FReD: 23 July 20101
Headlines
CESR launches two
derivatives consultations
Prime Minister
launches Big Society Bank
Bribery Act guidance
due in September
FSA fines Redstone
Mortgages Limited for unfair treatment of customers in
arrears
FSA fines father and
son for market abuse
FSA secures £3.7 million
compensation
European Union and International
European Council
Compromise proposal for
macro-prudential supervision published: A Presidency
compromise has been issued by the European Council on the proposal
for a regulation of the European Parliament and the Council on
European Union macro-prudential oversight of the financial system
and establishing a European Systemic Risk Board. (Source: European Union website)
Contact: Robert Finney or
Rosali
Pretorius.
Committee of European Banking Supervisors (CEBS)
CEBS publishes stress
test results of 91 banks: The results of the CEBS EU-wide
stress test will be released, both on an aggregated and on a
bank-by-bank basis, on 23 July 2010. (Source: CEBS Press Release)
Contact: Robert Finney or
Rosali
Pretorius.
Committee of European Securities Regulators (CESR)
CESR updates on
short-selling: CESR has updated its note on short-selling
measures in Member States. Poland has introduced new
legislation. (Source:
CESR/08-742)
Contact: Chris Borg or Matthew
Hodgson.
CESR launches two derivatives
consultations: CESR launched two consultations on 19 July
2010:
(1) transaction reporting on OTC derivatives
and extension of the scope of transaction reporting obligations
In this consultation CESR seeks comments on
the following proposals:
- All firms that are not exempt from the future
European Market Infrastructure Legislation (EMIL) should report
their OTC derivative transactions to trade repositories once the
trade repositories have been established under EMIL.
Investment firms, however, would retain the possibility of
complying with their transaction reporting obligations under MiFID
provisions; trade repositories would be recognised as a valid
third-party reporting mechanism under Article 25(5) of MiFID.
- The scope of MiFID's transaction reporting
obligations should be extended to include financial instruments
that are admitted to trading only on multilateral trading
facilities (MTFs) and to OTC derivatives.
(2) Standardisation and exchange trading of
OTC derivatives
In this consultation CESR seeks comments on
the following proposals:
- Standardisation. CESR believes that
greater standardisation of OTC derivatives contracts could deliver
efficiency benefits, although firms should be able to retain the
flexibility to customise aspects of an OTC derivatives contract
such as standard valuation, payment structures and payment
dates. The consultation seeks views on how standardisation
could be increased. CESR is also considering recommending
that the Commission take regulatory action to make the use of
electronic confirmation systems mandatory for European trading of
OTC derivatives.
- Exchange trading. CESR supports
providing incentives to promote the use of organised trading venues
and is consulting on whether it would be desirable to make such
usage mandatory.
An open hearing for the standardisation
consultation will be held on 11 August 2010. The deadline for
responses to both consultations is 16 August 2010.
(Source: CESR/10-610 and
CESR/10-809)
Contact: Chris Borg or Madeleine de
Remusat.
CESR launches four Key
Investor consultations: CESR launched four consultations on
20 July 2010: (1) guidelines on the selection and presentation of
performance scenarios in the Key Investor Information document for
structured UCITS, (2) guidelines for the transition from the
Simplified Prospectus to the Key Investor Information document, (3)
a guide to clear language and layout for the Key Investor
Information document and (4) template for the Key Investor
Information document. The deadline for responses is 10
September 2010. (Source:
CESR/10-530, CESR/10-672, CESR/10-532 and CESR/10-794)
Contact: Rosali Pretorius
or Melissa
Peters.
UK Government and Parliament
Bank of England (BoE)
BoE publishes
collateral consultation results: BoE publishes the results
of its recent consultation on broadening the range of collateral
eligible in its Discount Window Facility to include loan portfolio
and on its initiative to require greater information transparency
in relation to asset-backed securities and covered bonds as part of
the eligibility criteria for instruments accepted in its
operations. It intends to implement both of these
initiatives. Further details on the criteria and timescales
are to be announced later in the year. (Source: BoE website)
Contact: Brett Hillis or
Matthew
Hodgson.
Office of Fair Trading (OFT)
OFT launches e-consumer
consultation: OFT is consulting on a long-term strategy for
the protection of UK consumers online. Potential measures to
promote protection identified by the strategy include clarifying
the levels of protection available for consumer-to-consumer sales,
working with agencies to reduce spam, developing low-cost solutions
for checking non-compliant websites, and possible strengthening of
payments systems for online purchases. (Source: OFT website)
Contact: Brett Hillis or
Emma
Radmore.
