Key Regulatory Topics: Weekly Update 6 October - 12 October 2023

Published Date
Oct 12, 2023
Key developments this week have centred on ESG topics, including the FSB's publication of its progress report on climate-related disclosures, the TCFD's publication of its final status report, and the Transition Plan Taskforce finalising its disclosure framework - plus the launch of the CMA Green Agreements Guidance. Over in the EU, the EC published a speech on the SFDR and the progress still to be made, while the Parliament's Economic and Monetary Affairs Committee published a draft report on the proposal for regulating transparency and integrity of ESG rating activities.

This week has also seen some notable publications in relation to financial stability, with the FSB publishing its annual report on promoting financial stability globally and the BoE publishing the FPC's approach to assessing risks in market-based finance.  The resilience of market-based finance is also a theme of the FPC's financial policy summary and record, which considers other financial stability issues and potential vulnerabilities in relation to the UK banking system.


ESMA speech on ESAs work on financial education

On 9 October, ESMA published a speech on financial education given by Verena Ross, ESMA Chair, at the joint ESA 2023 Consumer Protection Day. In the speech, Ms Ross explained that the ESAs have joined forces on the important consumer protection topic of financial education and have developed interactive factsheets directed to the consumers to educate them on the two key themes of inflation/rising interest rates and sustainable finance. Further, Ms Ross announced that in November, the ESAs, together with NCAs, will publish an interactive factsheet to contribute to financial education input on sustainable finance. The factsheets will be available in all EU languages and will be proactively promoted at a national level. Ms Ross concluded her speech by noting that cross-selling, cryptoassets and greenwashing remain areas that consumers also need education on.


Council of the EU adopts the new consumer credit directive

On 9 October, the Council of the EU announced that it had adopted the consumer credit directive, which aims to enhance the protection for EU consumers applying for credit. The revised legislation repeals and replaces the current 2008 directive on consumer credit agreements. The new directive aims to: (i) ensure that credit information is presented in a clear and understandable manner and is adapted to digital devices; (ii) establish stricter advertising rules to reduce abusive credit to over-indebted consumers and create effective measures against overcharge; (iii) require lenders to assess whether consumers can repay their credit, so that they are protected from over-indebtedness; (iv) enlarge the scope of the directive to loans below €200 and buy-now-pay-later products; and (v) give consumers the right to terminate a credit agreement within 14 days, and give cancer survivors the right to be forgotten. Once the President of the EP and the President of the Council have signed the agreement, the directive will be published in the OJ, entering into force on the twentieth day following its publication.

Press Release

Financial crime and sanctions 

Home Office publishes terms of reference for independent review of disclosure and fraud offences

On 12 October, the Home Office published the terms of reference for its independent review of disclosure and fraud offences. Due to the broad nature of the review, it will report in two parts: (i) on the disclosure regime, assessing the operation of the criminal disclosure regime, with a focus on crime types with a large volume of digital material. The review will also assess the Attorney General’s Guidelines on Disclosure and consider legislative and non-legislative modifications that could improve the regime; and (ii) fraud offences, assessing whether the current fraud offences are sufficient for the challenges of modern fraud, including whether penalties fit the crime. The review will also explore if certain fraud offences should be summary only, rather than triable either way. This phase will consider making it easier for individuals to inform on associates in criminal fraud networks and investigate the scope of existing civil powers – including whether they go far enough to tackle fraud. The Home Office expects to report on the disclosure recommendations in Spring 2024, and the fraud offences recommendations in Spring 2025.

Terms of Reference


FCA updates feedback on good and poor quality cryptoasset applications under the MLRs

On 6 October, the FCA updated its cryptoasset AML / CTF regime webpage that provides feedback on applications under the MLRs. The webpage has been updated with more examples of good and poor practice the FCA has observed in cryptoasset business registration applications. These include: (i) applications failing to identify and assess the inherent risks of AML / CTF to which their business is subject. Firms are reminded that their business-wide risk assessment should include an exhaustive assessment of risk factors highlighted in Regulation 18(2)(b) of the MLRs; (ii) applicants often mistakenly identifying control failings as inherent risks; (iii) applicants failing to provide a clear methodology for risk-scoring customers, which drives the level of due diligence the applicant firm is required to conduct. Applicants are encouraged to consider enhanced due diligence triggers, levels of ongoing monitoring and the frequency of periodic reviews; and (iv) staff not being made aware of how to recognise and deal with suspicious activity. The FCA reminds firms that their application will not be approved where the SAR policy does not highlight a clear route of escalation internally to the MLRO/Nominated Officer, as well as externally to the NCA.



