The financial services industry is a highly dynamic and regulated sector, with authorities across the globe continuously introducing new rules, updates, and consultations. Keeping up with this ever-evolving regulatory landscape is crucial for organizations to maintain compliance, mitigate risks, and ensure operational resilience.
With our blog, you’ll gain a deep understanding of the implications of regulatory changes, enabling you to proactively adapt your strategies, policies, and procedures.
Business Line | Country | Regulator | Regulation/ Rule | Summary |
All | European Union | European Union | Enhanced Disclosure Requirements for Supplier Finance Arrangements | The European Commission has recently enacted Commission Regulation (EU) 2024/1317, which introduces significant amendments to the International Accounting Standard 7 (IAS 7) and International Financial Reporting Standard 7 (IFRS 7). Effective from 15 May 2024, this regulation mandates that companies provide detailed information about their supplier finance arrangements. This includes the impact on the company’s liabilities and cash flows, and their exposure to liquidity risks, ensuring stakeholders have a clearer understanding of financial health and risk management. The amendments are applicable for financial years starting on or after 1 January 2024, enhancing the integrity and transparency of financial statements across the EU. |
European Union | European Union | New regulations to create a harmonized framework for artificial intelligence | The European Union has adopted new regulations to create a harmonized framework for artificial intelligence, significantly advancing digital governance. The “Artificial Intelligence Act” amends existing regulations and directives to foster the development and deployment of AI across the EU, emphasizing a human-centric and trustworthy approach while ensuring the protection of health, safety, and fundamental rights. This legislation prevents member states from imposing disparate restrictions on AI, promoting a seamless market environment, and supporting innovation. The rules address the high-risk applications of AI, ensuring these systems are deployed responsibly and with respect to Union values and fundamental rights. | |
European Union | ESMA | In response to rising concerns about “greenwashing,” the European Securities and Markets Authority (ESMA) has finalized guidelines aimed at ensuring that investment funds using ESG (Environmental, Social, and Governance) or sustainability-related terms in their names adhere to strict sustainability standards. The guidelines, set to take effect three months post-translation publication, address misleading practices by stipulating that such fund names reflect true sustainability characteristics. Key modifications from earlier drafts include the elimination of a controversial 50% threshold for sustainable investments due to its perceived ambiguity and the introduction of meaningful investment commitments in sustainable practices for the usage of related fund names. These steps aim to enhance transparency and investor trust, promoting a more accurate representation of fund operations in alignment with stated environmental and social goals. | ||
European Union | ESMA | The European Securities and Markets Authority (ESMA) has outlined an extensive list of planned consultation papers for 2024, emphasizing its commitment to enhancing regulatory frameworks across various financial sectors. This initiative underscores the importance of cooperation and transparency in ESMA’s operations, facilitating robust stakeholder engagement and providing entities with advanced notice to prepare for upcoming consultations. Key areas of focus include amendments and technical standards for financial instruments under MiFID and MiFIR, crypto-asset guidelines under MiCA, and new measures under the Market Abuse Regulation (MAR). Additionally, ESMA plans to introduce significant updates in sustainable finance, particularly concerning the EU Green Bond Regulation and the European Single Electronic Format (ESEF) for reporting sustainability information. These planned consultations reflect ESMA’s proactive approach in addressing the dynamic needs of the financial markets, aiming to ensure compliance and enhance the integrity of the financial system within the EU. | ||
Global | ICMA | The Hong Kong Environmental, Social, and Governance (ESG) Ratings and Data Products Providers Voluntary Code of Conduct Working Group (VCWG), supported by the International Capital Market Association (ICMA) and sponsored by the Hong Kong Securities and Futures Commission (SFC), has initiated a public consultation to craft a voluntary Code of Conduct. This initiative aims to establish a globally consistent, interoperable, and proportionate framework for ESG ratings and data products providers operating in Hong Kong. Reflecting on recommendations from the International Organization of Securities Commissions’ (IOSCO) report and other existing standards, this Code of Conduct seeks to enhance the transparency and reliability of ESG services in the region. Stakeholders are encouraged to participate in the consultation process, which is open until 17 June 2024 | ||
