Skip to content

Key Regulatory Topics: Weekly Update 9-15 June 2023

Headlines in this article

Related news and insights

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

There were few updates from the UK regulators this week.  Conversely, in the EU, MiCA and the recast revised Wire Transfer Regulation were published in OJ, triggering implementation timetables.  Other updates include a package of measures for the EU sustainable finance framework from the European Commission and finalised guidelines from the EBA on improving resolvability, which introduce requirements on resolvability testing, reporting and master playbooks. 


LSB Standards of Lending Practice for business customers

On 15 June, the LSB launched a review of the Standards of Lending Practice for business customers. The outcomes focused Standards provide protections for SMEs with a turnover of up to £25 million, and are formally recognised by the FCA. The LSB invites views on areas including: (i) the impact of economic and regulatory developments, looking at whether any changes in the business lending landscape should be taken account of, in setting best practice when providing finance to business customers; (ii) the protections provided by the business Standards, looking at whether the protections in the Standards continue to reflect industry best practice; (iii) opportunities to develop new best practice and guidance, exploring whether the business Standards could build on more recent areas of focus for the industry, such as inclusion and sustainability; and (iv) scope, looking at whether the products covered by the business Standards, or wider Standards framework, are appropriate or whether further products could be covered to ensure consistent protections for business customers across the lending industry. The deadline for comments is 10 August. The LSB will engage with the FCA throughout the process to ensure that the Standards can continue to be recognised as an industry code of best practice.

Press release


FOS annual complaints data 2022/23

On 14 June, the FOS published its annual complaints data for the 2022/23 financial year. The top five most complained about products were: current accounts, credit cards, car/motorcycle insurance, motor hire purchase and buildings insurance. The FOS has also published its annual complaints data for financial advisers and change management companies.

Press release

Annual complaints data

Financial advisers data

Change management companies data 

Financial Crime and Sanctions

Please see the FinTech section for the publication of the recast revised WTR in the OJ. 


MiCA and recast revised WTR published in OJ

On 9 June, Regulation (EU) 2023/1114 (MiCA) and Regulation (EU) 2023/1113 (recast revised WTR) were published in the OJ. Both Regulations enter into force on 29 June, 20 days after publication in the OJ. MiCA applies from 30 December 2024, except for: (i) provisions relating to the development or adoption of Delegated Acts, RTS and ITS, which apply from 29 June 2023; and (ii) provisions relating to issuers of asset-reference tokens and e-money tokens (Titles III and IV), which apply from 30 June 2024. The recast revised WTR applies from 30 December 2024. Regulation (EU) 2015/847 (revised WTR) will then be repealed on that date. 


Recast revised WTR

Fund Regulation

ESMA updates Q&As on application of UCITS Directive and AIFMD

On 14 June, ESMA updated its Q&A on the application of the UCITS Directive. ESMA has added new Q&As on: (i) the management of AIFs and pension schemes by UCITS management companies; (ii) the de-notification of marketing arrangements for UCITS; and (iii) the scope of activities passported by UCITS management companies. ESMA also updated its Q&A on the application of the AIFMD. It has added new Q&As in relation to: (a) notifications of AIFs – specifically in relation to third party investment strategies, the pre-marketing notification and de-notification obligations when there are no investors in a host Member State; (b) notification of AIFMs – specifically in relation to passporting and ancillary investment management functions; and (c) calculating leverage – specifically in relation to calculating the leverage of an AIF whose core investment policy is to invest in real estate.

UCITS Directive Q&A


Markets and Markets Infrastructure

Please see the FinTech section for the publication of MiCA in the OJ.

EBA opinion on EC’s proposed amendments to draft RTS on crowdfunding service providers

On 14 June, the EC published an opinion on the amendments proposed by the European Commission to the EBA final draft RTS on requirements on credit scoring of crowdfunding projects, pricing of crowdfunding offers, and risk management policies and procedures. The EC had made one substantive change, with regard to the treatment of personal data included in the documentation related to the creditworthiness assessment of perspective project owners. Following the comments received by the European Data Protection Supervisor, the EC proposed to require that personal data included in that documentation shall be kept for a limited period of time (no longer than five years) after the repayment of the final instalment of the loan. In its Opinion, the EBA recognises the importance of treating personal data in accordance with the “storage limitation” principle established under Article 5(1) of the GDPR and, therefore, accepts the proposed amendment. The EBA highlights however: (i) that the record-keeping requirement in the RTS is aimed at providing enough time to crowdfunding platforms to build up a robust database on financial and non-financial factors on projects and project owners, so to improve their scoring models and enhance benchmarking analysis; and (ii) that personal data included in the documentation for the assessment of creditworthiness of prospective project owners shall always be treated in accordance with GDPR, i.e. for the time necessary to fulfil the original purpose of their collection and use, in this case for the period that is necessary to assess the capacity of project owners to repay their loan.

