Includes developments in relation to: Brexit; MiFID II; SM&CR; ESG and sustainable investment; Solvency II and anti-money laundering.
Click on the headings below to access each section:
Issue 1119 / 22 July 2021
- UK Government
- HM Treasury
- Treasury Committee
- Bank of England and Prudential Regulation Authority
- Financial Conduct Authority
Competition objective - BEIS publishes two consultation papers - 20 July 2021
The Department for Business, Energy & Industrial Strategy has published two consultation papers: ‘A new pro-competition regime for digital markets’ and ‘Reforming competition and consumer policy’. The digital markets consultation seeks feedback on the government’s proposals for the Digital Markets Unit and how it will work with other regulators including the FCA and the PRA. The competition and consumer policy consultation covers proposals organised around three key themes: (i) promoting competition to drive enterprise, innovation, growth, and productivity; (ii) updating consumer rights to keep pace with markets; and (iii) strengthening the enforcement of consumer law by individuals and regulators, for example strengthening prepayment protections for consumers.
Responses to the consultations are due by 1 October 2021.
Overseas Framework - HM Treasury publishes response to Call for Evidence - 22 July 2021
HM Treasury has published the response to its Call for Evidence on the framework for overseas access to UK markets published in December 2020 and previously reported in this Bulletin. The response summarises the 34 submissions received and outlines proposed next steps.
Key points emerging from the response are as follows:
- there was general support for the continued existence of the Overseas Persons Exclusion (OPE) set out in article 72 of the Regulated Activities Order, albeit with some suggested amendments, including clarification of the scope of activities covered;
- respondents saw benefit in the UK maintaining the equivalence provisions in Article 47 of the onshored Markets in Financial Instruments Regulation (600/2014) (MiFIR); however, they noted that if the UK were to make a positive equivalence determination under MiFIR Title VIII provisions then firms using that equivalence determination would be subject to more onerous regulation than firms from other jurisdictions that were servicing UK clients via the OPE and who had not been deemed ‘equivalent’ by the UK;
- some respondents expressed a preference for a clearer approach to the application process for recognition of an overseas exchange, in particular whether MTFs are eligible to apply for recognised overseas investment exchange (ROIE) status; and
- some respondents recommended a review of the thresholds included in Article 48 of the Financial Promotion Order on what constitutes a high net worth individual. They also called on the government to consider whether there is scope to allow a wider range of financial promotions to be made in the UK by overseas firms who are not authorised in the UK.
HM Treasury, working closely with the FCA, the Bank of England and the PRA, will now begin a review of the overseas regulatory perimeter to seek to identify whether there are elements of the overseas framework that need updating to reflect modern working patterns and advancements in technology, such as the “in the UK” test (described in the document as the “first consideration for firms assessing their regulatory compliance”).
Following this review, the government will consult on potential changes to the UK’s regime for overseas firms and activities, most likely in the fourth quarter of 2021. In particular, it will look to consult on proposed changes to the overseas regulatory perimeter, the OPE (including the option to remove the overlap between the OPE and equivalence provisions under MiFIR Title VIII) and whether further regulatory powers are needed for the ROIE and OPE to address any deficiencies in regulatory oversight. It will also consider options for amendments to the FPO exemptions relating to insurance distribution with an overseas element. The consultation is also expected to cover the more general question of whether the current operation of the regime appropriately balances openness whilst mitigating risks to the resilience and safety of financial markets, the protection of consumers and market integrity, and the promotion of competition.
Frozen bank accounts - Treasury Committee publishes letter sent to FCA - 22 July 2021
The House of Commons Treasury Committee has published a letter sent to the FCA in light of press reports that the bank accounts of some vulnerable customers are being frozen without good reason. Banks can freeze accounts for various reasons including suspicion of fraud or money laundering. The Chair of the Treasury Committee, Rt. Hon. Mel Stride MP, has asked the FCA to share its thoughts by 9 August 2021 on whether it believes this is a widespread problem across the banking sector and how it can ensure that banks treat customers fairly in relation to the freezing of accounts.
Bank of England and Prudential Regulation Authority
Complaints Commissioner’s annual report 2020/21 - Bank of England and PRA publish response to recommendations - 20 July 2021
The Bank of England (BoE) has published a summary of its response to the recommendations in the Office of the Complaints Commissioner’s annual report for 2020/21. Among other things, the BoE and the PRA have accepted the recommendation that they, together with the FCA, develop a better way of collaborating on joint complaints and are now working to establish a process to identify and respond to joint complaints. The BoE and the PRA have also committed to consider the recommendation to put in place an indicative scale for ex gratia payments for distress and inconvenience caused by delays in complaints handling as part of the PRA’s review of the responses to its revised complaints scheme consultation (PRA CP8/20).
Financial Conduct Authority
COVID-19 - FCA publishes statement on workstreams delayed due to pandemic - 16 July 2021
The FCA has published a statement providing an update on four key workstreams that had been delayed due to COVID-19. These are:
- Assessing Suitability Review (ASR 2): The FCA put this on hold in April 2020 and has decided not to continue work on it in order to focus on other priority work including defined benefit pension transfers work and the issues raised in the 2020 consumer investments call for input;
- Diagnostic review of business models: This work has been completed, despite delays in 2020. The aim was to identify retail lending business models that benefit from consumers not repaying their debts. The FCA has now identified indicators of such business models and has embedded its methodology and findings into its wider business model analysis across relevant sectors;
- Rules extending SME access to the Financial Ombudsman Service: Following its October 2018 policy statement (PS18/21), the FCA planned to start a post-implementation review of these rules. It is delaying this review so that it can include information drawn from COVID-19 related SME complaints and will report by April 2023; and
- De-anchoring remedy for credit cards: In July 2018, the FCA announced its intention to consult on requiring removal of the minimum repayment anchor. The work will now form part of the FCA’s 2022 review of the effectiveness of the credit card market study remedies.
Fair treatment of vulnerable consumers - FCA publishes FAQs - 19 July 2021
The FCA has published a set of frequently asked questions (FAQs) on the fair treatment of vulnerable consumers following its finalised guidance published in February 2021. The FCA’s answers link to key chapters and paragraphs in FG21/1, its feedback statement (also published in February 2021) (FS21/4) and other relevant documents, including its recent consultation paper on a new consumer duty (CP21/13).