Global | FATF | The Financial Action Task Force (FATF) has updated its mutual evaluation and follow-up procedures to address money laundering, terrorist financing, and the financing of the proliferation of weapons of mass destruction more effectively. The amended procedures, which were instituted in May 2024, prioritize evaluations based on the time elapsed since the last assessment, the level of risk, and the economic significance of a country’s financial sector. Countries are now evaluated on a six-year cycle, with a three-year period to address any deficiencies identified. Should a country fail to make the necessary improvements within this timeframe, it risks facing public censure by the FATF. This approach ensures that FATF member countries remain vigilant and proactive in their efforts to combat financial crimes, reflecting the FATF’s commitment to enhancing global financial security. | ||
Global | Cloud Security Alliance | SEC Implements Stringent Cybersecurity Disclosure Requirements | As of July 26, 2023, the Securities and Exchange Commission (SEC) has introduced robust rules requiring all registrants that file documents with the SEC to transparently report material cybersecurity incidents within four business days. This regulatory change aims to provide investors with critical, timely information about cybersecurity threats and the effectiveness of corporate defences. A “material” cybersecurity incident, as defined by the SEC, includes events like data breaches or unauthorized system access that could influence an investor’s decision-making. Furthermore, companies must discuss their process for evaluating the materiality of incidents and disclose their overall approach to managing cybersecurity risks under the newly mandated regulation S-K item 106. This directive extends to all U.S. and foreign private issuers under the SEC’s Exchange Act, with annual reporting updates required for fiscal years ending on or after December 15, 2023. Non-compliance could lead to significant penalties, emphasizing the importance for companies to fortify their cybersecurity measures and reporting mechanisms effectively. | |
Malta | MFSA | MFSA Briefs Listed Entities on EU Sustainability Reporting Standards | On April 29, the Malta Financial Services Authority (MFSA) conducted a seminar for over 90 listed companies, introducing them to the requirements of the new Corporate Sustainability Reporting Directive (CSRD) which took effect in January 2023. This directive mandates that listed companies and large corporations disclose their environmental, social, and governance risks, alongside the impact of their operations on society and the environment. Aimed at enhancing transparency, this initiative is a key component of the European green deal, helping stakeholders evaluate a company’s sustainability performance. The 2024 financial year marks the first application of these rules for Malta’s major entities, with sustainability reports due in 2025. The event also included insights from Alessandro d’Eri of the European Securities and Markets Authority and highlighted the MFSA’s ongoing efforts under the EU Technical Support Instrument Multi-Country Project to ensure smooth transition and compliance. Lorraine Vella, MFSA’s Head of Capital Markets, emphasized the broader benefits of sustainability reporting as a strategic tool for aligning business practices with emerging opportunities and sustainability goals. | |
New Zealand | FMA | New Zealand Enhances AML/CFT Framework with Updated Regulations | On June 1, 2024, New Zealand’s Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) regulatory framework will see significant enhancements as the Department of Internal Affairs, the Financial Markets Authority, and the Reserve Bank of New Zealand introduce new amendment regulations. These updates are designed to align the nation’s efforts with global AML/CFT standards and include revised rules on the cross-border transportation of cash, updates to definitions and exemptions, as well as adjustments to compliance requirements and transaction reporting. In preparation for these changes, the supervisory bodies have issued multiple guidelines on beneficial ownership, enhanced and regular customer due diligence. They plan to continue this supportive approach with further guidelines expected soon, ensuring entities are well-prepared to meet the new standards. While adopting an educational stance initially, the supervisors affirm their right to enforce compliance rigorously, emphasizing their commitment to a robust AML/CFT regime. | |
