Financial Services Regulatory Bulletin - Q4 2009


The Financial Services Bill

The Financial Services Bill was introduced to Parliament on 19 November 2009 and builds on the Banking Act 2009, which addressed the role, objectives and governance of the Bank of England; the resolution of failing institutions; and improving the framework for compensation. The FS Bill follows HMT's "White Paper on Reforming Financial Markets" published on 8 July 2009, which refers to the Turner Review and its accompanying FSA discussion paper (DP09/2). The FS Bill takes forward only some of the Government's White Paper recommendations at this stage, and it is uncertain that the Government will have time to enact the FS Bill before the 2010 General Election.
Click here to read the full article

Remuneration - widening the net

In its most recent initiative to address concerns over remuneration in the financial services sector, the Government introduced draft legislation in the pre-budget report to establish a new bank payroll tax.
Click here to read the full article

Corporate Governance - The Walker Review reports

The Review's final recommendations were published on 26 November 2009. The FSA has stated its support of the Review's conclusions and has confirmed that it will set in train a number of actions to implement recommendations relevant to it
Click here to read the full article

Building societies experience collateral damage

The Government has stated its commitment to helping the UK mutual sector to grow, serve a wider section of the community and provide a competitive counterweight to the banking sector. However, the reality is that building societies have been indirectly disadvantaged by the effects of the crisis, by reason of consolidation that has taken place in the retail banking sector and by the regulatory maelstrom precipitated, in the main, by the banks.
Click here to read the full article

Draft Directive on Alternative Investment Fund Managers update

Although the Swedish Presidency's conciliatory "compromise proposal" published on 12 November 2009 failed in the face of apparent Franco-German opposition, there is still an expectation that many of the more contentious aspects of the draft Directive on Alternative Investment Fund Managers, can be mitigated even under the Spanish who assume the Presidency from January, and are regarded as less sympathetic to the alternative funds industry.
Click here to read the full article

The FSA has a strong enforcement year

The past year has been one when a larger and emboldened FSA Enforcement Division has really got into its stride. Long gone is the notion that the FSA is "not an enforcement-led regulator" when its focus was on relationship-building and risk-based supervision. Hector Sants has spoken this year of how certain market participants should "be very frightened” of the FSA and Margaret Cole has continued to stress the importance of "credible deterrence".
Click here to read the full article

Retail Distribution Review - moving to endgame

On 16 December, the FSA published "Delivering the Retail Distribution Review: Professionalism; Corporate pensions; and Applicability of RDR proposals to pure protection advice" (CP09/31). Amongst other things, the proposals include the possibility of extending the restrictions on commission to the sale of protection products; and concessions on the requirement for examinations, with options for "alternative assessments" for investment advisers. It is not yet clear what form such assessments will take but their methodology must satisfy the requirements of the qualifications regulator.
Click here to read the full article

Lehman's case informs FSA CASS review

On 15 December, the High Court ruled in favour of a number of hedge funds in the matter of Lehman Brothers International (Europe) (in administration) (“LBIE”). The Administrators of LBIE sought the court's opinion as to how those of LBIE’s assets which it was holding pursuant to chapter 7 of the FSA Client money rules (“CASS 7”) should be distributed.
Click here to read the full article