a plan to rebuild their capital resources; (iii) a low minimum capital requirement underneath the buffer, to leave maximum space to use the buffer; (iv) like the CCyB in the current framework, the entire buffer would be potentially releasable in a stress; (v) all requirements would be met by common equity. Instruments like AT1 and ‘contingent convertible’ debt are considered to introduce complexity, uncertainty and additional ‘trigger points’ in a stress; (vi) a mix of risk-weighted and leveraged-based requirements; (vii) stress testing would be the central analytical input that ties the regime together. Mr Woods proposed moving away from a single annual scenario in favour of thinking holistically about risk appetite across a range of scenarios; and (viii) the regime would need an international framework that is clear and consistent, but also judgement-based. Although clearly divergent from current international standards, Mr Woods suggests that a simpler regime such as this conceptual alternative may have merit, comparing it to regimes with similar aspects: the liquidity coverage ratio and Solvency II.
RTS on methods of prudential consolidation under CRR
On 26 April, Commission Delegated Regulation (EU) 2022/676 containing RTS on the methods of prudential consolidation under Article 18 of the CRR was published in the OJ. The RTS specify the conditions for the application of the different methods of prudential consolidation. The RTS also specify several risk indicators to be taken into account by competent authorities in assessing whether an undertaking should be fully or proportionally consolidated for prudential purposes. It will enter into force on 16 May, 20 days after its publication in the OJ.
Delegated Regulation on RTS on fixed overhead requirements under IFR
On 25 April, the EC published the text of the Delegated Regulation with regard to RTS for own funds requirement for investment firms based on fixed overheads under the IFR, which it adopted on 11 April. The draft RTS: (i) further specify the deductions to be applied for the calculation from the figures resulting from the applicable accounting standards that are the basis for the calculation of the fixed overheads; (ii) introduce criteria specifying the notion of material change in the activity of an investment firm; and (iii) clarify the additional items to be deducted from the total expenses by commodity and emission allowance dealers on account of the particularity of the activities conducted by those undertakings. Since the mandate is similar to the mandate set out in the CRR, these draft RTS are based on the equivalent CRR RTS set out in Commission Delegated Regulation (EU) 2015/488, taking into account the broader scope of application and the necessary additional specifications. The Council and the EP will now scrutinise the Delegated Regulation and, if neither objects, it will enter into force 20 days after its publication in the OJ.
Recovery and Resolution
Please see the Prudential Regulation section for an announcement from the Council of the EU announcing that it has reached political agreement with the EP on the ‘Daisy Chain’ proposal amendments to the CRR.
NGFS report on enhancing market transparency in green and transition finance
On 27 April, the NGFS published a report on enhancing market transparency in green and transition finance. The report sets out some key considerations relevant to policymakers, including: (i) enhance market transparency about issuers’ and investors’ green and transition objectives. Taxonomies and climate transition frameworks are most effective when they are tied to clear objectives and science-based net zero targets; (ii) facilitate comparability and interoperability of taxonomies, frameworks, and principles. A common understanding of criteria, targets and methodologies is critical to avoid divergences in assessments in green external reviews; and (iii) accelerate efforts on disclosure and reporting. Enhanced disclosure and reporting, based on global disclosure standards with industry-specific metrics, will form the basis for consistent, comparable and reliable climate data, transition plans and investment products. The report aims to feed into international discussions on improving compatibility of approaches to identify, verify and align investments to sustainability goals.
HMT launches Transition Plan Taskforce
On 25 April, HMT launched the UK Transition Plan Taskforce (TPT) to develop a gold standard for climate transition plans. Under the rules announced by the Chancellor at COP26, the UK Government is requiring large companies and certain financial sector firms to publish a transition plan from 2023. The TPT will work with international frameworks which are preparing guidance on transition plan disclosures, including the Glasgow Financial Alliance for Net Zero and International Sustainability Standards Board. The TPT will take forward the foundational work from these bodies to develop granular transition planning templates that would be suitable for incorporation into regulatory frameworks in the UK. The TPT has a two-year mandate, and the FCA will be actively involved and draw on its findings to strengthen disclosure rules.
PRA speech on operational resilience progress and next steps
On 28 April, the BoE published a speech given by David Bailey, Executive Director for UK Deposit Takers Supervision on operational resilience, also setting out the next steps on the PRA’s supervisory roadmap. Mr Bailey shares some initial feedback on the progress that UK banks and building societies have made in meeting the PRA’s expectations: (i) firms have generally made positive progress for identifying important business services (IBS), although have taken a wide variety of approaches to the granularity with which they have identified their IBS. The PRA will be asking firms to clarify how they have incorporated the key points of the operational resilience policy in response to this; (ii) firms have found impact tolerances more challenging. Several of the IBS that have been submitted by firms were accompanied by an impact tolerance for customer harm or market integrity but did not include one for safety & soundness, and an even higher number did not include one for financial stability. The PRA expects firms to fill these gaps as a matter of priority. Mr Bailey comments that the range of impact tolerances that have been submitted for payments-related IBS seems surprisingly wide and therefore firms will be asked to justify their judgements and the PRA will undertake more detailed comparisons across peer groups. In terms of next steps, the findings indicate that significant further work is required to embed fully coherent mapping and testing frameworks ahead of the final March 2025 deadline. The PRA will continue to work with firms both directly though firm specific supervisory dialogue but also through industry wide events.
