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Financial Services - Regulatory & Risk

Blog

Crypto Assets and ICOs as seen by the SMSG - Part 2

Published on 09 November 2018. By Ella Shanks, Trainee Solicitor

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On 19 October 2018, the Securities and Markets Stakeholder Group (SMSG) published a report on initial coin offerings (ICOs) and crypto assets. The report is a useful one-stop shop for relevant definitions, classifications and statistics and we summarise the highlights in this two-part series.

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Blog

Interest-only mortgages - the new PPI?

Published on 08 November 2018. By Anthony Cutler, Associate

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A new wave of complaints is hitting the mortgage market, concerning interest-only mortgages taken out before the financial crisis. Why is this happening and what should we look out for?

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Part three: food for thought – some key features of the SMCR

Published on 06 November 2018. By James Kaufmann, Legal Director

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Having laid out the basic architecture under the SMCR, this final part of the series looks more closely at various elements of the new regime, which we consider particularly noteworthy and which give rise to specific issues to be addressed.

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Blog

Crypto Assets and ICOs as seen by ESMA's SMSG

Published on 05 November 2018. By Ella Shanks, Trainee Solicitor

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On 19 October 2018, ESMA's Securities and Markets Stakeholder Group (SMSG) published a report on initial coin offerings (ICOs) and crypto assets. The report is a useful one-stop shop for relevant definitions, classifications and statistics and we summarise the highlights in this two-part series.

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Blog

Part 2: What does the SMCR mean for me?

Published on 29 October 2018. By James Kaufmann, Legal Director

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The new “Conduct Rules” are a minimum, basic standard of good personal conduct and behaviour applicable to all financial services personnel, and against which the FCA will hold individuals to account.

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Blog

Hong Kong's Securities and Futures Commission to target cryptocurrency exchanges

Published on 24 October 2018. By Ben Yates, Senior Consultant

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The outgoing chairman of Hong Kong’s Securities and Futures Commission (the “SFC”), Carlson Tong Ka-shing, has reportedly stated that the SFC is looking to extend its regulatory reach to Hong Kong’s cryptocurrency exchanges, which have so far been operating in a largely unregulated sphere.

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Blog

Part 1: What is the SMCR?

Published on 23 October 2018. By James Kaufmann, Legal Director

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The Senior Managers & Certification Regime (“SMCR”) will replace the FCA’s existing approved persons regime and represents a paradigm shift in the financial services industry in the UK.

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Blog

FCA proposes FOS award limit increase to £350,000

Published on 17 October 2018. By David Allinson, Senior Associate and Ashley Daniells, Associate

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The FCA has announced plans for an increase in the current FOS compensation cap. Currently standing at £150,000, the changes would see the limit increase to £350,000, an increase of 133%. It is also proposed that the limit will further increase automatically each year in line with inflation.

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Blog

What's next for the FCA after Brexit?

Published on 10 October 2018. By Ashley Daniells, Associate

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Brexit - you can rarely go a day without hearing this word. But what does it mean in real terms for financial professionals? The FCA has acknowledged that a looming Brexit will have implications for how the FCA works in the future and has begun to discuss its plans.

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Blog

Relief for Skilled Persons as the Court of Appeal rules they are not amenable to judicial review

Published on 04 October 2018. By Davina Given, Partner and Lucy Kerr, Senior Associate

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In what circumstances might skilled persons appointed under FSMA be subject to judicial review? The Court of Appeal recently explored the vulnerability of skilled persons to judicial review and dismissed an application for judicial review against KPMG, acting as a skilled person on behalf of Barclays Bank, as it found the framework in which KPMG operated was not sufficient to bring it into the public law arena.

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Blog

SFC Disciplinary Action – Customer/Personal Data

Published on 03 October 2018. By Ben Yates, Senior Consultant

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On 20 September 2018, the Securities and Futures Commission (“SFC”) banned an individual named Ngo Wing Chun from re-entering the industry for 12 months (the “Decision”) for having taken the personal data of approximately 995 customers from his employer and emailed it to his personal email. The evidence showed that none of the information had been disclosed to any third parties.

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Blog

ESMA renews restrictions on CFDs and binary options

Published on 02 October 2018. By Lucy Kerr, Senior Associate

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The European Securities and Markets Authority (ESMA) has decided to renew intervention measures, which restrict the sale of contracts for difference (CFDs) and binary options to retail investors, for a further three months.

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Blog

Treasury Committee Calls for Cryptocurrencies to be Regulated by the FCA as a Matter of Urgency

Published on 21 September 2018. By James Kaufmann, Legal Director

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The House of Commons' Treasury Committee published its report on Crypto-assets on 19 September 2018. The report strongly recommends that cryptocurrencies and ICOs be considered regulated activities in the UK as a matter of urgency. But realistically, when can we expect the crypto-market to be regulated in the UK?

