Being better informed: April 2017

Spring has sprung, and our legislators and regulators are as busy as ever. Brexit developments continued apace last month, with the UK Government triggering Article 50 and publishing a white paper setting out its approach to the Great Repeal Bill. The Bill will replicate EU law into UK law and represents an enormous challenge for UK financial services regulators. But the Government failed to make specific reference to financial services in the white paper, so we await further updates on how law will be repealed and replaced in financial services.

The EC also tackled some big topics last month, releasing consultations on the operation of the ESAs, improving consumer access to financial services, and FinTech. On the ESAs, the EC is seeking viewpoints on the organisations’ governance structure, powers and funding. It asks whether the EBA and EIOPA should be merged into one entity to introduce a twin peaks supervisory structure, and whether ESMA’s consumer protection powers should be strengthened. Firms should look out for further developments to ensure they are informed of any potential changes to supervision under the ESAs.

In the UK, the FCA is consulting on new initial public offering rules. It aims to address concerns around conflicts of interest and the quality of market information resulting from the privileged role that 'connected research' plays in the public offering process. The FCA proposes that the issuer's prospectus must be published before any connected research.

The FCA’s work on implementing MiFID II in the UK took another step forward this month. It published its first MiFID II policy statement and encourages firms to submit any necessary applications in good time ahead of the new regime going live in January 2018. It plans to issue a second policy statement in June this year.

In the prudential space, the BIS confirmed an ongoing delay in the finalisation of the reforms known as 'Basel IV'. Stefan Ingves, Chairman of the Basel Committee, explained that while progress towards completion continues, agreement between members is taking longer than expected. Ingves didn’t disclose a timetable for finalising the reforms, so banks should look out for further updates.

In our first feature article this month we take an in-depth look at HMT’s new definition of investment advice, and what this will mean for firms’ business strategies and for consumer access to advice. Our second feature focuses on the CMU mid-term review, assessing what this work stream has achieved so far and how its future direction is likely to change, particularly in light of Brexit.

Looking ahead, in the coming weeks and months we expect to see ESMA’s technical standards on the BMR and the FCA’s 2017/18 business plan and mission. In the meantime, we hope you enjoy reading the latest updates.

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Tessa Norman
Senior associate
Tel: +44 (0)207 213 2508

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