The themes covered in the FAQs include:
- why the fair treatment of vulnerable customers is important;
- how the FCA will supervise firms on whether they are treating vulnerable customers fairly;
- practical actions firms can take in relation to product and service design, customer service and communications; and
- what firms need to do in terms of monitoring and evaluation.
See the Beyond Brexit section for an item on an FCA statement regarding the non-enforcement of financial promotion breaches and a related statutory instrument that makes technical amendments to exemptions in the Financial Promotions Order.
See the Financial Crime section for an item on HM Treasury’s call for evidence on the AML and CTF regime and a consultation paper on the MLRs 2017.
See the Enforcement section for an item on the publication of a report by the Treasury Committee on an inquiry into Greensill Capital.
Issue 1119 / 22 July 2021
- UK Government
- HM Treasury
- Financial Conduct Authority
UK Free Trade Agreement with Iceland, Norway and Liechtenstein - UK Government publishes full text and supporting documents - 16 July 2021
The Department for International Trade has published the full text of the free trade agreement (FTA) between the UK and Iceland, Norway and Liechtenstein (EEA EFTA states), as well as supporting documents. The publication follows the announcement of the signing of the agreement on 8 July 2021, as previously reported in this Bulletin. Among other things, the FTA includes three joint declarations adopted by the parties, one of which is on financial services and affirms the intention of the parties to “support financial services market access through deference arrangements at each Party’s discretion”, including, but not limited to, equivalence decisions.
Draft statutory instrument - The Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021 - 19 July 2021
HM Treasury has published the draft Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021, together with an explanatory memorandum and impact assessment.
The Regulations: (i) address deficiencies in the retained EU law version of the Markets in Financial Instruments Regulation ((EU) 600/2014) in relation to the non-discriminatory access regime for exchange-traded derivatives, which requires trading venues and central counterparties to grant each other non-discriminatory access; (ii) amend the low carbon benchmarks regime that sets out requirements and voluntary standards for benchmark administrators under the retained EU law version of the Benchmarks Regulation ((EU) 2016/1011); and (iii) make technical amendments to certain exemptions in the FSMA (Financial Promotion) Order 2005 (SI 2005/1529) to ensure that the definition of ‘relevant markets’ includes ‘UK markets’ following the UK’s departure from the EU.
The Regulations will come into force on 13 October 2021.
Financial Conduct Authority
UK PRIIPs - FCA publishes consultation paper on post-Brexit divergence - 20 July 2021
The FCA has published a consultation paper (CP21/23) containing proposals on changes to the disclosure documents provided to retail investors under the retained EU law version of the Packaged Retail and Insurance-based Investment Products Regulation (1286/2014) (UK PRIIPs). The aim of the changes is to provide more clarity to investors on the nature of PRIIPs, the risks and further information on likely future performance.
The FCA’s proposals include:
- the introduction of rules to clarify the scope of the PRIIPs Regulation in relation to corporate bonds, making it clearer that certain common features of these instruments do not make them into PRIIPs;
- the introduction of interpretative guidance to clarify what it means for a PRIIP to be ‘made available’ to investors; and
- amendments to the PRIIPs regulatory technical standards (RTS) to: (i) replace the requirement of performance scenarios in the key information document (KID) with a requirement for narrative information on performance; (ii) address the potential for some PRIIPs to be assigned an inappropriately low summary risk indicator in the KID; and (iii) address concerns pertaining certain applications of the slippage methodology when calculating transaction costs.
The proposed changes will be included in the FCA Handbook in a new ‘Product Disclosure’ sourcebook, and revisions to the PRIIPs RTS.
The consultation closes on 30 September 2021. The FCA plans to make final rules and amend the PRIIPs RTS by the end of 2021, which will take effect on 1 January 2022.
Non-enforcement of financial promotion breaches - FCA publishes statement - 21 July 2021
The FCA has published a statement with information for firms that use certain exemptions to the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (FPO) concerning communications relating to relevant UK markets.
As a result of changes to the FPO made during the Brexit onshoring process, the definition of ‘relevant market’ used in the FPO inadvertently no longer includes relevant UK markets. As a result, the exemptions under article 37, 41, 67, 68 and 69 of the FPO do not cover financial promotions relating to relevant UK markets or investments traded on such markets.
See item above for the draft version of the SI that will correct this error, the Markets in Financial Instruments, Benchmarks and Financial Promotions (Amendment) (EU Exit) Regulations 2021, published on 20 July 2021. HM Treasury intends for the SI to come into force on 13 October 2021.
The FCA confirms that, until the date the SI comes into force, it does not propose to take enforcement action against persons for breach of the financial promotion restriction if the breach only arises because the relevant exemption no longer applies because of this error. The FCA reserves the right to pursue enforcement action where there is misconduct by an affected person that goes beyond a failure to meet the criteria for exemption.
Banking and Finance
Issue 1119 / 22 July 2021
- Basel Committee on Banking Supervision
- Council of the European Union
- European Banking Authority
- UK Parliament
- Bank of England
- Prudential Regulation Authority
- Financial Conduct Authority
Basel Committee on Banking Supervision
G-SIB assessment methodology review process - Basel Committee publishes consultation paper - 20 July 2021
The Basel Committee on Banking Supervision (BCBS) has published a consultation paper on technical amendments to its review of the global systemically important bank (G-SIBs) assessment methodology. At present, the BCBS is committed, under SCO40.30 in the Basel framework, to undertake a review of the methodology every three years.
In the consultation, the BCBS sets out proposals for revisions to SCO40.30 to replace the current three-year review cycle with a new process of ongoing monitoring and review. This process will include monitoring:
- recent developments in techniques or new indicators that can be used for the assessment of systemic risk;
- emerging evidence on the effectiveness of the G-SIB regime; and
- structural changes that could impact the effectiveness of the regime.
The consultation closes on 3 September 2021.
Council of the European Union
Cross-border payments - Council of the EU publishes text of proposed codified Regulation - 14 July 2021
The Council of the EU has published the text (PE-CONS 34/1/21) of the proposed Regulation on cross-border payments in the EU, codifying and replacing the existing Regulation on cross-border payments (924/2009). According to the Council information note, the European Parliament adopted the Regulation at first reading on 23 June 2021.