HM Treasury (Treasury)
Treasury consults on
removing requirement to annuitise by age 75: Treasury is
consulting on the Government's proposals to end the requirement to
purchase an annuity by age 75 from April 2011. Treasury asks
for responses by 10 September 2010. (Source: Press Release)
Contact: Brett Hillis or
Emma
Radmore.
Treasury financial
sanctions notification: Treasury has updated the sanctions
lists in respect of terrorist finance. (Source: Treasury website)
Contact: Brett Hillis or
Emma
Radmore.
Treasury publishes
responses to draft terrorist asset-freezing bill: Treasury
has published a summary of responses received to its consultation
on draft terrorist asset-freezing legislation. Most of the
respondents recognised the need for the UK to operate an
asset-freezing regime to meet UN obligations to prevent and disrupt
the financing of terrorism. However, most respondents also
felt that the draft legislation proposed by the previous Government
did not sufficiently safeguard civil liberties. Government
will consider whether there is a strong case for strengthening the
civil liberties safeguards in the asset freezing regime along the
lines proposed by respondents to the consultation.
(Source: Treasury website)
Contact: Brett Hillis or
Emma
Radmore.
HM Revenue and Customs (HMRC)
Anti Money Laundering
Guide: HMRC has published a new Anti Money Laundering Guide
for Money Service Businesses. (Source:
HMRC website)
Contact: Brett Hillis or
Emma
Radmore.
Cabinet Office
Prime Minister launches Big Society
Bank: The Prime Minister has announced plans for a Big
Society Bank, which the Government plans to establish by April
2011. As well as private sector investment, the Big Society
Bank will be funded by dormant bank accounts. The Big Society
Bank will ensure that all money from dormant bank accounts is put
to good use for the benefit of society. (Source: Cabinet Office Press Release)
Contact: Robert Finney or
Rosali
Pretorius.
Legislation
Terrorist
asset-freezing bill in Parliament: The first reading of the
Terrorist Asset-Freezing etc. Bill in the House of Lords took place
on 15 July 2010. The second reading – the general debate on
all aspects of the Bill – takes place on 27 July 2010. The
purposes of the Bill include making provision for imposing
financial restrictions on persons suspected of involvement in
terrorist activities. Treasury has published explanatory
notes to the Bill. (Source: Parliament
website)
Contact: Brett Hillis or
Emma
Radmore.
Bribery Act guidance due in
September: The Bribery Act will come into force in April
2011.
The Act will:
- introduce a corporate offence of failure to
prevent bribery by persons working on behalf of a business. A
business can avoid conviction if it can show that it has adequate
procedures in place to prevent bribery;
- make it a criminal offence to give, promise
or offer a bribe and to request, agree to receive or accept a bribe
either at home or abroad. The measures cover bribery of a
foreign public official; and
- increase the maximum penalty for bribery from
seven to 10 years' imprisonment, with an unlimited fine.
Government will launch a consultation in
September on the guidance about procedures which commercial
organisations can put in place to prevent bribery on their
behalf. (Source: Ministry of
Justice Press Release)
Contact: Brett Hillis or
Emma
Radmore.
SRR Regulations
progress: There was a motion to approve the Financial
Services and Markets Act 2000 (Contribution to Costs of Special
Resolution Regime) Regulations 2010 in the House of Lords on 19
July 2010. (Source: Parliament
website)
Contact: Brett Hillis or
Matthew
Hodgson.
UK Financial Services and Markets Regulator
Financial Services Authority (FSA)
FSA fines for unfair treatment of
customers in arrears: FSA has fined a mortgage firm £630,000
for failings in relation to its mortgage arrears handling processes
and in its dealings with customers in arrears. (Source: FSA/PN/120/2010 and Final Notice)
Contact: Brett Hillis or
Emma
Radmore.
FSA fines father and son for market
abuse: FSA fined Jeremy Burley £144,200 (including a payment
of the financial benefit made through the market abuse) and his
father, Jeffery Burley, £35,000 for engaging in market abuse in
relation to the shares of Tower Resources plc, an oil and gas
exploration company, in June 2009. Jeremy Burley, a managing
director of a company which supplied vehicles and equipment to
Tower Resources, acquired inside information in relation to Tower
Resources' first oil well in Uganda. The information
indicated that the well was unlikely to proceed. Before Tower
Resources published this news, Jeremy Burley passed this
information to his father and instructed his father to sell his
holding in shares in Tower Resources. The size of Jeremy
Burley's fine reflects his lack of co-operation with the
FSA. Both father and son agreed to settle at an early
stage and so the fines include a 30% discount. (Source: FSA/PR/2010/121 and Final Notices)
Contact: Brett Hillis or
Emma
Radmore.
