The U.K. Financial Conduct Authority began the year by bringing its first ever enforcement action against a sponsor. Sponsors perform a dual role in the U.K. regulatory system, providing expert advice and guidance to current and prospective premium listed companies and providing regulatory assurances to the FCA to protect investors. In the enforcement action, the FCA fined a company £231,000 for failing to tell the U.K. Listing Authority that two thirds of its sponsor team – including the individuals responsible for leading and executing sponsor services – had left between June and November 2013. FCA Press Release.
On the regulatory side, the FCA issued Policy Statement 15/1 on the early implementation of the E.U.’s Transparency Directive on Payments to Governments. The Policy Statement sets forth the new rules that will apply to issuers of securities who are active in the extraction or logging of primary forest industries in November 2015. FCA Press Release.
Policy Statement 15/2 presents the FCA’s rules implementing the E.U.’s Recovery and Resolution Directive. These rules, which affect FCA-registered investment firms, entered into force on January 19, 2015, with the exception of the rules on the contractual recognition of bail-in which will come into force on January 1, 2016. The majority of the new rules have been incorporated into the FCA Handbook as amendments to the Prudential Sourcebook for Investment Firms. Some of the rules regarding the submission of information have been included in the Supervision manual.
The FCA is also consulting on a number of proposals. The most recent consultation involves the authority the FCA will assume on April 1, 2015 to enforce the prohibitions on anti-competitive behavior in the Competition Act 1998 and the Treaty on the Functioning of the European Union with respect to the provision of financial services. Consultation Paper 15/1 seeks comment on three separate documents: draft guidance on the FCA’s powers under the Competition Act 1998; draft guidance on market studies and making market investigation references; and a draft legislative instrument that would make minor amendments to the FCA Handbook. Comments should be submitted on or before March 13, 2015.
A consultation being conducted jointly with the Prudential Regulation Authority seeks comment on how individuals working for U.K. banks, building societies, credit unions, and investment firms should be held accountable for the roles they perform. Comments on the joint consultation should be submitted on or before February 27, 2015.
As 2014 came to an end the FCA proposed changes to its rules which govern how firms handle customer complaints. The consultation paper proposes a limit to the cost of calls that consumers make to firms when complaining. It also sets out proposals aimed at improving the reporting and publication of complaints and discusses the Alternative Dispute Resolution Directive, which is intended to give European consumers and traders access to out-of-court schemes to help settle contractual disputes that arise out of the purchase and sale/supply of goods or services. Comments should be submitted on or before March 13, 2015.
Last Friday, the Prudential Regulation Authority issued Policy Statement 1/15, “Implementing the Bank Recovery and Resolution Directive - response to CP13/14.” The policy statement sets out the final PRA rules on implementing the Bank Recovery and Resolution Directive, updates two related supervisory statements and responds to feedback received by the PRA to its proposals in Consultation Paper 13/14. The rules require banks, building societies and PRA-regulated investment firms to produce recovery and resolution packs.
Supervisory Statement 18/13, “Recovery planning,” presents the PRA’s expectations on scenario testing and the wind-down analysis. Supervisory Statement 19/13, “Resolution planning,” lists the information firms should provide to the PRA to aid resolution planning.