Issue 79 - April 2021

Welcome to the latest edition of Gem Compliance’s monthly regulation newsletter. The aim of the newsletter is to present a summary of relevant industry news which has occurred during the month in an easily digestible format. As such, not all sources of industry information or FCA publications (and no PRA publications unless specified) may be included.  

Clients and associates of Gem Compliance should periodically check the FCA’s, and where relevant, the PRA’s websites for regulatory developments. We hope you find this newsletter useful and should you have any feedback, compliance queries or require advice on any of these topics, please do not hesitate to contact us.


Other Newsletters & Updates

Since the last newsletter, a year of lockdown from 23 March 2020 passed which included a minute’s silence this year to recognise the victims of the pandemic. April also saw the passing of Prince Philip, Duke of Edinburgh on 9th April at the age of 99.
Otherwise, April’s general news headlines have continued to be influenced by the ongoing easing of restrictions over the coming months, and in line with respective governments’ roadmaps. As the rollout of the coronavirus vaccine across the UK continues, firms are recommended to check the dedicated coronavirus section (for firms and consumers) on the FCA’s website on a regular basis for any updated coronavirus news.
Other non-Covid industry news during the month included the unravelling of information relating to Greensill Capital’s recent financial failure, and linked to this, and in the lead up to elections in the UK in May, ongoing general debates regarding the ministerial code of conduct.  
The FCA’s news and publications are also now available in a daily email alert and you can find FCA’s latest published board meeting minutes (25th February) here.
The FCA Handbook Notice no.86 has been issued and the latest policy development updates can be found here.  The FCA also issued its April Regulation round-up. The FCA continues to update its dedicated Brexit webpage and encourages firms to visit this for any updates.
The FCA has now launched its new online fees portal, and also announced that its annual business plan has been delayed until later this year in July 2021. It also issued an email reminder to almost 3,000 firms which previously had CF30 staff approved prior to SM&CR but no staff certified as Directory staff by the registration date of the deadline of 31 March 2021 to either confirm to the FCA that the firm did not have certified staff or to register staff, or otherwise firms risk being fined.  
The Financial Ombudsman’s latest newsletter (no. 159) was published at the end of March which also refers to its 2021/2022 plans and budget and the most recent PRA Regulatory Digest (April 21) can be found here. The ICO’s (Information Commissioner’s Office) most recent newsletter is available here

Main Features

1. Building Operational Resilience - Policy Statement PS 21/3

The FCA, in partnership with the Bank of England and the PRA, has published its final rules and guidance (PS21/3) on new requirements to strengthen operational resilience in the financial services sector. This follows an earlier consultation, CP19/32 from December 2019, with feedback on that consultation delayed during 2020 due to Covid-19 impacts.
The objective of the new rules is to ensure that firms and the sector can prevent, adapt, respond to, recover and learn from operational disruptions which have the potential to cause wide-reaching harm to consumers and risks to market integrity, threaten the viability of firms and cause instability in the financial system.
Although only formally applicable to banks, enhanced scope SM&CR firms, PRA designated investments firms and insurers, there is the clear implication that the FCA expects smaller firms to take on board the key messages and principles and apply them as appropriate to their businesses. As such, the guidance provides some best practice that other firms should consider when considering their own resilience measures.
The new rules concentrate on ensuring firms can continue to provide their ‘important business services’ to clients rather than the firm just surviving a resilience testing event. These are defined as services whose disruption would cause intolerable levels of harm to clients and/or the FCA’s statutory objectives. As an initial stage and given the size of the task, the FCA expects that firms should, from 31 March 2021, begin identifying any such important business services.
This is essentially seen as an expansion of a firm’s business continuity plan arrangements in ensuring the outcomes are concentrated upon rather than just the inputs. Consequently, this is intended to align with the FCA’s three statutory objectives.  
In-scope firms have until 31st March 2022 in which to implement the new rules. The rules are not prescriptive in what firms have to do but the policy statement outlines the regulators’ views or expectations of steps to be taken in approaching the issue and demonstrating/evidencing compliance.
The policy statement provides a degree of flexibility for different firms of differing sizes with different business models. Relevant firms will need to carry out a firmwide assessment to consider the new rules and identify how these should be applied in the firm’s own circumstances.
Other main points in the policy statement include:
  • Having identified the important business services, their respective impact tolerances should be set at the first point at which a disruption to an important business service would cause intolerable levels of harm to consumers or risk to market integrity. Impact tolerances will usually be measured in the time or duration of an event.
  • These are the two key projects in the first year (to 31 March 2022) and requirements for mapping processes, people, technology, facilities, and information resources together with scenario testing are only expected in so far as they aid these two tasks, and to identify any vulnerabilities in their operational resilience. In practice however, it would be very difficult to complete these aspects of the project without effective mapping and testing, while the requirement to identify any vulnerabilities is a significant requirement.
  • A further transitional period of three years (until 31 March 2025) is allowed to ensure that in-scope firms can operate within their impact tolerances at all times.
There are further rules concerning mapping, testing, lessons learned exercises, governance and self-assessment, all related to the initial tasks.
Although not explicitly rule based, the FCA has made comment throughout the statement text at its desire for certain actions to be performed:
  • The regulators recognise the impact of Covid-19 on firms and the practical steps many firms have had to take to ensure operational resilience in practice. However future situations could well have very different characteristics.
  • The FCA expects to see a “positive change” in the numbers and types of incidents reported (under Principle 11). This would imply that they expect firms to identify more operational issues when there is an effective framework in place and report accordingly.
  • It is considered that going forward, good operational resilience can provide firms with a competitive advantage.
  • There is a reminder that the real test is how firms respond to incidents that are completely out of their control.
  • Impact of third-party service providers, particularly where they are involved in providing important business services, is also considered. Firms must understand their supply chain and how it operates at various levels and also identify any weaknesses to address.  
  • It is clear that while there are deadlines in place, the FCA expect firms should be trying to be compliant as soon as possible.
  • It is accepted that key individuals will not always be available. As such the FCA has said that plans need to be in place to cover this, and these deputies should also be trained as necessary.
  • Whether improvements could be applied incrementally or wholescale will depend on each client’s circumstances and if obvious gaps are present in BCP and succession arrangements.
A link to the FCA’s Policy Statement PS21/3 is attached here for the full details.

