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Posted in Regulatory and legislative updates, UK

UK: The FCA consults on new SM&CR guidance on statements of responsibilities and responsibilities maps

On 11 October 2018, the FCA published a guidance consultation for FCA-authorised firms on preparing statements of responsibilities and responsibilities maps under the Senior Managers and Certification Regime (SM&CR). Under the SM&CR, which will apply to all FCA authorised firms from 9 December 2019, firms will be required to prepare statements of responsibilities for each senior manager, and all enhanced firms will be required to have a responsibilities map.

While the guidance is directed at FCA-authorised firms, the FCA has indicated that it may also be useful for dual-regulated firms such as insurers and banks, which will also be required to prepare these documents.

The proposed guidance sets out the purpose of statements of responsibilities and responsibilities maps, questions for firms to ask themselves when drafting these documents and examples of good and poor practice. These examples are followed by analysis and commentary from the FCA, and provide a useful reference tool for firms preparing their statements of responsibilities and responsibilities maps. The guidance provides analysis relevant for each category of firm subject to the regime (limited, core, as well as enhanced firms). The guidance also contains example responsibilities maps for firms to consider.

The guidance is stated to be non-binding and a departure from it will not necessarily indicate a breach of the rules. Firms may apply the guidance in a risk-based and proportionate way by considering the size, nature and complexity of the firm. In a speech today, David Blunt, Head of Conduct Specialists at the FCA, indicated that the guidance has been generated following lessons learned from applying the SM&CR for banks and other firm types which are already subject to the regime. He indicated that the purpose of the examples provided is to help firms think about what should be included in these documents, but that these examples should not be slavishly or strictly followed or copied. In practice, firms should have regard to this guidance to ensure that the documents they produce take account of the FCA’s expectations.

In our experience, preparing compliant and representative responsibilities maps and statements of responsibilities documents can be a time-intensive process and is often an area of considerable uncertainty for firms seeking to comply. In the past, regulators have provided fairly limited guidance on what these documents should look like. It is therefore helpful that the FCA has decided to provide more detailed guidance in this area.

The deadline for comments on the consultation is 10 December 2018. For further detail on the proposed guidance from the FCA as well as how to respond to the consultation, please see https://www.fca.org.uk/publications/guidance-consultations/gc18-4-senior-managers-and-certification-regime-proposed-guidance-statements-responsibilities-firms

For more information on the near final rules on SM&CR released by the FCA and PRA, see https://www.hoganlovells.com/en/blogs/fision/the-fca-and-the-pra-have-released-near-final-rules-on-the-senior-managers-and-certification-regime

Please let us know if you would like to find out more about how we can help you implement the regime. We are able to offer flexible support to reflect your firm’s business needs. We can run your entire implementation project using a mix of our legal and consulting offering, provide legal advice on the key requirements and what you need to do to implement the regime, or provide template documentation to help you design and implement your own project. Let us know how we can help. 

Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – September 2018

The Hogan Lovells’ Corporate Insurance Newsletter for September has been published.  This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants.  In this issue, amongst other items, we cover:

  • Publication of a speech by David Rule at the PRA about current issues in insurance supervision.
  • A new consultation paper from the PRA on implementation of the SM&CR
  • Launch of a new insurer start-up unit by the PRA and FCA
Posted in European Union, Regulatory and legislative updates, UK

Addressing Implementation: Messages from the FCA Workshop on its approach to consumers

The FCA held a workshop last week on Customers in Vulnerable Circumstances which focused on its approach to ensuring inclusive and fair treatment of vulnerable consumers in the financial services industry. Much of the focus draws from its Approach to Consumers published in July 2018 (see our previous FISion blog here).

The FCA said?

The FCA’s statistics suggest that 1 in 4 of us will experience a mental health issue at some point in our lives and half the population will suffer a mental health issue in one way of another in our lifetime. Against this backdrop, Nick Stace (Non-Executive Director, FCA) emphasised the need for firms within the industry to demonstrate that guidelines and policies relating to vulnerable consumers are implemented effectively with their impact and the outcomes measured. Christopher Woolard (Executive Director of Strategy and Competition, FCA) stressed that firms which fail to do so could face FCA intervention. There have already been significant challenges determining how to define and treat vulnerability within Financial Services but the FCA are proposing to introduce minimum standards with which firms will need to be aligned.

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Posted in Case reports, South Africa

South Africa: What’s yours is mine and what’s mine is mine

In Naidoo v Discovery Life Limited & others (202/20170) ZASCA 88 (31 May 2018) the Supreme Court of Appeal was faced with the main task of determining whether a risk-only policy with a beneficiary clause constitutes an asset in the joint-estate as envisaged by section 15(2)(c) of the Matrimonial Property Act,1984 (MPA).

This case deals with two areas of law, insurance and matrimonial law, and illustrates the interplay between the two.

