Since our last publication, the PRA has updated its remuneration policy templates and tables. The FCA has published both its 17th quarterly consultation paper, and a consultation paper on implementing the Fourth Money Laundering Directive. In other news, the European Parliament has updated its procedure file on MLD5, indicating that it will consider this legislative proposal in October 2017.


PRA updates remuneration policy templates and tables: June 2017

The PRA has updated its remuneration rules webpage to inform firms it has updated a number of its remuneration policy statement (RPS) templates and tables. The other changes the PRA has made are:

  • An amendment to question (D.i) within the RPS template for firms in proportionality level one, relating to the identification of material business units (MBUs).
  • Additional notes on buy-outs within the notes section of the RPS tables.
  • Links to the updated RPS templates and tables are set out on the webpage under the heading "Self-assessment templates and tables".

PRA, 8 June 2017

FCA quarterly consultation 17

The FCA has published its 17th quarterly consultation paper. In CP17/14, the FCA seeks views on the following changes to its rules and guidance:

  • Changes to the Training and Competence sourcebook (TC) list of appropriate qualifications.
  • Clarifying the application of the requirement to have a client assets report to loan-based crowdfunding platforms.
  • Changes to reporting requirements in the Supervision manual (SUP).

Comments on the proposal set out in chapters 2 and 3 can be made until 12 July 2017, and comments on the proposals in chapter 4 can be made until 12 August 2017.

FCA, 12 June 2017

FCA consults on amendments to DEPP and EG as result of implementing MLD4 and revised WTR

The FCA has published a consultation paper on implementing the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) and the revised Wire Transfer Regulation (Regulation (EU) 2015/847) (revised WTR) (CP17/13). The FCA explains that HM Treasury's proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 will transpose MLD4 and the revised WTR in the UK.

The 2017 Regulations will replace the Money Laundering Regulations 2007 (SI 2017/2157) (MLRs) and the Transfer of Funds (Information on the Payer) Regulations 2007 (SI 2007/3298). Among other things, the new 2017 Regulations give the FCA enhanced supervisory powers to enable it to effectively oversee the extent to which firms comply with their obligations under both pieces of EU legislation. This includes powers for the FCA to assess the fit and proper status of those running "annex I financial institutions". The new 2017 Regulations also give the FCA new enforcement tools to deal with anti-money laundering (AML) and counter-terrorist financing (CTF) breaches.

FCA, 12 June 2017

JMLSG consults on revised version of electronic money guidance

The Joint Money Laundering Steering Group (JMLSG) published for consultation a revised version of its sectoral guidance on electronic money, which is contained in Part II of the JMLSG's anti-money laundering (AML) and counter-terrorist financing (CTF) guidance.

On a related webpage, the JMLSG explains that it has revised the guidance in line with the proposed Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (which a number of bodies are referring to as the "Money Laundering Regulations 2017"). The proposed 2017 Regulations are designed to transpose the Fourth Money Laundering Directive ((EU) 2015/849) (MLD4) and the revised Wire Transfer Regulation (Regulation (EU) 2015/847) (revised WTR) in the UK.

The JMLSG advises that as the electronic money guidance is of limited interest across the financial services sector, and has only been revised to reflect the provisions of the proposed 2017 Regulations, there is a very short consultation period. Comments can be made on the revised guidance until 20 June 2017.

JMLSG, 10 June 2017


European Parliament to consider MLD5 at 23 to 26 October 2017 plenary session

The European Parliament has updated its procedure file for the proposed Fifth Money Laundering Directive (MLD5). The procedure file indicates that the European Parliament will consider MLD5 at its 23 to 26 October 2017 plenary session. The European Commission published its MLD5 proposal in July 2016.

European Parliament, 12 June 2017

European Commission initiatives to tackle information barriers in SME funding market

The European Commission has published a staff working document addressing information barriers in the small and medium enterprise (SME) funding market in the context of the capital markets union (CMU). Key findings include the following:

  • The lack of financial knowledge by SMEs and the lack of a recognised source of business finance advice for SMEs, able to guide them through the complexities of bank and non-bank finance and help them secure access to the most appropriate form(s) of finance, hamper the use of financing options by SMEs. The Commission states, among other things, that as the leading funding provider for SMEs, banks are in a good position to improve the understanding of European SMEs of their financing opportunities (for example, through the provision of feedback on declined credit applications).
  • The lack of standardised, verifiable and accessible financial information about SMEs represents a significant barrier for alternative finance providers to invest into/lend to European SMEs.
  • Improving the availability of SME credit and financial information for (alternative) investors and lenders is essential to support their access to a broader range of funding options.
  • The alternative forms of finance are growing rapidly.
  • Addressing the information barriers in the SME funding market requires a mix of policy responses.

The staff working document provides examples of initiatives recently adopted by EU member states to improve the flow of information in the SME funding market.

To help address the limited understanding of SMEs with regard to their financing opportunities, the European Association of Co-operative Banks (EACB), together with four other European banking associations, has published a set of high-level principles regarding the communication between SMEs and banks around declined credit applications. The aim of the principles is to ensure that the feedback given by banks to their SME clients is sufficient for them to understand the reasons behind the bank's decision process regarding a credit application.

European Commission, 6 June 2017

ESMA response to European Commission consultation on FinTech

ESMA has published its response to the European Commission's consultation on FinTech, welcoming the Commissions initiative to take stock of the EU's FinTech industry.

ESMA, 7 June 2017

EBA issues revised list of ITS validation rules

The European Banking Authority (EBA) has published a revised list of validation rules in its Implementing Technical Standards (ITS) on supervisory reporting, highlighting those which have been deactivated either for incorrectness or for triggering IT problems. Competent Authorities throughout the EU are informed that data submitted in accordance with these ITS should not be formally validated against the set of deactivated rules.

EBA, 9 June 2017

EBA issues 2018 EU-wide stress test methodology for discussion

The European Banking Authority (EBA) has published its 2018 EU-wide stress test draft methodology and templates for discussion with the industry. The exercise will cover 70% of the EU banking sector and will assess EU banks' ability to meet relevant supervisory capital ratios during an adverse economic shock. For banks starting to report under IFRS 9 in 2018, the 2018 EU-wide stress test takes into account the impact of the implementation of IFRS 9 on 1 January 2018 both in terms of starting point and projections. The final methodology will be published as the exercise is launched, at the beginning of 2018, and the results to be published in mid-year 2018.

EBA, 7 June 2017

Case Law

Ashfaq v International Insurance Company of Hannover plc [2017] EWCA Civ 357

The Court of Appeal considered an appeal against summary judgment dismissing an insured's claim for an indemnity under a Residential Let Property Owners insurance policy. Among other things, the insured claimed that the judge at first instance had erred in failing to appreciate that the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (UTCCRs) and the FCA’s Insurance Conduct of Business sourcebook (ICOBS) rules were relevant in determining the insurer’s application for summary judgment. Had he done so, the insured claimed, the court would have determined that the insured was a consumer and that key clauses on which the insurer had relied in repudiating the policy for misrepresentation (that is, “basis of contract” and “subject to” clauses) were unenforceable against the insured.

12 May 2017

Key Contacts

Rosanna Bryant

Rosanna Bryant

Partner, Financial Regulation

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