2.  Consultation Paper on Annual Fees and Levies - CP21/8 

The FCA has published a consultation paper on regulated fees and levies rates for 2021/22 (CP21/8). In this paper, the FCA is consulting on its periodic fees rates and further FCA fees policy proposals, as well as the Financial Ombudsman Service (FOS) general levy and Money and Pensions Service (MaPS), Devolved Authorities and HM Treasury illegal money-lending levies for 2021/22.
The proposed 2021/22 overall Annual Funding Requirement (AFR) is set at £616.5 million, which represents an increase of 4.5% on 2020/21. However the FCA is not proposing any change at this stage to the current minimum fee that some smaller firms pay.
The Department for Work and Pensions (DWP) has notified the FCA that it must collect £149.2 million in total for MaPS in 2021/2. The FOS has requested the FCA recover £96 million through the general levy, an increase of just over £12 million (14%) compared to 2020/21. 
The FCA previously consulted in CP20/22 on proposals on how it will raise regulated fees and levies rates from 2021/22, and published some feedback and certain final rules in March 2021. CP20/22 also included proposals for increases to authorisation fees. In Chapter 7 of CP21/8, the FCA provides feedback on some (but not all) of its CP20/22 proposals relating to certain authorisation application fees including introducing new charges for notifications under the senior managers regime (SMR) and controlled functions for appointed representatives (CF(AR)). This will include a new ‘application’ fee for individual applications for SMF roles of £250 per application and a similar fee for any individual applications still required under APER for CF30’s for Appointed Representatives firms (these firms not having transferred to SM&CR). Fees in both cases will be payable on submission of an application once the final rules are implemented, possibly from July 21 onwards once the Policy Statement has been issued. It will apply to Long Form A applications but won’t apply to short Form A equivalents where this is permitted.
It will also include a one-off annual periodic fee for Principals of ARs as part of annual invoicing based on the number of AR entities registered on 1 April in any given year. The paper also highlights other supervisory aspects relating to its concern on the Principal/AR model including that they will more closely scrutinize how new AR applications fit into a Principal’s business model.
The current paper also confirms that it has withdrawn its proposal to charge for Change of Control applications submitted by authorised firms.
The consultation paper also sets out (at Chapter 8) the FCA’s proposals for charging application fees for funeral plan firms when they seek authorisation, as well as the structure of periodic fees for this sector.  This is in advance of this sector being newly regulated by the FCA from July 2022.  
The FCA also confirms that it will be conducting a wider review of its fees structure, including all minimum fees, as part of its Transformation Program and will consult on the resulting proposals.
The FCA has updated its online Fees Calculator to reflect the draft fees proposals for the current year should any firms wish to model financially what the impact of the proposals might be.
A link to the full consultation paper is shown here and the paper closes to responses on 25 May 2021. The FCA intends to publish feedback and the final fees and levy rates in a policy statement in July 2021, subject to FCA Board approval in June 2021. Thereafter invoices to firms for fees for the current year are likely to be issued although the FCA is proposing to extend the period for paying their fees by 2 months, thereby permitting 90 days from invoice date.  