Nigeria | FRC | The Financial Reporting Council (FRC), in collaboration with the Integrity Organization, the UN Global Compact Network Nigeria, and the MacArthur Foundation, is set to launch the Small and Medium Enterprises’ Corporate Governance Guidelines (SME-CGG) on May 30th, 2024. This launch is a significant milestone in the “SME Future Forward Project,” aimed at transforming corporate governance for Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. The event, scheduled for 11 a.m. in Abuja, will be conducted in a hybrid format to accommodate a wide array of stakeholders, including industry experts and government officials. The SME-CGG is designed to establish comprehensive governance standards to enhance transparency, accountability, and sustainable growth within the SME sector. The guidelines emphasize the importance of ethical practices and responsible leadership, aiming to foster a robust business ecosystem conducive to innovation and ethical business practices. | ||
UAE | Dubai FSA | The Dubai Financial Services Authority (DFSA) has officially announced amendments to its rulebook following the conclusion of the consultation period outlined in Consultation Papers No. 152, 153, and 154. Effective June 3, 2024, several modules including the General Module (GEN), Conduct of Business (COB), Collective Investment Rules (CIR), Anti-Money Laundering (AML), Fees (FER), Authorized Market Institutions (AMI), Auditor (AUD), and Glossary (GLO) will see significant revisions aimed at enhancing regulatory frameworks and compliance mechanisms. Additionally, further updates scheduled for January 1, 2025, will affect the Prudential – Investment, Insurance Intermediation and Banking Business (PIB) and Islamic Finance Rules (IFR) modules. These changes are part of the DFSA’s ongoing efforts to align with global financial standards and provide clear, updated guidance to entities under its jurisdiction. | ||
United Kingdom | GOV.UK | DBT | “Smarter Regulation” Initiative to Foster Innovation and Growth | UK Government presented a white paper to Parliament detailing a new regulatory framework designed to stimulate innovation, investment, and growth within the UK economy. Acknowledging the current regulatory environment as overly complex and burdensome, the “Smarter Regulation” policy aims to streamline processes and clarify responsibilities across the over 100 regulatory bodies involved. This reform is particularly timely as the UK carves its own path post-EU, setting standards that nurture business development and economic expansion. The white paper proposes systemic reforms, emphasizing a shift towards a service-oriented regulatory approach, fostering transparency, and enhancing accountability among regulators. Key initiatives include the introduction of a Growth Duty Performance Framework, a Regulators Council to oversee strategic dialogue between regulators and the government, and a commitment to reducing the economic burden of regulation, currently estimated to be as high as 3-4% of GDP. This strategic shift is expected to enhance the UK’s ability to adapt to new technologies and economic challenges while maintaining high standards in regulatory safeguards, environmental standards, and consumer protections. | |
United Kingdom | UK Finance | FCA Proposes Updates to Transaction Monitoring in Financial Crime Guide | The Financial Conduct Authority (FCA) has proposed updates to the Transaction Monitoring section of its Financial Crime Guide, aimed at enhancing the efficacy and adaptability of financial crime prevention measures in the face of rapidly evolving technologies. The revised guidance encourages the adoption of advanced technologies such as AI and machine learning to monitor customer behaviour more effectively, improving upon traditional methods. It also emphasizes the need for firms to thoroughly understand and justify the automation processes they deploy, particularly in how they handle and triage alerts. The proposal is part of a broader consultation seeking to ensure that financial institutions are equipped to manage the complexities of modern financial crime while maintaining robust compliance with regulatory standards. | |
United Kingdom | FCA | UK’s Financial Conduct Authority (FCA) has introduced three new Product Sales Data (PSD) returns as outlined in PS24/3. Effective from June 2024, these new reporting requirements aim to elevate the transparency and effectiveness of consumer credit market oversight. These changes mandate that firms engaged in consumer credit lending report detailed data on the initial sale and ongoing performance of individual agreements. This advancement is set to provide the FCA with deeper insights into how firms operate and the broader market dynamics, enhancing their ability to swiftly identify and mitigate risks. The integration of these new PSD returns into the Supervision manual (SUP 16) is expected to reduce ad hoc information requests, streamline the regulatory process, and enable more targeted and timely regulatory interventions, ultimately safeguarding consumer interests and maintaining market integrity. | ||
