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Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.  

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Claire Cummings

020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com


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FCA fines insurance intermediary and chief executive for failing to protect client money

On 30 August 2018, the FCA published the final notices it has issued to One Call Insurance Services Ltd, an insurance intermediary and John Radford, chief executive of One Call with responsibly for client money.  The FCA has fined One Call £684,000 and restricted it from charging renewal fees to its customers for 90 days, which it is estimated will cost the firm approximately £4,703,000. It has fined Mr Radford £468,000 and prohibited him from having any responsibility for client money or insurer money in relation to any regulated activity.  The FCA gave decision notices to One Call and Mr Radford in January 2018 notifying them of its decisions to fine them for failing to arrange adequate protection for One Call's client money (see Legal update FCA decision notices regarding insurance intermediary and chief executive for failing to protect client money). However, a company connected to One Call, One Insurance Ltd (OIL), made a reference to the Upper Tribunal as a third party in relation to certain statements in the decision notices making the decision notices provisional so far as they referred to OIL. That reference was withdrawn on 7 July 2018.


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BEIS publishes response to consultation on corporate governance and insolvency

BEIS has published the government's response to its consultation on proposals to improve the corporate governance of firms that are in or approaching insolvency. The government plans to take forward several specific actions. These include strengthening transparency requirements around group structures, strengthening shareholder stewardship, strengthening the framework on dividend payments, and bringing forward proposals to improve board effectiveness and strengthen directors' training and guidance. BEIS stated that these measures will be set out in further detail in the autumn.


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FCA fines insurance intermediary and chief executive for failing to protect client money. 

The FCA has published the final notices it has issued to One Call Insurance Services Ltd, an insurance intermediary and John Radford, chief executive of One Call. The FCA has fined One Call £684,000 and restricted it from charging renewal fees to its customers for 90 days, which it is estimated will cost the firm approximately £4,703,000. It has fined Mr Radford £468,000 and prohibited him from having any responsibility for client money or insurer money in relation to any regulated activity.


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European Commission communication on proposed ESMA amendments to MiFIR RTS on transparency requirements

On 3 September 2018, the European Commission published a communication on ESMA's proposed amendments to Delegated Regulation (EU) 2017/587 (RTS 1), which supplements the MiFIR.  In March 2018, ESMA submitted final revised amendments to RTS 1 to the Commission that sought to clarify that, for financial instruments subject to the minimum tick size regime, systematic internaliser (SI) quotes would only be considered to reflect prevailing market conditions where those quotes reflect the price increments applicable to EU trading venues trading the same instruments.  The Commission states that it intends to make these revisions because the co-legislators, when finalising the text of MiFIR, did not provide that SI quotes would need to respect tick size increments and consequently technical standards cannot be used to address this point. It also considers that there is evidence that not applying tick sizes to shares and depositary receipts risks negative repercussions on the liquidity in those two asset classes.  If the Commission decides to endorse RTS with amendments, ESMA has a six-week period to resubmit in the form of an opinion a revised version of the RTS based on the Commission's amendments. If ESMA does not resubmit the amendments in that period, or submits a version that is not consistent with the Commission's proposed amendments, the Commission may adopt its own version of the RTS or reject the RTS completely.


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Law Commission consultation paper addressing legal uncertainties concerning electronically executed documents

The Law Commission published a consultation paper seeking views on the provisional conclusions of its project to identify and address legal uncertainties concerning electronically executed documents. The consultation sets out the Law Commission's provisional view that under current law, an electronic signature is capable of meeting a statutory requirement for signature provided an authenticating intention is demonstrated, and that a legislative statement to confirm this position is unnecessary. The Law Commission did, however, raise the possibility of stakeholders gaining additional certainty by bringing a claim using the test case procedure under the Financial List to seek an authoritative ruling on the use of an electronic signature in certain circumstances. The consultation also considers the case for, and invites views on, various provisional proposals for reform aimed at clarifying the law around the use of electronic signatures and facilitating the electronic execution of deeds. The consultation closes on 23 November 2018.


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BEIS response to the consultation on corporate governance and insolvency

The government plans to take forward specific actions, subject to further consultation where necessary. These include measures to strengthen transparency requirements around group structures, strengthen shareholder stewardship and improve the framework for dividend payments. The government will also seek to ensure greater accountability for directors in group companies when selling subsidiaries in distress and extend the Insolvency Service's powers to investigate directors of dissolved companies where they are suspected of acting in breach of their legal obligations. These measures will be set out in further detail in the autumn.


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ECON report on regulatory and supervisory relationships between EU and third countries

On 29 August 2018, ECON published its report on relationships between the EU and third countries concerning financial services regulation and supervision.  The report contains a motion for a European Parliament resolution, the text of which includes the following recommendations:

  • Third countries must keep the European Supervisory Authorities (ESAs) (that is, ESMA, EIOPA and the EBA) informed of any national regulatory developments through the EU's future equivalence framework and the equivalence decision should require good regulatory and supervisory co-operation.

  • The European Commission should provide a clear framework for the application of equivalence procedures that introduces a standardised process for the determination of equivalence. Unlike the draft report, the report does not call on the Commission to adopt a legislative act for this purpose.

  • The relevant ESA should subject equivalence decisions to ongoing monitoring (rather than a review every three years, as proposed in the draft report) and the outcome of this monitoring should be made public.

  • The Commission should review the effectiveness of the current equivalence regime and publish its findings together with any proposals for improvement.

  • The Commission should report annually to the European Parliament on all decisions on equivalence and explain the rationale for those decisions.

  • The ESAs should have the capacity and powers to collect, collate and analyse data to enable them to monitor third country supervisory and regulatory frameworks.

The report, unlike the draft report, does not call for a financial services chapter as part of any potential future EU-US trade agreement.
The procedure file for the initiative indicates that the Parliament will consider the report in its plenary session to be held from 10 September to 13 September 2018.


 

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Cummings

Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327

Cummings Law
42 Brook Street
London Greater London W1K 5DB
United Kingdom

www.cummingslaw.com

19 12 2018

 
 

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