3. CP 21/7 - Further consultation on the Investment Firms Prudential Regime (IFPR)

The FCA has issued its second consultation paper (CP21/7) relating to the changes in prudential supervision for certain firms under the new Investment Firms Prudential Regime (IFPR), scheduled to be implemented by January 2022. This replaces arrangements for a number of firms currently covered by prudential supervision requirements arising out of MiFID authorisation scope.  
It is intended to mirror (but not implement) a new EU Investment Firms Directive and Regulation on prudential supervision to ensure that the UK regime can continue to evidence ‘equivalence’ in respect of prudential supervision of financial services firms post Brexit transition.  The new regime is also intended to streamline and simplify the prudential requirements for MiFID investment firms that are prudentially regulated by the FCA in the UK (FCA Investment Firms). 
This current CP sets out further proposals for changing prudential standards for these firms and should be read in conjunction with the first CP, CP20/24, published in December 2020. This also follows an initial discussion paper (DP20/2) issued in June 2020 outlining initial views on the changes to implementing the new regime as a whole.
Firms in scope include (amongst others):
  • Any MiFID investment firm authorised and regulated by the FCA that is currently subject to any part of the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR):
  • investment firms that are currently subject to BIPRU and GENPRU
  • ‘full scope,’ ‘limited activity’ and ‘limited licence’ investment firms currently subject to IFPRU and CRR
  • ‘exempt CAD’-firms
  • investment firms that would be exempt from MiFID under Article 3 but have ‘opted-in’ to MiFID
  • Collective Portfolio Management Investment Firms (CPMIs)
CP20/24 outlined the criteria of whether firms would be small non-interconnected firms (SNI), or if larger, non-SNI firms to which more complex arrangements will apply including some covered in the most recent CP.  
Although not an exhaustive list, this second consultation paper focuses on some of the following specific areas:
  • Own funds requirements (Chapter 4)
  • Firms’ risk management arrangements and also Internal Capital and Risk Assessment Process (ICARA) and the FCA’s Supervisory Review and Evaluation Process (SREP) (Chapter 7)
  • Governance (Chapter 8)
  • Remuneration Code arrangements (Chapters 9 to 12)
  • Regulatory Reporting (Chapter 13)
  • Interaction of MiFID with other prudential supervision sourcebooks (Chapter 14).
  • Applications and Notifications (Chapter 15).
Relating to the above, the following areas are specifically highlighted in this article:  
  • For own funds requirements, a fixed overheads requirement (FOR) will apply to all firms in scope, which will normally be 3 months of fixed operating costs. Other larger firms (non-SNI firms) will also be required to calculate ‘K factors’ which will be variable additional amounts of capital depending upon volume related calculations according to their particular MiFID investment activities.
  • The introduction of a basic liquid assessment requirement applying to all firms ensuring that there is at least one month’s capital which is ‘liquid’ (as defined in the paper).
  • An internal capital and risk assessment (ICARA) will be introduced for all investment firms. Through this, firms will be expected to meet an Overall Financial Adequacy rule (OFAR). For existing BIPRU firms, this process will replace the existing ICAAP process. For firms not currently in scope of producing an ICAAP, for example exempt CAD firms, this new process will be required for the first time.
  • The FCA will require all investment firms to have a clearly documented remuneration policy and comply with at least a small number of basic remuneration rules in respect of all of their own staff. More complex firms will also be required to comply with the full requirements of the rules including such areas as deferral and pay-out of variable remuneration.
The new regime represents a major change for investment firms. Despite these papers still being at consultation stage, given the amount of content of each CP to date, and one more to follow, it is critical that firms adequately prepare for the regime on a timely basis, well in advance of January 2022 or a Policy Statement being issued.  
To accompany this consultation, the FCA is publishing further proposed templates for the new reporting to support the IFPR and the guidance for completing these templates. It is also publishing proposed forms for applications and notifications. The FCA would welcome any feedback on these in addition to your feedback on this CP. 
A link to the full consultation paper is shown here and the paper closes to responses on 28 May 2021. The FCA intends to publish a further CP in Q3 2021. Following each consultation, the FCA will publish policy statement and near final rules. The actual final rules will be published once the current Financial Services Bill (the FS Bill) has passed through Parliament and all consultations are complete.