Please see the ‘Financial Crime and Sanctions’ section for the FCA updated feedback on good and poor quality cryptoasset applications under the MLRs.

FCA takes over regulation of cryptoassets from the ASA

On 8 October, the ASA announced that the FCA will take over the regulation of adverts for cryptoassets in non-broadcast media from 8 October. The ASA will no longer regulate adverts for ‘qualifying cryptoassets’, i.e. cryptoassets that are transferable and fungible, including cryptocurrencies and utility (fan) tokens. The FCA will also be introducing new rules that will apply to all firms marketing qualifying cryptoassets to UK consumers, regardless of which country they are based in, or the technology used. However, cryptoassets as a product remain unregulated, and the new rules do not cover cryptoassets that are non-fungible, such as NFTs, or Limited Payment Tokens that can only be redeemed with the issuer and used for the payments of specific goods and services. It is important to note that the ASA will continue to regulate: (i) adverts for cryptoassets that are out of scope for the FCA rules; (ii) all finance-related broadcast advertising cryptoassets in Ofcom-regulated TV and radio services; and (iii) the ‘non-technical’ aspects of advertisements for products by FCA-regulated business, such as matters relating to offence, social responsibility, and other claims that do not relate to specific characteristics of the product.

Press Release

Fund regulation 

FCA speech on its priorities updating and improving the UK regime for asset management

On 11 October, the FCA published a speech by Ashley Alder, Chair, on the FCA priorities for updating and improving the UK regime for asset management. In the speech, Mr Alder explains that proportional regulation, together with ways in which regulation can drive innovation, lies behind much of the FCA’s thinking about investment management. He further explains that, following the FCA’s discussion paper on asset management, it will be pursuing three main priorities for reform: (i) making the regime for alternative fund managers more proportionate, including in relation to reporting requirements; (ii) updating the regime for retail funds; and (iii) supporting technological innovation, including more work on initiatives such as the Direct2Fund proposal, that could make the UK fund dealing model and interactions with investors far more efficient. The FCA recognises the role the sector in mobilising domestic savings to fund productive investment in the UK and is pursuing reforms to promote the medium to long-term growth of the UK economy. Moving forward, Mr Alder announced that the FCA will be consulting on amending the AIFMD regime and re-evaluating the AIFMD rules for non-UCITS retail funds next year, and in 2025 will review the regulatory reporting regime. Mr Alder concluded his speech emphasising that the FCA fully appreciates the importance of the investment management industry for the UK as an international financial centre and for the UK economy, and its core objective is to pursue reforms which will strengthen the industry over the years to come.


FCA updates webpage on landing slots for funds in the temporary marketing permissions regime

On 9 October, the FCA updated its webpage on landing slots for funds in the temporary marketing permissions regime (TMPR). The FCA explains that the process of exiting the TMPR and notification of landing slots is still under review. If HMT makes equivalence regulations under s271A FSMA approving certain countries or territories, the FCA expects to contact fund operators shortly afterwards, with landing slot information. However, at this time no regulations have been made. While the process is still under review, operators of UCITS in the TMPR are encouraged to ensure the FCA holds the correct contact email address as this will be how the FCA contacts them with details of the process and landing slot. The FCA plans to publish more information on the webpage in due course.


Markets and markets infrastructure 

ESMA consults on draft technical advice to the EC on fees charged to Tier 1 Third Country CCPs under EMIR

On 12 October, ESMA launched a public consultation on the revision of the Delegated Regulation regarding fees charged to Tier 1 third country central counterparties (TC-CCPs) under EMIR. In the consultation, ESMA is proposing to: (i) allocate the annual fees among all recognised Tier 1 CCPs via a weighting factor which depends on their global turnover; (ii) introduce a basic minimum annual fee of EUR 50,000 per Tier 1 TC-CCP, and a maximum annual fee of EUR 250,000; and (iii) introduce an incentive scheme for Tier 1 TC-CCPs failing to submit annual audited turnover figures. ESMA’s proposals aim to ensure that the annual fees charged to Tier 1 TC-CCPs are more proportionate and accurately reflect the differences in size and activity across all Tier 1 TC-CCPs. The deadline for comments is 10 November.