United Kingdom | FCA | FCA Sets Guidelines for Consumer Duty Compliance on Closed Products and Services | The FCA’s upcoming implementation of the Consumer Duty for closed products and services on July 31, 2024, signifies a critical step towards enhancing customer outcomes in the financial services sector. Initially applied to open products in July 2023, this extension aims to ensure that even discontinued services align with the highest standards of consumer protection and corporate responsibility. The directive mandates that firms reevaluate their closed offerings against the Duty’s rigorous criteria, emphasizing fair value and appropriate treatment of potentially vulnerable customers. This policy underscores the FCA’s commitment to fostering a fair and transparent market, with specific provisions to prevent customer harm and encourage proactive compliance from financial institutions. Firms are urged to finalize their preparations and address any discrepancies in customer data or service delivery to meet the regulatory expectations set forth by the FCA. | |
United Kingdom | NIST | The National Institute of Standards and Technology (NIST) has officially updated its guidelines for safeguarding controlled unclassified information (CUI) within non-federal organizations that do business with the federal government. The updates, encapsulated in NIST Special Publication (SP) 800-171, Revision 3, and its companion SP 800-171A, Revision 3, refine the existing protocols for handling sensitive data such as intellectual property and employee health information. This initiative aims to eliminate ambiguity and enhance consistency with NIST’s comprehensive catalogue of security and privacy controls. The revisions, influenced by public feedback on draft versions, are designed to make the guidelines clearer and more actionable, assisting contractors and other relevant organizations in enhancing their cybersecurity measures efficiently. Additionally, NIST has made these guidelines available in machine-readable formats like JSON and Excel, facilitating easier integration and application by cybersecurity tool developers and implementers. | ||
United Kingdom | GOV.UK | UK Statutory Instruments | The UK Treasury has officially enacted the Financial Services and Markets Act 2000 (Overseas Funds Regime) (Equivalence) (European Economic Area) Regulations 2024. Coming into force on July 16, 2024, these regulations are designed to streamline the recognition process for EEA collective investment schemes, excluding money market funds, ensuring they meet the UK’s financial regulatory standards. This move is aimed at enhancing cooperation and providing equivalence in the regulatory treatment of EEA UCITS schemes, facilitating smoother operations for these funds within the UK market. The regulations apply across England, Wales, Scotland, and Northern Ireland, promoting a consistent approach to financial services regulation throughout the UK. | ||
United States | SEC | The Securities and Exchange Commission (SEC) has adopted amendments to Regulation S-P, significantly updating privacy regulations to better protect non-public personal information handled by financial institutions. Recognizing the evolving technological landscape and increasing risks of data breaches, these changes mandate that broker-dealers, investment companies, registered investment advisers, and transfer agents develop robust incident response programs. Announced by SEC Chair Gary Gensler, the amendments require these institutions to promptly notify affected individuals of any unauthorized access to their sensitive information within 30 days of detecting a breach. Set to take effect 60 days after Federal Register publication, the updated rules provide a structured timeline for compliance, granting larger entities 18 months and smaller entities 24 months to fully implement the necessary changes. This regulatory enhancement aims to fortify investor protection and trust in the digital age. | ||
Banking | Europe | EPC | New Entry-Into-Force Dates for 2025 Payment Scheme Rulebooks | The European Payments Council (EPC) has updated the entry-into-force dates for its 2025 rulebooks for various payment schemes and the new Verification of Payee (VOP) scheme. This adjustment is in response to the new regulatory frameworks introduced by the Instant Payments Regulation (IPR), which mandates significant changes for Payment Service Providers (PSPs) in the European Economic Area. The revised timeline sets the launch of the 2025 rulebooks for SEPA Credit Transfer, SEPA Instant Credit Transfer, SEPA Direct Debit Core, SEPA Direct Debit B2B, and One-Leg Out Instant Credit Transfer, along with the VOP scheme, for October 5, 2025. This synchronization is designed to streamline compliance and implementation processes for PSPs, Clearing and Settlement Mechanisms, and other service providers, emphasizing a reduced preparation period compared to typical cycles. The EPC encourages stakeholders to anticipate these changes in their strategic planning to ensure smooth integration and compliance. |