4. Financial Crime - UK Regulatory Changes 

There have been two recent legislative developments in the UK regarding high-risk countries, summarised below.  
Firstly on 24th March 2021, HMT issued an advisory note regarding risks posed by jurisdictions classed as high-risk following statements by the Financial Action Task Force (“FATF”) identifying jurisdictions with strategic deficiencies in their AML/CTF regimes.  
The advisory notice identifies the Democratic People's Republic of Korea* and Iran* as being higher-risk jurisdictions for which enhanced due diligence and appropriate countermeasures ought to be deployed to meet the risks presented by each to the international financial system and “to protect the international financial system from the money laundering, terrorist financing, and proliferation financing (ML/TF/PF) risks emanating from the country” (FATF Call for Action, Feb 2021).
The advisory notice identifies Albania, Barbados, Botswana, Burkina Faso, Cambodia, Cayman Islands, Ghana, Jamaica, Mauritius, Morocco, Myanmar*, Nicaragua*, Pakistan, Panama, Senegal, Syria*, Uganda, Yemen* and Zimbabwe* as countries for which appropriate actions should be taken to minimise the associated risks and these actions may include enhanced due diligence in high-risk situations.
(*These countries are subject to active sanctions measures, which require zero-error compliance.)
The changes to the previous list issued by FATF in October ‘20 are:
  • additions of Burkino Faso, The Cayman Islands, Morocco, Senegal
  • removal of The Bahamas. 
For a full list of FATF updates, please see link here.
In addition, the statutory instrument, Money Laundering and Terrorist Financing (Amendment) (High-Risk Countries) Regulations 2021 has been issued. The attached explanatory memorandum explains that the statutory instrument, which amends the 2017 Money Laundering Regulations (“MLRs”) by replacing references to the European Commission’s list of high-risk third countries (in respect of which extra customer due diligence measures must be taken by relevant persons under the MLRs) with a freestanding list of such countries identified in a new Schedule 3ZA to the MLRs. 
As with the previous European Commission list, this new Schedule will be periodically updated by way of further regulations, for example to reflect changes made by FATF to their relevant lists after each Plenary. 
The new Schedule 3ZA lists the same countries that are in the same list as detailed above in HMT’s advisory note.
It is recommended that all firms should ensure that their internal procedures reflect the above changes and also identify all prospective and existing relationships that are now considered higher risk and that should now be subject to enhanced due diligence and enhanced monitoring. Steps to evidence re-assessment of relevant risk profiles and monitoring measures must be taken. It should also be noted that high-risk relationships/transactions should be approved in advance by senior management.

Other Publications

FCA Coronavirus Publications 

The FCA has reminded consumers financially impacted by the coronavirus of the support available. This reflects finalised guidance to firms now issued under FG21/6 relating to mortgage repossessions. Finalised guidance to insurance, credit and debit card firms on cancellations and refunds, to help consumers understand their rights and routes to refunds for such events as travels, weddings etc has also been issued.  
Policy and Guidance

FG21/3: Finalised (non-Handbook) guidance on advising on pension transfers and conversions has been issued.
Policy Statement PS21/4 has been issued which summarises and confirms the FCA’s proposals to increase the number of firms which need to submit the FCA’s Annual Financial Crime Report, REP-CRIM.  This follows earlier consultation in CP20/17. Firms being brought into scope will include investment managers amongst others. Such firms will be required to submit their first return within 60 business days after their first financial year end after 30 March 2022. It is recommended that firms should therefore review the template return in advance to ensure that the required management information is already being collated to enable the firm to complete the annual return when first due from 2022.