The courts have previously decided on the issue of whether rights that arise by virtue of a life-insurance policy fell within the joint estate upon the death of the insured spouse. This issue was previously decided in Danielz NO V De Wet & another 2009 (6) SA 42 (C).

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Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – August 2018

The Hogan Lovells’ Corporate Insurance Newsletter for August has been published.  This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants.  In this issue, amongst other items, we cover:

  • Publication by the Government of various Brexit related papers including guidance from HM Treasury on preparation for a ‘no-deal’ Brexit for financial services.
  • An update on the Law Commissions’ consultation on insurance interest
Posted in Regulatory and legislative updates, UK

UK: Corporate Insurance Newsletter – July 2018

The Hogan Lovells’ Corporate Insurance Newsletter for July has been published.  This provides a round-up of UK, EU and international regulatory developments relevant to UK based insurance market participants.  In this issue, amongst other items, we cover:

  • Publication by the FCA and PRA of new policy statements and consultation papers relating to the implementation of the senior managers and certification regime
  • Publication by the Government of various Brexit related papers including draft Regulations to deal with the temporary permission regime
  • Publication of a series of policy statements from the PRA on changes to reporting formats, internal models, matching adjustment and reporting requirements.
  • Developments on ComFrame and the global insurance capital standard
  • Launch by EIOPA of thematic reviews on consumer protection issues in travel insurance and on Big Data.
Posted in Case reports, UK

“Come one, come all”: the Court of Appeal opens the floodgates and expands the scope of the jurisdictional gateways

Eurasia v Aguad [2018] EWCA Civ 1742

The Court of Appeal (“CoA“) has held that two of the “general grounds” jurisdictional gateways (as opposed to those gateways which operate only in relation to a specific type of claim) are complementary to each other, such that additional foreign defendants can be brought within English jurisdiction despite the case against those additional defendants having a merely tangential connection to England.

Read full Blog article here …

 

Posted in Italy, Regulatory and legislative updates

Italy: IVASS reviews rules on corporate governance system and outsourcing

IVASS published on 5 June Regulation no. 38 concerning provisions on the corporate governance system (the “Regulation“) implementing EIOPA Guidelines pursuant to Solvency II Directive.

The Regulation will be applicable to: (i) insurance and reinsurance undertakings having a registered office in Italy (ii) the Italian branches of insurance and reinsurance undertakings having a registered office in a third State and (iii) the Italian ultimate parent company, only with respect to the provisions concerning the group corporate governance system.
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Posted in Regulatory and legislative updates, UK

UK: PPI Update – July 2018

FCA Consultation Paper 18/18

On 4 July 2018, the FCA released a Consultation Paper providing guidance and seeking responses on PPI mis-selling complaints, and the issue of recurring non-disclosure of commissions. The consultation follows the publication in August 2017 of amendments to provisions the FCA Handbook relating to the handling of PPI mis-selling complaints (DISP App 3).

The amendments to DISP App 3 were the culmination of a series of regulatory changes following the Supreme Court decision in Plevin v Paragon Personal Finance Limited, in which the Court held that a lender’s failure to disclose the level of commission taken from a PPI sale gave rise to an unfair relationship between creditor and borrower under the Consumer Credit Act. Previous blog posts from Hogan Lovells have considered these changes in detail.

The Plevin case and subsequent cases which have come before the courts (including the Doran case discussed below) all concerned sales of “single premium” PPI products, purchased through payment of a lump sum at the time the customer took out their loan. Although the rules set out in DISP App 3 relate to complaints regarding both single premium and “regular premium” (where customers paid for PPI on a rolling basis), the FCA has determined that there is uncertainty about some complaints regarding sales of regular premium PPI.

In particular, the FCA considers that there is uncertainty about whether firms should consider recurring non-disclosure(s) (i.e. non-disclosures after the point of sale) of the existence of, or level of, commission and/or profit share (‘RND’) when assessing mis-selling complaints.

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Posted in Regulatory and legislative updates, UK

UK: The FCA and the PRA have released near final rules on the Senior Managers and Certification Regime

On 4 July 2018, the FCA and the PRA released near final rules on the extension of the Senior Managers and Certification Regime (SMCR). While the majority of the rules remain the same, the regulators have made a few changes and have also provided a significant amount of extra guidance to firms who will be subject to regime. Please see a summary below of some of the key points to note for different firm types.

Key Points for Insurers

The FCA and PRA have each released near final rules on the extension of the SMCR to Insurers. In general, there do not seem to be any significant changes made since the draft proposals. The only exception to this is the narrowing of the scope of the certification regime for small non-directive firms, where the certification regime will now encompass only members of the governing body (other than PRA/FCA approved persons or non-executive directors) rather than include all members of the governing body and all employees who report directly to the governing body.

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