European Union | European Union | New Directive on Faster and Safer Relief of Excess Withholding Taxes | The Council of the European Union established a general approach for a new directive aimed at enhancing the processes for relieving excess withholding taxes on dividends and interest from cross-border securities investments. This legislative update intends to streamline withholding tax procedures across EU member states, focusing on efficiency and fraud prevention. The directive introduces a framework that supports a quicker, automated system for tax relief, which should ease the administrative burden and strengthen protections against tax evasion schemes like Cum/Ex and Cum/Cum. It aims to ensure a more transparent and consistent approach by integrating digitalization in the certification of tax residency and fostering better cooperation among financial intermediaries and member states. The initiative is seen as a key step in improving the functioning of the Capital Markets Union, by removing financial barriers and promoting fair taxation across the European Union. | |
European Union | SRB | The Single Resolution Board (SRB) has released its 2024 Minimum Requirement for Own Funds and Eligible Liabilities (MREL) policy, incorporating insights from a public consultation held from December 2023 to February 2024. This update reflects significant legislative modifications, particularly concerning “daisy chain” entities and those in liquidation, as stipulated by Directive 2024/1174. Enhancements include recalibrated market confidence charges and improved monitoring of MREL eligibility. Alongside the policy, the SRB has issued its Q4 2023 MREL dashboard, which indicates that banks have successfully met the January 2024 MREL targets. The dashboard also reviews recent trends in funding costs and the issuance of MREL-eligible instruments, providing a comprehensive overview of the sector’s financial health and compliance. Dominique Laboureix, Chair of the SRB, highlighted the policy’s stability prospects and the SRB’s commitment to transparency and stakeholder engagement. | ||
Italy | BancadItalia | Revised Regulatory Framework for Interest Rate Risk in the Non-Trading Book | The Bank of Italy has opened a public consultation on proposed modifications to the regulatory framework concerning the measurement of interest rate risk in non-trading activities (IRRBB). These updates aim to align with European legislation, specifically integrating directives like CRDV, which address interest rate risks and credit spread risks in banking portfolios. The proposed changes involve updating methodologies for measuring economic value and interest margin changes under the regulatory guidelines established in Circular 285/2013. The consultation seeks feedback from banks, banking group parent companies, and other financial entities, aiming for a comprehensive update that enhances the measurement expectations in line with the latest European framework. | |
Japan | JFSA | Results of Public Comments on Amendments to Banking Law Enforcement Regulations | On May 17, 2024, Japan’s Financial Services Agency announced the implementation of new amendments to the Banking Enforcement Regulations. These amendments, which came into effect on May 18, 2024, follow a public comment period from June 30 to July 31, 2023. They incorporate legislative changes that address the MREL framework concerning “daisy chain” entities and liquidation entities, as stipulated by Directive 2024/1174. The agency received 31 comments from eight individuals and groups, which contributed to the refinement of the amendments. The revised regulations aim to enhance transparency and efficiency in monitoring and calibrating market confidence charges and MREL eligibility, ensuring a more robust regulatory framework for Japan’s banking sector. | |
Netherlands | Dutch Central Bank | Consultation on extension of mortgage risk weighting scheme for 2024 | Dutch National Bank (DNB) initiated a public consultation on the amendment of the regulation concerning specific provisions of CRD and CRR related to extending the minimum floor for risk weighting of mortgage loans secured by real estate in the Netherlands. The consultation, open until June 25, 2024, reviews the continuation of a measure initially set in motion on January 1, 2022, and previously extended in December 2022. This regulation mandates a minimum risk weight for mortgage portfolios of banks using internal models, under the authority granted by Article 458 of the Capital Requirements Regulation (CRR). In light of persistent systemic risks in the Dutch housing market, and the inadequacy of current risk weights derived from banks’ internal models to reflect these systemic risks adequately, DNB plans to extend the regulation for two more years, effective from December 1, 2024, to December 1, 2026. The extension aims to stabilize market risks and ensure the robustness of the housing market’s financial oversight. | |
New Zealand | RBNZ | The Reserve Bank of New Zealand – Te Pūtea Matua has opened a consultation for the inaugural set of standards under the new Deposit Takers Act 2023, as announced on May 16, 2024. This significant legislative update introduces a robust framework aimed at enhancing the stability and trustworthiness of New Zealand’s financial system. The proposed standards, which apply to both banks and non-bank deposit takers, focus on key areas including capital requirements, liquidity, mandatory disclosures, and the Depositor Compensation Scheme (DCS). The consultation, detailed on the Reserve Bank’s dedicated portal, is set to run until July 26, inviting valuable input from financial entities ahead of implementing these comprehensive regulatory measures. | ||
