President Trump's Russian problems continued when his son Donald Jr. confirmed he had taken a meeting with individuals offering information from the Russian government damaging to Hilary Clinton during the presidential campaign. Poland's plans to replace its Supreme Court judges with political appointees caused the European Commission to consider an Article 7 procedure to assess the threat to the rule of law which could lead to the introduction of sanctions. Brexit negotiations continued to be muddled, with the EU still seeking clarity on the UK's position and reports of UK government infighting amongst senior politicians. The European Central Bank confirmed that it had no immediate plans to reduce its economic stimulus programme. Below is our regular round up of the news in finance and regulation for the last two weeks.


Department of Finance published a feedback statement on its MiFID II consultation. It confirmed an intention to publish draft regulations in the coming weeks and confirmed that it expected to amend the Consumer Protection Code, the Investment Intermediaries Act and the Client Asset Requirements. There will also be some changes to the safe harbour provided by Article 39 on whether third country entities must establish branches in Ireland if providing investment services to retail clients.

The government confirmed that it will prepare the Insurance (Amendment) Bill 2017 which will increase the Insurance Compensation Fund for third-party liability motor claims. The Fund will make payments to policyholders where a non-life insurer authorised in Ireland or an EU Member State goes into liquidation. The Fund can currently pay the lower of up to 65% of the claim or €825,000; the bill will propose an increase of the first figure to 100% in cases of third-party liability.


The European Securities and Markets Authority published the results of its peer review on how national regulators examine IFRS financial information, and recommended improvements to enforcement. The areas for improvement include the method by which national regulators select reports for examination, the depth of enquiries into financial statements going beyond disclosure of information and the level of resources deployed in the investigations. The review questionnaire was sent to all European enforcement authorities with on-site visits to a further seven jurisdictions.

The new Prospectus Regulation came into force as of 20th July, subject to delayed implementation of some measures for a further two years. The new regulations allow for further issuances of fungible securities without the need for a prospectus and for the increase of the amount of securities which can be issued in ‘domestic only' issuances. The European Securities and Markets Authority also issued a consultation paper on the format of new prospectuses, calling for responses for 28th September 2017.

The European Insurance and Occupational Pensions Authority published its opinion on supervisory convergence in light of Brexit, in a similar exercise to that recently conducted by the European Securities and Markets Authority. The opinion provides guidance to national supervisory authorities on the authorisation of new Solvency II undertakings. It covers the topics of authorisation and approvals, governance and risk management, outsourcing of important activities and on-going supervision.

   United Kingdom

The Royal Bank of Scotland reached an agreement with the Federal Housing Finance Agency in relation to the issuance and underwriting of £25bn of residential mortgage backed securities. Chief Executive Ross McEwan described an agreement to settle the action for £4.2bn as ‘one of our last remaining very large legacy issues'. The criminal trial of four former Barclays Bank executives along with the bank was set for January 2019. The Financial Conduct Authority formally joined its investigation into the senior management of HBOS with a second investigation into losses at the bank's branch in Reading, which had previously resulted in 6 criminal convictions. Meanwhile, 11 out of 16 small business were reported to be holding out for a better compensation offer from the bank in relation to damage inflicted on them as a result practices at that branch.

The Financial Conduct Authority fined a compliance officer £75,000 for failing to ensure that pensions' advice at his firm was adequate. David Watters, who worked for FGS McClure Watters and Lanyon Astor Buller, was found not to have acted in relation to bad advice provided by wealth managers on leaving defined benefit schemes. The regulator determined that he left staff to decide their own processes and did not intervene where their advice was motivated by the generating of commissions rather than the best interests of the clients. The Financial Conduct Authority stepped up its review into unsuitable advice following increasing levels of pension transfer activity. In other pensions news, John Walker won his case in the Supreme Court allowing for his pension to be transferred to his husband in the event of his death. Mr. Walker entered into a Civil Partnership in 2004 which was later converted into a marriage.

The Financial Conduct Authority highlighted the use by currency transfer providers of interbank rates in currency convertor tools. The authority had previously highlighted the display of lower interbank rates which were only available to banks as a means of attracting business; it noted that eventual rate offered to customers is often significantly lower. The difference was not usually made clear to consumers until they registered with the service provider. The regulator gave warning that it was continuing to look for evidence of misleading practices.


US oil company ExxonMobil launched legal action against the US Treasury's Office of Foreign assets Control's decision to fine it €2m for sanctions violations. The breach was described as an egregious case whereby the company had failed to disclose transactions with the chief executive of Rosneft, the state controlled oil group. The action was complicated by the fact that US Secretary of State Rex Tillerson was the chief executive at the time of the breach.

Ukraine's central bank removed the auditing licence of PwC in relation to its failure to identify alleged improprieties which lead to a $5.5bn balance sheet hole at PrivatBank, the largest lender in the country. PwC had been the auditor of the bank since the 1990s; it was nationalised last year amid claims of massive related-party lending. The National Bank of Ukraine noted that the audit had failed to highlight levels of credit risk exposure and regulatory capital.

A United States appeals court quashed the convictions of two former United Kingdom Rabobank traders for Libor-rigging. The Court of Appeals for the Second Circuit found that Anthony Allen and Anthony Conti's Fifth Amendment right against self-incrimination had been violated when the US Department of Justice relied on evidence which came from compelled testimony given to the UK's Finance Conduct Authority. The judgement illustrates the difficulties in transatlantic prosecutions of regulatory breaches.

Former Brazilian President Luiz Inácio Lula da Silva was found guilty of corruption charges and sentenced to 10 years' imprisonment. Lula, as he was popular known, was found to have received kickbacks from construction company OAS, under an anti-corruption drive in the country known as ‘Operation Car Wash', which has particular focus on private company payments to elected politicians. The result was a huge shock as Lula was one of the most popular recent Presidents and he was due to run for election again in 2018. He faces further prosecutions under the investigation.

Topics covered by Better Regulation include
  • BRRD
  • Banking Structural Reform
  • Basel
  • Benchmarks Regulation
  • Brexit
  • Capital Markets Union
  • Capital Requirements Legislation
  • Central Securities Depositories Regulation
  • Credit Rating Agencies Regulation
  • Deposit Guarantee Schemes Directive
  • Dodd-Frank
  • EMIR
  • GDPR
  • Solvency II
  • Insurance Distribution Directive
  • Interchange Fees Regulation
  • Market Abuse/Insider Dealing
  • Markets in Financial Instruments Legislation
  • Money Laundering Directives
  • Money Market Funds Regulation
  • Mortgage Credit Directive
  • Payment Services Directive
  • PRIIPs Regulation
  • Prospectus Directive
  • Ring-fencing
  • Securities Financing Transactions Regulation
  • Securitisation Regulation
  • Senior Insurance Managers Regime
  • Senior Managers Regime
  • Undertakings for Collective Investment in Transferable Securities Directive