A feedback statement (FS21/7) has been issued following an earlier Call for Input on Open Finance.
The FCA has issued Primary Market Bulletin No. 33 covering a number of market issues including, amongst other matters, Brexit-related changes for EEA audit firms and the online portal for submitting major shareholdings notifications.
Updated data on the number of financial promotions in Q1 2021 that have been amended or withdrawn due to non-compliance with FCA rules has been issued.  
The PRA and the FCA published a joint 'Dear CEO' letter relating to the transition from LIBOR to Risk Free Rates following the cessation of the interest rate benchmark, due to take place at the end of 2021. The regulators have also separately written to the named SMF responsible for oversight of transition at the PRA and FCA firms with the largest and most complex LIBOR exposures to outline the steps they expect such firms to take.
Joint guidance from the FCA and the Pensions Regulator to employers and trustees on providing support with financial matters without needing to be subject to FCA regulation has been issued.
The FCA’s quarterly update on its application processing KPIs has been issued reflecting the position as at the end of September 2020.
Charles Rendell, Chair of the FCA, issued an update to John Glen, Economic Secretary to the Treasury regarding recent work being undertaken to progress the FCA’s Transformation Programme. The programme includes, amongst other actions, strengthening the FCA’s structure, and operational improvements.

FCA Press Releases & Statements 

FCA warns that younger investors are taking on big financial risks. This is following the publication of its research findings into better understanding investors who engage in high-risk investments like cryptocurrencies and foreign exchange.
The FCA has launched a campaign to encourage individuals to report wrongdoing. The campaign ‘In confidence, with confidence’ is intended to encourage individuals working in financial services to report potential wrongdoing to the FCA and to remind them of the confidentiality processes in place. It also includes a digital toolkit for industry bodies, consumer groups and whistleblowing groups to encourage individuals to have the confidence to step forward.
The PRA and FCA has issued a joint report and conclusions on liquidity management in UK open-ended funds. They have also issued a joint statement welcoming the Financial Stability Board’s (FSB) peer review of the UK remuneration regime.
The FCA has reminded Claims Management Companies (CMCs) and High Cost Lenders (HCLs) of its expectations that both types of firms should work together to resolve disputes and disagreements in the interests of their customers including agreeing streamlined claims handling processes with each other.  
The FCA reminds firms about changes certain consumer credit firms will have to make to pre-contract consumer credit information forms by 1 June 2021. Otherwise the credit agreement may only be enforceable against the debtor on an order of the court.
Following the announcement of HM Treasury regarding the Government’s compensation scheme for investors in London Capital & Finance (LCF), the FCA has set out its broad approach to assessing complaints made by investors to the FCA in relation to LCF. It has also set out its approach in relation to assessing investor complaints relating to the Connaught Income Fund Series 1, and associated companies, following the independent review into the FCA’s handling of that matter and the FCA’s response.  
The FCA has confirmed that the Financial Ombudsman Services (FOS) has appointed Nausicaa Delfas, currently Executive Director of Internal and interim Chief Operating Officer at the FCA, as FOS’s CEO and Chief Ombudsman from mid-May.  
The FCA has announced recent new appointments including Sacha Sadan as Director of Environment Social and Governance (ESG), Ian Alderton as Chief Information Officer and Ian Phoenix as Director, Intelligence and Digital. .
The FCA has provided an update on its website regarding its strategy in relation to sustainable finance. The update reflects its priorities set out in a previous feedback statement on this subject (FS19/6).

The importance of purposeful anti-money laundering controls. Speech by Mark Steward, Executive Director of Enforcement and Market Oversight.
Regulating the UK as a global financial centre; Speech by Nausicaa Delfas, Executive Director of International and Interim Chief Operating Officer.
Charles Randell, Chair of the FCA and PSR gave a speech outlining ‘Cautious optimism for the post pandemic world’.
Why black inclusion matters to us: Speech by Sheldon Mills, Executive Director, Consumers and Competition.
Levelling the playing field – innovation in the service of consumers and the markets: Speech from Nikhil Rathi, Chief Executive of the FCA.

Enforcement Actions and Prosecutions 

A Decision Notice has been issued by the FCA in respect of Jon Frensham, formerly known as Jonathan James Hunt, and prohibiting him from performing any functions in relation to regulated activity. This was as a result of non-financial misconduct.
The High Court has delivered a summary judgement in proceedings commenced by the FCA ruling that 24HR Trading Academy contravened FSMA 2000 by providing unauthorised investment advice to consumers via WhatsApp messages.   

The FCA has banned an adviser, Simon Varley from working in financial services and fined him £68,300 for knowingly performing a controlled function without approval and for providing investment advice to retail customers when he was not qualified or approved to do so.