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Blog

Pension watchdogs launch joint advertising campaign to warn against scammer tactics

Published on 20 August 2018. By Sarah Dowding, Senior Associate

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The Financial Conduct Authority and The Pensions Regulator have launched a joint TV advertising campaign to raise awareness about pension scams and the common tactics deployed by fraudsters.

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Blog

Trustees of defined benefit schemes – are they on the hook for pension transfers? Yes says the Pension Ombudsman

Published on 09 August 2018. By Rachael Healey, Legal Director

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The Pension Ombudsman has upheld a complaint against the trustees of a defined benefit scheme for failing to warn of the risks of a transfer to a pension liberation scheme. The Pension Ombudsman found that had the trustees provided documentation recommended under guidance from the Pension Regulator and identified and warned the member of certain hallmarks of a pension liberation scheme, the member would not have transferred his pension. The Pension Ombudsman has directed the trustees to reinstate the complainant's pension in the defined benefit scheme and pay £1,000 in distress and inconvenience.

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Blog

EIOPA Report on Cyber Insurance raises awareness and understanding of cyber risk in the European market

Published on 08 August 2018. By Anthony Cutler, Associate and Bethan Griffiths, Associate

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The European Insurance and Occupational Pensions Authority ("EIOPA") has published a report "Understanding Cyber Insurance – A Structured Dialogue with Insurance Companies", which heralds its first attempt to enhance understanding of cyber risk with a focus on the European market.

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Blog

New rules for peer-to-peer lending announced by FCA

Published on 01 August 2018. By Ashley Daniells, Associate

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The popularity of peer-to-peer (P2P) lending has increased exponentially in recent years, with nearly £10 billion being transferred through such platforms in the past ten years. In an attempt to fix "increasingly complex business structures", the FCA has announced new plans for new rules for peer-to-peer (P2P) lending.

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Blog

Is a "Duty of Care" required for financial services firms?

Published on 23 July 2018. By Katie Fry-Paul, Trainee Solicitor

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On 17 July 2018, the Financial Conduct Authority (FCA) released DP18/5 – its discussion paper on a duty of care and potential alternative approaches. In this article we summarise the discussion paper and then examine briefly whether a new duty is required.

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Blog

Accountants, auditors and actuaries beware: the FRC continues to show its teeth, as its future stands in the balance

Published on 18 July 2018. By Rachel Ford, Associate

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In widely publicised news, the Financial Reporting Council (FRC) continues to levy record high fines and has cast criticism on a number of firms. What appears to be an unforgiving stance taken by the regulator seems to come in the wake of the review into whether or not it should be disbanded, or folded into another regulatory organisation.

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Blog

The future of SIPPs – FCA responds to the Work and Pensions Committee

Published on 05 July 2018. By Rachael Healey, Legal Director

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A couple of weeks ago we reported on 5 pointed questions raised by the Work and Pensions Committee of the FCA in relation to the SIPP market. Those questions included whether or not the FCA was considering banning non-standard investments in SIPPs. The FCA has now responded. The response includes the FCA's views on the due diligence it expects of SIPP providers when it comes to non-standard investments.

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Blog

IMF provides framework to analyse cyber risk for the financial sector

Published on 26 June 2018. By Ashley Daniells, Associate

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The increased risk of cybercrime is well known to all. Attacks against large companies has meant that the International Monetary Fund have taken action by publishing a working paper which predicts the average annual losses to financial institutions.

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Blog

Action required: mandatory disclosure of cross-border tax planning arrangements – effective (very) soon

Published on 12 June 2018. By Ben Roberts, Senior Associate

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New EU rules providing for mandatory disclosure of certain cross-border tax planning arrangements by intermediaries and taxpayers will enter into force on 25 June 2018. Although reports to tax authorities will not be required until July/August 2020, the retrospective nature of the new rules means that reportable arrangements implemented after 25 June could be reportable in this first batch of (2020) reports. Preparations for the new regime should therefore begin now.

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Blog

ESMA formally adopts new measures to restrict the sale of binary options and CFDs

Published on 08 June 2018. By Lucy Kerr, Senior Associate and Charlotte Thompson, Associate

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On 1 June 2018, the European Securities and Markets Authority (ESMA) formally adopted new measures to prohibit the sale of binary options and to place restrictions on the provision of contracts for difference (CFDs) to retail investors. The measures will apply to binary options from 2 July 2018 and CFDs from 1 August 2018.

