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Key Regulatory Topics: Weekly Update 25 February - 3 March 2022

In a week that has borne witness to increasingly tragic scenes, as Russia’s military invasion of Ukraine causes ever greater damage and a growing humanitarian crisis in Ukraine and neighbouring countries, UK, EU and US governments and regulators continue to publish updates in relation to sanctions, the responses of and impacts on financial markets. Aside from these important reactions, HMT has published a number of responses to consultations relating to reviews of the wholesale market and prospectus regime in the UK and the regulation of mini-bonds. In the EU, the EBA published a report on developing a framework for sustainable securitisation.

Capital Markets 

Outcome of HMT consultation on UK prospectus regime review

On 1 March, HMT published the outcome of its July 2021 review of the UK prospectus regime. The government will replace the regime currently contained in the UK Prospectus Regulation and will legislate to do so when parliamentary time allows. The changes will separate the regulation of public offers of securities from the regulation of admissions of securities to trading, as Lord Hill recommended. The government will delegate a greater degree of responsibility to the FCA to set out the detail of the new regime through rules. As such, the full suite of reforms will take full effect after the FCA has consulted on, and is ready to implement, new rules under its expanded responsibilities. Particular changes include: (i) enhanced rule-making responsibilities for the FCA regarding admissions of securities to trading on UK regulated markets. The FCA will be able to specify in its rulebook if and when a prospectus is required, what a prospectus should contain and address the manner and timing of publication. FCA rulemaking responsibilities will also cover other matters that currently sit in the Prospectus Regulation; (ii) removing the statutory prohibition on requesting admission to trading on a UK regulated market without an FCA-approved prospectus; (iii) a general prohibition on public offerings of securities subject to exemptions including offering of securities (a) admitted to UK regulated markets; and (b) subject to conditions, to those who already hold equity securities in the offering company; (iv) alterations to the 'necessary information' test. The government also intends to raise the threshold for liability that applies to certain categories of forward-looking information in prospectuses; (v) removal of the current requirement for publication of an FCA-approved prospectus on offers over €8million in size. Securities will be allowed to be offered to the public provided the offer is made through a platform operated by a firm specifically authorised for the purpose (the government intends to create a new regulated activity). The government is still considering the threshold below which offers of securities from private companies are exempt from the prohibition on public offers; and (vi) regulatory deference for offers into the UK of securities listed on certain designated overseas stock markets.

Consultation response

Press release

Conduct and Governance 

Please see the “Markets and Markets Infrastructure” section for the FMSB standard for the conduct of participants in LBMA precious metal auctions.


Please see the “Other Developments” section for the BBRS publication of PIR1.

FCA consumer investments data review from April to September 2021

On 3 March, the FCA published a summary of its work on tackling consumer harm in the investment market between 1 April 2021 and 30 September 2021. Key findings include: (i) scam enquiries remained consistently high; (ii) the FCA saw an increase in reports about possible cryptocurrency scams. During the period, 172 firms were added to the FCA’s Unregistered Cryptoasset Businesses list; (iii) the FCA’s Authorisations, Supervision and Enforcement Divisions are acting assertively and working together to prevent, detect and tackle investment harms. At the gateway, the FCA stopped 32 new firms (1 in 4) from entering the consumer investments market between April and September 2021; and (iv) the FCA’s Enforcement work led to custodial sentences for 3 unauthorised individuals. It also persuaded 27 authorised firms to provide voluntary requirements (VREQs) and imposed own-initiative requirements (OIREQs) on 10 authorised firms (compared with 21 VREQs and 9 OIREQs for the previous 12 months), restricting firms’ activities to prevent harm. The data reviews are intended to provide useful insight into specific areas of FCA strategy, particularly higher-risk investments and scams.


