FCA looks at readiness for EMIR reporting: FCA has published a report on how the industry is dealing with the reporting obligations the European Market Infrastructure Regulation (EMIR) imposes. The EMIR derivatives contracts reporting obligation came into effect on 12 February and the collateral and valuation reporting obligation on 11 August. The review was based on discussions with counterparties between March and June 2014. Generally, FCA found good compliance with the derivatives contracts reporting obligation and good (at the time) preparedness for the collateral and valuation reporting obligation. It did however find some areas of confusion and practical difficulties, and has updated its EMIR FAQs to help firms. (Source: FCA Looks at Readiness for EMIR Reporting)

FCA writes to LMA on Fons: FCA has written to the Loan Market Association (LMA) in response to a letter LMA sent it on the implications of the decision in the Fons case on the accepted regulatory scope of the Regulated Activities Order investment category of "instruments creating or acknowledging indebtedness". FCA confirmed the judgment does not change its views and that the case does not impact on the regulatory perimeter. For details of the judgment, see our article. (Source: FCA Writes to LMA on Fons)

FCA calls for examples of retrospective rule application: As part of its Project Innovate, FCA is asking firms for examples of where they feel it, or its predecessor, applied rules retrospectively - that is, unduly harshly and with the benefit of hindsight. It asks for comments by 10 October. (Source: FCA Calls for Examples of Retrospective Rule Application)

FCA fines RBS and NatWest for mortgage advice failings: FCA has fined firms in the RBS Group £14,474,600 for failures in their advised mortgage sales business. A routine review by the Financial Services Authority (FSA), and subsequently the firms' own mystery shopping, internal audit and third party review, found that substantial amounts of the sales reviewed:

  • were not backed by sufficient evidence to demonstrate that suitable advice had been given;
  • gave rise to serious concerns about the suitability of the advice provided. In particular, risks arose from advisers not fully considering the customer's budget and any committed or future expenditure, not advising on term or not providing compliant advice when the sale involved debt consolidation; and
  • included instances of advisers giving personal views on the future movement of interest rates.

The Mortgage Business Quality Unit was testing advised sales against the sales process, rather than regulatory requirements. After FSA first raised concerns, it took the firms almost one year to adopt adequate measures. FCA was unhappy with the way the response up to that point had been planned, resourced and overseen, and found staff had not been trained to support the initial changes. On the other hand, FCA acknowledges that, upon receipt of the internal audit review, the firms have taken significant action such as limiting marketing for several months, introducing full file checking and committing to write to all customers who received mortgage advice during the period of the breaches. (Source: Final Notice on RBS and NatWest)

FCA clarifies approach on attestations: FCA has replied to a request by its Practitioner Panel for clarification of the principles under which FCA uses attestations. The reply outlines the most usual scenarios in which it will use attestations and the outcomes it expects in each of them. It stresses that the action required in attestations needs to be specific and achievable, including in relation to timelines. The concern that the tool may skew prioritisation of risk at firms should be assuaged by open dialogue between firms and FCA and the fact that FCA will have taken into account other risks the firm is dealing with before issuing the attestation. It will review its internal guidance and ensure sign-off of attestations at head of department level and review by its central quality assurance function. (Source: FCA Use of Attestations)

Regulators respond on use of Skilled Persons: FCA and PRA have responded to the request by Andrew Tyrie, Chairman of the Treasury Committee at the House of Commons, for information on the use of the power to require a report by a Skilled Person. Both make general remarks on the flexibility this regulatory tool provides but also on the need to make a proportional use of it. They then go on to detail the internal systems and controls in place to ensure effectiveness and proportionality in requirements for a Skilled Person review. (Source: FCA Letter and PRA Letter)