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Blog

EFAMA publishes revised Stewardship Code

Published on 08 June 2018. By Anthony Shatz, Partner and Katie Fry-Paul, Trainee Solicitor

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On 31 May 2018, the European Fund and Asset Management Association (EFAMA) published its Stewardship Code, setting out best practice principles for asset managers (the Code).

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Pension watchdogs formalise information sharing

Published on 31 May 2018. By Sarah Dowding, Senior Associate

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The Pensions Ombudsman and The Pensions Regulator have signed an information-sharing agreement in light of the recent rise in pension scams. The agreement will see the organisations share information about complaints and concerns with the aim of protecting scheme members.

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Blog

SIPPs – the work and pensions committee asks some pointed questions of the FCA

Published on 31 May 2018. By Rachael Healey, Legal Director

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The Work and Pensions Committee has sent a letter to the FCA following its review of defined benefit pension transfers raising 5 pointed questions in relation to SIPPs.

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Blog

Crypto and Blockchain

Published on 25 May 2018. By James Kaufmann, Legal Director

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In February, the House of Commons Treasury Committee announced an inquiry in to digital currencies. The inquiry covers the role of digital currencies in the UK and the potential impact of distributed ledger technology (blockchain) on financial institutions and financial infrastructure.

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TPR announces new approach for pension regulations

Published on 17 May 2018. By Ashley Daniells, Associate

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The Pensions Regulator (TPR) has announced new plans for the regulation of pensions, which will see a "clearer, quicker and tougher" approach. The plans are aimed at increasing standards in the pension sector following criticisms levied at TRP after the collapse of businesses such as Carillion and BHS.

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Blog

Cybercrime and its impact on D&O insurance

Published on 15 May 2018. By Ashley Daniells, Associate and Drew Naylor, Senior Associate

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Cybercrime has risen in recent years, perhaps more than anybody ever expected. For a long time, the focus was on defending businesses against such crimes. Now, with more people aware of cybercrime and the risks, insurers are becoming increasingly aware of the impact such crime may have on D&O policies.

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Blog

FSCS – reviewing the funding of the fund of last resort

Published on 09 May 2018. By Sarah Dowding, Senior Associate

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In its third consultation paper on this topic, the FCA has recently confirmed that: - FSCS claims in respect of investment advice will benefit from an increased compensation cap, from £50,000 to £85,000; - product providers will have to start making contributions to FSCS funding for insurance and investment advice claims; and - it proposes new rules to prevent personal investment firms' insurers excluding cover for claims where the firm or a third party becomes insolvent.

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Publication

Cryptocurrency pre-ICO funding – a regulatory overview

04 May 2018

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The FCA has issued a discussion paper targeted at the non-workplace pension market. The paper marks the start of the FCA's work looking at whether there is harm in the non-workplace pension market and to better understand the potential presence, nature, extent and cause of any harm.

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Publication

Pension transfers

30 April 2018

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The FCA tries again to get it right with new rules and a further consultation paper.

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The FCA publishes its 2018/19 Business Plan

Published on 23 April 2018. By Charlotte Thompson, Associate

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On 9 April 2018 the FCA published its Business Plan for 2018/19, demonstrating its continued focus on culture and governance in firms, tackling financial crime and the role of technology in the financial services industry.

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Blog

Unregulated cryptocurrencies – an end in sight?

Published on 18 April 2018. By Ashley Daniells, Associate and Matthew Watson, Associate

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Since their creation, cryptocurrencies have been somewhat of an enigma. Decentralised digital currencies such as Bitcoin have remained unregulated, despite becoming more prevalent in our day-to-day lives. That could be about to change with the FCA announcing plans to include them as part of their other regulated products or services.

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Blog

FCA success in the High Court: Compensation of £16.9m awarded to misled investors

Published on 16 April 2018. By Lucy Kerr, Senior Associate

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A five-year court battle between the Financial Conduct Authority ("FCA") and Capital Alternatives Limited concluded on 26 March 2018 when the High Court used its restitution powers under the Financial Services and Markets Act 2000 to award compensation to investors who lost money invested with Capital Alternatives.

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Blog

ESMA cracks down on the sale of binary options and CFDs to retail investors

Published on 29 March 2018. By Lucy Kerr, Senior Associate

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The European Securities and Markets Authority (ESMA) has announced its intention to prohibit the sale of binary options to retail investors and to place restrictions on the sale of contracts for difference (CFDs). This is the first use of ESMA's new intervention powers under MiFID II.

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FCA reviews approach to enforcement and penalties

Published on 28 March 2018. By Ashley Daniells, Associate and Sarah Dowding, Senior Associate

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The FCA has announced plans in its recent consultation paper on enforcement to review how it applies penalties which have gone from record highs to record lows over the past 5 years.