LSB January bulletin

On 2 March, the Lending Standard Board (LSB) published its January Bulletin. Emma Lovell, Chief Executive, discusses the LSB’s 2022 work programme. It: (i) has begun a programme of thematic reviews focused on the Standards of Lending Practice for business customers, to ensure that fair customer outcomes have been prioritised and achieved for SMEs in light of the impact of the pandemic on business lending. There will be a particular focus on the recoveries process since various Government support schemes for SMEs came to an end in 2021; (ii) has already begun work on a thought leadership piece focusing on inclusion in business banking; (iii) is pressing ahead with its planned activity in respect of the Contingent Reimbursement Model Code (the Code) for Authorised Push Payment (APP) scams. Over the coming months the LSB will be conducting follow up work from previous thematic reviews of the Code, publishing updated customer information document, and further updating the wording of the Code. The LSB is also continuing to work on how the Code can be applied more broadly across different types of business models in the financial services sector. It encourages firms that are able to sign up to the Code and apply its vital protections to do so without delay; and (iv) will strive to identify emerging risks, challenges and opportunities in the industry, sharing knowledge and insights through thought pieces, roundtables, podcasts and many other channels.


BoE consultation on proposal to withdraw FPC's affordability test recommendation

On 28 February, the BoE published a consultation paper on the proposal to withdraw the FPC’s mortgage affordability test. Following its latest review, published in December 2021, the FPC considers that the “loan to income” (LTI) flow limit is likely to play a stronger role than the affordability test in guarding against an increase in aggregate household indebtedness and the number of highly indebted households. Therefore, the FPC wish to maintain the LTI flow limit recommendation but are consulting on withdrawing its affordability test recommendation. The consultation asks the following questions: (i) what impact is the affordability test recommendation currently having on the mortgage market; (ii) how would lenders and the mortgage market respond if the recommendation were withdrawn; and (iii) what effect withdrawing the recommendation may have on the housing market as a whole and on particular segments of the market? The consultation will close on 6 May.

Consultation paper


Final FCA technical note on climate-related disclosure requirements for listed companies

On 25 February, as part of its Primary Market Bulletin No. 38, the FCA published the final text of its primary market technical note on TCFD aligned climate-related disclosure requirements for listed companies. Amendments include: (i) where a listed company provides details of any steps it is taking or plans to take in order to be able to make those disclosures in the future, and the timeframe within which it expects to be able to make those disclosures, it should provide sufficient level of detail so that investors and stakeholders can fully understand the nature of the proposed action; and (ii) the finalisation of the references to LR 14.3.27R to LR 14.3.31G (information to be included in the annual financial report).

Primary market bulletin

Primary market technical note


Finance Act 2022 published

On 1 March, the Finance Act 2022 was published on and includes, among others, provisions on the new economic crime (anti-money laundering) levy in Part 3. The provisions in Part 3 come into force on 1 April.

Finance Act 2022

Financial Crime and Sanctions

Russia's military invasion of Ukraine and the formal recognition of two regions in Eastern Ukraine – Donetsk and Luhansk – as independent states have led to a series of new sanctions being imposed by the US, the UK and the EU. Our sanctions, international trade and investment compliance experts are monitoring and advising on the situation and our publications can be accessed here. HMT and OFSI maintain a collection of pages listing all financial sanctions imposed in the UK by country. The lists of financial sanctions imposed in the UK in respect of Russia can be accessed here.

FCA webpage on the Ukraine invasion’s impact on financial markets

On 3 March, the FCA published a new webpage on the Ukraine invasion’s impact on financial markets. The FCA states that both the events themselves, and the wide range of financial sanctions imposed in response on Russia, Russian individuals and Russian business by numerous jurisdictions worldwide will have multiple impacts on companies with securities admitted to UK markets. During this period, issuers of securities admitted to UK trading venues are reminded of their disclosure obligations under the UK Market Abuse Regulation (MAR). Key points highlighted by the FCA include: (i) companies in scope of MAR are required to fulfil their obligations to disclose inside information as soon as possible unless they have a valid reason under the regulation to delay disclosure. This includes continuing to assess carefully what information constitutes inside information, recognising that both the invasion and responses to it by governments globally may alter the nature of information that is material to a business’ assets, operations and prospects. Companies assessing the effect of financial sanctions in all relevant jurisdictions should where necessary take legal advice; (ii) companies should ensure the market is fully informed of any information or changes that are required to be disclosed under MAR; and (iii) the FCA also reminds companies that disclosure obligations continue to apply even when trading of securities has been suspended. The FCA will continue monitoring the market carefully to ensure these obligations are met in full.


