The FCA has published a Call for Input on change and innovation in the unsecured credit market as part of a review that considers how regulation can better support a healthy, unsecured lending market (referred to as the Woolard Review).
The call for input is oriented around 4 key themes:
The deadline for responses is 1 December 2020. Feedback to the Call for Input will inform Mr Woolard’s report and recommendations to the FCA Board which are expected in 2021.
The FCA has published a Policy Statement summarising responses to its Consultation Paper CP20/18, published on 4 September 2020. The Policy Statement refers to amendments that will be made to Article 34(1) of the UK regulatory technical standards (UK-RTS) for strong customer authentication and secure communication which will require account servicing payment service providers (ASPSPs) to accept at least one other electronic form of identification issued by an independent third party, in addition to continuing to accept eIDAS certificates.
In July 2020, the EBA announced that eIDAS certificates of UK third-party providers would be revoked at the end of the transition period on 31 December 2020.
The changes will mean:
The amendments will enter into force, along with the UK-RTS, immediately after the end of the transition period for Brexit at 11 pm on 31 December 2020.
The FCA has published a Statement on its approach to the share trading obligation (STO) under the Markets in Financial Instruments Regulation (600/2014/EU) (MiFIR) after the end of the transition period.
The regulator will use the Temporary Transitional Power (TTP) to avoid disruption and allow firms to continue trading all shares on EU trading venues and systematic internalisers (SIs). Any such EU trading venue will need to be:
The FCA has stated that transitional directions will be published before the end of the transition period to implement these changes.
UK Finance has published a “Sanctions statutory instruments review” document to assist banks and other firms in their compliance with UK sanctions legislation, both in the UK and internationally. It refers to various statutory instruments (SIs) derived from the Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) as well as new regimes such as the Global Human Rights Sanctions Regulations (SI 2020/680).
A press release has also been published, noting that the paper will be updated as more SIs and amendments are laid, and that an updated version will be published on 30 November 2020.
The FCA has published a policy statement regarding its proposals to delay the mandatory requirements around the European Single Electronic Format (ESEF).
The FCA intends to proceed to push back the requirements to report financial statements in the ESEF format originally planned to apply to financial years starting on or after 1 January 2020. These requirements will now only be mandatory for financial years starting on or after 1 January 2021. However, issuers will still be able to publish and file their financial reports in the ESEF standard voluntarily for financial years starting on or after 1 January 2020 if they choose to do so.
There is no intention from the FCA to delay implementation of the requirement to tag notes to the annual financial statement. This will apply to financial years starting on or after 1 January 2022.
The FCA has published a new webpage which provides links to dedicated Brexit websites hosted by financial regulators in EEA member states. The FCA observes that this list is not exhaustive and will be updated as it receives further information.
Companies House has published guidance for firms to identify and record the people with significant control (PSCs). The guidance includes help on how to identify the PSCs and the conditions which need to be met for a person to qualify as a PSC, as well as details of the information which must be recorded for any PSCs of a firm.
Other areas covered by the guidance include what is required if PSC information changes, information a firm’s PSC register, and what happens if a firm fails to meet the requirements.
HM Treasury has published a policy paper detailing information on the equivalence decisions that the UK is making for EEA states.
16 of the equivalence decisions are being made by directions under The Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc.) (EU Exit) Regulations 2019 (S.I. 2019/541) and one equivalence decision is being made by Statutory Instrument (‘SI’) – under The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184).
HM Treasury notes that equivalence decisions have been made in the following areas:
Each decision will enter into force immediately after the transition period has ended and, at that time, they shall each have effect as if made under the relevant provisions of retained EU law, whether they were granted by direction or statutory instrument.
The FCA has responded to HM Treasury’s announced intention to make equivalence decisions in respect of the EEA states across a number of financial services areas. The FCA observes that the decisions cover areas where the FCA is the lead regulator, including:
The FCA summarises the impact of these particular decisions on firms and sets out what action firms need to take in order to benefit from the decisions.
The Payment Services and Electronic Money (Amendment) Regulations 2020 have been published, alongside an explanatory memorandum. The Regulations amend the Electronic Money Regulations 2011 and the Payment Services Regulations 2017 in order to apply sections 93(4) and 233-236 of the Banking Act 2009, with modifications, to authorised electronic money institutions, small electronic money institutions, authorised payment institutions and small payment institutions.
This will allow HM Treasury to make regulations to modify insolvency law with respect to these institutions, including setting up a bespoke insolvency regime applicable to them.
These changes have resulted from the fact that, in recent years, insolvencies in these sectors have led to consumers receiving reduced monies after the cost of distribution and the fact they have taken a number of years to be resolved.
HM Treasury intends to use the powers under the Regulations to create a Special Administration Regime for payments and e-money institutions, giving insolvency practitioners administering the insolvencies of payments or electronic money institutions an expanded toolkit.
The regulations will come into force on 8 December 2020.
The FCA has updated its webpage on changes to regulatory reporting during the COVID-19 pandemic. The updated webpage explains that the final date when the FCA allowed reporting deadline flexibility was 30 September 2020, and all regulatory returns scheduled for submission from 1 October 2020 should be submitted by their usual deadlines and will be subject to an administrative fee if late.
The National Crime Agency has published its annual report on suspicious activity reports, which stats that the UK Financial Intelligence Unit (UKFIU) received and processed a record number of SARs (575,085) and an increased number of requests for a defence against money laundering or terrorist financing (DAML) (62,408).
According to the report, assessment, and fast-tracking of SARs to law enforcement agencies remained an important growth area for the UKFIU, which helps ensure maximum value of SARs intelligence is exploited.
The statistics in the report show the importance of the SARs regime in providing information to UK authorities, and the increase in DAML requests reflects an increase in the awareness of money laundering risks.
The FCA has published a consultation paper (CP20/22) on its policy proposals for regulatory fees and levies in 2021/22.
The consultation period closes on 22 January 2021. The FCA intends to publish its feedback and final rules in a Handbook Notice in March 2021.
The FCA has published finalised guidance for firms to enhance support to consumer credit borrowers facing difficulties due to COVID-19. This guidance follows a consultation launched on 4 November 2020 and amends previous guidance published in July and September 2020.
The guidance sets out that:
The FCA has published a statement and two consultations on its intended policy in relation to its proposed new powers under the onshored EU Benchmarks Regulation ((EU) 2016/1011) (BMR) as amended by the Financial Services Bill. This co-ordinates with statements published by the ICE Benchmark Administration (IBA) and the International Swaps and Derivatives Association (ISDA) (see items above and below respectively in this section).
The FCA’s intended policy assumes that the financial services bill will be passed in its current form, though the final nature of those powers could change as the bill makes its way through parliament. The statement sets out the FCA’s potential approach to its proposed new powers, and has published 2 consultations regarding:
Comments on both consultations are welcomed until 18 January 2021, after which the FCA will publish relevant statements of policy on its website.
The FCA has published a new webpage for investment managers clarifying the process for reporting income for Financial Services Compensation Scheme (FSCS) levy calculations.
The process relates to the requirements on asset managers to report ‘look through’ income. The FCA explains that, when calculating annual eligible income, the options are to: (i) only include such annual income if it is attributable to business in respect of which the FSCS may pay compensation; or (ii) include all such annual income. Therefore, firms must include income which they know relates, or may relate, to eligible claimants. Where a firm cannot identify whether the underlying beneficiary is an eligible claimant, income derived from that business must be included.
The FCA has published further information regarding RegData, its new data collection platform, which outlines the enhancements it has made to the platform in response to feedback from firms and other users of Gabriel.
The enhancements made to the platform include: