Judgment handed down in FCA’s COVID-19 business interruption insurance test case

The High Court has today handed down judgment in the COVID-19 Business Interruption insurance test case of The Financial Conduct Authority v Arch and Others. Herbert Smith Freehills represented the FCA (who was advancing the claim for policyholders) in the case, which considered 21 lead sample wordings from eight insurers. Following expedited proceedings, the judgment brings highly-anticipated guidance on the proper operation of cover under certain non-damage business interruption insurance extensions.

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Hong Kong Monetary Authority announces LIBOR transition milestones and provides guidance on prudential issues

The Hong Kong Monetary Authority (HKMA) has issued a circular to announce the key milestones that authorised institutions (AIs) should endeavour to achieve in the transition from LIBOR to alternative reference rates (ARRs).

This follows a statement by the Financial Stability Board (FSB) on 1 July 2020 in which it maintained its long-held view that “firms across all jurisdictions should continue their efforts in making wider use of risk-free rates in order to reduce reliance on IBORs where appropriate and in particular to remove remaining dependencies on LIBOR by the end of 2021”, notwithstanding the Covid-19 outbreak.

As advised by the HKMA, AIs should implement a detailed work plan (by product and by business line) to achieve the milestones. If they anticipate difficulties in achieving the milestones, they should reach out to the HKMA as soon as possible.

This e-bulletin provides an overview of the milestones, as well as recent developments in Hong Kong and internationally. Among other things, the HKMA issued a circular on 23 July 2020 to provide guidance to AIs on the frequently asked questions published by the Basel Committee on Banking Supervision (BCBS) on prudential issues relating to the benchmark reform. Continue reading

Lending Standards Board launches consultation on Contingent Reimbursement Model

On 15 July 2020, shortly after the first anniversary of its assumption of governorship of the Contingent Reimbursement Model (“CRM”) Code, the Lending Standards Board (LSB) launched a consultation which will form the basis of its post-implementation review of the CRM Code. The LSB’s review also extends to its Practitioners Guide (which is made available only to signatories of the CRM Code) and its Information for Customers document. Continue reading

FCA finalised guidance for payments firms: safeguarding customer funds and Covid-19

The FCA recently issued its finalised guidance for payments and e-money firms on safeguarding customer funds and Covid-19. The guidance is designed to mitigate, in the short-term, concerns that some firms are not complying with the Payment Services Regulations 2017 (PSRs) and Electronic Money Regulations 2011 (EMRs) safeguarding rules in the way the FCA expects. It is also designed to help prevent potential harm to customers in the event of insolvencies caused by Covid-19.

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Pressure Points: Covid-19 and Fraud

Covid-19 restrictions are being slowly eased, but the impact of the pandemic and related lockdown measures on financial crime risk and on related compliance measures continues to be a high priority for business. In our April briefing, we analysed the impact of the restrictions on the UK criminal justice system – in particular, the practical issues facing law enforcement agencies (LEAs), the courts and the prison service.  Continue reading

IOSCO proposes updated Outsourcing Principles as Covid-19 drives operational resilience to the top of the agenda

Having initially delayed its planned consultation exercise to allow the financial services sector to focus on responding to Covid-19, the International Organization of Securities Commissions (IOSCO) subsequently found the pandemic a catalyst to proceed. Therefore, at the end of May, IOSCO launched its consultation on proposed updates to the 2005 Outsourcing Principles for Market Intermediaries and the 2009 Outsourcing Principles for Markets; feedback on the proposed new Outsourcing Principles (OPs) is requested on or before 1 October 2020. The decision to proceed reflects the acknowledgement that outsourcing is a key element for consideration when assessing operational resilience across the sector.

This post gives a high level summary of the consultation, with a link to our briefing that focuses in more detail on: the scope of application; IOSCO’s definition of outsourcing; intragroup arrangements; concentration risk; and access and audit rights. To provide additional context to IOSCO’s proposals, the associated briefing also catalogues relevant proposals and initiatives which are running concurrent to the consultation exercise.

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