EU financial sanctions against Russia

On 2 March, the EC as well as the Council of the EU published press releases on the various financial sanctions against Russia following its military aggression against Ukraine. These sanctions include: (i) the exclusion of key Russian banks from SWIFT. The decision, which also contains the list of banks affected, has been published in the OJ. It will take effect as of 12 March to give SWIFT and other operators a brief transition period to implement the measure, mitigating any possible negative impacts for EU businesses and financial markets. The EC is prepared to add further Russian banks at short notice; (ii) prohibitions on investing in projects co-financed by the Russian Direct Investment Fund and on transactions with the Russian Central Bank or any legal person, entity or body acting on behalf or at the direction of the Russian Central Bank; and (iii) the provision of euro-denominated banknotes to Russia has also been prohibited. The EC has published a webpage on EU solidarity with Ukraine which, amongst other things, hosts information on the package of EU sanctions against Russia.

Press release

Council of the EU press release

EU solidarity with Ukraine

OFSI sanctions lists changes and search tool

On 28 February, HMT and the Office of Financial Sanctions Implementation (OFSI) published a change notice regarding the Consolidated List and the list of persons named in relation to financial and investment restrictions. Changes were made to the format of the lists on 31 January and a dual running period, in which both the old and new versions of the lists were available simultaneously. This dual running period ended on 25 February and the old version of the lists will no longer be updated. Links to the old versions were removed from GOV.UK on 28 February 2022. A search function is available to enable users to find information relating to asset freeze and investment ban targets across all financial sanctions regimes implemented in the UK. A “fuzzy search” will find matches even when users misspell search terms or enter in only partial words for the search. Use of the search function does not remove an individual or entity’s obligation to undertake appropriate due diligence in respect of financial sanctions targets. Links to the new format lists, format guide and the search tool are contained in the change notice.

Change notice

Draft Economic Crime (Transparency and Enforcement) Bill published

On 28 February, the government published the Draft Economic Crime (Transparency and Enforcement) Bill, alongside a factsheet. The government is introducing a ‘Register of Overseas Entities’ to crack down on foreign criminals using UK property to launder money. The new register will require anonymous foreign owners of UK property to reveal their real identities to ensure criminals cannot hide behind secretive chains of shell companies, setting a global standard for transparency. Breaches of obligations can result in criminal sanctions, including daily fines of up to £500 or prison sentences of up to five years for the most serious breaches. The measures will apply to: (i) any company or similar legal entity that is governed by the law of a country or territory outside the UK (overseas entity); and (ii) individuals who have significant influence or control over the entity, e.g. they hold 25% or more of the shares or voting rights (beneficial owners). The Register of Overseas Entities will also apply retrospectively to property bought since January 1999 in England and Wales and since December 2014 in Scotland.

Draft Bill



FCA update on Green FinTech Challenge 2021

On 3 March, the FCA updated its webpage on the Green FinTech Challenge 2021. The FCA has revealed the ten firms which have been accepted into the Green FinTech Challenge to continue developing innovative products and services that will aid the transition to a net-zero economy, after the application window closed on 6 December 2021. The webpage describes the successful firms and their proposed innovations, as well as the benefits they will receive from the FCA.

Updated webpage

Markets and Markets Infrastructure 

Please see the “Other Developments” section for the FCA handbook notice no. 96.

EBA report on developing a framework for sustainable securitisation

On 2 March, the EBA published a report on developing a framework for sustainable securitisation. The report considers the following three areas for which regulatory guidance is deemed relevant at this stage, considering that the overarching EU regulations on sustainable finance are still being developed and that the EU sustainable securitisation market is still at an early stage of development: (i) the application of the EU green bond standard (GBS) to securitisation; (ii) the relevance, policy implications and possible design of a dedicated framework for sustainable securitisation products; and (iii) the nature and content of sustainability-related disclosures for securitisation products. The report includes policy recommendations addressed to the EC in each of these areas. The EBA’s analysis shows that it would be premature to establish a dedicated framework for green securitisation. Rather, the EBA is of the view that the upcoming EU GBS regulation should also apply to securitisation, provided that some adjustments are made to the standard. In this regard, the EBA recommends that the EU GBS requirements apply at originator level (instead of at the issuer/ securitisation special purpose entity level). This would allow a securitisation that is not backed by a portfolio of green assets to meet the EU GBS requirements, provided that the originator commits to using all the proceeds from the green bond to generate new green assets. The EBA sees the proposed adjustments as an intermediate step to allow the sustainable securitisation market to develop and to play a role in financing the transition towards a greener EU economy. They are also meant to ensure that securitisation is treated in a consistent manner as other types of asset-backed securities. The EBA also recommends that the Securitisation Regulation is amended in order to extend voluntary ‘principal adverse impact disclosures’ to non-STS securitisations. It also calls for further EBA work on green synthetic securitisation and social securitisation.


