Financial Services August 2013

Update Weekly Regulatory Update

Week to 23.08.13 This weekly update from Clyde & Co’s Financial Services Regulatory Team summarises new developments as reported by the FCA, the PRA, the UKLA, the Upper Tribunal, the Financial Ombudsman Service and the over the past week, with links to the full documents where these are available.

We hope that you will find this update between them bought and renewed useful. If you have any queries about approximately 23 million policies, will any of the information in this update soon receive a letter from CPP giving or financial services regulatory more information on the process. The matters generally, please contact redress bill could be up to GBP 1.3bn one of the individuals listed in the with redress per customer depending ‘Contacts’ section of this publication. on the type of policy (or policies) If you have any comments on the owned and the length of time held. content or format of the update or Banks and issuers have, if you no longer wish to receive it, or subject to the approval of the High have a colleague who would like to Court, agreed to establish a ‘Scheme of receive it, please email Arrangement’ that provides a simple [email protected]. process for customers who were mis-sold protection to make a claim Consultation papers: for redress. The following high street No new developments this week. banks and credit card issuers, together Discussion papers: with CPP, have voluntarily agreed to No new developments this week. be part of the Scheme and will provide the money needed to pay redress: Policy statements: No new developments this week. –– Plc (part of ) Press releases: 22 August: Redress package agreed –– Bank Plc for consumers mis-sold CPP –– Canada Square Operations Limited insurance products. The FCA has (formerly Egg Banking Plc) issued a press release announcing –– Capital One (Europe) Plc that it has reached an agreement with –– Plc (part of Card Protection Plan Limited (CPP) National Australia Group Europe and 13 high street banks and credit card issuers that will pave the way –– Home Retail Group Insurance for redress to be paid to customers Services Limited who were mis-sold CPP’s Card –– HSBC Bank Plc Protection and Identity Protection –– MBNA Limited policies. Seven million customers, who –– Morgan Stanley Bank International Limited 21 August: Final Notice: Ingram Graham Limited (In –– Nationwide Building Society Creditors’ Voluntary Liquidation). The FCA has published a Final Notice cancelling the Part 4A permission granted –– Santander UK Plc to Ingram Graham Limited (IGL). IGL had failed to pay fees –– The Plc and levies totalling GBP 21,348.36 owed to the Authority, –– Tesco Personal Finance Plc despite repeated requests that it do so. This led the The involvement of the banks and credit card issuers Authority to conclude that IGL had failed to manage its reflects the fact that they introduced customers to CPP’s business in such a way as to ensure that its affairs were products and so must share responsibility for putting conducted in a sound and prudent manner, that it was not things right. The scheme is still subject to approval and so a fit and proper person, and that it was therefore failing to redress is not expected to be paid out until Spring 2014. satisfy the Threshold Conditions in relation to the regulated activities for which IGL had permission. http://www.fca.org.uk/news/consumer-redress-agreed-for- mis-sold-cpp-insurance http://www.fca.org.uk/static/documents/final-notices/ ingram-graham-limited.pdf Speeches: No new developments this week. Application refusals: No new developments this week. Bulletins and newsletters: No new developments this week. Approved person refusals: No new developments this week. Final notices: 21 August: Final Notice: Mr Andrew Jeffery. The FCA has Research publications: published a Final Notice fining Mr Andrew Jeffery GBP No new developments this week. 150,000 and prohibiting him from carrying out any function Consumer research: in relation to any regulated activity on the grounds that No new developments this week. he is not a fit and proper person. Mr Jeffery’s misconduct Other FCA and PRA publications: occurred whilst he was acting as the sole director and only 22 August: FCA FG13/6 – Market Operators’ oversight approved person at Jeffery Flanders (Consulting) Limited, of member firm compliance with rules.The FCA has an insurance intermediary. Mr Jeffery referred the FCA’s published final guidance (FG13/6) on the oversight of decision to the Tribunal which, in a written decision dated member controls carried out by recognised investment 27 June 2013, upheld the Authority’s decision by finding exchanges (RIEs) and firms operating multilateral that Mr Jeffery was in breach of Statements of Principle 1 trading facilities (MTFs). The guidance includes feedback and 4, as he did not act with integrity and deal with the on the responses received by the FCA to its April 2013 Authority in an open and co-operative way. The Tribunal consultation (GC13/1). The feedback includes a request also found that Mr Jeffery was not a fit and proper person, for further clarification on the status of the guidance and and posed a serious risk to clients, to other parties dealing the regulatory provisions from which it is drawn. The with him and to the integrity of, and confidence in, the FCA states that, although the guidance sits outside the financial system. The Authority and the Tribunal found that Handbook, it nonetheless contributes to the FCA’s view of Mr Jeffery’s misconduct included the following: the elements that should be in place to ensure compliance –– Sending letters to insurers in the name of three clients with its rules in this area. and falsely representing the true position with the http://www.fca.org.uk/static/documents/finalised- intention and effect of deceiving insurers guidance/fg13-06.pdf –– Forging a client’s signature on a proposal form to a