FSA secures £3.7 million
compensation: FSA has secured £3.717 million for investors
in an unauthorised collective investment scheme operated by Upton
& Co. Accountants (Upton). Upton, which has never been
authorised by FSA, operated a collective investment scheme
promising high rates of return. The money was to be used to
invest in foreign exchange markets. However, limited foreign
exchange trading occurred and very little was returned in
cash. In February 2009 FSA commenced an investigation.
A month later FSA secured a High Court injunction to stop the
activity and freeze the firm's assets. In March 2010 FSA
reached agreement with Upton for the firm to pay compensation of
£3.6 million immediately and a further £840,000 in monthly
instalments. (Source:
FSA/PN/122/2010)
Contact: Brett Hillis or
Emma
Radmore.
Financial Services Consumer Panel (FSCP)
FSCP response to OFT
review: FSCP responds to OFT's review of barriers to entry,
expansion and exit in retail banking. FSCP does not believe
that the OFT's limited review can fulfil all the objectives set
out. (Source: FSCP website)
Contact: Brett Hillis or
Emma
Radmore.
Other Authorities/Regulators/Trade Associations
International Monetary Fund
(IMF)
IMF staff comment on
Commission's EMIR: Responding to the Commission's
consultation on European market infrastructure regulation, IMF
staff agree that to move OTC derivatives contracts to CCPs should
lower systemic risk but that it is essential that CCPs should be
financially sound, subject to prudent risk management procedures,
and be effectively regulated and supervised. IMF staff
recommend a gradual transition to CCPs and believe a lead authority
should be assigned to regulate CCPs. (Source: IMF website)
Contact: Chris Borg or Robert Finney.
IMF publishes policy
paper on international framework for cross-border banks: IMF
has published a policy paper entitled Resolution of Cross-Border
Banks – A Proposed Framework for Enhanced Coordination. Part
I of the policy paper examines the growth of cross-border financial
services and the challenges involved in effectively supervising and
resolving international financial groups. Part II identifies
a possible way forward, setting out the essential features of an
international framework for cross-border resolution. (Source: IMF website)
Contact: Robert Finney or
Rosali
Pretorius.
Bank for International Settlements/Basel
Committee on Banking Supervision (Basel)
Basel holds review
meeting: At its meeting on 14-15 July 2010, the Basel
Committee on Banking Supervision:
- reviewed the design and overall calibration
of the capital and liquidity frameworks, comments on its December
2009 consultation package, the results of its comprehensive
quantitative impact study (QIS) and its economic impact assessment
analyses. Based on this review, the Committee has developed
recommendations for the definition of capital, the treatment of
counterparty risk, the leverage ratio, the conservation buffer and
liquidity ratios which it will present to the Group of Central Bank
Governors and Heads of Supervision at its meeting later in July;
and
- reviewed proposals for the role of "gone
concern" contingent capital in the regulatory capital framework and
will issue a proposal for consultation shortly.
(Source: Committee Press Release)
Contact: Brett Hillis or
Melissa
Peters.
Basel consults on
countercyclical capital buffer proposal: The Committee is
consulting on a countercyclical capital buffer which would be
imposed when, in the view of the national authorities, excess
aggregate credit growth is judged to be associated with a build-up
of system-wide risk. Comments on the countercyclical proposal
should be submitted by 10 September 2010. (Source: Committee
Press Release)
Contact: Brett Hillis or
Matthew
Hodgson.
British Bankers' Association
(BBA)
BBA issues overdraft
statement: BBA has issued a statement in response to BBC's
Panorama programme on overdrafts. BBA states that overdrafts
are not designed for long term borrowing. (Source: BBA website)
Contact: Brett Hillis or
Emma
Radmore.
City of London Law Society
(CLLS)
Lawyers respond to FSA
consultation on controllers regime: The Law Society and City
of London Law Society have responded jointly to FSA's consultation
on proposed changes to the controllers regime in the supervision
manual. They strongly disagree with FSA's approach to
guidance on "the contemplated acquisition of shares or voting" when
determining "acting in concert" for the purposes of Part XII
FSMA. (Source: City of London Law
Society website)
Contact: Robert Finney or
Rosali
Pretorius.
European Insurance Association
(CEA)
CEA makes preliminary
comments on IMD revision: CEA has published its response to
the Commission's request for advice regarding the revision of the
Insurance Mediation Directive. (Source: CEA website)
Contact: Chris Borg or Emma Radmore.