United Kingdom | FCA | CP24/6: FCA regulated fees and levies: rates proposals for 2024/25 | The Financial Conduct Authority (FCA) has issued a consultation paper (CP24/6) proposing fee structures for the fiscal year 2024/25 to fund its operations, the Financial Ombudsman Service, and other governmental levies. This paper outlines adjustments in fee rates to reflect the FCA’s increased utilization of technology and data analytics, aiming to enhance regulatory oversight efficiently. Key proposals include revisions to the Financial Ombudsman Service’s general levy and updates to fee blocks and pricing to align more closely with the actual costs of regulating different sectors. These adjustments aim to distribute costs fairly across regulated entities while supporting the FCA’s strategic objectives to adapt to market changes and maintain high regulatory standards, providing a crucial opportunity for stakeholders to influence the outcome and ensure a balanced approach to regulatory funding. | |
United Kingdom | FCA | Dear CEO letter: Implementing the Consumer Duty for closed products and services – Retail Banking | The Financial Conduct Authority (FCA) has issued a reminder to firms about the upcoming application of the Consumer Duty to closed products and services, effective July 31, 2024. Initially introduced in July 2023 for open products, the Duty aims to elevate the standard of care financial services firms provide to retail customers, fostering a culture shift towards better outcomes. This extension allows firms to align their existing closed products with the Duty’s requirements, focusing on fair treatment, especially for vulnerable customers, and ensuring that financial products continue to offer fair value and meet the regulatory standards without disrupting the ongoing service provisions to existing customers. Firms are encouraged to finalize their compliance plans and address any gaps in data handling, product management, and customer communication to meet the July deadline. | |
Insurance | European Union | European Union | On May 13, 2024, the European Commission implemented Regulation (EU) 2024/1289, which introduces detailed technical standards for calculating technical provisions and basic own funds within the insurance and reinsurance sectors. This regulation is critical for reporting within the reference dates from March 31, 2024, to June 29, 2024, as mandated by the Solvency II Directive. Aimed at harmonizing the calculation methodologies across the EU, the regulation specifies the use of updated risk-free interest rate term structures, fundamental spreads, and volatility adjustments, ensuring uniformity and stability in financial reporting. This step is part of the EU’s ongoing efforts to enhance financial transparency and stability in the insurance market, reflecting an adaptation to market dynamics and the necessity for precise and reliable financial information. | |
Isle of Man | GOV.IM | CP24-04 Update to the Insurance Solvency Framework and Insurance Fees Regulations | The Isle of Man Financial Services Authority (IOMFSA) has opened consultation CP24-04, seeking feedback on proposed amendments to the Insurance (Fees and Solvency) (Amendment) Regulations 2024. The consultation, which opened on April 3, 2024, and closed on May 17, 2024, aims to update the island’s Insurance Solvency Framework to align with international standards, including changes to the risk margin calculation. Additionally, it seeks to update the Insurance (Fees) Regulations 2021, particularly concerning the framework for Insurance Special Purpose Vehicles as discussed in consultation paper CP24-03. The IOMFSA intends to use the feedback to refine and enact the regulations, ensuring the solvency framework remains robust and reflective of evolving international practices. | |
Isle of Man | GOV.IM | CP24-03 Update to the Insurance Regulations and Insurance Special Purpose Vehicles Regulations | The Isle of Man Financial Services Authority (IOMFSA) has been seeking input through consultation CP24-03, focusing on proposed updates and integration efforts for the Insurance Regulations 2021. The goal is to combine these regulations with the simpler elements of the Insurance (Special Purpose Vehicles) Regulations 2015 and related guidance notes into a unified document, the Insurance Regulations 2024. Key topics of the consultation, which ran from April 3 to May 17, 2024, include implementing fast-track authorizations, regulatory sandbox provisions, and evaluating potential restrictions on activities conducted in parallel with regulated insurance operations. The responses received will guide the finalization and enactment of the new regulatory framework, reflecting modernized and streamlined insurance regulation practices. | |
