UBS fined £27.6m for transaction reporting failures

The Financial Conduct Authority has imposed a fine of £27,599,400 on UBS AG for breaches of transaction reporting obligations imposed by MiFID (the Markets in Financial Instruments Directive (2004/39/EC), as well as a breach of Principle 3 of the FCA’s Principles of Business, which requires regulated firms to take reasonable care to organize and control their affairs responsibly and effectively, with adequate risk management systems.

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HM Treasury advisory notice on money laundering and terrorist financing controls in high-risk jurisdictions

Overview

HM Treasury published an updated advisory notice on money laundering and terrorist financing controls on 26 February 2019, identifying risk ratings and measures to be adopted by the UK regulated sector when dealing with high-risk countries.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 require the UK regulated sector to apply enhanced customer due diligence measures and enhanced ongoing monitoring to any business relationship or transaction with persons in high risk countries. The 2017 Regulations mandate the UK regulated sector to take into account “geographical risk factors” when assessing risk and the extent of measures that should be taken to manage and mitigate that risk. Continue Reading

Financial Ombudsman Service compensation limit increases to £350,000 on 1 April 2019

The Financial Conduct Authority (“FCA”) has published a policy statement detailing that the Financial Ombudsman Service (“FOS”) compensation limit of £150,000 will increase to £350,000 from 1 April 2019. This follows a Consultation on the topic of the FOS award limit, which was open between October and December 2018.  

The new limit of £350,000 applies to complaints about actions or omissions of firms, which took place after 1 April 2019. For complaints about actions/omissions occurring prior to 1 April, but referred to the FOS after that date, there is a smaller increase in the limit to £160,000. The policy statement further confirms that the financial awards limit will now automatically adjust annually in line with inflation.

Finally, the FCA has also announced that recourse to the FOS will now be available to larger small and medium-sized enterprises (“SMEs”) as well as individual consumers. To qualify, the SME must have an annual turnover of under £6.5 million, an annual balance sheet total of under £5 million, or fewer than 50 employees. This extension has been introduced by the FCA in recognition of the cost and time difficulties faced by consumers and SMEs when considering taking firms to Court. In particular, Andrew Bailey, Chief Executive of the FCA, stated that “…it is essential [that consumers and SMEs] can receive fair compensation from the Financial Ombudsman Service when things go wrong”.

These changes could significantly increase the value and number of financial awards made as a result of complaints to the FOS. Firms should also note that the implementation period for these new rules is relatively short.

 

 

English Court refuses permission for collateral disclosure of evidence to the FBI

In ACL Netherlands BV and others v Lynch and another [2019] EWHC 249 (Ch) (“ACL“), the High Court said that an applicant is unlikely to be granted permission for collateral use of evidence  disclosed in English civil proceedings, unless there are special circumstances amounting to ‘cogent and persuasive reasons’.

Judge holding gavel in courtroom

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FCA Releases Final Brexit Guidance to Financial Sector

Overview

The Financial Conduct Authority published a policy statement on 28 February 2019 setting out near-final rules and guidance that will apply to financial services firms in the event of a no-deal Brexit. Most notable is the introduction of a 15-month ‘grace period’ for firms to comply with rule changes in the event of a no-deal Brexit on 29 March 2019.

 The FCA has been in the process of converting EU rules into domestic rules but the changes made will have a knock-on effect on firms’ reporting systems. These rules (which will require Treasury approval before coming into effect) seek to combat that knock-on effect by giving financial firms the grace period in order to comply.Banks, asset managers, insurers and brokers would be covered by these updated rules and could face penalties if they do not comply in time.

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Breach of Competition Law by Asset Managers leads to FCA Fines – First Formal Decision from the FCA under its Competition Enforcement Powers

FCA

The conclusion of a three-year investigation into price collusion in an initial public offering (‘IPO’) saw the FCA issue a decision, on 21 February 2019, which finds three investment firms (the ‘Firms’) to have breached competition law with fines of £414,900 have been imposed as a result. This is the FCA’s first formal decision under its competition enforcement powers.

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