European Union

EBA publishes opinion on transitional arrangements and credit risk adjustments due to the introduction of IFRS 9. The EBA announced that it has published an Opinion addressed to the European Commission, Parliament and Council and to all competent authorities across the EU on transitional arrangements and credit risk adjustments to mitigate the effect of the accounting standard IFRS 9 on prudential ratios. (3/6/2017)

EBA provides transparent and harmonized information on asset encumbrance across the EU. The EBA announced publication of its final draft Regulatory Technical Standards (RTS) on the disclosure of encumbered and unencumbered assets for the provision of transparent and harmonized information on this topic, as laid down in the Capital Requirements Regulation. (3/3/2017)

EBA consults on the coverage of entities in banking group recovery plans. The EBA announced its launch of a consultation on its draft Recommendation on the coverage of entities in banking group recovery plans and the extent of such coverage. Comments on the consultation must be submitted by June 2, 2017. (3/2/2017)

EBA publishes fourth thematic comparative report on recovery planning. The EBA announced the publication of its fourth thematic comparative Report on recovery planning, with a focus on recovery options, which are crucial for assessing institutions’ actual capacity to regain viability following a period of severe financial distress. (3/1/2017)

EBA consults on specification of an economic downturn. The EBA launched a public consultation on its draft RTS specifying the nature, severity and duration of an economic downturn according to which institutions estimate the downturn loss given default and conversion factor. Comments on the consultation must be submitted by May 29, 2017. (3/1/2017)

EBA publishes results of the CRDIV-CRR/Basel III monitoring exercise as of end June 2016. The EBA announced publication of its eleventh Report of the CRDIV-CRR/Basel III monitoring exercise on the European banking system. This exercise presents aggregate data on capital ratios and liquidity ratios for banks across the EU. (2/28/2017)

ESMA issues implementing rules for package orders under MiFID II. ESMA announced that it has published its final report on draft RTS regarding the treatment of package orders under the amended Markets in Financial Instruments Directive (MiFID II) and Regulation (MiFIR). ESMA’s draft RTS specifies how the MiFIR pre-trade transparency requirements apply to package orders. (2/28/2017)

ESAs publish statement on variation margin exchange. The European Supervisory Authorities published a statement in response to industry requests relating to operational challenges in meeting the deadline of March 1, 2017 for exchanging variation margin. (2/23/2017)

United Kingdom

FCA, PRA remind firms that additional provisions of the Senior Managers & Certification Regime are now in effect. The UK Financial Conduct Authority and the Prudential Regulation Authority issued statements that mark the one-year anniversary of the implementation of the Senior Managers & Certification Regime and remind firms that certain provisions of the regime come into effect on March 7, 2017, including rules on regulatory references for Senior Managers and staff as well as the application of the Conduct Rules to a wider range of staff. (3/7/2017) FCA press release and PRA press release.

FCA finalizes regulatory approach to the Lifetime Individual Savings Account. The FCA published a policy statement that contains the final rules and guidance on the FCA’s regulatory approach to the Lifetime Individual Savings Account, which takes an “enhanced ISA” approach to requirements on communications, information disclosures, cancellation rights, and client assets. The final rules will become effective on April 6, 2017. (3/7/2017) FCA press release.

FCA consults on proposals for the implementation of the Insurance Distribution Directive. The FCA published a consultation paper containing its proposals for the application of the Insurance Distribution Directive, which concerns the distribution of insurance and reinsurance as well as the administration and performance of an insurance contract post-sale. Comments are due on or before June 5, 2017. (3/6/2017) FCA press release. 

FCA reviews find investment managers coming up short in best execution and dealing commission arrangements. The FCA published the results of two reviews of investment managers. The first review, which focused on how investment managers deliver best execution for their clients, found that most firms had failed to make improvements to their best execution strategies following the FCA’s 2014 thematic review. The second review, which assessed firms’ dealing commission arrangements, found that most firms engaged in poor practices and could not show meaningful improvements in terms of how they spend their customers’ money through their dealing commission arrangements. (3/3/2017)

FCA publishes quarterly consultation paper. The FCA requested comments on a quarterly consultation paper that proposes to make minor and miscellaneous changes to the FCA’s Handbook. Comments on certain proposals related to the Prospectus Regulation are due on or before April 3, 2017, while comments on the remaining proposals are due on or before May 3, 2017. (3/3/2017) FCA press release.