Switzerland | FINMA | The Swiss Financial Market Supervisory Authority (FINMA) has declared its intention to revise its liquidity circular for insurers, aligning it with updates to the Insurance Supervision Ordinance (ISO) that took effect on January 1, 2024. This revision reflects changes that mandate annual liquidity planning reports from insurers to FINMA and responds to increased international focus on liquidity in insurance supervision. The comprehensive overhaul of Circular 2013/5 “Liquidity – insurers” will introduce enhanced practices in liquidity management and risk management across six principled areas: governance, liquidity management and planning, liquidity reserve, risk management, controlling and monitoring, and emergency strategies for handling liquidity bottlenecks. Stakeholders are invited to participate in the public consultation process, which remains open until July 12, 2024. | ||
United Kingdom | FCA | Dear CEO letter: Implementing the Consumer Duty for closed products and services – consumer finance | The UK’s Financial Conduct Authority (FCA) has issued a final reminder to financial institutions regarding the compliance requirements for closed products and services under the Consumer Duty. The Consumer Duty, which aims to enhance the standards of care that firms provide to their customers, was extended to include closed products and services following its initial application to open products in July 2023. This directive emphasizes the need for firms to finalize preparations by the 31 July 2024 deadline. The FCA expects firms to conduct thorough reviews against all aspects of the Duty, ensure good customer outcomes, and address specific challenges such as fair value assessment and data integrity for closed products. This effort is part of the FCA’s broader strategy to ensure that financial services are reliable, fair, and well-suited to consumer needs, promoting a healthier and more competitive market environment. | |
United Kingdom | FCA | Dear CEO letter: Implementing the Consumer Duty for closed products and services – Life Insurance | The Financial Conduct Authority (FCA) has issued a directive to financial services firms, emphasizing the importance of complying with the Consumer Duty for closed products and services by July 31, 2024. This move is part of a broader FCA strategy to elevate consumer protection standards, following the enactment of the Financial Services Act 2021. The FCA recognizes the complexity involved in adapting closed products to new standards and has provided an additional year for firms to make necessary adjustments. The directive outlines critical aspects such as the application of the Duty to closed products, key issues to address, and specific actions required to ensure readiness by the deadline. The FCA’s approach is to foster a culture shift within firms, driving them to enhance consumer outcomes and adhere to higher standards of accountability and transparency in financial services. | |
Investment | European Union | European Union | Regulation (EU) No 806/2014, established by the European Parliament and the Council on 15 July 2014, sets forth uniform rules and procedures for the resolution of credit institutions and certain investment firms within the EU’s Single Resolution Mechanism (SRM). This framework, integral to the EU’s banking union, aims to ensure efficient and orderly resolution of failing banks while minimizing costs for taxpayers. The regulation has been amended several times, reflecting its dynamic adaptation to the evolving financial landscape. Notable amendments include Regulations (EU) 2019/877, 2019/2033, 2021/23, and the recent Directive (EU) 2024/1174, each enhancing the robustness of the SRM and addressing specific aspects like consolidated supervision by the ECB. These amendments emphasize the SRM’s critical role in maintaining financial stability and the integrity of the banking sector across participating Member States. | |
Finland | FSA | The Financial Supervision Authority has announced significant updates with the replacement of Standard RA1.1 by the newly established Regulations and Guidelines 1/2024, effective from June 1, 2006. This revision aligns the reporting standards for intra-group transactions among credit institutions, investment firms, and financial conglomerates with current legislative requirements. Previously, Standard RA1.1 covered all intra-group dealings within financial and insurance conglomerates and consolidation groups. The recent amendments now exclude financial conglomerates from its scope, as detailed by the Commission Delegated Regulation (EU) 2015/2303 and Commission Implementing Regulation (EU) 2022/245, which allow for conglomerate-specific reporting guidelines set by the coordinating supervisor. Additionally, the obligation for these transactions to be carried out at market terms has been removed, reflecting its redundancy due to existing legal provisions. The first report under the new regulations is due by November 15, 2024, for transactions conducted from July 1 to September 30, 2024. These changes are part of a broader effort to streamline reporting processes and reduce unnecessary regulatory burdens on institutions while ensuring transparency and compliance with evolving financial regulations. | ||
