Purpose
1. This article rounds up some of the key recent developments in UK financial services that may be of interest to clients.
FCA Market Watch 79 – Market Abuse Surveillance
2. The FCA has published Market Watch 79. In it, the FCA discusses (a) market abuse surveillance issues caused by problems with factors such as data and automated alert logic, and (b) the FCA’s recent peer review of firms’ testing of front-running surveillance models. The FCA have identified issues with surveillance arrangements not working as intended, as a result of faulty implementation or bugs. The FCA offer some examples of the types of issues it has seen. The FCA also outlines some steps to consider, including in relation to data governance, model testing and model implementation and amendment.
FSRC Call for Evidence re FCA consultation on enforcement investigations
3. In February 2024 the FCA published consultation paper CP24/2: Our Enforcement Guide and publicising enforcement investigations—a new approach. We have written about this separately. The consultation included proposals around how the FCA will “publicise our enforcement investigations to increase transparency about our enforcement work and its deterrent effect and to disseminate best practice.” The proposals are dramatic and far-reaching, and have seen widespread condemnation from financial services firms. The consultation closed on 30 April. The Financial Services Regulation Committee (FSRC), chaired by Lord Forsyth of Drumlean, wrote to the FCA on 18 April to express concerns about the proposals contained in the consultation. The FSRC has now issued a call for evidence seeking views on the FCA’s proposals. The FSRC invite anyone with expertise or experience of the matters relating to consultation CP24/2 to share their views with the Committee, including any views in favour of the proposals or concerns about the proposed changes, by 4 June 2024. This is effectively a second chance to voice your opposition, so don’t miss out!
FCA Guidance for Social Media Promotions
4. The FCA has published finalised guidance on financial promotions in social media (FG24/1). This includes cryptoasset promotions. The draft is almost entirely unchanged from that which the FCA consulted on in July last year. A key point is that where firms are working with influencers and other affiliates, they need to take proactive responsibility for their communication of financial promotions.
Consumer Duty
5. The FCA is due to review how firms are supporting customers regarding the Consumer Duty. In the summer of this year, it is due to contact around 400 firms for information, and then later in the year it will request more detailed information from a smaller selection of firms. Feedback will be published in early 2025.
FCA Consultation on Financial Crime Guide
6. The FCA publishes a financial crime guide, which gives guidance on countering financial crime risks. The FCA has proposed updates to the guide in relation to sanctions, proliferation financing and transaction monitoring. It is also proposing to add references to cryptoassets and the Consumer Duty. The FCA is undertaking a consultation (CP 24/9), which is relevant to all FCA financial crime supervised firms, and firms that the FCA supervise under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs), including cryptoasset businesses. Comments are due by 27 June 2024.
DORA
8. The European Supervisory Authorities (ESAs) are launching a voluntary exercise for the collection of the registers of information of contractual arrangements on the use of ICT third party service providers by financial entities. Under the Digital Operation Resilience Act (DORA) and starting from 2025, financial entities will have to maintain registers of information regarding their use of ICT third-party providers. In the dry run exercise, this information will be collected from financial entities through their competent authorities and will serve as preparation for the implementation and reporting of registers of information under DORA. The ad-hoc data collection is expected to be launched in May 2024 with the financial entities expecting to submit their registers of information to the ESAs through their competent authorities between 1 July and 30 August.
We’re doing lots of work on DORA, and the deadline of 17 January 2025 is fast approaching; so, if you have any questions, please get in touch.
Comments