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.
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
The Court of Appeal has allowed parties to two claims against LIBOR panel banks to amend their pleadings to include allegations that the banks made implied representations relating to the accuracy of LIBOR. In doing so, the Court held that the amendments were sufficiently arguable so as to have a real prospect of success. Continue reading
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.
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.
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
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
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.
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
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