new 21 August: FCA Board appoints new members to insurer the Regulatory Decisions Committee. The Regulatory –– Failing to effect insurance for a number of clients, and/or Decisions Committee (RDC) is responsible for taking failing to inform them of the true position decisions on whether to refuse or grant contested –– Acting with a lack of integrity in his dealing with an applications into the regulated community and issuing insurance company and clients in the matter of a risk warning and decision notices for certain enforcement cases appraisal of the clients’ property on behalf of the FCA. The FCA has announced that it has –– Making false statements to the Authority at a time he appointed the following three new members to the RDC: knew they were false when he made them –– Iraj Amiri, a former Senior Partner at Deloitte, who has –– Failing to deal with the Authority in an open and co- auditing experience spanning financial, retail and public operative way and failing to disclose information of sectors. During his time at Deloitte, he was seconded to which the Authority would reasonably expect notice Schroders Plc as Global Head of Internal Audit for more http://www.fca.org.uk/static/documents/final-notices/ than ten years andrew-jeffery.pdf –– Richard Berliand, an investment banker at J.P.Morgan until he retired from this position in 2011. He holds a number of Non-Executive Director (NED) roles including UKLA publications: membership of the Supervisory Boards of Deutsche Börse No new developments this week. AG & Eurex Frankfurt AG. He is a member of the CFTC Upper Tribunal (Tax and Chancery Chamber): Global Markets Advisory Committee No new developments this week. –– John Callender, a former Commercial Director at Barclays Bank Plc UK Banking, he has various NED positions Financial Ombudsman Service (FOS): including as the Non-Executive Chair of ANZ Bank 20 August: FOS ombudsman news issue 111. The FOS Europe Ltd has published issue 111 of its ombudsman news. This issue includes: In addition to these new members, the FCA Board has also appointed Andrew Long, who is currently acting Chair, as –– Case studies setting out the wide range of issues that Chair of the Committee until September 2014. older people bring to the FOS http://www.fca.org.uk/news/fca-board-appoints-new- –– The perspective of Age UK and Which? with regard to members-to-the-regulatory-decisions-committee age-related complaints –– Confirmation from the FOS that although it now 20 August: FCA FG13/5 – The use of the group exclusion publishes individual ombudsman decisions in full, it and the CREST regulated activity. The FCA has published will continue to publish tables of complaints data about revised guidance (FG13/5) clarifying the arrangements named businesses under which a firm can rely on the group exclusion when sending dematerialised instructions through CREST. The http://www.financial-ombudsman.org.uk/publications/ guidance relates to the scenario where a firm (Firm A) ombudsman-news/111/issue111.pdf acts as a broker or portfolio manager to its clients and London Stock Exchange (LSE): the investments are held by a nominee company in Firm No new developments this week. A’s group (Firm N). The question is whether the group exclusion means that Firm A is not carrying on a regulated Legislative updates activity when it sends instructions through CREST in No new developments this week. relation to the investments held by Firm N for Firm A’s clients. The guidance states that the group exclusion is available to Firm A because Firm N is the legal owner of the securities and Firm A is treated as acting on behalf of Firm N. As Firm N is in the same group as Firm A, the group exclusion is available. http://www.fca.org.uk/static/documents/finalised- guidance/crest-revised-guidance.pdf 20 August: David Gagie joins the FCA as Senior Advisor. The FCA has announced that David Gagie has joined the FCA as its newest Senior Adviser, focusing on Consumer Credit. Mr Gagie has extensive experience in the consumer lending, banking, credit card and internet payments industries, and has advised businesses in the US, Canada, South America and Europe on consumer lending business strategy and risk management. Until recently, Mr Gagie was a non-executive director on the ING Direct UK advisory board. He is currently a non-executive director of Payzone Group, a pan European payments processing and ATM network business. Mr Gagie is also a founder/ director of PaySwyft which provides cloud-based electronic bill payments services in the UK, US and Australia; a founder/director of MyWorkSearch, a cloud-based business providing services to the employment sector; and is advising Itemize Corp, a US based receipts and invoice data processing company. http://www.fca.org.uk/news/david-gagie-joins-the-fca-as- senior-advisor UK Contacts Contentious

James Cooper Laura Cooke Partner Partner Professional & Commercial Disputes Professional & Commercial Disputes T: +44 (0)20 7876 6388 T: +44 (0)20 7876 6387 E: [email protected] E: [email protected]

Julian Connerty Partner Dispute Resolution Group T: +44 (0)20 7876 4503 E: [email protected]

Non-contentious Further information If you would like further information on any issue raised in this update please contact: Financial Services Team [email protected] Clyde & Co LLP The St Botolph Building Nick Dent Geraldine Quirk 138 Houndsditch Partner Partner London EC3A 7AR Employment & Pensions Corporate Insurance T: +44 (0) 20 7876 5000 (contentious and non-contentious) T: +44 (0)20 7876 4258 F: +44 (0) 20 7876 5111 T: +44 (0)20 7876 6208 E: [email protected] E: [email protected] Further advice should be taken before relying on the contents of this summary. Clyde & Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co LLP. Clyde & Co LLP is a limited liability partnership registered in England and Wales. Authorised and regulated by the Solicitors Regulation Authority. © Clyde & Co LLP 2013

CC03736 - August 2013