The FCA has commenced criminal proceedings against Larry Barreto and Tassib Hussain relating to an offence of conspiracy to commit fraud by false representation relating to mortgage applications and involving both defendants, and two further offences by Larry Barreto of carrying on regulated activities without authorisation.

The FCA has publicly censured Alsford Page and Gems Ltd (APG) regarding activities relating to customers who purchased extended warranty insurance policies during 2013 to 2016. The policies were sold by the firm’s Appointed Representatives (ARs) which meant that as Principal, APG was responsible for ensuring customers were treated fairly by its ARs. The FCA found, amongst other aspects, that APG had failed to sufficiently consider or address the risks associated with these products being sold to the relevant customer and its systems and controls were inadequate relating to its oversight of ARs.
Industry News


The US regulator, the Securities and Exchange Commission (SEC) is said to be investigating special purpose acquisition vehicles (SPACs), also described as  ‘blank cheque’ acquisition companies that have taken Wall Street by storm in the last year. The SEC is seeking information on how underwriters are managing the risks involved. This is an area that the FCA is also now starting to focus on, according to a statement issued at the end of March regarding future consultation.  

In addition to a relaxation (subject to certain conditions) to the end of 2021 on the rule itself of investment firms having to report 10% portfolio value drops, it is reported that the FCA is also intending to consult on whether to scrap the rule itself including the need for this to be done in 24 hours.

It is reported that the FCA intends to scrutinise the role and transparency of ESG (environment, social and corporate governance) providers as it looks to tighten regulation for sustainable investors. Rating providers are used by many advisers and fund managers when picking ESG funds for underlying investors. The increased popularity of such funds has led to greater scrutiny on how these ratings are reached, including where there is a variation in rating between providers.
The Payment Services Regulator (PSR) has issued a factsheet on its Annual Plan and Budget for 21/22.

The Chancellor, Rishi Sunak, has written to the CEO of the FCA, Nikhil Rathi to make recommendations, required at least once in each Parliament, about aspects of the economic policy of the government to which the FCA should have regard when considering how to act in a way compatible with the FCA’s strategic objective, and its operational objectives.

The regulatory ‘fall out’ from the FCA’s handling of the London Capital and Finance (LCF) failure continued including a further response from Andrew Bailey, (currently Governor of the Bank of England but CEO of the FCA at the time of events), to the Treasury Select Committee’s previous correspondence. In addition, Megan Butler, Executive Director for Transformation at the Financial Conduct Authority, and Jonathan Davidson, senior adviser at the Financial Conduct Authority, both appeared in front of the Treasury Select Committee.  Ms Butler said she had “sincere regret” at the losses bondholders had but did not consider resigning. Mr Davidson also offered his personal apologies to bondholders in LCF. He also admitted that it was a ‘mistake’ in not scrutinising LCF’s application for authorisation more closely at the time. Both regulators also spoke about the culture at the FCA, saying it failed to look at allegations of wrongdoing “holistically.”
It has been announced that the Treasury Committee is undertaking a short enquiry following the failure of Greensill Capital. The inquiry will be divided into the following two strands: Lessons for the financial system and its regulation from the failure of Greensill Capital, and Lessons for HM Treasury (and its associated public bodies) from its interactions with Greensill Capital during the Covid crisis. Rushi Sunak, UK Chancellor, has also recently responded to MPs enquiries regarding HM Treasury’s role in previous communications relating to Greensill Capital. The impact of the Greensill Capital fallout has also created a wider consideration in relation to political lobbying generally. This was initially in relation to the role and actions of the former UK Prime Minister, David Cameron but more recently has also been relating to the activities of a number of other politicians in lobbying, either also connected with Greensill Capital or more generally in relation to potential conflicts between political roles and commercial organisations or interests as a whole. In the meantime, it has been reported that the British Business Bank had launched a probe into Greensill Capital before its collapse relating to loans it extended to Liberty Steel, a major UK steel provider, also now financially at risk. The fallout from Greensill Capital has also impacted on Credit Suisse and GAM Investments regarding fund investments into Greensill.  

Financial services lobby group, the City UK, has called upon regulators to adopt a lighter touch to allow the industry to help drive a UK economic recovery. It called for an overhaul of rules to unlock capital for small to medium size businesses and also highlighted recent proposals regarding a relaxation of the UK’s listing rules.