Consultation Paper

Press Release

ESMA puts forward expectations towards effective circuit breaker implementation

On 12 October, ESMA published a supervisory briefing on circuit breakers, which provides a comprehensive overview of supervisory expectations regarding the calibration of circuit breakers implemented by trading venues (TVs). The supervisory briefing outlines several principles that NCAs should enforce to ensure effective circuit breaker implementation and aims to strengthen convergence among NCAs on circuit breaker calibration methodology, promoting compliance, common understanding and enforcement practices. The guidance comes in the context of the letter ESMA sent to the EC about measures to be implemented in energy markets. Following on from the briefing, NCAs will now inform the TVs in their jurisdiction and follow up on the compliance of trading venues with the expectations set out in the briefing. It is expected that the calibration of circuit breakers throughout the EU will improve and therefore volatility will be better managed.

Supervisory Briefing

Press Release

EMMI consults on proposed changes to Euribor methodology

On 11 October, the European Money Markets Institute (EMMI) published a consultation paper proposing changes to Euribor methodology, a critical benchmark widely used in the global financial system for a broad range of financial products and contracts. The consultation paper outlines EMMI's efforts to further enhance Euribor’s methodology and the proposed changes, which are designed to address specific aspects of the benchmark while preserving its core characteristics. The key elements under consideration are: (i) reformulation of Level 2.3, in particular by enlarging the starting point for its calculation and redefining the Market Adjustment Factor to better reflect changes in interest rates as well as changes in the perceived credit risks; and (ii) discontinuation of Level 3. As a consequence of these changes, EMMI explains that Euribor Panel Banks’ operational and cost burdens would significantly diminish and provide an opportunity to expand the Euribor Panel, while maintaining the benchmark's reliability and characteristics. The deadline for comments is 11 December.

Consultation Paper

Press Release

EC adopts Delegated Regulation amending the RTS as regards the transition to the TONA and SOFR benchmarks referenced in certain OTC derivative contracts

On 11 October, the EC adopted a Delegated Regulation amending the RTS laid down in Delegated Regulation (EU) 2015/2205 as regards the transition to the TONA and SOFR benchmarks referenced in certain OTC derivative contracts. In the explanatory memorandum, the EC explains that there are currently three Delegated Regulations on the clearing obligation. They mandate a range of interest rate and credit derivative classes to be cleared. However, the EC believes that in the light of the benchmark transition, there is a need to review the scope of the clearing obligation for the classes and currencies impacted by these changes, namely interest rate derivative classes in JPY and USD. As such, Delegated Regulation (EU) 2015/2205 should be amended to reflect the transition. Article 1 of the amending Regulation modifies Delegated Regulation (EU) 2015/2205 regarding interest rate derivative classes, in the following way: (i) Article 3(1c) is added to specify the date from which the clearing obligation shall take effect for certain transactions referencing SOFR and TONA; and (ii) the annex is amended to reflect the deletion of old benchmarks and the introduction of new benchmarks. The Delegated Regulation is now with the EP and Council of the EU for consideration.


Payment services and payment systems

PSR publishes revised penalty statement

On 12 October, the PSR published its revised penalty statement. The statement aims to help firms better understand how the PSR determines whether to impose a financial penalty and its amount, and provide clarity about what to expect if the PSR identifies non-compliance. The revisions follow on from the PSRs consultation in March, where the regulator proposed the following five changes: (i) to combine the (then) three penalty statements into one; (ii) to change how it considers the duration of a compliance failure and revenue when calculating penalties; (iii) to clarify what it means by senior management; (iv) to clarify further when it considers a compliance failure is deliberate or reckless; and (v) to reinforce the principle that penalties should disincentivise compliance failures. Following consultation feedback and recent legal developments, the PSR has decided to implement all but one change (change (iv) – while the PSR will proceed with its general proposal, this will not include the specific element of the proposal that awareness of a risk can be assessed on an objective basis when considering whether a compliance failure is reckless.