Global | ISDA | Review and Consultation for Credit Derivatives Determinations Committees | The International Swaps and Derivatives Association (ISDA) has released a comprehensive review conducted by Linklaters LLP on the structure and governance of the Credit Derivatives Determinations Committees (DCs), initiating a market-wide consultation to refine these critical components. This initiative aims to modernize and enhance the governance of the DCs to maintain robust, standardized settlement processes for credit default swaps, which are essential for the stability of the financial system. Key areas under consultation, managed by the Boston Consulting Group until July 26, 2024, include conflict of interest resolutions, potential reduction in committee membership, introduction of independent oversight, and increased transparency and funding mechanisms. ISDA’s proactive approach highlights its commitment to sustaining the effectiveness and integrity of the DCs amidst evolving market conditions. | |
Guernsey | GFSC | Bailiwick Commission issued a policy statement supporting the tokenization of funds within its jurisdiction, acknowledging the potential of this technology to enhance capital market efficiencies. The Commission emphasizes its openness to innovation, particularly technologies that improve investor services and operational effectiveness. While the existing legal framework permits fund tokenization using distributed ledger technology, it mandates strict adherence to the Protection of Investors Law and other regulatory standards, highlighting the requirement for a privately managed, permissioned blockchain system under the supervision of a designated administrator. This initiative reflects the Commission’s proactive approach to integrating advanced technological solutions within its regulatory regime, while maintaining a cautious stance on broader crypto and virtual asset issuances due to associated risks, especially to retail investors. | ||
Switzerland | FINMA | The Swiss Financial Market Supervisory Authority (FINMA) has announced a public consultation on a draft circular aimed at clarifying its supervisory practice concerning rules of conduct under the Financial Services Act (FinSA). Since FinSA came into effect in 2020, inconsistencies in implementation among supervised entities have led to recurring questions on the application of conduct rules. The proposed circular is designed to foster transparency, create legal certainty, and ensure uniform investor protection standards across all regulated institutions. Key provisions include detailed guidance on how clients should be informed about the nature of financial services, associated risks, and potential third-party compensations. This initiative by FINMA underscores its commitment to facilitating informed investment decisions and enhancing regulatory compliance. The consultation period is open until 15 July 2024. | ||
United Kingdom | FCA | Dear CEO letter: Implementing the Consumer Duty for closed products and services – asset management | The Financial Conduct Authority (FCA) is mandating the application of the Consumer Duty to closed financial products and services by 31st July 2024. Initially applied to open products in July 2023, this extension seeks to enhance standards across the financial services sector, as per the Financial Services Act 2021. The Duty emphasizes the necessity for firms to offer fair value, improve customer data handling, support vulnerable consumers, and manage disengaged customers. With less than three months before the deadline, the FCA has issued guidelines and definitions, underscoring the urgency for firms to ensure compliance. This policy will not retroactively affect past actions but will govern ongoing activities from the implementation date forward, thus demanding a significant shift in how closed products are managed and regulated. The FCA is actively supporting firms through this transition, providing resources and readiness assessments to safeguard consumer interests effectively. | |
United Kingdom | FCA | The Financial Conduct Authority (FCA) has issued a directive to firms for the implementation of the Consumer Duty for closed products and services by 31 July 2024. This expansion of the Consumer Duty, which initially applied to open products and services in July 2023, aims to enhance customer outcomes in the financial services sector. The directive includes a set of specific action prompts for firms, focusing on issues like gaps in customer data, ensuring fair value, addressing the needs of vulnerable consumers, managing disengaged customers, and handling vested contractual rights. Firms are expected to review their compliance with these requirements comprehensively, ensuring their actions align with the Duty’s expectations by the specified deadline. This initiative underscores the FCA’s commitment to fostering a fair and transparent market environment, enhancing consumer confidence, and supporting ongoing innovation in the financial sector. |
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