ESMA working group on euro risk-free rates work programme for 2022/23

On 2 March, the ESMA Working Group on Euro Risk-Free Rates (WG) published its Work Programme for 2022/23. To continue contributing to the reform efforts in the euro area and facilitate coordination between private sector and public sector efforts, the WG will focus amongst others on: (i) fostering the use of €STR in a diverse range of financial products; (ii) assessing the level of implementation and potential impediments to the timely adoption of EURIBOR fallback provisions by EU supervised entities; (iii) identifying potential issues related to the impact of LIBOR discontinuation in the EU; (iv) coordinating on cross currency issues with similar working groups in other jurisdictions; and (v) informing, raising awareness and educating users about interest rates reform in the EU. For each of the above areas of focus, the WG might also consider the publication of corresponding recommendations, best practices, guidance or other types of communications.

Work programme

HMT consultation response on regulation of mini-bonds

On 1 March, HMT published a response to its April 2021 consultation on the regulation of non-transferable debt securities (NTDS, also commonly referred to as mini-bonds). While the majority of responses to the consultation agreed that NTDS should be brought into regulation, a number of responses asked for a joined-up approach that treats NTDS consistently with other types of securities. Respondents also generally considered that investors would benefit from more written information when they were considering investing in NTDS, while noting that the prospectus document is likely not an effective way to provide this information. HMT therefore intends to include NTDS (and non-transferable securities more generally) within the scope of the new public offerings regime that is being developed as part of the Prospectus Regime Review. It considers that including NTDS within the scope of the new public offerings regime would have a similar effect in practice to making the issuance of NTDS a regulated activity. This is because the new public offerings regime would make it a requirement to issue non-transferable securities via an intermediary (a public offer platform). The use of intermediaries by NTDS issuers is something that the HMT explained would be likely to happen if the issuance of NTDS was made a regulated activity, given that NTDS issuers would look to avoid the need to become authorised. However, there is still further work to develop this proposal to ensure it allows businesses to raise finance through the issuing of securities while ensuring appropriate consumer protection. Were issues to emerge relating to the preferred option, HMT would return to exploring the option of making the issuance of NTDS a regulated activity.

Consultation response

HMT consultation response to wholesale markets review

On 1 March, HMT published a consultation response to its July 2021 consultation on the wholesale markets review. HMT considers that taken together, the package of reforms will create a simpler and less prescriptive regime, while maintaining or improving regulatory outcomes. Reforms include: (i) simplification of the systematic internaliser (SI) regime. HMT intends to proceed with its plan to revert to a qualitative definition of SIs so that firms do not have to carry out complex calculations for this purpose. HMT also believes that specific restrictions to midpoint execution might not be required, so long as SIs consider the extent to which their use of midpoint execution is consistent with their best execution obligations; (ii) removing restrictions on firms’ ability to execute transactions to ensure that market participants can get the best outcomes for investors. This includes removing matched principal trading restrictions for investment firms operating a trading venue and allowing reference price systems to match orders at the midpoint within the current bid and offer of any UK or non-UK trading venue that offers the best bid or offer, so long as it supports best execution; (iii) bringing the scope of the derivatives trading obligation in line with the clearing obligation and expanding the grounds for an exemption to all post-trade risk reduction services. HMT also proposes to grant the FCA the power to modify or suspend the DTO; (iv) delegating the transparency regime for fixed income and derivatives to the FCA; (v) reducing the scope of the commodities position limits regime with delegation to trading venues to ensure that market activity is not unnecessarily restricted, while ensuring that markets function efficiently; and (vi) granting the FCA tools to support the provision of a consolidated tape. Some changes will require legislative amendments, and HMT intends to deliver the most important changes as a priority when parliamentary time allows. Where legislative changes are needed but respondents indicated that fast implementation is not paramount, HMT will wait until the outcomes of the Future Regulatory Framework (FRF) Review have been implemented. Where changes can be made to parts of the regime already set out in regulatory rules and guidance, the FCA has committed to progress these in line with its normal processes.