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Blog

Frederick & Others v Positive Solutions Limited – a win for principals on vicarious liability

Published on 14 March 2018. By David Allinson, Senior Associate and Lucy Joyce, Senior Associate

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The Court of Appeal has reinforced the idea that liability will only attach to a principal in cases where a tort committed by an agent can be shown to have been completed as an integral part of the business activities of the principal. Furthermore, all elements composing the tort must take place within the course of the agency. The case thickens the lines defining what conduct of an agent could lead to recovery from the principal.

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Blog

Changes on the horizon - FCA consults on non-workplace pensions

Published on 22 February 2018. By Rachael Healey, Legal Director

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The FCA has issued a discussion paper targeted at the non-workplace pension market. The paper marks the start of the FCA's work looking at whether there is harm in the non-workplace pension market and to better understand the potential presence, nature, extent and cause of any harm.

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Blog

Privilege: A welcome respite from ENRC?

Published on 05 February 2018. By Davina Given, Partner and Mafruhdha Miah, Trainee Solicitor

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Are interviews held with employees to prepare a report intended to deter a governmental authority from taking legal action privileged?

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ESMA to use new powers to attack the sale of CFDs and binary bets to retail investors

Published on 25 January 2018. By Lucy Kerr, Senior Associate

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ESMA has launched a public consultation on measures to protect retail investors investing in contracts for difference (CFDs) and binary bets. Potential changes include wide-ranging restrictions on the marketing and sale of CFDs, and a complete prohibition on the sale of binary bets to retail investors. An intervention would mark ESMA's first use of its new powers under MiFID II, which came into force on 3 January.

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FOS consultation on SME access to Ombudsman service

Published on 23 January 2018. By David Allinson, Senior Associate

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The FCA is currently consulting on proposed new rules to allow larger small and medium sized enterprises to refer complaints to the FOS.

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The FCA pledges to take action against providers of contracts for difference

Published on 12 January 2018. By Lucy Kerr, Senior Associate

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The FCA has concluded that consumers are at "serious risk of harm" due to the poor practices of some providers and distributors of CFDs. The regulator will take further action against at least one firm in its latest crack-down on these "complex, high-risk" products.

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Thoughts on the FCA's fund fee transparency proposals

Published on 11 January 2018. By James Kaufmann, Legal Director

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Alternative investment funds may soon be required to report total cost of ownership in a standardised form. Work on new templates in ongoing, and fund managers need to be aware of the situation and to be involved in this important debate that has so far been largely overlooked.

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Initial Coin Offerings – the digital financing process under global scrutiny

Published on 08 December 2017. By Rachel Ford, Associate

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In an era of social media platforms and the like, the technological world creeps into its corporate counterpart of today. Initial Coin Offerings (ICOs) storm the corporate world by force, but what does the future hold for the new phenomenon?

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FCA revisits FSCS funding proposals, and abandons plans for significant changes to professional indemnity insurance requirements

Published on 01 November 2017. By Robert Morris, Partner

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The FCA has published a second consultation paper on the thorny subject of FSCS funding. Although not widely reported so far, the new consultation makes it clear that the FCA will not, after all, consult on significant changes to personal investment firms' professional indemnity insurance requirements.

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FCA allows confidential report to be scrutinised by Treasury Select Committee

31 October 2017

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The FCA has allowed the Treasury Select Committee to review its s.166 report into RBS' Global Restructuring Group (GRG) and has published an interim summary of the report. It is possible that the threat of publication will play on the minds of firms subject to s.166 reports, which may reduce cooperation with skilled persons and therefore the efficacy of this investigatory power.

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The FCA makes clear its expectations of financial advisers

Published on 18 October 2017. By Charlotte Thompson, Associate

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Are there dark clouds on the horizon for SIPP providers?

Published on 17 October 2017. By David Allinson, Senior Associate

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According to Citywire, the FCA is poised to complete further supervisory work on the SIPP industry with a specific focus on non-standard investments. We understand that the FCA has questioned SIPP providers on the number of high risk investments they hold following a spate of complaints about such products in recent years.

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FCA criticised by Complaints Commissioner for its handling of enforcement limitation issues

Published on 04 October 2017. By Lucy Kerr, Senior Associate

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The Office of the Complaints Commissioner recently upheld two complaints against the FCA for making a "serious mistake" in its management of limitation issues for two connected investigations. The Commissioner criticised the FCA not only for its mismanagement of the limitation issue, but also for the unnecessary delays in concluding its own internal investigation into these complaints.

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