Clifford Chance
This week at the UK regulators - 17 March 2014
17 March 2014
The spotlight has again been on the Bank of England over the past week, with further announcements as to how it will conduct its investigation in connection with suggestions that members of staff condoned, or were aware of alleged manipulation in the foreign exchange market or the sharing of confidential information.
Away from these developments, in addition to announcing an arrest in a boiler room investigation, the FCA has left consumer credit businesses which will shortly come within its regulatory purview in no doubt as to its approach. It has made clear that it intends to subject them to much more intensive scrutiny than is the case under the current regime and has stated that it expects that up to a quarter of these firms will choose to leave the market in response to the stricter arrangements. In a further reminder of its focus on understanding the experience and behaviour of consumers, it has announced the results of its first market study, which concerned the general insurance add-on sector, proposing practical remedies to alleviate findings of consumer detriment, including a ban on pre-ticked boxes.
Concluded enforcement cases have been confined to small cases. However, the modest penalty imposed in one case for failures to prevent false and misleading information from being submitted in mortgage applications provides a relatively rare exposition of the FCA's interpretation of the meaning of "recklessness" under its rules.
In other developments, the FCA has given an update on a study it is completing in collaboration with the Office of Fair Trading (and which it will complete in collaboration with the new Competition and Markets Authority from 1 April), pointing to continuing barriers to entry for smaller players in the SME banking sector and the PRA has issued a consultation paper proposing substantial extensions to the breadth of circumstances in which bonuses may be clawed back.
Further afield, a former analyst at an associate firm of SAC Capital, has become the tenth individual subject of concluded enforcement action taken by US authorities in connection with alleged and established insider trading at the firm and affiliate firms. Elsewhere, the European Parliament has adopted the draft version of new anti-money laundering legislation which will, when eventually adopted, require national registers of beneficial ownership and extend the definition of "politically exposed persons".