Consultation response

FMSB standard for the conduct of participants in LBMA precious metal auctions

On 1 March, the FICC Markets Standards Board (FMSB) published the final Standard for the Conduct of Participants in LBMA Precious Metal Auctions (LBMA Auctions). It is understood that certain participants in an LBMA Auction may not be submitting House Orders due to concerns around the management of regulatory and conduct risks associated with sourcing liquidity through an auction process which sets the LBMA Precious Metal Price, or managing both Client Orders and House Orders in the LBMA Auctions. This Standard, through its five Core Principles, clarifies the way in which those risks can be managed to increase the volume of bids and offers submitted to LBMA Auctions and improve the quality of price discovery resulting from them.


Payment Services and Payment Systems 

Please see the “Consumer/Retail” section for the LSB January bulletin, which confirmed pressing ahead with its planned activity in respect of the Contingent Reimbursement Model Code for Authorised Push Payment scams.

Please also see the “Financial Crime and Sanctions” section for the EU financial sanctions against Russia, including the exclusion of key Russian banks from SWIFT.

FCA expectations on SCA reauthentication exemption

On 1 March, the FCA updated its webpage on strong customer authentication (SCA), adding a section containing information relating to the SCA reauthentication exemption. The FCA has introduced several changes to the RTS on SCA and secure communication (SCA-RTS). These include the creation of a new exemption under Article 10A which, if adopted by account servicing payment service providers (ASPSPs), means customers will not need to reauthenticate when they access their account information through a third party provider (TPP). Instead, TPPs will be required to obtain explicit consent from customers at least every 90 days. The FCA strongly encourages ASPSPs to apply the exemption as soon as possible after the changes to the SCA-RTS come into effect on 26 March with a view to the widespread adoption of the exemption by 30 September. The FCA states that implementing this change will help remove the barriers it identified to the continued growth of open banking and to support competition and innovation in the sector. The FCA expects TPPs to be technically ready to reconfirm customer consent under Article 36(6) of the SCA-RTS as soon as possible after 26 March. However, up to 30 September it will not object if TPPs do not reconfirm customer consent, provided that SCA is applied at least every 90 days during that period. This is to limit the risk of consumer disruption and to ensure that either SCA has been applied or re-consent obtained in any 90-day period.


PSR press release on the situation in Ukraine

On 1 March, the PSR published a press release regarding the situation in Ukraine. The PSR announced working closely with the Treasury, financial authorities and other government agencies in the UK to help make sure the financial sector continues to work well and no harm comes to consumers and financial markets. Given the situation, the PSR is encouraging firms to consider how they can manage any associated risks, in particular: (i) the ability to withstand attack from a sophisticated state actor; (ii) whether staffing levels are available to deal with an elevated cyber risk from state sponsored or other actors; (iii) the implications on third party suppliers if there are sanctions; and (iv) the resilience of third party suppliers. The PSR flags that the National Cyber Security Centre (NCSC) has published guidance outlining the actions organisations should take in response to the current situation in Russia and Ukraine. While the NCSC is not aware of any current specific cyber threats to the UK in relation to these events, organisations should be vigilant. The PSR also encourage firms to review the NCSC’s Cyber Essentials scheme.

