UK government publishes Brexit white papers

The UK government has published two white papers, one on the future relationship between the UK and the EU and the other on legislating for the withdrawal agreement between the UK and the EU.  In respect of financial services, the UK government is proposing a new economic and regulatory arrangement with the EU, based on the principle of autonomy for each party on decisions relating to access to its market, with a bilateral framework of treaty-based commitments.  It proposes that the existing equivalence framework be expanded to encompass a broader range of cross-border activities. The UK government acknowledges that this arrangement cannot replicate the EU's passporting regime.  There should be reciprocal recognition of equivalence between the UK and the EU under all existing third country regimes that takes effect at the end of the transition period. Future determinations of equivalence should be an autonomous matter for each party.  However, the bilateral arrangement framework should contain provisions relating to: 

1. Common principles for the governance of the relationship 
2. Extensive supervisory co-operation and regulatory dialogue so that the UK and the EU should be able to understand and comment on each other's proposals at an early stage; and supervisory co-operation concerning firms that pose a systemic risk or that provide significant cross-border services on the basis of equivalence (or both). There should be codified procedures for routine co-operation and for co-ordination in crisis situations
3. Predictable, transparent and robust processes to ensure that the relationship is stable, reliable and enduring through a mixture of treaty-based bilateral agreements and the autonomous measures of the UK and the EU.  These processes should relate to: (a) transparency assessment methodology for assessing equivalence; (b) a structured withdrawal process if either party considers withdrawing equivalence; and (c) long term stabilisation - there should be a presumption against unilateral changes that narrow the terms of existing market access regimes, other than in exceptional circumstances.

Read: The white paper on the future relationship  

Read: The white paper on legislating for the withdrawal agreement 

Shortly after the publication of the first white paper, the FCA published a webpage for firms preparing for Brexit.

Access: The FCA webpage 

FCA publishes a discussion paper on a potential new consumer duty of care

The FCA has published a discussion paper on a new consumer duty of care for regulated firms to enhance behaviour in the financial services market.  It has published this to gain a better understanding of whether there is a gap in its regulatory and legal framework, or the way it applies it in practice, that could be addressed by introducing a new duty of care to consumers.  In the discussion paper the FCA uses a "New Duty" to cover all possible formulations of any new duty of care or fiduciary duty on firms; to better understand and consider possible alternative approaches that might address stakeholders' concerns raised in response to the FCA's consultation on its approach to consumers; to understand what a New Duty for firms might do to enhance good conduct and culture in financial services, including how this could influence consumer outcomes, alongside the SMCR; and to assess whether change is desirable and, if so, what form it might take, how it would work in practice alongside the current framework and what consequences it would have for consumers, firms and the FCA.  In the discussion paper, the FCA also explains the various routes by which consumers can currently obtain redress when harm does occur and considers whether a New Duty would provide an additional route by which consumers could secure redress, and whether that is needed. 

Comments are being sought from regulated firms, etc, by the deadline of 2 November 2018.  

Read: The discussion paper  

FCA publishes investment platforms market study interim report

The FCA has published an interim report on its market study to examine the relatively new but growing investment platform market.  The interim report states that competition is working well for most consumers, but it has competition concerns about how investment platforms compete for particular customer groups.  

The FCA found various barriers and possibilities for confusion, etc, and so proposes to monitor market developments during the implementation of MiFID II, and potentially introduce new guidance, measures to improve transparency, measures to improve the feasibility, timing and cost of switching, and improve the monitoring of orphan clients.  

The FCA will assess industry progress before deciding whether it should introduce additional remedies. The deadline for comments is 21 September 2018. The FCA will publish its final conclusions in early 2019.

Read: The interim report