Digital Regulation Cooperation Forum 2021/22 Annual report, 2022/23 work plan and discussion papers on algorithms
On 28 April, the Digital Regulation Cooperation Forum (DRCF) published its first annual report, covering the period 2021/22 setting out how the four UK regulator members (the CMA, FCA, ICO and Ofcom) coordinated through the DRCF and what they jointly achieved. The DRCF also published a work plan for 2022/23, outlining the key strands of work under three pillars: (i) coherence between regimes; (ii) collaboration on projects; and (iii) capability building across regulators. Projects highlights include: (a) fostering competitive online advertising markets that deliver innovation and economic growth, while respecting consumer and data protection rights, via joint ICO and CMA work; (b) supporting the use of algorithmic processing to promote its benefits and mitigate the risks to people and to competition, by exploring ways of improving algorithmic transparency and auditing; (c) encouraging responsible innovation and explore different models for how we coordinate our work with industry to support innovation; and (d) building on synergies and bridging gaps in horizon scanning activity, particularly of emerging technologies. The DRCF also published two discussion papers on: (1) the benefits and harms of algorithms. The paper outlines the current and potential harms and benefits of algorithmic processing and explores possible roles for UK regulators; and (2) on the landscape of algorithmic auditing and the role of regulators. The paper summarises the key issues in the current audit landscape and explores the potential shape of the future ecosystem for algorithmic audit, with a specific focus on the role for regulators. The deadline for responses to both discussion papers is 8 June.
CMA Annual Concurrency Report 2021/22
On 27 April, the CMA published its annual concurrency report covering the period from 1 April 2021 to 31 March 2022. Amongst other things, the report outlines how the CMA and other regulators have been working to promote competition and improve their collective ability to enforce the law and how the concurrency arrangements allow the regulators to help each other on a range of matters, including technical advice on specific markets and procedural guidance in competition investigations. Highlights include: (a) five cases were brought to a close, including the PSR’s first infringement decision which led to fines totalling more than £33 million; (b) three investigations – led by the CMA, Ofgem and Ofwat – resulted in firms signing formal commitments to improve their practices; and (c) four new investigations were launched –in the digital advertising, electric vehicle charging and financial services sectors.
ECB FAQs on Russia-Ukraine war and ECB Banking Supervision
On 26 April, the ECB published FAQs on its supervisory approach with regards to the Russian invasion of Ukraine. The FAQs include nine questions covering: (i) the ECB’s role in the sanctions and some related guidance for banks; (ii) the size of banks’ exposures to Russia and Ukraine; and (iii) miscellaneous questions including on the expected impact of Russian retaliation on the European banking system.
On 26 April, the FCA announced that it was launching a new initiative called Early and High Growth Oversight. It will provide enhanced supervision for firms as they get used to their regulatory status and support them to understand their obligations so they can meet the standards the FCA expects as they grow. It will also ensure that the FCA can identify and address harm developing in newly authorised firms quicker. Over 2022 to 2023, Early and High Growth Oversight will take in up to 300 newly authorised firms. Firms will be contacted directly if they are included. The FCA also outlines some insights that may be useful for other firms applying for authorisation, based on discussions with firms in the pilot.
FCA speech on critical issues in financial regulation
On 26 April, the FCA published a speech given by Nikhil Rathi, FCA CEO on the FCA’s perspective of critical issues in financial regulation. Highlights include: (i) the cost of living crisis means consumers are more exposed to risk and more reliant on financial services. One way the FCA is responding is by stopping firms with inadequate controls from entering the markets – one in seven applicants currently do not obtain authorisation, up from one in 13. Higher standards will be set where needed. The new consumer duty will ensure firms take into account ‘good outcomes’ for consumers and the FCA expect clear rules and fewer future rule changes will in future cut costs for firms; (ii) Mr Rathi considers that there needs to be wider consideration by policymakers on the ability of cryptoasset firms that have been rejected by the FCA for AML registration still being able to service UK customers from offshore; and (iii) post Brexit, as firms exit the Temporary Permissions Regime, they are sharing their business plans with the FCA. Most plans seen meet the FCA’s expectations. However, in some cases the FCA has asked firms to think again. Where firms are not predominantly focused on the UK, and where the FCA has good cooperation with the home state regulator, a branch may be appropriate. However, where firms are predominantly undertaking business in the UK, the FCA consider such firms should have their main regulated entity based in the UK. In the FCA’s view, the OPE is not intended to run a UK-focused business.
EU Court of Justice to broadcast hearings and judgements
On 22 April, the Court of the Justice of the EU announced that, from 26 April, it will broadcast the delivery of its judgements and the reading of Advocate Generals’ opinions live. That broadcast, which at this stage will only include cases assigned to the Grand Chamber, will be made from the start of hearings for the delivery of judgments, in accordance with the timetable provided in the judicial calendar. The hearings in cases assigned to the Grand Chamber of the Court of Justice will also, in principle, be the subject of a later broadcast for a pilot period of 6 months. It will be possible to view the morning hearings on the same day and the following day for afternoon hearings, but it will not be possible to consult them subsequently.