Insolvency and companies court rules that EMRs do not create statutory trusts in favour of electronic money holders

On 25 February, in the Re (Allied Wallet Ltd) [2022] EWHC 402 (Ch) case, the Insolvency and Companies Court retracted its previous finding that the Payment Services Regulations 2017 (PSRs 2017) and Electronic Money Regulations 2011 (EMRs) create a statutory trust in favour of payment service users and electronic money holders respectively. This was done in the light of the conflicting judgment in Re ipagoo LLP (in administration) [2021] EWHC 2163 (Ch). The court had previously agreed with the FCA that under the safeguarding provisions of the EMRs, in the event of a firm's insolvency monies segregated (and those that should have been) were subject to a statutory trust extending to the traceable proceeds of any payments received. However, between them hearing the application and circulating the draft judgment, David Halpern QC, sitting as a Deputy High Court Judge, had handed down his conflicting judgment in Re ipagoo LLP, where it was help that the EMRs do not create a statutory trust in favour of electronic money holders but give them a statutory right to be paid out of relevant funds in priority to all other creditors. As a result, the judge in Re (Allied Wallet Ltd) acknowledged that they were bound by the decision of the High Court and must now conclude with a finding that a statutory trust did not arise.


Prudential Regulation

Draft Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022

On 1 March, the Draft Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022 were published by HMT, alongside a draft explanatory memorandum. The primary purpose of these regulations is to make consequential changes to primary, secondary, and retained EU law as a result of the Financial Services Act 2021, and the implementation of the IFPR and certain Basel III standards. Specifically, the Regulations: (i) repeal the Banking Act 2009 (Exclusion of Investment Firms of a Specified Description) Order 2014 as it is redundant following the removal of FCA-regulated investment firms from the UK resolution regime; (ii) make transitional provision in respect of risk retention requirements for certain securitisations following the implementation of the IFPR. These requirements relate to the retention of a material net economic interest in a securitisation by the originator, sponsor, or original lender to better align their interests with those of investors; (iii) amend the definition of “investment firm” in section 48D of the Banking Act 2009 to ensure that short-term liabilities owed to both PRA-regulated and FCA-regulated investment firms with permission to underwrite or deal on own account will continue to be exempt from bail-in. HMT also published its response document to its consultation on this on 2 March; and (iv) address further deficiencies arising from the withdrawal of the UK from the EU. When formally made, these Regulations will come into force on 17 August.

Draft regulations

Explanatory memorandum

Consultation response

Delegated Regulation on RTS on liquidity horizons for A-IMA under CRR

On 28 February, the EC adopted a Delegated Regulation supplementing the Capital Requirements Regulation (CRR) with regard to RTS on liquidity horizons for the alternative internal model approach (A-IMA), as referred to in Article 325bd(7) of the CRR. The A-IMA for market risk was introduced in the CRR by Regulation (EU) 2019/876. In accordance with Article 325bd, this Delegated Regulation establishes, for the purpose of identifying the relevant liquidity horizons, the rules that institutions should use to map risk factors of positions for which they have been granted A-IMA permission to the appropriate risk factor category and subcategory. Despite the expectation that the vast majority of risk factors will clearly be mapped on to a sub-category, a general approach covering less obvious cases is also provided. Such a general approach is complemented by various specifications including ad hoc treatments for some specific risk factors. Such specifications have been introduced to clarify how to categorise some risk factors and thus map them to the appropriate category and subcategory. In addition, these RTS set out, in line with international standards, the list of currencies constituting the most liquid currencies subcategory of the broad category of interest rate risk factor and the list of currency pairs constituting the most liquid currency pairs subcategory of the broad category of foreign exchange risk factor. The RTS also provide definitions of small market capitalisation and large market capitalisation, complementing the definitions provided in the international standards with criteria reflecting the EU’s equity market. The Delegated Regulation will enter into force 20 days after its publication in the Official Journal.

Delegated regulation

Recovery and Resolution

Please see the “Prudential Regulation” section for an update on the Draft Financial Services Act 2021 (Prudential Regulation of Credit Institutions and Investment Firms) (Consequential Amendments and Miscellaneous Provisions) Regulations 2022.

Regulation updating ITS on procedures and standard forms and templates for the provision of information under BRRD

On 3 March, the EC adopted an Implementing Regulation amending Regulation 2018/1624 laying down ITS on procedures and standard forms and templates for the provision of information for the purposes of resolution plans under the BRRD, alongside two annexes. The Regulation updates previous Templates and Annexes of Regulation 2018/1624 to reflect changes introduced by BRRD II. The Implementing Regulation will enter into force 20 days after its publication in the OJ.