FCA finalizes rules and guidance on PPI complaints. The FCA published a policy statement that contains final rules and guidance on payment protection insurance complaints. The final rules establish an approach for firms in handling complaints based on the UK Supreme Court’s judgment in Plevin v Paragon Personal Finance Ltd. and also introduce a deadline of August 29, 2019, for consumers to file new PPI complaints, along with a two-year communications campaign to notify consumers of the deadline. (3/2/2017) FCA press release. 

FCA consults on reforms to availability of information in the UK equity IPO process. The FCA requested comments on a consultation paper that proposes rules to improve the range and quality of information available to investors during the initial public offering process by ensuring that a prospectus or registration document is published, and providers of “unconnected research” have access to the issuer’s management, before any connected research is released. Comments are due on or before June 1, 2017. (3/1/2017) FCA press release. 

FCA warns loan-based crowdfunding platforms of possible FSMA violations in facilitating loans to lending businesses. The FCA sent a letter to firms that operate loan-based crowdfunding platforms regarding the potential implications of facilitating loans to lending businesses. The letter notes that if a lending business borrows through a platform and then lends that money to others, it may be “accepting deposits” and, as a result, violating the Financial Services and Markets Act 2000 if the borrower lacks regulatory permission to accept deposits. (2/28/2017) FCA letter.

FCA, PRA amend rules and guidance on loan to income ratios in mortgage lending. The FCA published finalized guidance that clarifies the general guidance on the Financial Policy Committee’s Recommendation on loan to income ratios in mortgage lending by applying the LTI flow limit on a four-quarter rolling basis and excluding certain loan categories from the LTI flow limit, including second and subsequent charge mortgages; interest roll-up bridging loans; and mortgages ported to another property where there is no increase in the principal outstanding. The PRA also published a policy statement that amends its rules to implement a similar four-quarter rolling LTI flow limit. (2/27/2017)

PRA consults on refinements to Pillar 2A capital framework. The PRA requested comments on a consultation paper that proposes changes to its Pillar 2A capital framework in an effort to reduce the disproportion in capital requirements between the Standardized Approach, mainly used by smaller banks and building societies, and the Internal Ratings Based Approach. Comments should be submitted on or before May 31, 2017. (2/24/2017) PRA press release.

FCA finalizes Handbook changes on delay in the disclosure of inside information. The FCA published a policy statement that establishes final rules to amend its Handbook provisions concerning the delay in the disclosure of inside information to conform to Guidelines under the Market Abuse Regulation. (2/24/2017) FCA policy statement.

PRA publishes responses, final rules arising from Occasional Consultation Paper. The PRA published a policy statement containing the final rules arising from its October 2016 Occasional Consultation Paper, which proposed various changes to the PRA’s Rulebook relating to branch supervision; own funds, group supervision, and insurance company; ring-fenced bodies; and the prudential regulation of credit unions. The policy statement also contains corrections to the Pre-Issuance Notification rules for an administrative error. The PRA additionally published updated supervisory statements on market risk and the prudential regulation of credit unions alongside the final rules. (2/23/2017)

PRA supervisory statement addresses liquidity reporting by third-country firms. The PRA issued a supervisory statement that explains its expectations for liquidity reporting by PRA-regulated UK branches of third-country, and non-EU European Economic Area, credit institutions and designated investment firms. (2/23/2017) PRA press release. 

Regulation Round-up. The FCA released the February 2017 issue of its Regulation round-up, which is a special edition focused on the FCA’s recent consultation on the future funding of the Financial Services Compensation Scheme. (2/23/2017)

FCA releases data on trends in retirement income market and its consumer contact center. The FCA published a new data bulletin that contains data regarding the consumers of financial services firms who contact the FCA’s consumer contact center as well as information regarding the latest trends in the retirement income market. (2/23/2017) FCA press release.

FCA statement on March 1, 2017, variation margin deadline. The FCA issued a statement on the March 1, 2017, deadline for compliance with the Regulatory Technical Standards on variation margin under the European Market Infrastructure Regulation, which establishes requirements for risk mitigation for OTC derivatives not cleared by a central counterparty. The FCA explained that it will take a risk-based approach to firms that that are unable to comply with the requirements by the deadline, taking into account the progress they have made and their plans to achieve full compliance. (2/23/2017)

FCA, BOE review effectiveness of MoU for the supervision of market infrastructure. The FCA published a performance statement that assesses the operation of the Memorandum of Understanding between the FCA and the Bank of England in the supervision of market infrastructure during 2016. The review concluded that the MoU remains effective, with appropriate coordination and no material duplication. (2/22/2017) FCA press release.