December 7, 2023 | Greg Kilminster
Estimated reading time: 4 minutes
CUBE RegNews November 2023 summary
Stay informed with our monthly regulatory and compliance recap, providing you with a comprehensive overview of the latest regulatory events. For daily updates, check out our RegNews summaries here.
In November, regulatory bodies across the globe continued their enforcement efforts, with several high-profile fines being imposed.
The month began with the Securities and Exchange Commission (SEC) fining Royal Bank of Canada $6 million for accounting control failures. Later in the month, the SEC published its 2023 enforcement round-up which confirmed that nearly $5 billion had been imposed on firms this year – the second highest ever amount.
Meanwhile, the Consumer Financial Protection Bureau (CFPB) fined Toyota Motor Credit Corporation $12 million plus $48 million redress for illegally withholding refunds.
Bank of America was also fined $12 million for breaching the Home Mortgage Disclosure Act which requires financial institutions to report demographic data about mortgage applicants.
Twelve million, it seems, was the magic number for regulators in November with Mercer Financial Advice (Australia) Pty Ltd being fined Aus$12 million for failing in its duty to fulfill fee disclosure obligations, charging fees to clients without entitlement. OnePath was fined Aus$5 million by the Australian Securities & Investments Commission (ASIC) just a day later for very similar offences.
In Europe, Robobank was fined more than €26 million for participating in a cartel related to the trading of Euro-denominated bonds.
The biggest fines, however, were for Binance. The crypto exchange was fined a multi-billion-dollar amount in a combination of actions from the Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission (CFTC) and the Office of Foreign Assets Control (OFAC).
Regulators are not yet relaxing for 2023 and there are already numerous consultation periods in place extending well into 2024.
During November, we reported on the Prudential Regulation Authority (PRA) consulting on capital requirements and the Bank of England and Financial Conduct Authority (FCA) issuing discussion papers looking at a regulatory framework for stablecoin. The FCA also opened its consultation on the prudence of Personal Investment firms and the Bank of England opened discussions on the FSCS General Insurance Limit.
In Europe, the European Banking Authority (EBA) announced a consultation on its guidelines for complaints handling.
In Australia, a major consultation on sustainable finance was announced, and the Australian Financial Complaints Authority (AFCA) issued a consultation, similar to the EBA consultation above, on the best approach to determining compensation in complaints involving financial advisers. Meanwhile, the Australian Prudential Regulation Authority (APRA) is consulting on liquidity and capital requirements aimed at strengthening the banking sector’s resilience to future stress and ASIC announced a consultation on the Banking Code. The Australian government also announced a new consultation to a proposed scams code framework. Australia consulted on several other issues including insurance definitions, remaking class order on ETFs and genetic testing in life insurance.
Finally, in the US, we noted the Commodity Futures Trading Commission (CFTC) consultation on investment of customer funds. which aims to make changes to the CFTC’s existing regulations concerning the safeguarding and investment of funds held on behalf of customers participating in futures, foreign futures, and cleared swaps transactions.
Policies and Procedures
Having launched its key Consumer Duty earlier in the year, the FCA was keen to stress the importance of its new policy with two speeches made during the month: one emphasising the need not to treat Consumer Duty as a tick box exercise, the other, from Chief Operating Officer Emily Shepperd, looking at the duty and the recent diversity and inclusion proposals. The regulator also wrote to wealth management firms and stockbrokers reminding them of the Consumer Duty requirements.
The regulator issued further guidance to crypto firms, hundreds of whom have already been warned following the implementation of the FCA’s crypto marketing regime in October. In the US, the SEC adopted a new rule to improve clearing house governance and SEC chair Gary Gensler provided a comprehensive overview of the current state of the Treasury markets and outlined some key initiatives and reforms.
In Europe, a speech from the European Insurance and Occupational Pensions Authority (EIOPA) chair Petra Hielkema hinted at future supervisory developments, whilst the European Securities and Markets Authority (ESMA) announced a shift of its focus on to cyber risk, digital resilience, as well as its existing focus on ESG disclosures. The European Banking Authority (EBA) meanwhile confirmed that it has extended its risk-based anti-money laundering and countering the financing of terrorism (AML/CFT) supervision guidelines to AML/CFT supervisors of crypto-asset service providers (CASPs).
Finally, in Australia, ASIC outlined both its general and specific enforcement priorities citing, in both cases, greenwashing as a key priority. And if anyone was left in any doubt that greenwashing will not feature highly in ASIC’s regulatory objectives for 2024, ASIC deputy chair Sarah Court wrote an article spelling out additional areas of interest that ASIC will be closely monitoring.
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