FCA Business Plan 2021/22 – transformation, accountability, and regulatory priorities for the coming year

The FCA’s annual business plan is a closely watched indicator of what we can expect from the regulator in the coming year. The recently published Business Plan for 2021/22 indicates the FCA’s focus on continued transformation and greater accountability as a regulator. It also sets out key priorities for the FCA for  the coming years across a mix of familiar focus areas and more nascent emerging themes.

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Compulsory ADR – Coming soon to a dispute near you?

Alternative dispute resolution (or “ADR”) has long played an important role in dispute resolution. A recent report by the Civil Justice Council (the “Report”), commissioned to consider the legality and desirability of making ADR compulsory, could see ADR playing an even more prominent role in future. Continue Reading

Bank did not breach duties in loan renegotiation

In December 2006, Mr Morley, a commercial property developer, entered into a £75m, three-year loan with Royal Bank of Scotland plc to refinance his property portfolio, add new properties to it and provide him with a “bonus payment” for his personal use. The bank secured the loan over his portfolio of 21 commercial properties in the North of England valued at around £98m.

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Supreme Court establishes new scope of duty test in professional negligence

The UK Supreme Court has significantly reformulated the scope of duty test that applies in cases of professional negligence. It handed down its decision in the case of Manchester Building Society v Grant Thornton UK LLP [2021] UKSC 20 on 18 June 2021. SPB acted for the successful party, Manchester Building Society.

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FCA issues updated statement on insurers making deductions for Government support from COVID-19 business interruption settlements

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Last month, the Financial Conduct Authority (“FCA”) published updated guidance regarding COVID-19 business interruption settlements and deductions made for Government support.

The FCA first commented on this issue in August 2020, following reports that some insurers were making deductions for Government support received by policyholders, when calculating payments for business interruption insurance claims.

The FCA’s recent statement follows its January “Dear CEO letter”, which we discussed in our previous blog post here. In this letter, the FCA re-iterated its expectations that insurers should only deduct Government support from claim payments if the appropriateness of such a deduction has been thoroughly considered and the insurers’ conclusions properly documented.

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Authorised Push Payment Fraud – court rules on scope of banks’ obligations

In March 2018, Mrs Philipp transferred two payments to accounts in the UAE, totalling £700,000, representing her and her husband, Dr Philipp’s savings. In doing so, Mrs and Dr Philipp thought they were assisting an investigation by the FCA and National Crime Agency (“NCA”) into fraudulent activities. Unfortunately for the Philipp family, they were, in fact, the victims of that fraud, not helping to tackle it.

Dr Philipps authorised transfers to Mrs Philipps’ accounts from his own, and Mrs Philipps authorised the transfers to the two UAE-based bank accounts. They knew the destination of the funds, and meant for them to be sent. What they did not know was that the two accounts were controlled by fraudsters, who had tricked them into making the payments to “safe” accounts, as part of investigations into an alleged fraud.

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GameStopped? Regulators react to the “short squeeze”

While trading frenzies are as old as the markets themselves, the novelty of widespread retail trading in obscure US stocks fueled by Reddit chat forums has prompted recent interventions by regulators on both sides of the Atlantic.

Unfortunately the FCA’s terse 29 January statement on “recent share trading issues” gave little insight into how it viewed these events from a regulatory perspective. The FCA said only that buying shares in volatile markets is “risky“, and “unlikely to be covered” by the FSCS.

Several of the major online securities trading platforms responded to the volatility by stopping orders in affected securities. The FCA was supportive, noting that broking firms “are not obliged to offer trading facilities to clients“, and “may withdraw their services, in line with customer terms and conditions if…they consider it necessary or prudent to do so“.

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FCA Launches Defined Benefit Advice Assessment Tool

FCALast month, the FCA launched its Defined Benefit Advice Assessment Tool (“DBAAT“) as part of its strategy to reduce harm to consumers and improve the suitability of defined benefit (“DB“) transfer advice. The tool will help firms to understand precisely how the FCA assesses the suitability of DB transfer advice.

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Sustainable Finance Disclosure Regulation – new ESG challenges for asset managers

What is SFDR?

The SFDR is part of the European Commission’s package of reforms to implement its sustainable finance strategy. The strategy focuses on three areas:

  • Strengthening the foundations for sustainable investment by creating an enabling framework. The Commission believes many financial (and non-financial) companies still focus excessively on short term financial performance instead of long term development and sustainability-related challenges and opportunities.
  • Increasing opportunities to have a positive impact on sustainability for citizens, financial institutions and corporates – enabling them to “finance green”.
  • Integrating climate, environmental, and social risks into financial institutions and the financial system as a whole.

To that end SDFR introduces a series of disclosure requirements for investment firms to address environmental, social and governance (ESG) concerns. It applies to asset and fund managers (e.g. MiFID investment managers, alternative investment fund managers (AIFMs), and UCITS managers), and investment firms, as well as credit institutions and insurers. The SFDR entered into force in December 2019 and its implementation date is on 10 March 2021.

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FCA Publishes Updated Guidance on the BI Insurance Test Case

FCAThe Financial Conduct Authority (the “FCA”) has published a ‘Dear CEO’ letter to insurers following the recent decision made in the Supreme Court test case on non-physical damage business interruption (“BI”) insurance. The FCA is determined to make the next steps on the recent ruling as clear as possible.

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