European Agreement on Creation of a Single Supervisory Mechanism
An agreement has been reached on the way the European Central Bank (ECB) will be responsible for the supervision of banks within the framework of the single supervisory mechanism.
The agreement, made between the Council of the EU, the European Commission and the European Parliament (EP), was announced in a press release. Billed as being the first step towards a European banking union, the press release summarizes areas where the EP pushed through changes to improve democratic accountability, including a stronger role for national parliaments, a strict division of the ECB between monetary policy and supervision and stronger accountability of the supervisor by the EP.
The next step in the process towards the single supervisory mechanism will be the formal ratification of the agreement by the EP.
Implications of the UK 2013 Budget for Investment Funds
The 2013 budget, delivered by the U.K.'s Chancellor of the Exchequer, George Osborne on March 20, incorporated a number of provisions affecting investment funds, which are included in a UK investment management strategy.
The U.K. government announced a package of measures in areas of taxation, regulation and marketing, designed to make the UK one of the most competitive places in the world for investment funds.
Regarding taxation, stamp duty reserve tax is to be abolished by 2014/15, and withholding rules for bond fund interest distributions are to be altered to make these funds more attractive to foreign investors. Changes will also be made to tax provisions on the residency status of offshore UCITS, the investment manager's exemption and tax transparent funds.
For regulation, the strategy paper states that the FSA has agreed to actively engage with the fund management industry to streamline and improve the efficiency of the fund authorization process.
Finally, on marketing strategy, the U.K. government has stated that it will introduce a one-stop shop service for fund managers wishing to set up in the UK, through collaboration with TheCityUK and the Investment Management Association.
OFT Annual Plan for 2013/14: Financial Services Implications
On March 21, the OFT published its annual plan setting out its priorities for 2013/14. The OFT stated that it does not intend to make any fundamental changes to the themes for 2013/14 but that the following financial services-related issues were of importance:
Consumer credit enforcement. The OFT intends to scrutinize applications from businesses wishing to operate in high risk areas. It also intends to implement its consumer credit enforcement tools where there is an urgent need to protect the interests of consumers.
Payday lending sector. The OFT has noted the widespread failure of the payday lending sector to comply with the law and OFT guidance and intends to implement a number of actions in response.
Supporting transition to the Financial Conduct Authority (FCA). The OFT has also announced that the transfer of the OFT's consumer credit responsibility to the FCA is expected to take effect from April 2014, and that it will be working with the FCA to ensure an effective transition. The OFT will also assist with establishing the FCA's interim permissions regime and ensure that any OFT-initiated enforcement action can be carried on and concluded by the FCA. The OFT is also developing a memorandum of understanding which will clearly set out the roles of the OFT and FCA.
FSA Consults on FCA Publication of Warning Notices
On March 18, the FSA published a consultation paper (CP13/8) setting out proposals on how the Financial Conduct Authority (FCA) will use its new power under section 391(1)(c) of the Financial Services and Markets Act 2000 (FSMA) to publish information about the matter to which a warning notice relates.
The consultation paper stated that the FCA will consider each case on its merits but will generally publish a statement where it has issued a warning notice to which the power under section 391(1)(c) applies. When considering whether a publication would be unfair to the person against whom the action is proposed to be taken, the FCA will consider whether the person is an individual or a firm and to what extent they have been made aware of the case against them. Information about the warning notice will be published in a statement by the FCA. The statement will not normally contain details of any proposed sanctions, and if the FCA does intend to publish a warning notice statement, the person to whom the notice is given or copied will be consulted.