articles: Financial Services

Regulator’s spotlight now firmly on COREP returns accuracy

Last year, the PRA issued a ‘Dear CEO letter’ setting out its intention to review the accuracy of COREP returns. Now, the Regulator has started to press ahead with their review, and has issued a wave of S166 reviews to investigate individual business’ COREP processes and procedures. We now believe that the next step will be for the FCA to take the same approach for those firms that fall under its regulation.

Extending the Senior Managers & Certification Regime to all FCA firms – summary of Consultation Paper 17/25 on Individual Accountability

On Wednesday, the FCA issued a consultation paper (CP17/25)  on the extension of the Senior Managers & Certification Regime (‘SM&CR’) to those FSMA authorised firms that are not currently in scope of the regime.
The key drivers of this reform are still the same as the original SM&CR that is currently applicable to the banking sector; Improving culture and governance in financial services firms, holding senior managers to high standards through individual accountability and increasing consumer protection remain amongst the highest priorities for the FCA.

MiFID II : governance and organisational requirements

In addition to changes to market structure, conduct of business and transparency, MiFID II will introduce extensive requirements in respect of internal management, organisational arrangements, individual responsibilities and governance. The reform takes provisions derived from the Capital Requirement Directive (CRD IV) that were originally intended for banks and large institutions, and extends these to all MiFID firms.

The future of regulation in the shadow of Brexit

With the Prime Minister Theresa May indicating that there is insufficient time to replace European bodies with a new British regulatory regime, the implications of Brexit look to have limited short term impact on Financial Services regulation. However, beyond March 2019, what would a hard or soft Brexit look like in terms of future regulation?

Should you expect more from your CASS Auditors?

With increased regulatory focus, further complexity for CASS rules, and recording-breaking fines for CASS failings, it is paramount that you have an advisor who combines technical CASS expertise with an in-depth understanding of the industry. However, last year’s introduction by the Financial Reporting Council of rigorous new CASS audit led most fees to increase considerably. But are you getting value for money?

MiFID II: common misconceptions

With only seven months to go until its implementation date, MiFID II is one of the most talked-about topics in the financial industry. However, we are still finding that a number of firms fall victim to some misinterpretations and common misconceptions about the changes brought about by MiFID II.

How ready are you for MiFID II?

With an implementation date of 3 January 2018, the deadline for readying your firm for the required changes is rapidly approaching. However, in a recent Moore Stephens survey, it was found that only 7% of firms had started their implementation plans and more than half did not even have a plan in place yet to achieve timely compliance.
 
To aid firms in scope of MiFID II, this article highlights the key milestones you need to work towards over the coming nine months.

MiFID II countdown: transaction reporting

MiFID II expands the current objective of transaction reporting from “the detection and investigation of potential market abuse” to “supporting ‘market integrity”.

An important component of achieving that objective is the ability to obtain sufficient and relevant information on market activity. This requirement is at the heart of the transaction reporting requirements expressed in MiFID II. 
 

MiFID II authorisations gateway

The FCA announced the opening of the MIFID II authorisations gateway on 30 January. It is thought that around 600 applications will be submitted over the coming months including new applications for authorisation of organised trading facilities, commodities dealers and data reporting service providers. Similarly, variations of permissions and notifications from existing firms that require a change of permission or passporting rights are expected.

Demystifying SOC reports: what, why & how?

With investors, clients and even their auditors now seeking evidence of a strong system environment and control framework from firms as well as assurance regarding financial processes, Service Organization Controls (SOC) reports (also known as ISAE3402, SSAE16 or even SAS70 reports in old money) can prove to be a much needed tool in a firm’s armoury. In fact, if used properly, SOC reports can not only provide confidence and help to build long-lasting relationships, they can also help give you a competitive advantage.

The FCA’s proposed guidance on wind down planning

In May 2016, the FCA consulted on their proposal to issue a guidance document entitled The FCA’s approach to wind down planning. The Consultation is aimed at FCA solo-regulated firms and is intended to offer an approach to wind down planning.
 
While it is not a prescribed approach, and it does not by itself impose any obligations on firms to create wind down plans, the FCA is currently asking firms whether they have a wind down plan in place when they are seeking authorisation. We are finding that more and more of our clients are now asking for advice and support to prepare their wind down plans.

FCA increases focus on the FX and CFD market

With a rapidly increasing level of enforcement action and a concentration of thematic activity on Brokers in the FX and CFD arena, there is a clear statement of intent from the regulator: the sector is not meeting regulatory expectations and firms offering such products are now firmly under the FCA's microscope.

The regulated activity of ‘advising on P2P agreements’ and the impact this has for your firm’s permissions

With effect from 6 April 2016, the FCA has automatically varied the permissions of all firms who currently hold permissions of ‘advising on investments’ to add the new regulated activity of ‘advising on P2P agreements’. This change has also affected firms who give advice on non-investment insurance contract and those whose main business activity is not to provide investment advice, e.g. general insurance intermediaries.
 