The note states that the Parliament’s position reflects what had been agreed between the institutions in informal contracts and consequently the Council should be in a position to approve the Parliament’s position. The Council’s Permanent Representatives Committee voted on 7 July 2021 to approve the Regulation on that basis.
The next step will be for the Council to approve the Parliament’s position, as set out in PE-CONS 34/1/21. The proposed Regulation will codify the existing Regulation on cross-border payments.
European Banking Authority
CRR - EBA consults on amendments to ITS on currencies with constraints on availability of liquid assets - 16 July 2021
The European Banking Authority (EBA) has published a consultation paper (EBA/CP/2021/29) on proposed amendments to the implementing technical standards (ITS) on currencies with constraints on the availability of liquid assets. The ITS supplement the Capital Requirements Regulation (575/2013/EU) (CRR).
In the consultation paper, the EBA sets out proposals to amend Commission Implementing Regulation (EU) 2015/2344 by removing the Norwegian Krone from the list of currencies that benefit from a derogation for the purpose of the calculation of the liquidity coverage ratio (LCR) under Article 419 of the CRR.
The consultation closes on 16 October 2021. The EBA expects to submit the final draft amendments to the ITS to the European Commission before the end of 2021.
Consultation paper: Draft Amending Implementing Technical Standards on currencies with constraints on the availability of liquid assets in accordance with the Capital Requirements Regulation (575/2013/EU) (EBA/CP/2021/29)
Proportionality assessment methodology - EBA publishes discussion paper - 22 July 2021
The European Banking Authority (EBA) has published a discussion paper on the methodology for the application of proportionality to the treatment of credit institutions and investment firms. It explains that it already uses part of the proposed classifications in its work involved with the Basel III monitoring exercise (that is, classifications I and II). However, it has identified the need to expand its existing classifications (classifications I and II) within the second Capital Requirements Regulation ((EU) 2019/876) (CRR II) (that is, classification III) and the Investment Firms Regulation ((EU) 2019/2033) (that is, classification IV).
The deadline for comments on the discussion paper is 22 October 2021. The EBA will consider any feedback, following which it will finalise the document and make it a point of reference for proportionality assessments.
Bank of England Act 1998 (Macro-prudential Measures) (Amendment) Order 2021 published - 21 July 2021
The Bank of England Act 1998 (Macro-prudential Measures) (Amendment) Order 2021 (SI 2021/869) has been published, along with an explanatory memorandum. The Order sets out amendments to the statutory instruments that give the Financial Policy Committee (FPC) the power to direct the PRA and the FCA to take action with respect to specific macro-prudential measures relating to sectoral capital requirements, mortgage lending and the leverage ratio.
More specifically, one of the amendments extends the FPC’s powers to holding companies approved under Part 12B of FSMA. The Order also specifies that certain macro-prudential measures can be applied on a consolidated or sub-consolidated basis.
The Order also amends the definition of the total exposure measure for the purposes of the leverage ratio, which is set out in the Bank of England Act 1998 (Macro-prudential Measures) Order (SI 2015/905), to define it by reference to the PRA’s rules, rather than to the UK Capital Requirements Regulation (575/2013) (UK CRR). The Order also provides for the FPC to specify how the total exposure measure should be defined for the purposes of implementing a direction in relation to the leverage ratio.
The Order came into force on 21 July 2021.
Bank of England
Executing bail-in - Bank of England publishes operational guide - 22 July 2021
The Bank of England (BoE) has published an operational guide on executing bail-in, together with draft ‘base’ or ‘illustrative’ legal instruments it might make, including:
- a Bail-in Resolution Instrument template to be made by the BoE at the point of entry into resolution;
- a Supplemental Resolution Instrument template to be made by the BoE when it has quantified the level of recapitalisation required for the firm in resolution, determined the exchange ratio of certificates of entitlement of each class for shares in the firm, and is ready to start the process for exchange of certificates of entitlement; and
- an Onward Transfer Instrument template that the BoE would make to give effect to the transfer of shares (or other compensation) to the certificate of entitlement holders who have exchanged their certificates.
The guide and templates are intended to enhance the transparency and credibility of the bail-in tool. It covers pre-resolution contingency planning, the ‘resolution weekend’, the bail-in period and the end of bail-in and exit from resolution.
MREL - Bank of England publishes consultation paper on proposed changes to framework - 22 July 2022
The Bank of England (BoE) has published a consultation paper on proposed changes to its framework for the minimum requirement for own funds and eligible liabilities (MREL). The BoE has also published a statement by BoE Deputy Governor for Markets and Banking, Dave Ramsden, commenting on the proposals and an operational guide on executing bail-in that has been published alongside the consultation paper.
The consultation paper is the second part of the BoE’s review of its MREL framework, following its December 2020 discussion paper. The BoE’s feedback to the points raised in response to the discussion paper, which informed its proposals, can be found in Annex 1. There are a range of proposed revisions to the BoE’s approach in this context, including the following:
- the BoE has proposed changes to the transactional accounts threshold to mitigate the risk of disruption in insolvency. The paper also sets out proposals for a ‘stepped glide-path’ for new and growing firms;
- it proposes amending its statement of policy on its approach to setting a minimum requirement for own funds and eligible liabilities to address legacy capital instruments; and
- the BoE will review its policy on intragroup MREL distribution in light of any progress in international engagement.
Proposed changes to the text of the BoE’s MREL statement of policy are set out in Annex 2. The consultation closes on 1 October 2021. The BoE intends to make any policy changes by the end of 2021, taking account of feedback received.
Prudential Regulation Authority
Remuneration - PRA publishes policy statement on correcting definition of ‘higher paid material risk taker’ - 21 July 2021
The PRA has published a policy statement on correcting an error in the definition of ‘higher paid material risk taker’ in the PRA Rulebook (PS18/21). In the policy statement, the PRA amends the definition, as set out in the Remuneration Part, so that it will apply to an individual either whose annual variable remuneration exceeds 33% of their total remuneration or whose total remuneration exceeds £500,000. At present, the definition only applies to individuals that satisfy both of these conditions.
The appendices to the policy statement set out the final versions of the PRA Rulebook: CRR Firms: Remuneration Instrument 2021 (PRA2021/10), which contains amendments to the Remuneration Part, as well as a revised version of the PRA supervisory statement on remuneration (SS2/17).
The instrument and the revised supervisory statement will come into force on 23 July 2021.
Financial Conduct Authority
Mortgage prisoners review - FCA publishes terms of reference - 20 July 2021
The FCA has published the terms of reference for its mortgage prisoners review. The FCA’s programme of work will cover:
- Data review: The FCA intends to review and update its data to consider the demographic and loan characteristics of mortgage prisoners, including updated assumptions arising from the change in economic conditions caused by COVID-19; and
- Interventions review: The FCA will review the effect of its interventions to remove regulatory barriers to switching. In particular, this will involve examining the effect of the FCA’s modified affordability assessment and the lender switching options.
The FCA plans to carry out the data review and analysis between July and October 2021. It will report to HM Treasury on the outcome of the review by the end of November 2021. The Government had committed to use the results of the review to establish whether solution can be found for mortgage prisoners.
See the Enforcement section for an item on the FCA’s announcement of action following a review of debt packager firms.
Securities and Markets
Issue 1119 / 22 July 2021
- International Organization of Securities Commissions and Committee on Payments and Markets Infrastructures
- European Commission
- European Securities and Markets Authority
- CSDR - ESMA publishes report to European Commission on provision of banking-type ancillary services by CSDs- 16 July 2021
- MiFID II - ESMA publishes consultation on draft updated guidelines on certain aspects of remuneration requirements- 19 July 2021
- MiFID II suitability rules - ESMA publishes statement on common supervisory action- 21 July 2021
- HM Treasury
- Bank of England and Financial Conduct Authority
International Organization of Securities Commissions and Committee on Payments and Markets Infrastructures
Financial market infrastructures and business continuity planning - CPMI and IOSCO publish report - 21 July 2021
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) have published a report monitoring the implementation of the Principles for Financial Market Infrastructures (FMIs), first published in 2012, looking specifically at business continuity planning and Principle 17 (Operational risk).
The report covered 38 FMIs from 29 jurisdictions. One serious area of concern identified in the report is that a number of FMIs do not fully meet expectations for recovery from operational incidents, such as natural disasters or IT systems outage. Relevant FMIs and their supervisors are expected to address this as a matter of the highest priority.
MiFID II - European Commission adopts Delegated Regulation specifying criteria for ancillary activity test - 15 July 2021
The European Commission has adopted a Delegated Regulation (C(2021) 5115 final), supplementing the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II) by specifying the criteria for establishing when an activity is to be considered to be ancillary to the main business at group level.
Article 2(1)(j) of MiFID II exempts persons dealing on own account, or providing investment services to clients, in commodity derivatives, emission allowances or related derivatives, provided that this is an ancillary activity to their main business on a group basis and the main business is not the provision of investment services. The Commission adopted Delegated Regulation (EU) 2017/592 (RTS 20) specifying the criteria for establishing when an activity is to be considered ancillary to the main business of a group. The MiFID Quick Fix Directive ((EU) 2021/338) amended the ancillary activity exemption and empowered the Commission to adopt a Delegated Regulation to replace RTS 20. The changes triggered by the amended ancillary activity exemption are the deletion of the overall market size test in Article 2 of RTS 20 and the introduction of the new de-minimis threshold test.
The Delegated Regulation continues to apply the established calculation methodologies and principles of RTS 20. It also retains a calculation period of three years set out to address the legal uncertainty that would arise for non-financial groups that do not have a complete and representative set of data covering their main and ancillary activities.
The Council of the EU and the European Parliament will now scrutinise the Delegated Regulation. It will enter into force 20 days after its publication in the Official Journal of the EU.
Commission Delegated Regulation supplementing the Markets in Financial Instruments Directive (2014/65/EU) by specifying the criteria for establishing when an acitivty is to be considered to be ancillary to the main business at group level (C(2021) 5115 final)
European Securities and Markets Authority
CSDR - ESMA publishes report to European Commission on provision of banking-type ancillary services by CSDs - 16 July 2021
The European Securities and Markets Authority (ESMA) has published a report to the European Commission on the provision of banking-type ancillary services by central securities depositories (CSDs) under the Central Securities Depository Regulation (909/2014/EU) (CSDR). The report includes suggestions to enhance the authorisation process for CSDs to provide such services themselves and several proposals to facilitate the provision of such services by non-baking CSDs, particularly the provision of settlement services in foreign currencies.
The report was prepared in response to a request from the European Commission as part of the Commission’s ongoing CSDR Targeted Review, launched in 2020. The CSDR Targeted Review has identified that facilitating the provision of banking-type ancillary services as a key priority and ESMA’s recommendations in the report will inform the Review.
ESMA’s main conclusions include that:
- on the authorisation process for providing banking-type ancillary services: ESMA reports that only five authorisation procedures have been launched and four of them have been completed. At present no other CSD intends to apply. A particular concern is the one-month consultation period under the CSDR, which is considered too short. ESMA suggests the period is extended to three months in line with the main CSDR authorisation process; and
- on the conditions under which banking-type ancillary services can be provided: the main concern appears to be the strictness of the conditions governing the access by non-banking CSDs to the provision of banking services, given that no designated credit institution has been created. In addition, the threshold applying to the provision of such services by regular commercial banks does not satisfy certain CSDs’ needs in relation to commercial bank money, particularly the provision of settlement in foreign currencies.
ESMA, therefore, proposes that the Commission considers: (i) allowing banking CSDs to provide banking-type ancillary services to non-banking CSDs; (ii) modifying the approach on access to commercial banks; and (iii) imposing less stringent requirements to non-banking CSDs which only offer settlement in foreign currencies as banking-type services.
MiFID II - ESMA publishes consultation on draft updated guidelines on certain aspects of remuneration requirements - 19 July 2021
The European Securities and Markets Authority (ESMA) has published a consultation paper (ESMA35-36-2324) on draft updated guidelines on certain aspects of the remuneration requirements under the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II).
The paper is relevant to: (i) investment firms and credit institutions providing investment services and activities; (ii) investment firms and credit institutions when selling structured deposits; (iii) Undertakings for the Collective Investments in Transferable Securities (UCITS) management companies; and (iv) external alternative investment fund managers when providing investment services and activities in accordance with the UCITS Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU) (AIFMD).
