Since our last publication the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 have been published, and came into force. In other news, the FCA has published a consultation paper on proposed handbook changes to reflect the Benchmarks Regulation.
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) (SI 2017/692) have been published and came into force on 26 June 2017. The purpose of the 2017 Regulations is to update UK laws to take into account the measures included in the EU's Fourth Money Laundering Directive and to amend the UK's anti-money laundering and counter-terrorist financing regime to ensure it is kept up to date, effective and proportionate. The new Regulations do not represent a wholesale change to current rules, but instead reflects the evolution of financial regulation and customer due diligence requirements in order to combat changing and increasingly sophisticated money laundering and terrorist financing activities. The 2017 Regulations introduce a number of new requirements on companies, including in relation to internal controls, senior management responsibility, employee supervision and training, record keeping and in particular in relation to customer due diligence procedures.
Legislation.gov.uk, 23 June 2017
FCA consults on Handbook changes to reflect application of Benchmarks Regulation
The FCA published a consultation paper on proposed Handbook changes to reflect the application of the Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (Regulation (EU) 2016/1011) (Benchmarks Regulation or BMR) (CP17/17). The majority of the provisions of the BMR will apply from 1 January 2018 and benchmark administrators can apply for authorisation or registration from that date. Section 5.1 of CP17/17 sets out a flowchart to help benchmark administrators decide whether they should be authorised or registered.
FCA, 22 June 2017
FCA Handbook Notice 45
The FCA has published Handbook Notice 45 which includes changes made to the FCA Handbook made by the Board on 22 June 2017. The changes include raising fees and levies in 2017/18, changes to COBS to help firms exercise greater choice when selecting their suppliers, clarifications on what data should be reported to the FCA to improve data quality and remove unnecessary duplication of prudential reporting rules between the FCA and PRA.
FCA, 23 June 2017
FCA follow-up work on general insurance appointed representatives
In its regulatory round-up for June 2017, the FCA provided an update on its follow-up work relating to general insurance appointed representatives. It has conducted follow-up supervisory work focusing on the London Market insurance intermediaries, which have diversified and developed networks of appointed representatives, as this was identified as a specific risk in TR16/6. The FCA has found that the issues identified in TR16/6 existed in a wider sample of firms in this sector. The issues include (a) widespread failings in principals' oversight of their appointed representatives. These included not giving adequate consideration to the impact of appointing appointed representatives on their businesses, and not undertaking adequate due diligence before appointing appointed representative and (b) significant shortcomings with appointed representatives involved in the sale of warranty insurance products. The FCA found numerous examples of potential mis-selling because customers had been given inadequate information.
FCA 22 June 2017
New FCA cyber security guide for firms
The FCA has published a new guide to the foundations of good cyber security in its June 2017 Regulation round-up. The FCA has designed the guide to help firms, particularly smaller businesses, become more resilient to cyber-attacks and to respond appropriately to cyber incidents. The FCA has seen a significant increase in the number of material cyber incidents reported to it over the last three years: from five incidents in 2014, to 90 incidents in 2016. This trend shows no sign of slowing down. By outlining the foundations of good practice, the FCA hopes the guide will help firms to review their approach to cyber security. More specifically, the guide:
- Helps firms develop their cyber security strategy by identifying potential areas of strength or weakness.
- Provides some useful questions to ask about the way firms manage and protect their people, processes and technology.
- Explains when firms may need to report a cyber-incident, how to report it, and to whom.
- Sets out how to link with the UK networks for sharing threat information.
FCA, 22 June 2017
FOS consults on amending voluntary jurisdiction rules to reflect FCA final rules and guidance on PPI complaints
The Financial Ombudsman Service (FOS) published a consultation on proposed amendments to its voluntary jurisdiction rules to reflect the FCA's final rules and guidance on PPI complaints.
Financial Ombudsman Service, 19 June 2017
PRA policy statement on residential mortgage risk weights
The PRA has published a policy statement on residential mortgage risk weights (PS13/17). PS13/17 is relevant to banks and building societies that use the internal ratings based approach to calculate credit risk capital requirements relating to residential mortgage portfolios. It contains feedback to the PRA's July 2016 consultation paper on residential mortgage risk weights (CP16/19).
Prudential Regulation Authority, 19 June 2017
FCA call for input on access to insurance
The FCA has published a call for input on access to insurance looking at access issues experienced by those who have, or have had, cancer and other pre-existing medical conditions.
FCA, 20 June 2017
PSR market review remedies decision into the ownership and competitiveness of infrastructure provision
The Payment Services Regulator has published a remedies decision on its market review into the ownership and competitiveness of infrastructure provision.
PSR, 20 June 2017
CMA publishes consultation on regulated payment systems appeals rules and guide
The CMA has published a consultation on draft rules of procedure to govern appeals that may be made to it under section 79 of the Financial Services (Banking Reform) Act 2013 in respect of certain decisions made by the PSR under the Act.
CMA, 20 June 2017
PRA supervisory statement on guidelines for completing regulatory reports updated
The PRA has updated its supervisory statement on guidelines for completing regulatory reports.
PRA, 23 June 2017
BBA and Payments UK respond to Commission consultation on FinTech
The British Bankers' Association (BBA) and Payments UK (PUK) have issued a joint response to the European Commission's consultation 'FinTech: A more competitive and innovative European financial sector'. The BBA and PUK broadly welcome the co-ordination of the EU FinTech agenda, but warn that due to the extensive amount of work progressing at pace across the EU, there is a risk of duplication and error if there is not proper coordination.
British Bankers’ Association and Payments UK, 19 June 2017
Four Draft Delegated Regulations supplementing Benchmarks Regulation published
The European Commission has published the draft texts of four Delegated Regulations supplementing the Benchmark Regulation. Feedback is required on the regulations by 20 July 2017.
European Commission, 23 June 2017
ECB to develop service for settlement of instant payments (TIPS)
The European Central Bank (ECB) has announced that it will develop a new service, referred to as TARGET instant payment settlement (TIPS), for the settlement of instant payments. The new service, referred to as TARGET instant payment settlement (TIPS), is intended to help facilitate instant money transfers, offered via banks, so that instant retail payments can be made across Europe. It will be available all day and on every day of the year. The service will be developed in close co-operation with the EU banking industry. To encourage take-up, it will be offered to banks at a low price for at least the first two years of operation. The ECB has also published an article on TIPS. The article considers the emergence of instant payments and their challenges, together with the services and benefits that TIPS will offer.
TIPS is scheduled to start operating in November 2018.
ECB, 22 June 2017
European Commission responses to FinTech consultation
The European Commission has published the responses to its consultation on FinTech, which was published in March 2017. The respondents include the Payment Systems Regulator. Among other things, in its response, the PSR summarises the work it is carrying out relating to FinTech and how it has established the Payments Strategy Forum to help deliver a strategy involving innovation and industry collaboration.
European Commission, 21 June 2017