Regulation  

New rules, old scores, the Queen speaks: The week in news

New rules, old scores, the Queen speaks: The week in news

This week’s news was again dominated by regulatory action, with the Financial Conduct Authority’s belated proposals on adviser capital requirements, even more belated enforcement action with the Keydata case, and implementation of European rules all garnering multiple stories.

This all almost overshadowed the re-opening of parliament, with all the attendant pomp and circumstance that comes from the Queen sticking her hat on and performing as the prime minister’s puppet, running through the proposed legislative agenda.

So here are the five key themes from the last five days:

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1. Long awaited proposals surprisingly ‘sensible’.

After waiting several years and fearing the worst, the industry was pleasantly surprised by the proposed calculation for personal investment firms’ capital requirements.

Most firms will need to hold the greater of £20,000 or 5 per cent of their investment business income, although firms acting as principal or holding client money could have to hold 10 per cent of income.

As per usual, FTAdviser pored through the paper for pertinent points, unearthing the fact that the Financial Services Compensation Scheme’s funding model will be formally reviewed by the regulator by the end of 2016, in a move designed to limit the burden of industry claims.

2. Keydata trio fined - but Tribunal awaits.

Another long-awaited FCA publication came through earlier this week, in the form of the regulator’s suggested bans and fines for the trio of senior figures blamed for Keydata’s demise.

The FCA cited “reckless” actions when handing down almost £80m worth of fines - the majority being levelled at founder Stewart Ford in what would be a record individual penalty - and also complained it was “deliberately misled” by the firm.

The case will be decided at the Upper Tribunal, as all three have contested the decision notices. Mr Ford soon claimed that he will be “glad to see the FCA in court” and will launch a claim against the regulator and auditor PricewaterhouseCoopers for damages worth £650m.

“I am glad it has now come to this stage... once the spotlight is on the FCA, it will find itself wanting,” he stated.

3. Industry debates EU rule implementation.

Amid chatter about a referendum on EU membership that is now officially pending, several industry stakeholders got on their soapboxes this week to support or disparage the FCA transposing various parts of the European Markets in Financial Instruments Directive to UK law.

First up was the Wealth Management Association, which called for the existing “failed” definition of independent advice to be scrapped, so providing “an opportunity to address some of the anomalies arising under the current RDR regime”.

This was then backed by the Association of Professional Financial Advisers, whose director general Chris Hannant also came out in support of Mifid II’s standard “as it better reflects the guidance the FCA has issued and the standard it seems to expect”.

However, the adviser trade association was more concerned with the potentially onerous EU rules requiring advisers to record all calls relating to actual or proposed client transactions, giving the FCA an ultimatum to choose between ‘gold plating’ the directive “or pursuing... common sense”.