The updated guidelines will remain substantially the same as the existing guidelines issued in October 2013 (2013 guidelines) but will include some additional information to clarify, refine and supplement certain aspects. They will also reflect new requirements under MiFID II and the results of national competent authorities’ (NCAs) supervisory activities in relation to remuneration since the 2013 guidelines were issued. Parts of the 2013 guidelines will be deleted where these have been incorporated directly into the MiFID II framework or are now unnecessary.
The guidelines fall into three broad sections: (i) design of remuneration policies and practices; (ii) governance; and (iii) controlling risks that remuneration policies and practices create.
The consultation closes on 19 October 2021. ESMA will consider any responses and expects to publish the final report and guidelines by the end of Q1 2022.
MiFID II suitability rules - ESMA publishes statement on common supervisory action - 21 July 2021
The European Securities and Markets Authority (ESMA) has published a statement presenting the results of the 2020 common supervisory action (CSA) with national competent authorities relating to the suitability requirements under the Markets in Financial Instruments Directive (2014/65/EU) (MiFID II). In short, the CSA shows that firms are complying adequately with key elements of suitability requirements, for example, firms’ understanding of products and clients and the processes and procedures to ensure the suitability of investments.
However, ESMA has identified a number of areas for improvement, including that the majority of the 206 firms in the sample have not yet incorporated the collection and analysis of ESG preferences into their suitability policies and procedures.
There appears to be different understandings across firms and jurisdictions of what should be regarded as equivalent products and practices for the purposes of MiFID II and no common interpretation of what is to be considered ‘switching’. Finally, a variety of approaches are used for providing clients with suitability reports.
ESMA plans to update its guidelines on suitability to address these areas later in 2021 or 2022 with examples of good and poor practices. It intends to align the guidelines with its draft guidelines on appropriateness and execution-only and the MiFID II Delegated Regulation on sustainable finance.
Introduction of the SM&CR for Financial Market Infrastructures - HM Treasury publishes consultation paper - 20 July 2021
HM Treasury has published a consultation paper on its proposal to introduce a Senior Managers and Certification Regime (SM&CR) for financial market infrastructures (FMIs) to cover Central Counterparties (CCPs); Central Securities Depositories (CSDs); payment systems recognised under the Banking Act 2009 (recognised payment systems); and specified service providers to these recognised payment systems.
The existing regulatory regimes for FMIs currently make limited provision for the oversight of individual conduct within these entities. The proposed SM&CR would enhance the accountability of senior managers and improve governance arrangements at these systemically important firms. It would closely mirror the existing SM&CR for other parts of the financial services sector: a regime for determining whether individuals who perform roles that pose a potential risk to financial stability or to the continuing functioning of the FMI have the appropriate competence, expertise and probity to carry out their roles; a certification regime; and, conduct rules. It would give the Bank of England (BoE), as FMI supervisor, new rule-making, supervisory and enforcement powers analogous to those currently granted to the FCA and the PRA. The existing regime would be modified to recognise that FMIs are not ‘authorised persons’ with the FSMA meaning of the term.
The consultation closes on 22 October 2021. HM Treasury intends to legislate for the new regime when parliamentary time allows.
Bank of England and Financial Conduct Authority
Risk-free rates in cross-currency swaps market - FCA and Bank of England encourage switch - 21 July 2021
The FCA and Bank of England (BoE) have published a press release encouraging liquidity providers in the LIBOR cross-currency swaps market to adopt new quoting conventions for interdealer trading based on risk-free rates (RFRs) instead of LIBOR from 21 September 2021. The aim of the change is to facilitate market liquidity towards RFRs. This follows a survey undertaken by the FCA which identified strong support for a change in the interdealer quoting convention.
In the period leading up to 21 September 2021, the FCA and the BoE will continue to engage with market participants and international authorities to determine whether market conditions allow the switch to proceed. The press release sets out technical notes explaining the changes to quoting conventions.
Issue 1119 / 22 July 2021
- European Commission
- Financial Conduct Authority
UCITS - European Commission adopts legislative proposal for amendments on PRIIPs KID exemption - 16 July 2021
The European Commission has adopted a legislative proposal (COM(2021) 399) for a Directive amending the Undertakings for the Collective Investments in Transferable Securities Directive (2009/65/EC) (UCITS Directive) in relation to the use of key information documents (KIDs) by management companies of UCITS (2021/0219(COD)).
The proposed Directive inserts a new Article 82a in the UCITS Directive. It states that where a KID is drawn up, provided, revised and translated for a UCITS pursuant to the Regulation on Packaged Retail and Insurance-based Investment Products (1286/2014/EU) (PRIIPs), it should be considered as satisfying the requirements applicable to key investor information for the purposes of the UCITS Directive. EU Member states are expected to apply measures implementing the amending Directive from 1 July 2022.
Article 32 of the PRIIPs Regulation also provides for a transitional arrangement for management companies, investment companies and persons advising on, or selling, units of UCITS and non-UCITS, temporarily exempting them from the requirement to provide retail investors with a KID. Given the arrangement currently applies until 31 December 2021, the Commission has adopted a legislative proposal extending it to 30 June 2022 so that it ties in with the date on which the new UCITS Directive takes effect.
Proposal for a Directive amending the UCITS Directive (2009/65/EC) as regards the use of key information documents by management companies of undertakings for collective investment in transferable securities (UCITS) (COM/2021/399 final)
Financial Conduct Authority
ESG and sustainable investment funds - FCA publishes Dear Chair letter and guiding principles - 19 July 2021
The FCA has published a Dear Chair letter addressed to the chairs of authorised fund managers (AFMs) on improving the quality and clarity of authorised environmental, social and governance (ESG) and sustainable investment funds. In the Annex to the letter, the FCA sets out guiding principles that should be considered when an authorised investment fund pursues a responsible or sustainable investment strategy and claims to pursue ESG or sustainability characteristics, themes or outcomes. The principles are intended to complement the FCA’s June 2021 consultation paper (CP21/17) on climate-related disclosure rules for asset managers and asset owners (as reported in this Bulletin).
The Annex sets out an overarching principle and three supporting principles, with each principle being accompanied by a set of key considerations:
- The overarching principle is consistency: a fund’s ESG or sustainability focus should be reflected consistently in its design, delivery and disclosure, particularly in its name, stated objectives, documented investment policy and strategy, and holdings.