It is reported that a new regulator aiming to curb the dominance of tech giants has started work in the UK. The Digital Markets Unit (DMU) will look to create new codes of conduct for companies such as Facebook and Google and their relationship with content providers and advertisers.

Speaking at FinTech Week, ambitious plans to boost the UK fintech and financial services has been announced by the Chancellor, Rishi Sunak.

Prime Minister Boris Johnson has been urged to focus on regulatory failures in the financial sector with renewed calls for an enquiry into the Blackmore Bond scandal. In the meantime, it is reported that at least two MPs from different parties have questioned the UK regulator’s response to a second mini-bond scandal, following related issues regarding London Capital and Finance (LCF). According to a freedom of information request submitted by the Telegraph, the City of London police first alerted the FCA in 2018 to events at mini-bond provider Blackmore, 18 months before it eventually failed.

Coronavirus - Industry Updates

The Treasury Select Committee has written to six UK banks requesting information about their business current accounts practices. The letter, which was sent to Natwest, Lloyds, Metro Bank, Barclays, HSBC and Santander, asks whether they are considering from withdrawing from the SME market and whether account opening criteria has changed since the pandemic.


The impending provisional declaration on financial services between the UK and the EU is reported to be a 'good start' but experts have warned that it remains far from a guarantee that the UK will ever access EU markets. It was also reported by UK Government at the end of March that technical negotiations had concluded on the UK – EU Memorandum of Understanding but formal steps still required to be taken on both sides before it could be signed.   
The European Data Protection Board (EDPB) has issued an opinion on the European Commission’s (EC) draft implementing decisions on the adequacy provisions of protection of personal data in the UK.

Pensions & SIPPs 

Two MPs have told FCA Chief Executive, Nikhi Rathi, that they are seeking an independent review against the regulator’s handling of the British Steel Pension Scheme (BSPS) including into the enforcement action taken against advisers that gave unsuitable advice to transfer.
The Court of Appeal has sided with claimant Russell Adams, the investor, and found against SIPP provider, Carey Pensions, overturning a previous High Court ruling in a landmark decision. This outcome, which will have ramifications for the rest of the industry, focused on the responsibility of a provider when accepting investments in a SIPP.  The Court of Appeal also highlighted the risk of responsibility for regulated firms of dealing with unregulated entities if those entities breach the regulatory perimeter. As a result of the recent ruling, the Pensions Ombudsman has also confirmed that it will restart claims investigations against Carey Pensions which were put on hold whilst the appeal was being heard.  

HMRC & Tax

New rules on IR35 ‘off payroll’ working arrangements were introduced as planned on 6 April.
It is reported that the Government is planning on forcing all tax advisers to hold professional indemnity insurance (PII) in a bid to improve standards.
HMRC has issued its cryptoassets manual which expands on and replaces previous guidance. The manual is intended to reflect the formalisation of HMRC’s guidance on this market as it expands, as any event potentially triggering a tax liability should be considered individually. The manual highlights some key principles for business to consider in areas such as trading, chargeable gains, employment tax, VAT and stamp taxes.

Compensation & Complaints

MP Stephen Timms wants financial harm from online scams and advertisements to be added to the government’s online safety bill. He has suggested that the FSCS levy will fall if his financial harms amendment is passed.
Following previous consultation, the Financial Ombudsman Service (FOS) has issued its final plans and budget for the 2021/2022 year. This document includes its strategic plans, complaints trends, what it expects to see in the year ahead and its aims for developing and resourcing its service. The budget is subject to approval by the FCA.
St James’s Place has been hit by a Financial Ombudsman Service (FOS) claim after it rejected a complaint from a retired couple that their financial adviser used pressure tactics to get them to invest £300,000 in an enterprise investment scheme (EIS).
The Treasury has released details of a government-funded compensation scheme for London Capital and Finance (LCF) bondholders given that such claims won’t be covered by the FSCS scheme. Along with the compensation scheme, the government is also proposing to bring the issues of mini-bonds within the FCA’s regulatory perimeter in the future.


The Chartered Insurance Institute (CII) has committed to raising awareness of its membership code of conduct relating to bullying and professional misconduct amongst members.
HM Treasury has issued its Annual Progress Report for 2021 regarding its Investment in Women Code which was launched in July 2019.  

This newsletter contains generic information and has been generated for professional clients and associates of Gem Compliance Consulting Limited only and should not be regarded as advice. We will not be liable for loss, however caused by parties acting on the information contained herein.

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