FCA publishes findings on SME thresholds for complaints
The Financial Conduct Authority (FCA) has published FS23/5 which sets out the regulator’s views on whether the SME thresholds to allow access to the Financial Ombudsman Service (FOS) need to be adjusted.
The feedback statement confirms the view that the FCA is satisfied that the thresholds for SMEs to be able to refer complaints to the ombudsman service remain appropriate.
The thresholds that came into effect on 1 April 2019 (any business with an annual turnover of less than £6.5 million and fewer than 50 employees or a balance sheet total of less than £5 million) remain meaning any business meeting these criteria can refer complaints to the FOS.
First ever triple regulatory action in Hong Kong
In a ground-breaking collaboration, the Securities and Futures Commission (SFC), the Independent Commission Against Corruption (ICAC), and the Accounting and Financial Reporting Council (AFRC) have joined forces to conduct a joint operation involving two Hong Kong-listed companies. This operation aimed to investigate suspected falsification of corporate transactions amounting to HK$193 million.
As part of this operation, a total of 16 premises were simultaneously searched by the three agencies. During the joint operation, three individuals, including an executive director of a listed company, were arrested by the ICAC on suspicion of committing offenses related to using documents with intent to deceive under the Prevention of Bribery Ordinance.
The suspected fictitious transactions came to light during a collaborative SFC-ICAC operation against a suspected ramp-and-dump syndicate. It was revealed that the management of the two companies listed on the Stock Exchange of Hong Kong Limited had allegedly conspired with members of the syndicate to falsify corporate transactions, falsely claiming that these companies engaged in various transactions with multiple entities in Hong Kong and Mainland China between May 2018 and December 2021. This led to an overstatement of HK$83.9 million in their revenue and a misstatement of assets totalling HK$109.2 million.
Joint EU-UK financial regulatory reform statement
The first meeting of the Joint EU-UK Financial Regulatory Forum (the Forum) between the European Union (EU) and the UK took place in London on 19 October 2023 and notes of the meeting have been published.
As this was the first meeting, the report notes that participants discussed practicalities for future meetings and topics to be discussed.
UK participants updated the group on the UK’s Smarter Regulatory Framework, under the Financial Services and Markets Act 2023, and the Edinburgh and Mansion House reforms. EU participants provided a general update on the EU agenda concerning financial services until the end of the current legislature. The forum then considered four areas.
Banking: The Forum delved into the implementation of Basel III standards, emphasising the need to adhere to prescribed timelines and stages for implementation. Participants also explored the prospect of transitioning to T+1 settlement for transactions, a development with potential far-reaching implications for the industry. Both sides highlighted their individual capital markets reforms, underlining the significance of open and well-functioning capital markets to facilitate growth in both the UK and the EU.
Insurance: The discussion on insurance revolved around ongoing reforms to Solvency II, demonstrating a commitment to enhancing regulatory frameworks. An essential point of agreement was the necessity of finalising the Insurance Capital Standard (ICS) for International Active Insurance Groups (IAIGs), a step aimed at bolstering stability and trust in the insurance sector.
Digital Finance: The UK and the EU updated one another on developments within the digital finance domain, with specific focus on crypto assets, stablecoins, and retail Central Bank Digital Currencies (CBDCs), such as the digital pound and digital euro. Of particular interest was the legal and regulatory frameworks surrounding these digital financial assets. The Forum participants expressed shared interests in the topics addressed during this session and stressed the importance of jurisdictions implementing the Financial Stability Board’s high-level recommendations concerning crypto asset activities and stablecoins. Additionally, they stressed the significance of close bilateral and multilateral engagement, particularly in regard to the global implementation of the Financial Action Task Force’s Travel Rule for crypto asset transfers.
Sustainable Finance: The Forum dedicated time to discussions regarding sustainable finance, aiming to chart a course for a smooth transition to net zero. Participants agreed on the importance of participating in the G20 Sustainable Finance Working Group and similar forums to drive multilateral efforts in support of this transition. Both sides highlighted progress made in implementing taxonomy standards and provided updates on developments concerning environmental, social, and governance (ESG) ratings and sustainability disclosure requirements. The significance of ensuring the interoperability of standards, including those relating to disclosure requirements, was underscored, with strong support for the work of the International Sustainability Standards Board (ISSB).
EBA and ESA joint committee chair hints at what is to come
In a brief statement to the European Parliament’s Committee Committee on Economic and Monetary Affairs José Manuel Campa, chair of the Joint Committee of the three European supervisory bodies, hinted at what might be on the horizon. Concluding his statement, Manuel Campa said: the Joint Committee will “continue to assess risks and vulnerabilities across the financial system. We will keep promoting consumer and investor protection namely through financial education and support to the packaged retail and insurance-based investment products (PRIIPS) regulation. Regarding sustainable finance, we will support and monitor the implementation of SFDR (Sustainable Finance Disclosure Regulation) and take part in the one-off climate risk stress test. We will also deliver our advice on greenwashing. In digital finance, we will finalise the Digital Operational Resilience Act (DORA) policy mandates and continue preparations for the Oversight framework one Critical ICT Third Party Providers (CTPPs). We will also continue our work towards the coordination of cyber incidents.”
Manuel Campa also spoke to the same committee in his role as chair of the European Banking Authority. He noted several risks and challenges including geopolitical uncertainty, interest rate risks, ESG and climate and new technologies. As with his joint committee role he also cast a glance to the future noting three areas to enhance the European single market: the need to complement the banking prudential framework with an adequate crisis management element; the need to establish a stronger AML/CFT framework in the EU and the need for regulators and supervisors to focus on revaluation of banks’ bond portfolios, rising funding costs and mounting credit loan losses.
A selected summary of key developments for regulated financial institutions
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