Annex I

Annex II

Sustainable Finance

Please see the “Corporate/Issuers” section for the final FCA technical note on climate-related disclosure requirements for listed companies, as well as the “Markets and Markets Infrastructure” section for the EBA report on developing a framework for sustainable securitisation.

Please also see the “Fintech” section for the FCA update on Green FinTech Challenge 2021.

EU platform on sustainable finance final report on social taxonomy

On 28 February, the EU Platform on Sustainable Finance, an advisory body subject to the EC’s horizontal rules for expert groups, published its final report by Subgroup 4 on social taxonomy. Concerns have been expressed that social matters are regulated at Member State level and between social partners, not at EU level and that a social taxonomy would overburden companies, especially small companies, with additional reporting requirements. The report proposes a structure for a social taxonomy within the present EU legislative environment on sustainable finance and sustainable governance. Subgroup 4 of the platform was also asked to: (i) consider the relationship between the social and environmental taxonomies; and (ii) reflect on other sustainability objectives like governance and the regulatory environment. The suggested structure of the social taxonomy employs the following structural aspects of the environmental taxonomy: (a) the development of social objectives; (b) types of substantial contributions; (c) ‘do no significant harm’ criteria; and (d) minimum safeguards. However, the social taxonomy deviates from the environmental taxonomy by containing sub-objectives which spell out different aspects of the following three social objectives: (1) decent work (including for value-chain workers); (2) adequate living standards and wellbeing for end-users; and (3) inclusive and sustainable communities and societies. The sub-objectives to these three objectives focus on health and safety, healthcare, housing, wages, non-discrimination, consumer health and communities' livelihoods. Lastly, the report presents some requirements for future social criteria and indicators within this framework alongside ideas about the next steps for developing a social taxonomy.

Final report

Other Developments

Dormant Assets Act 2022 published

On 1 March, the Dormant Assets Act 2022 was published on The Act amends the Dormant Bank and Building Society Accounts Act 2008 and expands its scope to cover a range of financial products, being long-term insurance products, certain pension assets, collective investment scheme assets, client money, and proceeds or distributions from shares in traded public companies. The Government estimates that this could allow a total of around £880 million to be released to good causes. It also introduces a specific legal requirement for firms participating in the scheme to make attempts to reunite assets with their owners, before passing them into the scheme.


BBRS publishes PIR1

On 28 February, the Business Banking Resolution Service (BBRS) published a report on the findings from its Post Implementation Review Part 1 (PIR1). An independent, external panel, commissioned by the BBRS, conducted the review into the set-up of the BBRS. The purpose of PIR part 1 was to consider how well the establishment of the BBRS reflected the build requirements as set out in the UK Finance response to the Walker Report and in the Implementation Steering Group Terms of Reference (ISG ToR). Key findings from the report include: (i) the BBRS is independent in its leadership, governance and adjudication process. The report confirmed the set-up of the BBRS provides a structure and process that is independent of the banks and the SME community; (ii) there is nothing to indicate that determinations of eligible complaints would be or have been anything other than fair and reasonable; (iii) the BBRS largely reflects the ISG ToR. The legal architecture and scheme rules of the BBRS had the approval of all ISG members, and all parties were present at the final agreement and subsequent closure of the ISG. The eligibility criteria referred to in the current scheme rules differ to some extent from those included in the initial ISG terms of reference. Some were widened to extend a larger complaints time period, and some were clarified to dovetail with the FOS; (iv) there was an over estimation in the numbers of eligible complaints forecast by the ISG; and (v) the BBRS is an independent body which does not have the powers to change the scheme rules within which it operates. The only way to make changes to the rules is by agreement of all parties. Further sign posting on how to change these rules are needed. The next stage will be to examine the operational effectiveness of the BBRS. This process is expected to take place later in 2022.


