The FCA publishes proposals to ban sale of crypto-derivatives to retail consumers

The Financial Conduct Authority (“FCA“) has published proposals to ban the sale of derivatives or exchange traded notes (“ETNs“) which reference certain types of cryptoassets (“crypto-derivatives“), to address harm posed to retail consumers. The scope of the ban would extend to the sale, marketing and distribution of all derivatives (ie. options, futures and contracts for difference (“CFDs“)) and ETNs which reference ‘unregulated transferable cryptoassets’ by FCA-regulated firms acting in, or from the, UK to retail consumers (ie. ‘retail clients’ as defined in COBS 3.4). The ban would be implemented through proposed changes to the conduct of business (“COBS“) sourcebook.

Continue reading

SFC and AMF sign MOU on mutual recognition of funds between Hong Kong and France

Last week, the Securities and Futures Commission (SFC) of Hong Kong announced that it had signed a Memorandum of Understanding (MOU) with the Autorité des Marchés Financiers (AMF) of France on mutual recognition of funds (MRF) between Hong Kong and France.

The MOU allows eligible Hong Kong funds and French UCITS funds to be distributed to retail investors in France and the public in Hong Kong respectively, through a streamlined authorisation process. The types of funds currently covered are equity funds, bond funds and mixed funds.

Continue reading

UK: Retail product distribution payments under the FCA spotlight – finalised guidance on inducements and conflicts of interest

The FCA has set an uncompromising compliance standard for what it sees as unacceptable payments from product providers to advisors in the retail investments sector; and laid down a marker for similar payments in the mortgages, protection and other ICOBS sectors. Firms affected must review their distribution/services agreements and other payment arrangements by 16 April 2014. Continue reading

Australia: ASIC releases reports on capital protected products

ASIC has released two reports on ‘capital protected’ and ‘capital guaranteed’ investment products: a report that ASIC describes as a ‘health check’ on the capital protected and capital guaranteed products market (Report 340); and a research report into retail investors’ understanding of those products (Report 341).  These reports echo, and are a timely reminder of, a number of the themes from ASIC’s 2010 “Review of disclosure for capital protected products and retail structured or derivative products”, and confirm that capital protected and capital guaranteed structured products remain on ASIC’s radar.  Structured product issuers and advisers should familiarise themselves with these reports, and revisit their use of ‘protected’ or ‘guaranteed’ labels, particularly where the protection or guarantee is subject to conditions.   To read our fuller briefing, click here.


UK: Financial Conduct Authority (FCA)’s Risk Outlook and Business Plan for 2013 published

The FCA’s Risk Outlook (FCA RO) has been published today, setting out the regulator’s current thinking on conduct in financial markets by analysing the root causes and emergence of conduct risk, and identifying the forward-looking risks that the FCA deems pose the greatest risk to its objectives.  Whilst the document inevitably focuses on consumer detriment arising from the wrong products ending up in the wrong hands, there is welcome recognition that this needs to be balanced against the detriment to society of people not being able to get access to the right products.  The FCA stresses its collective responsibility with industry to co-operate in acting to address these challenges.

The FCA’s Business Plan, also published today, confirms that the FCA’s strategic priorities are driven by the key forward-looking risks in the FCA RO, as well as the FCA’s operational objectives, and the need to address crystallised risks such as LIBOR, PPI and Interest Rate Swaps.  The key priority risks identified in the FCA RO are set out below together with the work planned to address them.  We also summarise the ongoing work the FCA plans to meet its operational objectives, including enforcement and financial crime priorities.   Martin Wheatley commented that “achieving the FCA vision is in all of our interests, not only socially, but also financially”.  The FCA’s budget – which will be wholly separate from that of the PRA – comes in at £445.7m, just over 80% of the FSA’s budget as single regulator for 2012/2013.

Continue reading

UK OFT publishes guidance on its power to suspend consumer credit licences

The OFT has published guidance on how and when it will use its new power to suspend consumer credit licences. Section 108 of the Financial Services Act 2012 amends the Consumer Credit Act 1974 by adding new sections 32A (mechanics of the new power), 32B (duration of the suspension) and 34ZA (the licensee’s right to representations).  Continue reading

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

French AMF calls on investors to take basic precautions in relation to non-financial investments: consumer responsibility?

The French AMF has issued a public warning to investors who may, in the light of current low interest rates, be tempted to invest in unregulated sectors.  Highlighting an increase in the number of parties offering favourable investment returns for non-financial products as diverse as letters and manuscripts, works of art, solar panels, stamps, wine and diamonds, the AMF reminds investors that such unregulated products are not subject to the consumer protection rules governing the sale of financial products, that the contractual documentation is not subject to AMF review, and that if problems subsequently arise, rights of redress are likely to be limited.

Continue reading

UK FSA consults on new capital regime for Self-Invested Personal Pension (SIPP) operators

In light of the failure and near failure of a number of SIPP operators since 2007, the FSA has concluded that its current prudential requirements are no longer sufficient to support the orderly wind-down of a SIPP operator.  The FSA has therefore today published its consultation paper on its proposed new capital regime for SIPP operators. Continue reading