FCA publishes draft margin exemption form

FCA has published a draft application form relating to the exemption from the requirement to exchange margin for intragroup transactions under the European Market Infrastructure Regulation (EMIR) provided certain criteria have been met. Firms will be able to use this form until FCA publishes the final form, which it cannot do until the draft margin RTS are adopted. (Source: FCA publishes draft margin exemption form)


FCA reports on lending decisions and mortgage competition

FCA has published the findings of its responsible lending review into mortgage lending decisions. It found that, overall, firms have implemented responsible lending rules in line with FCA’s expectations following the mortgage market review (MMR). It noted no evidence of previous poor practices like self-certification of income or interest-only lending without a credible repayment strategy and, equally, where lending was affordable, no evidence the rules had prevented firms lending responsibly across particular groups, for example older borrowers and the self-employed. Neither did it find the new requirements had had a material effect on lending volumes. However, it thinks firms could improve their affordability assessment processes, record-keeping of lending decisions and use of exemptions from the requirements.

FCA also published its feedback statement following its call for inputs on competition in the mortgage sector. Responses noted that:

  • consumers face challenges in making effective choices, particularly in assessing and acting on information about mortgage products, with intermediaries being key to the process;
  • there are opportunities to make more effective use of technology in the provision of information and advice;
  • commercial relationships between different players in the sector’s supply chain, in particular the use of panels, might give rise to competition concerns; and
  • certain aspects of the regulatory framework might have a negative impact on competition.
  • FCA will carry out further work on areas where it thinks there is the greatest scope for competition to improve consumer outcomes. It plans a targeted market study in Q4 2016 focused on consumers’ ability to make effective choices, with a view to improving how competition works in consumers’ best interests. The study will cover:
    • how currently available tools meet consumers’ needs;
    • the effects of changes in intermediation post-MMR; and
    • the impact of panel and other commercial arrangements between lenders, brokers and other players in the mortgage supply chain.

(Source: FCA reports on lending decisions and mortgage competitions)


FCA announces insider dealing sanctions

FCA has:

  • banned and fined Mark Taylor, a financial adviser formerly of Towry Law, for trading off the back of inside information accidentally provided to him in his role at Towry Law. Mr Taylor had traded after a message was sent to staff in error, followed by a message instructing staff not to act on it. He had later called his broker to try to reverse the trade as he was concerned about insider dealing, but the broker had not been able to do this and had reported the activity. The fine of £36,285 reflected Mr Taylor’s financial situation;
  • announced the Court has sentenced Martyn Dodgson and Andrew Hind, respectively, to 4.5 and 3.5 years’ imprisonment (see FReD 13 May). The 4.5-year sentence is the longest sentence handed down for insider dealing in a case brought by FCA.

(Source: FCA fines and bans trader and FCA announces Dodgson and Hind sentences)


Complaints Commissioner judges on IRHP complaint

The Complaints Commissioner has rejected a complaint about how FCA handled the publication of its agreements with banks in interest rate hedging products (IRHP). The complainant contended it would have considered a better solution to the dispute with its bank had it had access to the agreements between FCA and banks that were published in 2015. The Complaints Commissioner says FCA should not have dealt with the initial complaint using the “local area” level, and should apologise for providing contradictory information. However, he said he should uphold the complaint only if he could conclude FCA should never have entered into the agreements with the banks or had unreasonably delayed or not pursued the issue of permission for their disclosure more aggressively. He considered FCA’s position that it was in the public’s best interest that it reaches prompt agreement on voluntary redress schemes, which can only happen if there is confidentiality. He said this is clearly arguable, but not manifestly wrong. (Source: Complaints Commissioner judges on IRHP complaint)


Queen’s Speech 2016

Her Majesty the Queen has spoken to the Houses of Parliament at the State Opening of Parliament for 2016. She noted the intention to introduce legislation designed, among other things, to tackle corruption, money laundering and tax evasion through the Crime Finances Bill which introduces a criminal offence for corporations who fail to stop their staff facilitating tax evasion and improves the operation of the suspicious activity reports regime.  (Source: Queen’s Speech 2016)


Committee warns over mis-selling risks

The Public Accounts Committee has warned of the continuing risks of mis-selling of financial products. It is disappointed both that FCA and FOS have not been sufficiently proactive on PPI complaints, which means claims management companies have acted for a significant number of consumers, thus meaning the consumers do not get the full amount of compensation which they could have kept had they complained directly, and that FCA has not yet articulated how it expects the industry to change its culture to reduce the risk of further mis-selling. It also called on FOS to publish details of when it expects to clear its PPI complaint backlog. (Source: Committee warns over mis-selling risks)


Select committee asks for whistleblower assurance

The Treasury Select Committee has published an exchange of letters with FCA in which it noted that FCA had compromised the position of whistleblowers in the “SME alliance” by passing on details of their complaints to the subject of the complaints – which were banks. FCA said it had not treated the SME alliance as whistleblowers and had not been asked to protect confidentiality. The committee is concerned FCA does not understand the dilemmas whistleblowers face. (Source: Select committee asks for whistleblower assurance)


Select committee doubts 2025 EMU

The House of Lords Select Committee on EU financial affairs has expressed doubt that economic and monetary union (EMU) can happen by the 2025 target date. The report notes the “useful addition” to the banking union of the European Deposit Insurance scheme and says capital markets union will benefit the UK. Fiscal integration and strengthening eurozone institutions, however, will take longer and the Committee considers current plans are “speculative”. (Source: Select committee doubts 2025 EMU)