Revised Penalty Statement


Press Release

PSR speech on how well UK payments is doing and what it should be focusing on next

On 11 October, the PSR published a speech by Chris Hemsley, Managing Director of the PSR, on how well UK payments is doing and what it should be focusing on next. Key considerations in the speech included: (i) how far UK payments has come and issues that need addressing. Mr Hemsley explains that a challenge that is of particular focus for the PSR at present is making sure that the transition to digital payments happens in a way that protects people and promotes effective competition; (ii) how the UK compares against other economies.  The UK compares fairly well, although Mr Hemsley notes that there are always new things to learn; and (iii) the UK’s positioning in terms of embracing the future. Mr Hemsley believes the UK to be increasingly engaged in debates about the future of payments, such as discussions surrounding a digital pound. Mr Hemsley emphasised that while UK payments has come a long way, it is important for the PSR to keep up the pace and deliver on the reforms underway. In particular, he pointed to the UK’s work on APP fraud as an opportunity to lead the way.


FSB publishes annual progress report on G20 cross-border payments targets

On 9 October, the FSB published its 2023 consolidated report on progress made on priority actions to meet the G20 cross-border payments roadmap targets. The report sets out the key insights from the KPIs monitoring report that was published alongside the progress report. The FSB explains that there are signs of progress, and the KPIs provide some clear indications of where investment and actions by the public and private sector could make the most significant contribution to achieving the targets. The FSB also notes that good progress has been made on structures to encourage and facilitate the necessary action by both the public and private sectors, although the FSB emphasises that there is a considerable distance to go and more needs to be done across all of the key areas for action. In order to achieve the targets, the FSB advises collaboration and engagement between and beyond the G20, believing that if the public and private sectors work together, the roadmap goals can be achieved, and the benefits realised.

Report on Key Performance Indicators

Report on Key Performance Indicators Webpage

Consolidated Progress Report

Consolidated Progress Report Webpage

Methodology Document

Press release

Prudential regulation 

FSB publishes annual report on promoting global financial stability

On 11 October, the FSB published its annual report describing its work to promote global financial stability. The report looks back at the banking turmoil in March, and notes that decisive actions taken by the relevant authorities and the implemented Basel III reforms helped shield the sector and real economy from a more severe crisis. The report also provides an overview of the FSB’s work on current and emerging vulnerabilities, including: (i) the finalisation of a global regulatory framework for cryptoassets; (ii) work to address systemic risk in non-bank financial intermediation; (iii) the development of a global standard for financial resources and tools to support resolution of systemically important central counterparties; (iv) work under the FSB Roadmap for Addressing Climate-related Financial Risks; (v) work to achieve greater convergence in cyber incident reporting and the development of a policy toolkit for authorities, financial institutions and service providers for their third-party risk management and oversight; and (vi) work to enhance cross-border payments through practical projects, including strengthened partnerships with the private sector. The report finds that progress in implementing the G20 reforms continues but remains uneven. It emphasises that developments over the past year reinforce the importance of global regulatory cooperation, including the completion of the post-crisis reform agenda with G20 support. The FSB and standard-setting bodies will continue to promote approaches to deepen international cooperation, coordination, and information sharing.

Annual Report

Press Release


FPC sets out approach to assessing risks in market-based finance

On 10 October, the BoE published a Financial Stability in Focus report setting out the Financial Policy Committee’s (FPC) approach to assessing risks in market-based finance. The report notes that market-based finance has grown significantly since the global financial crisis, with non-banking financial institutions currently accounting for around half of UK and global financial sector assets. This has reduced the reliance of many UK businesses on banks and diversified their sources of finance and other financial services. As such the FPC seeks to ensure the UK financial system is prepared for the wide range of potential risks. The FPC has accordingly established an approach to identifying, assessing, monitoring, and responding to financial stability risks and vulnerabilities associated with market-based finance. The report aims to advance domestic and international debates on market-based finance risks to financial stability. The FPC welcomes feedback on its approach and over the coming months BoE staff will engage with interested parties on the report.