The supporting principles relate to:
- Design: references to ESG or related terms in a fund’s name, financial promotions or fund documentation should fairly reflect the materiality of ESG or sustainability considerations to the objectives, or investment policy and strategy, of the fund;
- Delivery: firms should apply appropriate resources in pursuit of a fund’s stated ESG objectives. The way that a fund’s ESG investment strategy is implemented, and the profile of its holdings, should be consistent with its disclosed objectives on an ongoing basis;
- Disclosure: pre-contractual and ongoing periodic disclosures on responsible or sustainable investment funds should be easily available to consumers and contain information that helps them make investment decisions.
The principles’ aim is to help AFMs comply with existing requirements by ensuring that fund disclosures accurately reflect the nature of the fund’s responsible or sustainable investment strategy in both the pre-contractual documentations and on an ongoing basis. The FCA has produced the principles after receiving a large volume of applications for the authorisation of funds with a sustainable focus that have been poor-quality and fallen below its expectations.
Issue 1119 / 22 July 2021
- European Insurance and Occupational Pensions Authority
- Prudential Regulation Authority
- Financial Conduct Authority
European Insurance and Occupational Pensions Authority
COVID-19 - EIOPA publishes supervisory statement on Own Risk and Solvency Assessment - 19 July 2021
The European Insurance and Occupational Pensions Authority (EIOPA) has published a supervisory statement on Own Risk and Solvency Assessment (ORSA) in the context of COVID-19, which is addressed to national competent authorities (NCAs). Every insurer and reinsurance undertaking must conduct an ORSA under Article 45 of the Solvency II Directive (2009/138/EC).
In the supervisory statement, EIOPA indicates that ORSA is designed and considered as an important and effective tool for risk management. Carrying out an ORSA under the current circumstances is intended to provide insight into the potential impact of COVID-19 on an undertaking’s risk profile to support decision-making by its administrative, management or supervisory body. In addition, the ORSA promotes the identification and effective management of an undertaking’s risks to ensure it has sufficient capital to absorb possible losses and help steer its business through periods of adversity.
The statement focuses on the supervision of undertakings’ internal processes that are necessary for a good quality ORSA and guides undertakings through supervisory expectations as a result of COVID-19. It covers three main areas: (i) ORSA as a management tool; (ii) timing of the regular ORSA and ad-hoc ORSAs; and (iii) scenarios used in the ORSA.
EIOPA notes that, while the statement specifically addresses the COVID-19 situation at the time of its publication, the recommendations are applicable to any similar situation with the necessary adaptations.
2021 strategic approach to conduct of business supervision - EIOPA publishes paper - 22 July 2021
The European Insurance and Occupational Pensions Authority (EIOPA) has published a paper setting out its 2021 strategic approach to a comprehensive risk-based and preventive framework for conduct of business supervision at EU level. Its strategy continues to emphasise:
- driving supervisory convergence in practical conduct of business supervision, including in relation to the Insurance Distribution Directive (EU) 2016/97 (IDD), the Regulation on Packed Retail and Insurance-based Investment Products (1286/2014/EU) (PRIIPs) and the Pan-European Personal Pension Product Regulation ((EU) 2019/1238) (PEPP);
- assisting in developing new tools to promote more effective conduct supervision; and
- further enhancing market monitoring and conduct risk assessment.
EIOPA has also identified adequate product design (including by way of close monitoring of product oversight and governance) as one of its supervisory priorities.
Prudential Regulation Authority
Transitional measures on technical provisions relief for insurers - PRA publishes statement - 19 July 2021
The PRA has published a statement on transitional measures on technical provisions (TMTP) relief for insurers.
Under the Solvency II Regulations (SI 2015/575), firms are permitted to carry out a recalculation of the transitional measure provided they present sufficient evidence to the PRA of a material change in risk profile. In its Supervisory Statement on maintenance of TMTP under Solvency II (SS6/16), the PRA states that risk profile changes that may trigger a recalculation include changes in operating conditions, such as a change in interest rates, or market prices of other financial assets, leading to revised market risk exposures.
The PRA indicates that it has been monitoring market conditions since the previous biennial TMTP calculation in December 2019 and has also considered whether changes in market conditions since then can reasonably be considered to have been sustained. In the PRA’s view, recent movements in risk free rates (RFR) meet the threshold for a material change in risk profile as set out in SS6/16.
The PRA indicates it is willing to accept applications from firms to recalculate TMTP as at 30 June 2021. In their applications the PRA expects firms to:
- be able to demonstrate that a material change in risk profile has occurred – in the period up to 31 July 2021, the PRA considers that it would be reasonable for a firm to take a forward-looking view that encompasses how the risk profile is expected to evolve as a result of the GBP RFR transition to SONIA; and
- use firms’ existing TMTP calculation methodology in order to expedite the application process.
The PRA states that any applications received at this time would be in addition to the expected biennial TMTP recalculation on 31 December 2021.
Solvency II - PRA updates QIS webpage and publishes related Dear CEO letter on data gathering - 20 July 2021
The PRA has updated its Solvency II (2009/138/EC) Review quantitative impact study (QIS) webpage with the QIS materials and has published a Dear CEO letter from PRA Executive Director, Insurance, Charlotte Gerken, introducing the QIS and setting out the PRA’s thinking on the risk margin and the matching adjustment.
The PRA has invited several firms to participate in the QIS exercise. These firms are asked to prioritise their resources to complete the exercise, and to engage in the exercise and provide feedback or queries within the next few weeks. Other UK regulated firms may participate if they wish.
In relation to the risk margin, the PRA’s letter explains that there is a strong case for making the risk margin less sensitive to interest rates but there are still decisions to be made about how a reformed version should be designed and calibrated. Firms have been asked to provide the PRA with some ‘input data’ so that it can do its own modelling of a range of possible designs and calibrations, and balance sheet data based on two alternative risk margin structures. The PRA is gathering data under different economic scenarios to help it model future potential policy options through the cycle.
In relation to the matching adjustment, the PRA is gathering data on two alternative possible design variations. These variations would recognise more explicitly the risk profile of individual assets and make more allowance for the credit risk premium within asset returns, while still recognising the aim of the matching adjustment and preserving its valuable stabilising effects.
The deadline for submitting responses to the QIS is 20 October 2021.
