UK Financial Regulatory Developments - July 2016 #2


Industry reacts to Brexit

In the wake of the referendum vote for the UK to leave the EU, regulators and industry associations posted their immediate reactions:

  • regulators were quick to point out that firms must continue for the moment to abide by all laws stemming from the EU that apply in the UK, to assure firms that there has been significant contingency planning and to note that the longer-term impacts will depend on the future relationship between the UK and the EU;
  • industry associations called for the government to develop a clear view of the exit process and published FAQs for businesses and consumers. Among key views were those of:
    • BBA, which noted that banking services, including those currently passported, will continue for the foreseeable future and changes will take place over a long period. It welcomed the government’s decision not immediately to activate the withdrawal notification process;
    • the Investment Association, which called for a focus on preserving the pre-eminence of the UK’s financial services sector including the asset management industry;
    • ICMA, which explained the withdrawal process, noting all the steps that have never yet been tested, outlining the main withdrawal options and noting that there is no clarity yet on which option the UK will prefer;
    • AIMA, which singled out five areas as likely to receive significant attention ̶  AIFMD Passport and whether the UK would be granted it, MiFID 2 and preparation for it, EMIR and deciding where to clear, UCITS and setting up an EU management company, and whether the risk in the Financial Transaction Tax is gone.

(Source: BBA reacts to Brexit and ICMA reacts to Brexit)


FOS publishes Ombudsman News

The May/June issue of Ombudsman News highlights the breadth of “everyday problems” which FOS sees so that consumers and financial businesses can better understand the service’s role. It also gives an ombudsman’s perspective on the new pension freedoms which have now been available for a year. (Source: FOS May/June 2016 Ombudsman News)


CMA responds to consultation on competition regime

CMA has published its response to the government’s consultation on proposed options for refining the UK competition regime. The proposed reforms are designed to refine the decision-taking system for market and merger cases and make assessments and investigations quicker. There are also proposed changes to CMA’s powers to support more effective enforcement. CMA largely welcomes the changes proposed. (Source: CMA responds to consultation on competition regime)


PRA makes rules for contractual recognition of bail-in

PRA has published a supervisory statement setting out its expectations for firms subject to the Bank Recovery and Resolution Directive (BRRD) with regard to impracticability in the context of the contractual recognition requirement. It also describes the considerations which BRRD firms could take into account when determining impracticability. These non-exhaustive considerations relate to illegalities, international protocols and membership of non-EU bodies among other things. PRA has also published a policy statement presenting the feedback or its consultation on proposed amendments to PRA rules in relation to the contractual recognition of bail-in. The instrument will come into force on 1 August, and the Rulebook amendments follow a previously published modification by consent. (Source: PRA statement on bail-in impracticability and PRA bail-in policy statement)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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