Investment Management Association
(IMA)
IMA consults on
recommended practice for authorised funds: IMA has issued a
draft revised Statement of Recommended Practice for Authorised
Funds. The deadline for comments is 3 September 2010.
(Source: IMA press release)
Contact: Rosali Pretorius
or Matthew
Hodgson.
Recent publications and forthcoming events
Complying with sanctions laws: JMLSG takes action: Emma Radmore wrote
an article for Complinet on the draft JMLSG guidance on the
financial sanctions regime.
Robert
Finney appeared on CNBC commmenting on European and UK
development in light of the financial sector's success in
pushing back on proposed reforms. Robert suggested that the
watering down of the original proposals was a result of a normal
legislative process of compromise, from extreme to workable
proposals - some nonsensical ideas were likely to remain in the
final legislation, but most of the worst excesses of the extreme
reaction to the financial crisis would probably be avoided.
The MiFID
Review: Emma
Radmore has written an article for Compliance Monitor on the
progress of the MiFID Review to the end of May 2010.
Insurance broker bribery and corruption controls: FSA wants
action: Emma
Radmore has written an article for Complinet on FSA's
latest report.
Compliance Register
MLRO conferences: The Compliance Register is running a
series of MLRO conferences. The first is on 9 June and
Emma
Radmore will be speaking at the second event on 13
October.
Financial
Markets and Regulation partners' opinions in the media:
You can see the Financial Markets and Regulation group's national
media appearances on the BBC, in the Financial Times, City AM and
other national press and on CNBC. Most recently, Robert Finney was
quoted in City AM and appeared on CNBC discussing the future of
FSA after the Conservative-Liberal Democrat Coalition scrapped the
orginal Conservative plans to disband it.
FSA Business Plan 2010-2011: We wrote an article for
Complinet on FSA’s Business Plan for 2010-2011. For further
information, contact Rosali
Pretorius or Ming Da Wang.
FSA Financial Risk Outlook 2010: We wrote an opinion for
Complinet and an
article for Compliance Monitor on FSA’s Financial Risk Outlook
2010. For further information, contact Rosali
Pretorius, Emma Radmore or
Ming Da
Wang.
Developments in Anti-Money Laundering: We wrote an article for
Compliance Monitor on recent developments in Anti-Money Laundering
laws and practices. For further information, contact Emma Radmore.
Bank notes on new regulatory treatment of sukuk: The latest
edition of our Bank notes publication includes an article by
Robert
Finney and Matthew Sapte on
the new regulatory treatment of sukuk.
PLC/DWS practice note on Consumer Credit Directive: We
have collaborated with PLC Financial Services on a practice note
looking at key issues in implementation of the Consumer Credit
Directive into UK law. For more information, please contact
Ian Roberts,
Brett Hillis
or Matthew
Hodgson.
Single Customer View: Time to get your customer data in
shape: John Worthy, a
partner in Denton Wilde Sapte's Technology group, has written an
article for Complinet in which he reviews what FSA's new rules on
the SCV mean, what issues they raise and whether there is good news
for financial institutions.
Bedding Down to BCOBS: We have written an article for
Compliance Monitor on FSA's new Banking Conduct of Business
Rules. For more information, please contact Brett Hillis or
Emma
Radmore.
Turner Review feedback: a victory for FSA?: We have
written an article for Complinet on FSA's response to the Turner
Review feedback. For more information, contact Robert Finney or
Emma
Radmore.
Perfect har-money?: The new e-money directive: We have
written an article on the new e-money directive and its interaction
with other legislation. For further information, contact
Brett Hillis
or Melissa
Peters.
Structure of UK financial regulation: fix it or rip it up and start
again?: We have written an article on key reports
analysing flaws in regulation and changes needed. For further
information, contact Robert Finney or
Emma
Radmore.
Financial
sanctions and financial institutions: We have
written an article on UK financial sanctions and FSA's expectations
of the regulated community for Financial Regulation
International. For further information, please contact
Robert
Finney or Emma Radmore.
Social usefulness: The purpose of
regulation?: We have written an article for Complinet on Lord
Turner's recent speech in New York. For further information,
please contact Rosali Pretorius
or Emma
Radmore.
Can you prove your TCF? We have published an
article looking at how a firm can prove it has met FSA's TCF
outcomes. For further information, please contact Brett Hillis,
Emma Radmore
or Dominic
Gilmore.
Know your contacts: We have written an article on
the lessons from the Aon fine. For further information,
please contact Rosali Pretorius
or Emma
Radmore.
New choices for credit card issuers: We have
written an article on how the Payment Services Directive may affect
credit card issuers. For further information, please contact
Ian Roberts,
Brett Hillis
or Dominic
Gilmore.