Press release

Letter to EC


ESA letter to EC on EMIR bilateral margining framework and equity options

On 13 June, the ESAs published a letter sent to the EC in relation to the exemption for non-centrally cleared OTC derivatives that are single-stock equity options or index options (‘equity options’) from the bilateral margining framework, as set out in the Bilateral Margin RTS. The ESAs note that the exemption, together with an exemption for intragroup derivative contracts, has been repeatedly extended, most recently at the request of the EC, but is now set to expire on 4 January 2024. They therefore seek clarity on what the permanent treatment of equity options should be. The ESAs note that there is some disagreement on the desirability of the exemption and therefore consider that the ongoing EMIR review should look into the issue further.


ECON draft reports on EMIR 3 legislative package

This week, ECON published its draft reports on the EC’s legislative proposals for: (i) a Regulation amending EMIR, the CRR and the MMFR as regards measures to mitigate excessive exposures to third-country CCPs and improve the efficiency of Union clearing (EMIR 3) (dated 13 June); and (ii) a Directive on the treatment of concentration risk towards CCPs and the counterparty risk on centrally cleared derivative transactions (dated 9 June). The draft reports set out ECON’s suggested amendments to the EC’s proposed texts.

Regulation draft report

Directive draft report

Payment Services and Payment Systems

PSR response to Treasury Committee inquiry into APP scam reimbursement

On 14 June, the Treasury Committee published the PSR’s response to its recommendations in relation to APP scam reimbursement. In response to the Committee’s concerns with regards to Pay.UK’s inherent conflicts of interest as an industry body making it inappropriate to deliver mandatory reimbursement, the PSR considers that simultaneously using a more direct regulatory route will help mitigate any risks. The PSR intends to use new powers from the FSM Bill to: (i) require Pay.UK to establish scheme rules for the FPS to require all PSPs using FPS to comply with the PSR's APP fraud reimbursement policy; and (ii) issue a general direction to all PSPs, requiring them to comply with the scheme rules. Any delay to implementation would risk triggering formal enforcement action by the PSR for a failure to comply with the directions. Over time, the PSR does not envision Pay.UK taking a regulatory role, but that it would play a greater role in monitoring compliance and making sure that all participants comply with the system rules. The PSR notes that, subject to enactment of the FSM Bill, it intends for the protections to come into full effect in 2024.


Prudential Regulation

EBA report on LCR and NSFR implementation

On 15 June, the EBA published its third report on the monitoring of the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) implementation. The report assesses the potential impact on LCR and NSFR levels of the upcoming central bank funding repayment (mainly repayments of the targeted longer-term refinancing operations) as well as of a potential scenario of higher liquidity risk, particularly affecting government bonds, derivatives and repo markets, in the context of a higher interest rate environment, inflation and recession risks. The EBA: (i) analyses the potential liquidity and funding needs that EU banks might need to cover to maintain regulatory and prudent LCR and NSFR levels. To that end, the EBA has developed some broad projections of LCR and NSFR values in 2023 and 2024 before considering alternative funding sources; (ii) provides guidance to both banks and supervisors on how they should monitor, on an ongoing basis, the real capacity of markets and the economic conditions for potential funding sources. This is particularly important in case of reinforced funding demand by many institutions at the same time or in case of protracted periods of market volatility; (iii) highlights the importance for banks’ funding plans to include realistic ways in which to seek other funding to replace maturing central bank funding, where needed; and (iv) announces that it does not intend in the current environment, to work further on a methodology facilitating the application of a 3% reduced outflow rate for stable retail deposits. This was suggested as a potential workstream following the second report, however the EBA notes that no bank in the EU is currently applying such an outflow rate. The EBA will continue to monitor specific aspects of the LCR and NSFR due to current circumstances and the interest rate environment, in close cooperation with competent authorities.

