Brexit – EC publishes latest round of position papers following stalling of talks
On 7 September, the EC published a number of position papers in a bid to break the Brexit negotiations deadlock. The papers cover a range of topics, including data protection regulations, intellectual property rights and public procurement, as well as broaching the subjects of Northern Ireland and customs arrangements.
Brexit – AFME paper on transitional arrangements for financial services
On 6 September, AFME published a paper on transitional arrangements in financial services following the UK's departure from the EU. In the paper, AFME repeats its call for transitional arrangements to be agreed to avoid cliff-edge risks in financial services. In particular, it highlights cliff-edge risks relating to the recognition of CCPs, existing cross-border contracts and data transfers once the UK becomes a third country. AFME suggests that the design of transitional arrangements should consist of: existing market arrangements should be maintained during the transitional period; the EU and the UK government should commit to the transition period in a legally binding agreement as soon as possible; and the transitional arrangements should consist of a bridging period, which would cover the period from the expiry of the Article 50 period to the date on which the new relationship between the UK and the EU is ratified, and an adaptation period that would enable phased adjustment to the new trade relationship. AFME also suggests a number of transitional measures intended to minimise disruption.
AML measures – Europol publishes report on trends in STRs in the EU
On 5 September, Europol's Financial Intelligence Group published a report on the extent of suspicious transaction reports (STRs) in the EU with a view to providing a pan-European perspective. The report provides a law enforcement perspective on the benefits and shortcomings of the current framework regarding the use of STRs to combat organised crime and terrorism. It also focuses on recommendations to improve the regime's effectiveness in achieving this goal.
DPAs – Cambridge Symposium 2017: Alun Milford, SFO General Counsel speech
On 5 September, Alun Milford, the SFO General Counsel, gave a speech on deferred prosecution agreements at the Cambridge Symposium on Economic Crime 2017. He confirmed that the SFO had now secured four deferred prosecution agreements (DPAs), and the following themes emerged: they are not a rubber-stamp exercise. The court takes an active role in examining the agreement and, as is evident from the published rulings, very carefully scrutinises every aspect of the application for approval; cases in which the criminality was of the most serious kind remain, in principle, eligible for a disposal by way of DPA, citing the example of the Rolls-Royce case; when considering the interests of justice two factors are critical: co-operation and reform; and he went on to address the confusion that has arisen from co-operation as a result of the Rolls-Royce case, where the company did not immediately self-report.
MAR – ESMA updates Q&A
On 1 September, ESMA published an updated version of its Q&A on the MAR. ESMA has added a question relating to market soundings (new Question 9.1) and two questions relating to insider lists (new Questions 10.1 and 10.2). In addition, ESMA has updated the answer to existing Question 6.1 to clarify the scope of Article 16 of MAR (Prevention and detection of market abuse). According to ESMA, non-financial firms trading on their own account in financial instruments as part of their business activities, for example, industrial companies for hedging purposes, may be considered to be firms professionally arranging or executing transactions in financial instruments under Article 16(2) (see also point (28) of Article 3(1) of MAR).
HMRC publish guidance on failure to prevent facilitation of tax evasion offence
On 1 September, HMRC published new government guidance for the corporate offences of failure to prevent the criminal facilitation of tax evasion. The guidance sets down six guiding principles for companies and organisations to follow. Part 3 of the Criminal Finances Act 2017, creating the corporate offences of failure to prevent facilitation of UK and foreign tax evasion, comes into force on 30 September. The guidance aims to: (i) Illustrate how relevant bodies might conduct an assessment of the risk of their representatives criminally facilitating tax evasion; (ii) Help relevant bodies adopt a more effective, risk-based and outcomes-focused approach to mitigating the risk of associated persons criminally facilitating tax evasion; (iii) Assist consideration of whether the reasonable procedures defence is available; (iv) Enhance the understanding of government expectations and help relevant bodies to assess the adequacy of their existing systems and controls and remedy deficiencies; and (v) Assist trade bodies in the formulation of more detailed sector-specific procedures.
AFME sets out views on application of MiFID II share trading obligation
On 6 September, AFME published a paper (dated 24 July) setting out its view on the scope of the requirement in Article 23 of MiFIR for certain share trades to be carried out only on specified regulated trading venues. The requirement applies to an investment firm when it "undertakes" trades in certain shares. In AFME's view, this means that it applies only to a firm when it is the final entity in the chain of execution in any given trade flow. However, a firm that places an order with or transmits an order to a third party for execution, or is a passive intermediary, should not be caught by the obligation, as it does not "undertake" the trade.
CRR – EC adopts Delegated Regulation on disclosure of encumbered and unencumbered assets
On 4 September, the EC published the text of a Delegated Regulation (C(2017) 5959 final) it has adopted, which amends the CRR with regard to RTS for the disclosure of encumbered and unencumbered assets. The EC has also published the accompanying annexes, which set out the disclosure templates together with instructions for completing them. The next step will be for the Council of the EU and the EP to consider the Delegated Regulation. If neither the Council or the EP object to the Delegated Regulation, it will be published in the OJ. It will enter into force 20 days after its publication in the OJ and will apply from one year after its entry into force.
Recovery and resolution
BRRD – EBA final draft ITS on MREL reporting by resolution authorities
On 5 September, the EBA published a report (EBA/ITS/2017/06) setting out its final draft ITS on procedures and templates for the identification and transmission of information by resolution authorities to the EBA, on MREL. It has published the annexes to the ITS separately. The ITS set out minimum procedural obligations covering reporting periods and submission dates, as well as templates to be used by resolution authorities when informing the EBA of the MREL requirements they have set. The EBA has submitted the ITS to the EC for endorsement.
Complaints data – FOS releases business-specific complaints data for January to June 2017
On 5 September, the FOS published its latest set of six-monthly complaints data relating to individual financial businesses for the period 1 January to 30 June, together with a related press release. The data shows that the FOS took on almost 170,000 new cases in the first six months of 2017. This represents a 13% increase in complaint figures when compared to the last six months of 2016. It reflects rises in almost every product sector, including PPI and banking. The FOS notes: almost two thirds of the complaints it received in the first six months of 2017 were provided by just ten businesses; PPI continues to be the most complained about product, with almost 90,000 complaints, making up over half of all complaints made to the FOS during the relevant period; and complaints about banking and credit have increased by 12% to around 47,000. Within this, consumer credit complaints are up by almost a fifth to nearly 15,000.
FCA quarterly consultation 18
On 1 September, the FCA published its 18th quarterly consultation paper (CP17/32). In CP17/32, the FCA seeks views on changes to its rules and guidance on: changes to fees for varying permission under PSD2; FCA enforcement approach to breaches of PRIIPs Regulation; changes relating to IDD and COBS 16; change to IFPRU 2; PRIIPs KID and personal projections; changes to COBS relating to FCA projection rates; changes to reporting requirements in SUP; and retirement interest-only mortgages. The deadline for comments is 1 November.
FCA policy development update: September 2017
On 1 September, the FCA updated its policy development update webpage, which sets out information on recent and future FCA publications. This update summarises the FCA's proposed future publications and highlights the changes made to the webpage since it was last updated on 4 August.