Featured Product

    FCA Announces Multiple Regulatory Updates for Financial Sector

    November 25, 2022

    The Financial Conduct Authority (FCA) published an interim report on credit information market study, consultations on greenwashing rules for sustainable investment products and synthetic USD London Inter-Bank Offered Rate (LIBOR), discussion paper on the potential competition impact of bigtech firms, and an announcement on the formation of a group to develop the code of conduct for ESG data and ratings providers.

    Below are key highlights of these recent updates:

    • Credit Information Market Study Interim Report. The report sets out interim findings from the credit information market study as well as proposals to improve the credit information sector to deliver higher quality and more comprehensive information for consumers and firms. Credit reference agencies build financial profiles of consumers which they sell to credit information users to inform lending and other decisions. In order to ensure that credit is offered only where appropriate and at a fair price, FCA proposed potential measures to reform industry governance arrangements and agree a set of priorities for the industry over the next three years, improve the quality and coverage of credit information, enable greater competition and innovation through potential changes to data access arrangements and more timely reporting of key metrics, and support consumers to access and dispute credit information. FCA seeks comments, until February 24, 2023, on the findings and potential measures outlined in this interim report. The report will be applicable to new and existing credit reference agencies, credit information service providers, users of credit information such as lenders, and consumer organizations.
    • Code of Conduct. FCA announced the formation of a group to develop a code of conduct for environmental social and governance (ESG) data and ratings providers. FCA also welcomed the appointment of the International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG) as the Secretariat leading this work. The Code will seek to be internationally consistent, by taking into account International Organization of Securities Commissions’ (IOSCO) recommendations as well as developments in jurisdictions such as Japan and the European Union. This will help encourage the development of consistent global standards. The group will be co-chaired by M&G, Moody’s, London Stock Exchange Group (LSEG) and Slaughter and May, and will be composed of stakeholders including investors, ESG data and ratings providers, and rated entities. The group will hold its first meeting in late of 2022.
    • CP22/20. In this consultation, FCA proposed new rules to protect consumers or retail investors from greenwashing and rebuild trust in sustainable investment products. The proposals include introduction of sustainable investment product labels, restrictions on how certain sustainability-related terms—such as ESG, green, or sustainable—can be used in product names and marketing for products that do not qualify for the sustainable investment labels, consumer-facing disclosures to help consumers understand the key sustainability-related features of an investment product, more detailed disclosures suitable for institutional investors or retail investors, requirements for distributors of products, such as investment platforms, to ensure that the labels and consumer-facing disclosures are accessible and clear to consumers, and a general anti‑greenwashing rule covering all regulated firms to avoid misleading marketing of products. FCA intends to set out final rules in a policy statement by the end of the first half of 2023. The consultation applies to all FCA-regulated firms and will be open for comments until January 25, 2023.
    • DP22/5. The purpose of this discussion paper is to stimulate a discussion on the potential competition impact identified using existing research to inform the approach to bigtech firms. FCA has published analysis focusing on the potential competition impact of bigtech’s entry into four vital retail sectors: payments, deposit-taking, consumer credit, and insurance. The paper suggests that bigtech firms can bring benefits to consumers by offering new innovative products with competitive pricing driven by increased efficiency, delivering healthy competition with incumbent financial services providers; however, in the long run, could pose competition risks by rapidly gaining market share and exploiting market power. The paper accompanies wider joint work on online safety, consumer protection and financial stability in digital markets, including work on operational resilience and the role of critical third parties with the Prudential Regulation Authority (PRA) and Bank of England, and work with Ofcom through the Digital Regulation Cooperation Forum (DRCF) on online safety and financial fraud to protect consumers from scams. The consultation period for this discussion paper will end on January 15, 2023. Going forward, FCA will publish a feedback statement in the first half of 2023, that sets out regulatory approach in response to the feedback received.
    • Consultation on synthetic USD LIBOR (CP22/21). FCA is seeking comments, until January 06, 2023 on proposal to require publication of the one-, three- and six-month USD LIBOR settings on a synthetic basis until end of September 2024, as well as on the appropriate methodology for constructing such synthetic US dollar LIBOR settings, and permitting use of these synthetic USD LIBOR settings in all contracts except cleared derivatives. FCA also seek views on winding down synthetic sterling LIBOR. FCA intends to compel LIBOR’s administrator ICE Benchmark Administration Limited to continue publishing three‑month sterling LIBOR until end of March 2024, after which it will cease permanently. With regard to synthetic yen LIBOR, FCA reminded market participants to be prepared for publication to cease permanently at the end of 2022.

     

    Related Links

     

    Keywords: Europe, UK, Banking, ESG, Climate Change Risk, Sustainable Finance, Libor, Credit Risk, Greenwashing, Disclosures, Bigtech, Regtech, ESG Data Product Providers, FCA

    Featured Experts
    Related Articles
    News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News
    News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News
    News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    News

    Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks

    At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.

    September 14, 2023 WebPage Regulatory News
    News

    ISSB Standards Shine Spotlight on Comparability of ESG Disclosures

    The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures

    August 22, 2023 WebPage Regulatory News
    News

    EBA Issues Several Regulatory and Reporting Updates for Banks

    The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.

    August 10, 2023 WebPage Regulatory News
    News

    BCBS Proposes to Revise Core Principles for Banking Supervision

    The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.

    August 04, 2023 WebPage Regulatory News
    News

    US Proposes Final Basel Rules, Transition Period to Start in July 2025

    The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.

    August 04, 2023 WebPage Regulatory News
    News

    FSB Report Outlines Next Steps for Climate Risk Roadmap

    The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.

    August 04, 2023 WebPage Regulatory News
    News

    EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise

    The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.

    July 31, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8931