FCA creates MiFID 2 pages: FCA has created a set of pages on its website providing information on the revised Markets in Financial Instruments Directive and Regulation package (MiFID 2). The pages explain how firms need to start planning for the changes and state that FCA is already discussing with trade associations the best way to implement them. (Source: FCA Creates MiFID 2 Pages)

FCA makes new rules: At FCA's Board Meeting on 1 May, it made:

  • the Mortgages (FPC Interest Rate Stress Test Recommendations) Instrument 2014: this amends the Glossary and the Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB) from 2 May. The changes will require lenders to have regard to any prevailing Financial Policy Committee recommendation when forming a view on likely future interest rates when assessing affordability for a mortgage;
  • the Recognised Investment Exchanges Sourcebook (REC) (Competition) Instrument 2014: this amends REC from 2 May and 2 June respectively to clarify how competition requirements will apply in relation to recognition requirements for investment exchanges, and to require recognised overseas exchanges to disclose in annual reports whether any material events have occurred affecting competition;
  • the Prospectus Rules (PR) (Regulatory Technical Standards) Instrument 2014: this amends the PR from 5 May to reflect EU requirements on supplementary prospectuses; and
  • the Listing Rules (LR) (Listing Regime Enhancements) Instrument 2014: this amends the Glossary, LR and the Decision Procedure and Penalties Manual in respect of various enhancements to the listing regime from 16 May.

(Source: Handbook Notice No 11)

FCA bans former trader for allowing unauthorised trading: FCA has banned John Hughes, former senior trader on the UBS AG London exchange traded funds (ETF) desk. It found Mr Hughes, as the most senior trader, allowed another trader to carry out unauthorised trading which caused US$2.3 billion in losses. Part of the trading by Kweku Adoboli (who was sentenced to seven years' imprisonment for his actions), included creating an "umbrella" which created and used an undeclared profit of funds and had the effect of manipulating the desk's reported profit and loss. FCA found Mr Hughes knew of this umbrella and how it was used and also influenced decisions on its funding and use, in the knowledge UBS would not have authorised it. UBS was fined nearly £30 million in late 2012 for the significant failings that prevented it from detecting the unauthorised trading. (Source: FCA Bans Former Trader for Allowing Unauthorised Trading)

FCA seeks leave to appeal in land banking case: FCA has announced it is seeking leave to appeal following a Crown Court judgment to stay proceedings in its prosecution of Scott Crawley and four other individuals for conspiracy to defraud, possessing criminal property and various offences under the Financial Services and Markets Act in respect of land banking activities. The court ordered the stay in light of a number of factors indicating one or more defendants would not receive a fair trial with no advocate to represent them, and the fact that ordering an adjournment was unlikely to help. (Source:FCA Seeks Leave to Appeal In Land Banking Case)

FCA updates on scheme requirements: FCA has updated the information it gives firms on requirements for submission of the Key Investor Information Document (KIID) and the Non-UCITS Retail Scheme Key Information Document. It has also reminded firms of the need for an authorised scheme's depositary to sign certain forms but stressed it is possible to provide this signature electronically. (Source: FCA Updates on Scheme Requirements)

FCA finalises post-RDR unit class guidance: FCA has published its finalised guidance to firms on how they should act when transferring investors from pre-Retail Distribution Review (RDR) unit classes to post-RDR unit classes. The guidance considers how firms should comply with relevant rules including the client's best interests rule and the role of advice and advisers in the conversion process. It also confirms that a new KIID would not normally be required on conversion. (Source: FCA Finalises Post-RDR Unit Class Guidance)

FCA updates on insurance announcement inquiry: FCA has published the Protocol and updated Terms of Reference for the independent inquiry into the handling of its announcement of its proposed supervisory work on the fair treatment of long standing-customers in life insurance. (Source: FCA Updates on Insurance Announcement Inquiry)

FCA updates on skilled persons reports: FCA has published further details on the number of skilled persons reports it commissioned in the fourth quarter of 2013/14, by firm business type and category of report. Half of the 10 reports relate to deposit-takers, most reports relate to governance, controls and conduct of business, and half the reports relate to firms in the C4 conduct category. (Source: FCA Updates on Skilled Persons Reports)