Temporary Product Intervention Rules: inadequate safeguards

The FSA is consulting (as it is required to do under the Act) on the new power given to the FCA under the Financial Services Act 2012 to issue temporary product intervention rules without the chore of a consultation (CP12/35).

Such rules cannot be in force for more than 12 months – but that alone is far from an adequate safeguard when the rules we are talking about include banning a product from sale.

So, what more is needed to allay concerns that it will be used inappropriately? Continue reading

Suitability and systems: UK FSA fines wealth management firm as further thematic review work continues

Following on from its initial thematic work on wealth management firms, the FSA has fined Savoy Investment Management Limited (Savoy) £412,000 for failures to take reasonable care to ensure the suitability of the investment portfolios of its wealth management clients between April 2010 and 31 January 2012, in breach of Principles 3 and 9 and the rules set out in COBS 9.2.1R, 9.2.2R and 9.2.3R. Continue reading

Dear CEO: please confirm your asset management firm has identified and mitigated the risk of conflicts of interest between it and its customers

Conflicts of interest between asset managers and their customers: Identifying and mitigating the risks is a ‘Dear CEO’ publication in which the FSA summarises the output of a thematic review undertaken between June 2011 and February 2012.  The review was initiated after reports from supervisors suggested that the standards and practices of asset managers had suffered some relaxation from what FSA considers to be well-established market norms. Continue reading

FSA fines bank and its former MLRO for failure to comply with anti-money laundering requirements

In May 2012 the FSA issued Final Notices fining Habib Bank AG Zurich (“Habib”) £525,000 for failure to take reasonable care to establish and maintain adequate anti-money laundering (“AML”) systems and controls and fining its former Money Laundering Reporting Officer (“MLRO”) Syed Hussain £17,500 for failure to take reasonable steps to ensure that Habib complied with relevant AML requirements. Please click here for our update which summarises the decisions and identifies the key messages for MLROs.

MiFID II: a greater step away from the RDR?

Key recommendations by the Rapporteur on the investor protection elements of the proposed MiFID II Directive, contain some potentially significant concessions for firms.  However, the recommendations are at odds with the UK’s Retail Distribution Review (RDR) rules.  If the Rapporteur’s position prevails, this is likely to fashion an even greater unlevel playing field across the EU.  It remains to be seen whether the recommendations will follow through into the final report, or indeed how influential the report will ultimately be.  However, it is unlikely to allay existing concerns about the competitiveness of UK firms operating in Europe. Continue reading

The Lehman client money judgment: Supreme Court upholds Court of Appeal decision

The Supreme Court handed down its judgment yesterday in relation to the client money application relating to Lehman Brothers International (Europe) (LBIE). The judgment has a number of implications for firms which hold client money, and for firms who hold money with banks and other firms as clients themselves.   Our briefing summarises the three issues considered in the appeal and the Court’s findings, and also includes a checklist of some key practical points for consideration arising out of the judgment.