FCA consults on further changes to SMCR

Authors: Sarah Thomas, Cat Dankos and Hywel Jenkins

At the end of January, the UK Financial Conduct Authority (FCA) issued a further consultation paper (CP19/4, the CP) on the Senior Managers and Certification Regime (SMCR). Responses to the CP are requested by 23 April 2019. Alongside other minor proposed changes which seek to “optimise” the SMCR, the key proposals are:

  • For all firms (banks, insurers, and all solo regulated firms), the legal function will not need to have a SMF Manager responsible for it.
    • Responsibility still has to be allocated to someone, but that individual does not need to be a SMF Manager.
    • The FCA expects the Head of Legal to be a certified function and that the conduct rules will apply to all legal staff.
    • Banks and insurers need to think about whether to change their SMF Manager allocations in light of this confirmation (as well as statements of responsibility and responsibilities map), and how to depict the position of the legal function on their responsibilities map.
  • For all firms (banks, insurers and solo regulated firms) the certification regime definition of the ‘client dealing’ function has been clarified (with a narrowing effect). It will exclude individuals who have no scope to exercise discretion.
    • Insurers and banks may wish to cross-check their existing pool of client dealing staff against the proposed new definition in readiness for the final rules.
  • For solo regulated firms, the FCA has expanded the scope of the forthcoming Enhanced regime to cover more intermediaries.
  • For limited scope solo regulated firms, Manager Conduct Rule 4 (SC4) will be amended to cover non-approved executive directors.

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SINGAPORE PAYMENTS AND FINTECH UPDATE

In this bulletin we cover the following key developments in the payments and fintech space:

  • Payment Services Bill: On 14 January 2019, the Payment Services Bill (Bill) was passed by the Singapore Parliament. When it comes into force, the Payment Services Act (as the enacted Bill will be known) will introduce two regulatory frameworks: a designation scheme which enables the Monetary Authority of Singapore (MAS) to designate significant payment systems for financial stability reasons, and a licensing regime which allows MAS to regulate a wider range of payment services, including cryptocurrency dealing and exchange services, in a proportionate manner depending on the scope and scale of the provider’s services.
  • Sandbox Express: On 14 November 2018, MAS released a consultation paper on Sandbox Express, which comprises of a set of to pre-defined sandboxes to complement the existing approach of customised sandboxes.
  • Digital Token Offerings: On 3 December 2018, MAS updated its Guide to Digital Token Offerings which provides general guidance on the application of the securities laws administered by MAS to offers or issues of digital tokens in Singapore.

For more information on the key developments in the payments and fintech space and the implications of the Payment Services Bill, Sandbox Express and Guide to Digital Token Offerings, please see our full bulletin here.

Hong Kong Insurance Authority prepares for direct regulation of insurance intermediaries in mid-2019 – what is the progress so far?

It is anticipated that in around mid-2019, the Insurance Authority (IA) will take over the regulation of insurance intermediaries from the three self-regulatory organisations (SROs). In preparation for the commencement of the new regime, the IA has launched several public consultations on guidelines and rules. For our full briefing on these developments, please click here.

 

Revamped SFC Code on Unit Trusts and Mutual Funds targeted for implementation on 1 January 2019 with transitional period

On 6 December 2018, the Securities and Futures Commission (SFC) published the conclusions to its consultation on proposed amendments to the Code on Unit Trusts and Mutual Funds (UT Code). The proposed amendments are aimed at updating the regulatory regime for SFC-authorised funds and addressing the risks posed by financial innovation and other developments. Continue reading

HKMA publishes open API framework for Hong Kong banking sector and launches own open API

On 18 July 2018, the HKMA announced that it had concluded a consultation on its intended approach to open application programming interface (API) for the Hong Kong banking sector, and had published its final framework and implementation plan.

The open API is one of seven initiatives announced by the HKMA in September 2017 to bring Hong Kong into a “new era of smart banking”. Brief details of the consultation can be found in our briefing of February 2018.

The framework focuses at this stage on retail banking, but banks are welcome to extend the framework to other banking businesses as they consider appropriate. Please click here to read more.

 

William Hallatt
William Hallatt
Head of Financial Services Regulatory, Asia
+852 2101 4036
Hannah Cassidy
Hannah Cassidy
Partner, Hong Kong
+852 2101 4133
Valerie Tao
Valerie Tao
Professional Support Lawyer, Hong Kong
+852 2101 4125

MANDATORY REFERENCE CHECKS TO STOP ROLLING BAD APPLES – MAS ISSUES CONSULTATION PAPER ON PROPOSED REQUIREMENTS

On 6 July 2018, the Monetary Authority of Singapore (MAS) issued a Consultation Paper which, among other things, proposes requirements for Financial Institutions (FIs) to conduct and respond to reference checks on representatives (Reference Check Consultation Paper). Submissions on the Reference Check Consultation Paper close on 6 August 2018. Continue reading

Hong Kong open-ended fund company regime expected to commence on 30 July 2018

On 18 May 2018, the Hong Kong Securities and Futures Commission (SFCpublished the conclusions to its consultation on the detailed legal and regulatory requirements applicable to the upcoming open-ended fund company (OFC) regime.

The detailed requirements are set out in the Securities and Futures (Open-ended Fund Companies) Rules (OFC Rules) and the Code on Open-ended Fund Companies (OFC Code), which supplement the basic OFC framework to be introduced via amendments to the Securities and Futures Ordinance.

To read our full briefing on the regime, please click here.

 

William Hallatt
William Hallatt
Partner, Head of Financial Services Regulatory, Hong Kong
+852 2101 4036
Hannah Cassidy
Hannah Cassidy
Partner, Hong Kong
+852 2101 4133
Jackie Lam
Jackie Lam
Associate, Hong Kong
+852 2101 4194

FCA consults on proposals to regulate claims management firms

The Financial Conduct Authority (FCA) has issued a joint consultation paper – Claims management: how we propose to regulate claims management companies (CP18/15) (the Consultation) with the Financial Ombudsman Service (FOS) setting out draft proposals on how the FCA intends to authorise and regulate claims management companies  (CMCs).

This Consultation will be of interest to:

  • CMC’s operating in England, Scotland and Wales.
  • Organisations that are not CMCs but have the potential to be affected by them

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FCA issues outcome of high cost credit review and seeks feedback on proposals for new rules and guidance for overdrafts and high cost credit

The Financial Conduct Authority (FCA) has issued a press release setting out the outcome of its high-cost credit review (HCCR) together with new proposals on rules and guidance designed to protect consumers that use overdrafts and high-cost credit (the Proposals). Continue reading

ESAs consultations: amendments to EMIR for securitisation issuers

In May 2018, the Joint Committee of the European Supervisory Authorities (“ESAs“) launched two consultations (the “Consultations“) to amend EMIR concerning (i) the clearing obligation and (ii) certain risk mitigation techniques for non-cleared OTC derivatives in respect of securitisation issuers.

Prior to the Consultations, the Securitisation Regulation amended EMIR to ensure one goal: consistency of treatment between derivatives entered into by covered bonds issuers; and derivatives entered into by simple, transparent and standardised (“STS“) securitisation issuers. Please click here to read our full briefing.

 

Dina Albagli
Dina Albagli
Partner, London
+44 20 7466 2390
Joy Amis
Joy Amis
Partner, London
+44 20 7466 2840
Jake Jackaman
Jake Jackaman
Partner, London
+44 20 7466 2883
Nick May
Nick May
Partner, London
+44 20 7466 2617
Michael Poulton
Michael Poulton
Partner, London
+44 20 7466 2777