Financial institutions general regulatory news, 14 February 2020

FIG Bulletin

Recent regulatory developments of interest to financial institutions generally.

Contents 

General

Approach to supervising platforms: FCA Dear CEO letter

The Financial Conduct Authority (FCA) has published a Dear CEO letter to firms in its "platforms" portfolio, setting out the FCA's key concerns and expectations in supervising platforms. It may also be of interest to other firms that allow customers or their advisers to access retail investment products through an online portal.

The FCA emphasises that, following the implementation of the senior managers and certification regime, it expects the CEO to ensure there is clear accountability within senior management and for individuals to have a clear understanding of their roles and responsibilities and of the issues set out in this letter.

The FCA describes its supervision strategy for platforms regarding key harms relating to:

  • technology and operational resilience;
  • third-party outsourcing;
  • conflicts of interest;
  • implementing the findings and recommendations of the Investment Platforms Market Study (IPMS); and
  • preparing for the end of the transition period following the UK's withdrawal from the EU.

The FCA says that it will target its supervisory focus on firms where there is evidence that the expectations in these areas are not being met. This is in addition to its wider supervision monitoring, such as ensuring firms are maintaining adequate financial resources and maintaining adequate CASS controls.

Behaviourally informed consumer policy: FCA Occasional Paper 51

The FCA has published Occasional Paper No. 51: Using online experiments for behaviourally informed consumer policy, in which the authors discuss the merits of online experiments for investigating consumer behaviour in different settings to inform consumer policy. The authors will look to further develop and discuss consumer policy research to improve consumer outcomes and welfare.

FCA speech on strategic and integrated approach to market integrity

The FCA has published a speech by Mark Steward, FCA Executive Director of Enforcement and Market Oversight, on the FCA's strategic and integrated approach to market integrity.

Among other things, Mr Steward discusses the FCA's supervision of market integrity, the transaction reports and STORs it receives, the FCA's latest market cleanliness metric and abnormal trading volume metric, both of which indicate improvements in market behaviour, insider dealing and market manipulation.

FCA policy development update

The FCA has updated its policy development update (PDU) webpage, which sets out information on recent and future FCA publications.

Sales of personal data: FCA, ICO and FSCS warn insolvency practitioners and authorised firms

The FCA, the Information Commissioner's Office (ICO) and the Financial Services Compensation Scheme (FSCS) have published a joint statement, warning insolvency practitioners and FCA-authorised firms to be responsible when dealing with personal data.

Among other things, the FCA reminds firms that, by passing on personal data, companies may be failing to meet their obligations under the Data Protection Act 2018 and the General Data Protection Regulation. In addition, any subsequent direct marketing calls, texts or emails carried out by claims management companies may breach the Privacy and Electronic Communications Regulations 2003.

Sustainable finance: ESMA strategy and speech

The European Securities and Markets Authority (ESMA) has published its Strategy on Sustainable Finance. The strategy sets out how ESMA will place sustainability at the core of its activities by embedding Environmental, Social, and Governance (ESG) factors in its work.

The key priorities for ESMA include transparency obligations, risk analysis on green bonds, ESG investing, convergence of national supervisory practices on ESG factors, taxonomy, and supervision.

An annex to the document provides an indicative timeline for actions on sustainable finance.

Separately, Steven Maijoor, ESMA Chair, has delivered a speech on sustainable finance issues. In his speech, Mr Maijoor focused on, among other things, regulatory authorities' role in tackling climate change, the need for reliable ESG standards and their supervision, and the need for measures across the whole of the investment chain.

Blockchain and the EU single market: opinion of the Economic and Social Committee

The European Economic and Social Committee's opinion on blockchain has been published in the Official Journal of the European Union. The opinion calls on the European Commission to launch a comprehensive blockchain initiative setting out a common EU approach, complemented by an action plan for Europe to become the reference point for blockchain worldwide. It further calls on the Commission to establish an EU blockchain stakeholder platform.

Brexit

BoE speech on future UK-EU regulatory and supervisory relationship

The Bank of England (BoE) has published a speech by Sir Jon Cunliffe, BoE Deputy Governor for Financial Stability, on the governance of financial globalisation, in which he considers how the UK and EU regulatory frameworks and supervisory practices and cooperation should develop after the end of the Brexit transition period.

Hogan Lovells Brexit resources

Given the moving Brexit target at the moment we recommend that for an up-to-date take on Brexit impact please try the Hogan Lovells Brexit Hub, an open resource online.

Hogan Lovells Brexit Hub

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Authored by Yvonne Clapham

 

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