Press release


EBA draft Implementing Regulation updates list of closely correlated currencies under the CRR

On 9 June, the EBA published a draft Implementing Regulation, which updates the list of closely correlated currencies as set out in Implementing Regulation 2015/2197 supplementing the CRR. The list is part of the ITS that were drafted for calculating the capital requirements for foreign-exchange risk according to standardised rules. The updated list has been submitted to the EC for endorsement.

Press release

Draft Implementing Regulation

Draft Annex

Recovery and Resolution

EBA finalised amendments to BRRD resolvability testing guidelines

On 13 June, the EBA finalised amendments to its guidelines on improving resolvability for institutions and resolution authorities, which introduce a new section on resolvability testing. The new guidelines: (i) introduce a self-assessment by resolution entities focusing on the minimum standard set by the EBA resolvability guidelines and transferability guidelines; (ii) require authorities to develop a multi-annual testing programme for each resolution entity so that institutions would demonstrate the adequacy of their resolvability capabilities; and (iii) introduce a master playbook for the most complex institutions, which aims to ensure that institutions adopt a holistic approach to resolution planning to ensure the overall coherence of their capabilities to execute the resolution strategy. The guidelines will apply from 1 January 2024. Institutions are expected to submit their first self-assessment report by 31 December 2024 and complex institutions their first master playbook by 31 December 2025. Authorities should provide their first testing programme by 31 December 2025.

Press release

Final report

Sustainable Finance

EC sustainable finance package

On 13 June, the EC published a package of measures for the EU sustainable finance framework, which includes: (i) a proposal for a Regulation on the transparency and integrity of ESG rating activities – the EC aims for new organisational principles and clear rules on the prevention of conflicts of interest to increase the integrity of the operations of ESG rating providers. ESG rating providers will be authorised and supervised by ESMA. The EC will now engage in discussions with the EP and Council on the proposal; (ii) a new set of EU Taxonomy criteria for economic activities making a substantial contribution to one or more of the non-climate environmental objectives, namely: sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control and protection and restoration of biodiversity and ecosystems. To complement this, the EC has also adopted targeted amendments to the EU Taxonomy Climate Delegated Act, which expand on economic activities contributing to climate change mitigation and adaptation not included so far – in particular in the manufacturing and transport sectors. The EC has also adopted amendments to the EU Taxonomy Disclosures Delegated Act, to clarify the disclosure obligations for the additional activities. Once all EU official languages are available, the Delegated Acts will be officially adopted and transmitted to the EP and the Council for their scrutiny. They are expected to apply as of January 2024; (iii) recommendations on transition finance to provide guidance as well as practical examples for companies and the financial sector; and (iv) an overview of the recent measures and tools put forward to address key implementation issues and questions raised by stakeholders, including an EU Taxonomy User Guide.

Press release

Sustainable finance package


EC Communication

NGFS survey results on climate scenarios

On 6 June, the Network for Greening the Financial System (NGFS) published the results of its first public feedback survey on climate scenarios. Of the 213 respondents from 57 countries, over 70% use the NGFS scenarios, primarily to assess how climate risks could affect their organisation, individual financial institutions, or financial stability. Looking ahead, key priorities identified by survey respondents align with and reinforce ongoing improvements planned for the next release of the NGFS scenarios, anticipated by the end of 2023.

Press release

Summary note

Other Developments

ESMA five year Data Strategy

On 15 June, ESMA launched a five year Data Strategy. Over the next five years, ESMA intends to: (i) become an enhanced data hub – focusing on improved data and information accessibility, interoperability and usability, and achieving synergies and economies of scale; (ii) ensure access to data of public interest – contribute to providing easily accessible and usable information to the market participants, including to retail investors, in machine readable formats and via user-friendly search and analytical interfaces; (iii) promote data-driven supervision – enable cutting-edge, smart and effective data-driven supervision by joint developments and use of novel technologies; (iv) increase data collaboration – achieve better data standardisation, quality and reusability, and to promote the adoption of innovative technologies; (v) produce efficient data policy output – reduce the compliance burden for reporting entities by reducing duplicative and inconsistent requirements, optimising reporting flows, effective and efficient data sharing, and exploiting emerging technologies; and (vi) facilitate systematic data use – establish processes, methodologies and tools enabling systematic use of data for evidence-based policy development, supervision and risk assessment. This strategy is intended to be revisited over time as new legislative, technological or any relevant types of development emerge that need to be addressed in a way that would require adjustments.

Press release