Financial Conduct Authority
COVID-19 - travel insurance - FCA updates expectations of general insurance firms - 19 July 2021
The FCA has updated its webpage on its expectations of general insurance firms in relation to COVID-19 and their provision of travel insurance. The FCA states that it expects firms to take account of the changes to the travel landscape in their marketing, sale, design and monitoring of travel insurance products and to consider their regulatory requirements given the changing market.
Its focuses on four areas:
- Communication: firms should not use terminology that customers might not understand. It has seen firms advertising and selling insurance products that have “coronavirus cover” or “enhanced COVID-19 cover” – these terms do not have a commonly understood meaning and can reflect very different types of cover depending on the insurance product being provided;
- Sale standards: firms should provide existing and prospective customers with clear information and ensure they have a clear understanding of the extent that travel products will protect them against COVID-19 related risks so they can make informed decisions. Such information needs to include the policy’s main benefits, limitations, conditions and exclusions and include those relating to COVID-19, regardless of the sophistication of the customer and whether they have previously bought a travel policy from the firm. Where exclusions are in place, they should be sufficiently clear so that customers understand the impact and circumstances in which the policy will not pay out;
- Demands and needs: the FCA expects firms to only offer customers travel insurance that meets their demands and needs; and
- Product governance: the FCA states that firms manufacturing new insurance products, or making significant adaptations to existing products, must apply a product approval process under its product governance rules before marketing or distributing that product. Where firms are making changes to an existing product, including adding any material exclusions from cover, they must consider whether these changes are significant enough to trigger the product approval process. The FCA considers that a change to an existing product to exclude the insurer’s liability for risks relating to COVID-19, either in whole or in part, is likely to amount to a significant adaptation of the insurance product.
See the Beyond Brexit section for an item regarding an FCA consultation paper on PRIIPS and post-Brexit divergences.
Issue 1119 / 22 July 2021
- European Commission
- AML - European Commission publishes proposal for a Directive amending Directive (EU) 2019/1153, as regards access of competent authorities to centralised bank account registries through the single access point-20 July 2021
- AML/CTF in the EU - European Commission adopts new package of measures- 20 July 2021
- HM Treasury
AML - European Commission publishes proposal for a Directive amending Directive (EU) 2019/1153, as regards access of competent authorities to centralised bank account registries through the single access point - 20 July 2021
The European Commission has published a proposal (and an accompanying commission staff working document) for a Directive of the European Parliament and of the Council amending Directive (EU) 2019/1153 of the European Parliament and of the Council, as regards access of competent authorities to centralised bank account registries through the single access point (COM(2021) 429 final).
The proposal seeks to extend access to the bank account registers (BAR) single access point – which is being developed and will be operated by the Commission - to law enforcement authorities. The BAR will contain information from centralised bank account registries to allow the identification of any natural or legal persons holding or controlling payment accounts, bank accounts and safe-deposit boxes.
The deadline for providing feedback on the proposed Directive is 16 September 2021. Comments received will be summarised and presented to the European Parliament and the Council of the EU to feed into its consideration of the proposed legislation.
Proposal for a Directive of the European Parliament and of the Council amending Directive (EU) 2019/1153 of the European Parliament and of the Council, as regards access of competent authorities to centralised bank account registries through the single access point (COM(2021) 429 final)
AML/CTF in the EU - European Commission adopts new package of measures - 20 July 2021
The European Commission has adopted a package of measures with a view to strengthening the EU’s anti-money laundering and countering terrorism financing (AML/CTF) rules following commitments made by the Commission in its AML/CTF action plan, adopted in May 2020, as previously reported in this Bulletin.
The package comprises four legislative proposals:
- a proposed Regulation on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (COM(2021) 420 final). This contains a range of new and directly applicable AML/CFT rules, including in relation to customer due diligence and beneficial ownership;
- a proposed Regulation establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) 1093/2010, (EU) 1094/2010 and (EU) 1095/2020 (COM(2021) 421 final). This will establish a new EU regulatory agency to be known as AMLA which will act as a central authority to ensure the consistent application of EU AML/CTF rules;
- a proposed Regulation on information accompanying transfers of funds and certain cryptoassets (recast) (COM(2021) 422 final) which would revise Regulation 2015/847/EU on information accompanying transfers of funds, making it possible to trace transfers of cryptoassets and limit large cash payments; and
- a proposed Directive on the mechanisms to be put in place by EU member states for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. This Directive would repeal Directive (EU) 2015/849 (COM(2021) 423 final) (known as MLD4), and would be the sixth EU Directive on AML/CTF (MLD6).
AMLA will have a co-ordination role in the non-financial sector as well as direct supervision of financial sector entities exposed to the highest risk of money laundering and terrorism financing. AMLA will be established in 2023 and start most of its activities in 2024, taking over direct supervision of certain high-risk financial entities in 2026.
Notably, the package will expand the list of obliged entities subject to the EU AML/CTF rules to include, among others, all types and categories of cryptoasset service providers, crowdfunding service providers falling outside the scope of the EU Crowdfunding Regulation ((EU) 2020/1503), mortgage credit intermediaries and consumer credit providers that are not financial institutions.
The Commission has also published an impact assessment, FAQs and a factsheet to accompany the legislation. The proposals will now be considered by the European Parliament and the Council of the EU. The full AML/CTF rulebook, including technical standards, is expected to be in place and apply by the end of 2025.
Proposal for a Regulation establishing the Authority for Anti-Money Laundering and Countering the Financing of Terrorism and amending Regulations (EU) 1093/2010, (EU) 1094/2010 and (EU) 1095/2020 (COM(2021) 421 final)
Proposal for a Directive on the mechanisms to be put in place by the Member States for the prevention of the use of the financial system for the purposes of money laundering or terrorist financing and repealing Directive (EU) 2015/849 (COM(2021) 423 final)
AML/CFT in the UK - HM Treasury publishes call for evidence on review of regulatory and supervisory regime and consultation paper on MLR 2017 - 22 July 2021
HM Treasury has published a call for evidence on the review of the UK’s anti-money laundering and counter terrorist financing regulatory and supervisory regime. According to the press release, this is to be achieved by focussing on three key themes: (i) the overall effectiveness of the regimes and their extent (i.e. the sectors in scope as relevant entities); (ii) whether key elements of the current regulations are operating as intended; and (iii) the structure of the supervisory regime including the work of OPBAS to improve effectiveness and consistency of supervision.
