FCA advice for firms during the Brexit implementation period
On 30 January 2020, the FCA issued a press release regarding the Brexit implementation period which will commence at 11pm on 31 January 2020 until 31 December 2020. The FCA confirmed that during the implementation period; (i) EU law will continue to apply; (ii) firms and funds will continue to benefit from passporting between the UK and EEA; and (iii) consumer rights and protections derived from EU law will also remain in place. There will therefore be no changes to the reporting obligations for firms, including those for MiFIR transaction reporting, under EMIR, and for CRAs, which will continue in line with existing EU regulatory requirements.
Any EEA firm wishing to use the Temporary Permissions Regime and any fund managers wishing to continue to market in the UK under the Temporary Marketing Permissions Regime (TMPR) must have notified the FCA by the close of 30 January 2020. The FCA advised that firms and fund managers that have already submitted a notification need take no further action at this stage. The FCA stated that it will confirm plans for reopening the notification window later this year, which will allow additional notifications to be made by firms and fund managers before the end of the implementation period.
Andrew Bailey, Chief Executive of the Financial Conduct Authority, commented:
‘The work the FCA has undertaken, along with government and the Bank of England, ensured the financial services sector was one of the best prepared industries for any of the possible Brexit outcomes. The implementation period gives firms a period of certainty while negotiations are continuing on our future relationship with the EU. The FCA intends to use this time to work with government, the Bank of England, firms and other regulators to ensure the financial services industry is ready for the end of 2020. We will continue to keep firms and consumers updated on any changes that will impact them.’
The FCA continues to provide regular updates on its Brexit webpages, which can be accessed here: https://www.fca.org.uk/brexit
Firms required to update or confirm firm details annually
On 23 January 2019, the FCA announced that from 31 January 2020, firms that come under Sup 16.10 reporting requirements have to check, amend or confirm the accuracy of their firm details annually, using the FCA’s Connect portal. They will need to do this within 60 business days of their Accounting Reference Date (see link for details on firms not caught by SUP 16.10 https://www.handbook.fca.org.uk/handbook/SUP/16/10.html).
The FCA has confirmed that even if a firm’s details have not changed from the previous year, it will still need to log on to Connect and confirm that the details are accurate and up to date. Firms are required to comply with these rules. If they do not, the FCA has stated that it will consider using its full regulatory tools, including enforcement. All firms must also meet the principles for businesses. This includes principle 11, which states a firm must deal with its regulators in an open and cooperative way, and provide them with relevant information.
New Swiss rules for marketing private funds into Switzerland
On 1 January 2020, the Swiss Financial Services Act (FinSA) came into force in Switzerland, together with the implementing Ordinance of FinSA. FinSA addresses new rules governing the marketing of financial products, including investment funds. This will be of interest to those distributing or planning to distribute, their funds in Switzerland. The new rules introduce new concepts such as a definition of “financial services” and of “client advisors” and introduce the requirement to join an ombudsman office.
Central Bank group to assess potential cases for central bank digital currencies
On 21 January 2020, the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the Sveriges Riksbank and the Swiss National Bank, together with the Bank for International Settlements, have created a group to share experience as they assess the potential cases for central bank digital currency (CBDC) in their home jurisdictions.
The group will assess CBDC use cases; economic, functional and technical design choices, including cross-border interoperability; and the sharing of knowledge on emerging technologies. It will closely coordinate with the relevant institutions and forums – in particular, the Financial Stability Board and the Committee on Payments and Market Infrastructures (CPMI).
The group will be co-chaired by Benoît Cœuré, Head of the BIS Innovation Hub, and Jon Cunliffe, Deputy Governor of the Bank of England and Chair of the CPMI. It will include senior representatives of the participating institutions.
European Commission Work Programme 2020
On 29 January 2020, the European Commission (EC) published a communication (COM(2020) 37 final) outlining its work programme for 2020, which includes proposals relating to a range of financial services matters relating to, amongst other things, sustainable finance, the Capital Markets Union and cryptoassets. These proposals are expected in Q3 of 2020.
FCA returns funds to land banking victims
The FCA has obtained High Court approval for a scheme to return £2.5 million to compensate victims of a series of unauthorised collective investment schemes.
The background to this is that between 2005 and 2010, approximately 800 people invested approximately £32.8m in unauthorised collective investment schemes established and operated by Countrywide Land Holdings Limited, James Kenneth Maynard (trading as Regional Land and Countrywide Land Holdings) and Stephen Ronald Watkins (trading as Consolidated Land UK). These schemes involved the unlawful selling of plots of land.
The FCA has recovered £2.5 million from the liquidation of a related Panamanian company, Paradigm Consultancy SA, and this amount will now be distributed to the 573 qualifying investors identified by the FCA.
ESMA consults on the use of No Data options in securitisation reporting
On 17 January 20120, ESMA published a consultation paper on guidelines on securitisation repository data completeness and consistency thresholds. The consultation’s objective is to help market participants and securitisation repositories to understand ESMA’s expected maximum use of “No Data” options contained within a securitisation data submission.
The proposed guidelines set out an initial standardisation of thresholds to be applied by securitisation repositories when verifying the completeness and consistency of disclosure templates submitted to them under the technical standards recently published by the European Commission setting out the key elements of the disclosure obligations for securitisation transactions as well the operational standards of securitisation repositories.
The consultation closes on 16 March 2020.
Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.
If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.
Phone: 0207 585 1406