 

FCA Business Plan: key plans and priorities for the regulator in 2016/17

The FCA Business Plan and Risk Outlook form the cornerstone documents for regulated firms to remain ahead of the curve for regulatory change. These documents effectively signpost the major regulatory focuses for the coming year and outline the FCA’s view on key risks, its priorities, and planned activities. We have drawn out, and summarised, the key points firms should make sure they are aware of.

The Budget 2016 – video summary

A sugar-coated Budget for the next generation

In the uncertain global economic environment, the Chancellor’s deficit-reduction goals have become more challenging. But he still managed to strike an up-beat tone when delivering “a Budget that puts the next generation first”.

Senior Managers and Certification Regime: Deadline Monday 7 March

The rule changes that introduce the Senior Managers Regime (SMR) and increase individual accountability of senior managers in the financial sector take effect on 7 March. The new regime is designed to improve professional standards and culture within the financial services sector and will make it easier for firms and regulators to be clear about who is responsible for which aspects of an organisations core business areas and critical functions. The senior managers regime will also require allow senior managers to be held to account for any misconduct that falls within their area of responsibility

Regulator hones in on CFD providers: what to do next

The FCA formed the view there is a high risk that CFD  providers industry-wide are not meeting the requirements of the rules when taking on new clients or are failing to do enough to prevent financial crime. The FCA’s concern was such that they said “firms should examine their own processes”. Here is what we suggest you should review first.

FCA announces findings from review into the CFD market

In a ‘Dear CEO’ letter issued this week, the FCA expressed concerns following a review of ten firms offering Contracts for Difference (CFDs).
The key focus of the review was to assess client take-on procedures against the requirements of the COBS and SYSC, rules with particular reference to the following areas:
  • the firms’ approach to assessing the appropriateness of CFD trading for prospective clients;
  • initial disclosures to clients;
  • anti-money laundering (AML) controls;
  • client categorisation.

An Autumn Statement for “rebuilding Britain”

Five years since delivering his first spending review, George Osborne spent over an hour delivering his 2015 Autumn Statement. He repeatedly stated the Government’s intent to build public services, infrastructure, national defences and strong public finances.

Awards win at the Compliance Register Platinum Awards

For the second time this month our team has been recognised for our financial services compliance expertise, this time at the Compliance Register Platinum Awards. Lorraine Bay received an award for Significant Contribution to Corporate Governance, Risk and Compliance whilst our regulatory compliance team were runners up in the hotly contested Best Compliance Consulting Firm category.

 

Consumer credit update: FCA issues final proposed rules for consumer credit firms

Last week the FCA issued Policy Statement PS15/23: Consumer credit - feedback on CP15/6 and final rules and guidance. The document outlines the changes that will take place in respect of consumer credit rules and guidance.

Some of the rule changes have already come into effect, following the Policy Statement which was issued on 28 September 2015, and the remaining changes will become effective from 2 November 2015.

Issues to consider if you are providing CFDs

In a ‘Dear CEO’ letter issued this month, the FCA has expressed concerns following a review of 10 firms offering contracts for difference (CFD) products. The review identified several areas of concern that the FCA wished to highlight to firms across the industry offering CFDs and warned them to do more to ensure that customers know the risks they are taking with these products. With the ensuing regulatory focus we detail what firms should be doing over the coming weeks to ensure they address the FCA’s concerns.

AIFMD and MiFID Compatibility

Further to the implementation of the Alternative Investment Fund Managers Directive (AIFMD) in the UK, it has become apparent that some fund managers who have been granted authorisation as full scope UK AIFMs have encountered some difficulties in establishing the exact scope of permitted activities under the new permission profile.
 

The Autumn Statement – what can we expect?

The Chancellor of the Exchequer will deliver his Autumn Statement on Wednesday 3 December. This will provide an update on the government’s plans for the economy based on the latest forecasts from the Office for Budget Responsibility, which will be published the same day.

EMIR: Collateral and valuation reporting

As part of the EMIR reporting requirements that have been in effect since 12 February 2014, from 11 August 2014 EU established financial counterparties (FC), including brokers and AIFs and non-financial counterparties (NFC+s that exceed the €1bn or €3bn clearing threshold), are expected to comply with further obligations, including providing daily collateral and valuation reports of any OTC or exchange-traded derivatives trades.
 

The Budget 2014 – summary

In a speech full of sound bites, the Chancellor’s 2014 Budget repeated past themes – the need to build a resilient economy and for Britain to live within its means. But his dominant message was new: this was a Budget for “the makers, the doers and the savers”.

Keep focused despite relaxation of AIFMD deadline

There is good news for those firms who have yet to prepare their AIFM variation of permissions. The Treasury is intending to amend the AIFM Regulations 2013 to provide that, if a transitional AIFM’s application for authorisation or registration is submitted without sufficient time for the FCA to determine the application by 22 July 2014 (the end of the transitional year), that AIFM will be able to continue managing AIFs until the FCA has determined the application.