FCA handbook notice no. 96

On 28 February, the FCA published Handbook Notice No 96, alongside the Funeral Plans (No 3) Instrument 2022, Technical Standards (Markets in Financial Instruments) (Transaction Reporting) Instrument 2022, and Enforcement Guide (EU Exit Passport Regulations) Instrument 2022. This Handbook Notice describes the changes to the FCA Handbook and other material made by the FCA Board under its legislative and other statutory powers on 25 February. Changes include: (i) Technical Standards (Markets in Financial Instruments) (Transaction Reporting) Instrument 2022. This instrument makes changes to amend the exclusion from transaction reporting for securities financing transactions (SFTs) which is set out in Article 2(5)(a) of Markets in Financial Instruments Directive RTS 22, as onshored. The amendment widens the existing exclusion of SFTs from reporting under the UK MiFIR to also include SFTs where the counterparty is a member of the ESCB or the BoE. This instrument comes into force on 1 April; and (ii) Enforcement Guide (EU Exit Passport Regulations) Instrument 2022. This instrument makes changes to the Enforcement Guide by adding a new section to EG 19 to explain a power under the EU Exit Passport Regulations and how the FCA is likely to exercise this power. This instrument came into force on 28 February.

Handbook Notice

Technical Standards Instrument 2022

Enforcement Guide Instrument 2022

UK and New Zealand sign comprehensive FTA

On 28 February, the International Trade Secretary announced that the UK and New Zealand signed a new, comprehensive free trade agreement (FTA), after reaching agreement in principle last October. Key points include: (i) UK-New Zealand trade is expected to see a boost of almost 60% under the deal; (ii) the agreement will see red tape slashed for the UK’s world-leading tech, creative and services companies; (iii) the deal drives towards accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership; (iv) tariffs will be eliminated on all UK exports to New Zealand; (v) UK professionals will be able to work in New Zealand more easily, and bring their families with them; (vi) flexible rules of origin will give British exporters an advantage over international rivals in the New Zealand import market; and (vii) for financial services, the FTA includes commitments relating to digital trade and cross-border data flows, the facilitation of cross-border financial services trade and regulatory standards, also in relation to labour and environmental standards and competition policy. The government published the text of the FTA alongside various documents offering guidance for businesses in understanding the impact and implications of the agreement. The FTA will enter into force after both the UK and New Zealand complete their respective domestic procedures to ratify and implement it. The HoC International Trade Committee also published a call for evidence seeking views on the new FTA by 3 April.

Press release

Text of the FTA

Call for evidence

UK and Singapore sign new innovative digital trade deal

On 25 February, the UK Department for International Trade announced that the UK and Singapore signed a Digital Economy Agreement (DEA). According to the UK government, this new DEA is the most innovative trade agreement ever signed, and the first by a European nation. This new agreement will: (i) cut costs, slash red tape and pave the way for new era of modern trade; (ii) support the development of safe and secure cross-border electronic payments, including by encouraging the adoption of international standards, and promoting interoperability between e-payment systems; (iii) enable free and trusted cross-border data flows, by preventing the introduction of unjustified restrictions on cross-border data transfers, data localisation requirements or transfers of intellectual property requirements, including source code and cryptographic information; (iv) digitalise trading systems and trade administration documents, permit electronic signatures, electronic contracts and invoicing systems, and work towards mutual recognition of electronic authentication and signatures; (v) safeguard the UK’s high standards on personal data protection and locks in a requirement for personal data to be protected in both countries, by banning misleading, deceptive, fraudulent and unfair commercial practices and making it easier for consumers to opt out of unsolicited "spam" emails; (vi) strengthen the UK and Singapore’s relationship for financial services by ensuring data can flow freely without unjustified barriers and enhanced cooperation for innovative financial services; and (vii) create a new partnership with Singapore to build cybersecurity defences against attacks by private operators or hostile states. In addition to signing the DEA, the UK and Singapore also agreed to revitalise the existing FinTech Bridge, and signed memoranda of understanding on cybersecurity, digital identities and the digital facilitation of trade. The agreement will enter into force after both the UK and Singapore complete their respective ratification and implementation procedures.

Press release

Agreement summary

EBA report on implementation of ESRB recommendation on identifying legal entities

On 25 February, the EBA published a report on the implementation of the ESRB’s recommendation on identifying legal entities. The report provides information on the substance, such as the legal form of the measure and the type of financial institutions covered, as well as on the timing of the actions taken by the EBA in relation to the implementation of the recommendation.