Financial Services Regulatory Bulletin - Q1 2010


Delays in reaching agreement on the draft proposed directive on Alternative Investment Fund Managers

Both the European Parliament and the Council of the European Union ("the Council") have delayed arriving at their respective positions on the proposed directive on Alternative Investment Fund Managers ("the Directive"). Both bodies must reach a compromise on the Directive as part of the co-decision process.
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FSA sets out its priorities for 2010/11

On 17 March 2010, the FSA published its Business Plan for 2010/11. The Business Plan sets out the FSA's priorities and initiatives for the coming year to address the risks identified in the FRO, which was published on 10 March 2010.
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FSA Enforcement still on the front foot

The first quarter of 2010 has seen no let up in the FSA's determination to follow its credible deterrence strategy as part of its tougher stance on enforcement.
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Client assets come under the spotlight

On 19 January 2010, Sally Dewar, Managing Director of Risk at the FSA wrote to CEOs of major insurance brokers and investment firms which are able to hold money or assets on behalf of clients, drawing their attention to the FSA’s concerns over the handling of clients’ money and assets.
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FSA makes further moves towards product regulation

The FSA has become increasingly concerned about product design, characterisation and communication, particularly in relation to capital protection products, payment protection insurance ("PPI") and with-profits products. Traditionally the FSA has taken steps through its supervision of its firms to encourage them to treat customers fairly while refraining from actual regulation of products. The focus has been on disclosure, sales processes and suitability. The FSA now sees significant limitations to this approach.
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Regulatory changes for building societies

On 26 March, the FSA announced that new handbook guidance to ensure building societies diversifying from traditional business models have proper risk management systems and skills will come into effect on 1 April 2010 (with transitional provisions). This announcement follows Consultation Paper 09/17 "A Specialist Sourcebook for Building Societies: Enhanced supervisory guidance on Financial and Credit Risk Management" which the FSA published in June 2009.
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