FCA Scraps New RDR Rules for Nominees to Pass on Fund Information and Voting Rights on FCA Authorised Funds to Beneficial Owners

The FCA board agreed on 30 July 2015, to revoke certain new rules and guidance in its Conduct of Business sourcebook (COBS 14.4) that had been scheduled to come into force at the end of 2015. The rules had been adopted in August 2011 as part of the FCA’s Retail Distribution Review (RDR) and would require certain nominee companies (called “intermediate unitholders” in the rules) to notify the underlying beneficial owners of units in FCA authorised funds when the fund manager issues certain fund information and voting rights. The proposals were intended to give consumers who invest in funds on an intermediated basis the same rights as those who invest in funds directly.

The revocation followed a public consultation (CP 15/20) that had commenced on 22 June 2015.

Read the FCA's Handbook Notice. 

Read Retail Distribution Review (Platforms) (Amendment No. 3) Instrument 2015. 

FCA Published Minutes of MiFID II Implementation Roundtable

The FCA published on 10 August 2015, the minutes of its MiFID II implementation roundtable which was held on 17 July 2015.

Items of interest include:

• A summary of the industry's key implementation issues: these relate to policy concerns, technical challenges, uncertainty over key processes and interpretation of the legislation and particularly concern the scale and nature of changes to be required and the related planning difficulties. The FCA reiterated that firms need to plan effectively for implementation but acknowledged that they could not achieve the impossible and there will be difficulties in transitioning from MiFID to MiFID II. European regulators appreciate that guidance will be needed on top of legislation.
• Answers to specific wholesale questions raised. Among the topics covered were authorisation (there could be a case for extending the transitional provisions to commodity derivatives firms), market-wide data (ESMA is considering what could assist firms), over-reporting of transaction reports (the FCA is considering this issue), the taping regime (does not apply to face-to-face conversations; the rules are similar to existing FCA rules), the position limit reporting regime (the FCA is to speak to exchanges), legal entity indentifiers (the FCA might provide information on its website) and the availability of information on instruments trading on trading venues across the EU (firms will have access to the same information as competent authorities).
   
• Feedback on certain retail issues raised. The issues related to:

1. 1. product governance: ESMA has signalled scope for future work. The FCA noted that consistency with PRIIPs also needs to be taken into account;
   2. trail commission: there are no plans to change the current rules or to alter pre-RDR trail off-platform; and
   3. costs and charges disclosure: the regulator highlighted ESMA’s technical advice that firms can generally be assured that a client has accessed the valuation if they have a record that the client has logged on online and accessed the relevant section.

• Level 3 work of the European Securities and Markets Authority (ESMA). The FCA reported that at this stage ESMA's level 3 work was not sufficiently advanced enough for the FCA to have anything to report on. The FCA did however note the concern that industry should be consulted, unlike in the case of the EMIR Q&A process.

The FCA intends to hold its next MiFID II conference on 19 October 2015. The conference will focus on the implementation of markets and wholesale issues, with communication on retail issues occurring via other means.

Read the FCA's Regulation Roundup for August 2015.