Financial Stability in Focus Report

Recovery and resolution

FSB report on preliminary lessons learnt from resolution following 2023 bank failures

On 10 October, the FSB published a report on the 2023 bank failures and the preliminary lessons learnt from resolution. The report identifies preliminary lessons learnt regarding the FSB Key Attributes’ framework for (i) resolving a G-SIB, drawing on an analysis of the Credit Suisse case; and (ii) the resolution of systemically important banks more broadly, drawing on the recent bank failure episodes in the US. The review of the Credit Suisse case found that: (i) recent events demonstrate the soundness of the international resolution framework but there are several areas for further analysis and improvements – including the need for an effective temporary public sector liquidity backstop, and operational readiness of banks to access that as a last resort; (ii) firms and authorities need to: (a) address the legal issues identified in the execution of bail-in across borders during resolution planning; (b) better operationalise a range of resolution options such as transfer and sale of business tools alone or in combination with bail-in; and (c) understand the impact of bail-in on financial markets. In addition, authorities should continue to prioritise testing and simulating effective decision making and execution at domestic and international levels; and (iii) firms and authorities should also extend their communication and coordination efforts outside of the core crisis management group. In its review of US bank failures, the FSB highlights that banks not identified as G-SIBs can still be systemically significant or critical upon failure. Noting that while the three US regional banks were effectively resolved without bailing out shareholders and unsecured creditors, there were still a number of issues to explore, including: (i) whether the scope of resolution planning requirements and loss-absorbing capacity requirements needs to be expanded; (ii) how resolution authorities can be better prepared for the increased speed of bank runs due to, for example, 24/7 payments, mobile banking and the use of social media; and (iii) the implications of recent events for the role of deposit insurance in resolution arrangements. Moving forward, the FSB will conduct work to further explore these areas and will continue to coordinate closely with the other standard-setting bodies.



Press Release

Sustainable finance 

EBA report on the role of environmental and social risks in the prudential framework

On 12 October, the EBA published a report on the role of environmental and social risks in the prudential framework. The report recommends targeted enhancements to accelerate the integration of such risks across the Pillar 1 framework.  The aim is to support the transition towards a more sustainable economy while ensuring that the banking sector remains resilient. The report also develops considerations on the potential use of macroprudential tools. The EBA explains that due to challenges in terms of design, calibration, and complex interaction with the existing Pillar 1 framework, it does not support the introduction of a green supporting factor or a brown penalising factor. As such, the EBA puts forward recommendations for short-term actions to be taken over the next three years as part of the implementation of CRR3 and CRD6. In particular, the EBA is proposing to: (i) include environmental risks as part of stress testing programmes under both the IRB and the IMA under the Fundamental Review of the Trading Book; (ii) encourage inclusion of environmental and social factors as part of external credit assessments by credit rating agencies; and (iii) require institutions to identify whether environmental and social factors constitute triggers of operational risk losses. The report also presents possible revisions of the Pillar 1 framework reflecting the growing importance of environmental and social risks.

Press Release

CMA launches Green Agreements Guidance to help businesses cooperate on environmental goals

On 12 October, the CMA published new Green Agreements guidance, which aims to explain how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain, to help them act on climate change and environmental sustainability. The Guidance sets out key principles which apply to such agreements, along with practical examples that businesses can use to inform and shape their own decisions. In particular, there is a chapter dealing specifically with agreements tackling climate change. The Guidance is part of a wider CMA awareness campaign which includes a roadmap focussing on different categories of risk. Following the publication of the Guidance, the FCA published a statement confirming that it will have regard to the Guidance where relevant in the application of its own competition powers.

Green Agreements Guidance


Environmental Sustainability Collection Webpage

Press Release

FCA Statement

TCFD publishes final status report

On 12 October, the TCFD published its sixth and final status report. The report highlights steady momentum in companies disclosing TCFD-aligned information, but emphasises more progress is needed with disclosure levels still falling short. Other key findings include: (i) 97 of the 100 largest companies in the world have declared support for the TCFD, report in line with the TCFD recommendations, or both; (ii) disclosure of climate-related financial information in financial filings is limited; (iii) the majority of jurisdictions with final or proposed

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