Regulatory News and Updates

2022/05/23 11:00 - Financial Conduct Authority
The FCA, jointly with the Bank of England, and with the endorsement of the Treasury, has today published a Discussion Paper on Money Market Fund (MMFs) reform. This seeks views to inform the development of MMF reform proposals. The FCA has also published guidance on the UK MMF Regulation.

MMFs are a type of open-ended investment fund, considered to be a low-risk investment that gives investors credit risk diversification and a place to hold, rather than grow, their assets.

The Covid pandemic put severe strain on MMFs as investors quickly sought access to cash. There is concern amongst authorities that underlying vulnerabilities within MMFs and threats to financial stability remain. Financial Stability Board (FSB) members, including the UK, agreed to assess and address the vulnerabilities that MMFs pose in their country.
The Information Commissioner's Office (ICO) has fined Clearview AI Inc £7,552,800 for using images of people in the UK, and elsewhere, that were collected from the web and social media to create a global online database that could be used for facial recognition.
Clearview AI Inc breached UK data protection laws by failing to use the information of people in the UK in a way that is fair and transparent, given that individuals are not made aware or would not reasonably expect their personal data to be used in this way.
2022/05/20 05:00 - Financial Conduct Authority
Speech by Charles Randell, Chair of the FCA and PSR, at the Centre for Commercial Law Studies, Queen Mary University of London. Transcript available in the link.
This transcript of the speech by the chair of the FCA is well worth reading by firms. In it Mr Randell covers the relationship between government policy and the regulator and notes where this has succeeded and failed. He also spends some time on how the UK's recent announcements about becoming a world-leader in cryptocurrencies will affect the FSCS and who will pay for the FCA to create the significant new regulation required.
The FCA is to use new powers to more swiftly cancel or change what regulated activities firms are permitted to do, these are known as permissions. This new power is available following a change in the law allowing the FCA to streamline and shorten the removals process. The FCA will provide a firm with two warnings if it believes it is not using its regulatory permission. The FCA will then be able to cancel the permission, or change it, 28 days after the first warning if the firm has not taken appropriate action.
Use it or lose it! This is sensible action from the FCA and will reduce the risk of harm to consumers from zombie firms who may be at more risk of "cloning" by fraudsters. These powers also remind firms to review and remove unused permissions which could benefit them in reduced compliance costs.
The Financial Conduct Authority (FCA) has refused to authorise Alexander Jon Compliance Consulting Limited (AJCC) to provide regulatory hosting services.

This is a service which would have allowed AJCC to take responsibility for firms carrying out regulated activities without being directly FCA approved, known as Appointed Representatives (ARs).
The App-Rep system and regulatory hosting have always seemed at odds with the idea that those offering financial services should be carefully managed and regulated.
2022/05/11 15:31 - Financial Conduct Authority
"We have seen some recent social media posts regarding cryptoassets and non-fungible tokens (NFTs). We cannot comment on individual products. However, as we have said previously, the FCA has not been given regulatory oversight over the direct investments in cryptoassets and NFTs. There are no consumer protections for those who buy any cryptoassets and NFTs, and they are not FSCS protected. As a result, if you buy cryptoassets you should be prepared to lose all the money you invest."

Since cryptoassets are not designated investments under FSMA in the UK, the FCA is not the regulator for them regarding the Financial Promotions Order. Those marketing cryptoassets must abide by the guidelines set out by the Advertising Standards Authority (ASA) in particular pointing out that there is no compensation scheme for investors in them.
The European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) issued today a joint supervisory statement regarding the 'What is this product?' section of the key information document (KID) for packaged retail and insurance-based investment products (PRIIPs). The expectations put forward in the supervisory statement aim at improving the quality of descriptions provided by PRIIPs manufacturers and thereby contribute to better protection of retail investors. 
The "What is this product?" section must contain information on the type of the product, its objectives, the type of retail investor targeted, any insurance coverage and the term of the product, if known.
2022/05/06 12:00 - Bank of England
The expectations in this Supervisory Statement aim to further the PRA's general objective to promote firms' safety and soundness, advanced primarily by minimising the adverse effect firm failure could have on financial stability.
PRA-regulated firms need to ensure they are ready to comply with Rule 2.11 and Rule 8 of the PRA Rulebook which cover a firm's ability to demonstrate that the implementation of its recovery plan is reasonably likely to maintain or restore the firm’s viability and financial position, and that the recovery plan is reasonably likely to be implemented quickly and effectively.
2022/05/05 10:09 - Financial Conduct Authority
Speech by Sheldon Mills, Executive Director, Consumers and Competition, delivered at the Building Societies Annual Conference.
High-level stuff full of good intentions. On New Consumer Duty we note the policy statement and any new rules should be finalised by the end of July.
2022/05/04 14:06 - European Banking Authority
The European Banking Authority (EBA) today published a Report on non-bank lending in response to the European Commission's February 2021 Call for Advice on this topic.
The EBA's proposals aim at addressing risks arising from the provision of lending by non-bank entities in the areas of supervision, consumer protection, anti-money laundering and countering the financing of terrorism (AML/CFT), macro and microprudential risks.
The EBA has noticed the increased variety and volume of lending now happening on non-traditional platforms including crowd-lending and DeFi yield farming.
2022/05/03 18:57 - Financial Conduct Authority
As the FCA continues its transformation, it has recruited three experienced individuals to its senior leadership team.

Mel Gunewardena will take up a Senior Advisor role at the FCA, Graeme Reynolds has been appointed Director of Competition, and Simon Walls has been appointed as an Interim Wholesale Director.

The FCA has successfully recruited over 250 colleagues so far this year as staff turnover returns to pre-pandemic levels.
The FCA is certainly making efforts to transform itself through senior hires, increased staffing, and new "right-sized" regimes. If they succeed it will be better for firms and their customers but there is a long haul ahead as this week's strike action shows.