The call for evidence does not seek to recommend significant changes to the operation of the Proceeds of Crime Act 2002 or other legislation, but states: “the Home Office also intend to consult shortly on a package of legislative proposals related to economic crime”.
HM Treasury has also published a consultation paper on potential amendments to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017/692) (MLR 2017), which will run in parallel to the review. The revisions proposed are designed largely to ensure that the UK continues to meet international standards set by the Financial Action Task Force. The consultation looks at potential changes in five areas:
- changes in scope to reflect latest risk assessments;
- clarificatory changes to strengthen supervision;
- expanded requirements to strengthen the regime;
- information sharing and gathering; and
- transfers of cryptoassets.
Any amendments adopted subject to this or subject to further internal consideration will be taken forwards through secondary legislation due to be laid in spring 2022. The consultation closes on 14 October 2021. A final report setting out the findings of the review and options for reform will be published no later than 26 June 2022.
Issue 1119 / 22 July 2021
- Treasury Committee
- Financial Conduct Authority
- Recent Cases
Greensill Capital - Treasury Committee publishes report on inquiry - 20 July 2021
The House of Commons Treasury Committee has published a report which considers the lessons learnt following its inquiry into Greensill Capital. Points of interest in the report include:
- the failure of Greensill does not appear to have threatened financial stability. The Committee therefore considers that Bank of England (BoE) Governor, Andrew Bailey, was right to conclude that there was no case for regulation on the basis of financial stability in this case;
- the Committee does not think the failure of Greensill leads to strong evidence about procyclicality in the regulation of insurance markets. It also does not believe that the failure of Greensill has demonstrated a need to bring supply chain finance within the regulatory perimeter for financial services;
- the failure of Greensill has highlighted risks around the growth of the non-bank sector and the expansion of non-banks into areas of financial intermediation traditionally dominated by banks. The Committee welcomes the BoE’s focus on the importance of enhancing data on the non-bank financial sector. In addition to international work to intensify global co-operation and data-sharing on non-bank finance, HM Treasury should work with the BoE and the FCA to consider which domestic data gaps could be addressed;
- there should be reform of the change in control process that regulates who can acquire the ownership of an existing bank. This should ensure that the PRA has the powers necessary to ensure that existing banks are not owned by entities which would not be granted a banking licence in their own right. The Committee considers this should be done as a matter of urgency; and
- it appears that the appointed representatives regime may be being used for purposes beyond those for which it was originally designed. The Committee welcomes the FCA’s investigation into the oversight of Greensill’s regulatory permissions by Mirabella Advisers LLP. The FCA and HM Treasury should consider reforms to the appointed representatives regime, with a view to limiting its scope and reducing opportunities for abuse of the system.
Financial Conduct Authority
Debt packager firms - FCA announces action following review - 20 July 2021
The FCA has announced that, following a review of the practices of debt packager firms, five firms have stopped providing regulated debt advice, having applied for voluntary arrangements to be imposed. This means that they can no longer provide regulated advice services until the FCA is satisfied they can comply with the rules. The FCA has also used its formal powers to remove another firm’s permission to provide regulated debt advice.
Debt packager firms advise consumers on how to deal with their debts, often referring them to an insolvency practitioner or debt management firm, for which they receive referral fees. The fees can be higher when firms refer consumers to an insolvency practitioner to enter into an individual voluntary arrangement. The FCA has made it clear to firms that it expects them to manage this conflict of interest to ensure that their advice is right for consumers, not just firms’ financial interests.
The FCA’s review identified concerns that some debt packager firms appear to have, for example: manipulated consumers’ income and expenditure to meet the criteria for an individual voluntary arrangement; used persuasive language to promote these products to consumers without fully explaining the risks involved; and provided advice that did not accurately reflect their conversations with consumers or information that consumers had given. The FCA’s view is that firms failed to sufficiently consider consumers’ circumstances and vulnerabilities, including mental health issues and economic abuse.
As part of its priority work to ensure that consumer credit markets work well for consumers, the FCA is considering policy changes to address the significant potential for harm through poor advice that the debt packager business model poses. If it concludes that changes are needed, it plans to consult on proposals later in 2021.
The FCA has also published two letters, one between FCA Executive Directive, Consumers and Competition, Sheldon Mills and Insolvency Service CEO, Dean Beale, setting out how the two organisations are approaching these issues and working together to protect consumers who need debt advice.
European Commission v Landesbank Baden-Württemberg (Joined Cases C-584/20 P and C-621/20 P) (EU:C:2021:601)
Single Resolution Fund – 2017 ex-ante contributions – authentication of a decision of the Single Resolution Board – obligation to state reasons – confidential data
The European Court of Justice (ECJ) has considered an appeal brought by the European Commission and the Single Resolution Board (SRB) against a decision of the General Court concerning the calculation of the 2017 ex-ante contributions to the Single Resolution Fund (SRF), and the legality of provisions in Commission Delegated Regulation (EU) 2015/63.
Landesbank Baden-Württemberg, a German credit institution, brought an action to annul the SRB’s decision concerning these contributions. In September 2020, the General Court annulled the SRB’s decision, concluding that provisions in Articles 4 to 7 and 9 and in Annex I of the Commission Delegated Regulation were illegal, on the grounds that the method of calculation specified in them meant that the SRB was not in a position to give verifiable and reviewable reasons for the individual burdens imposed on an institution.
The ECJ has set aside the General Court’s judgment. It has annulled the SRB’s decision on the ground that the SRB’s statement of reasons was inadequate, although it has taken a different approach from that of the General Court concerning the scope of the requirement to state the reasons for the decision. It has concluded that the obligation to state reasons is fulfilled where the institution concerned by a decision fixing ex ante contributions to the SRF has been provided with: (i) the method of calculation used by the SRB; and (ii) sufficient information to understand, in essence, how their individual situation has been taken into account for the purposes of the calculation. That is the case even if the institution has not been provided with confidential data relied on by the SRB in making the calculation.
However, the ECJ has not upheld the General Court’s finding on the illegality of the provisions in the Commission Delegated Regulation. Instead, it has concluded that the provisions do not prevent the SRB from disclosing, in collective and anonymised form, sufficient information to enable an institution to understand how its individual situation has been taken into account in making the calculation.