Theresa May outlined her negotiating position ahead of BREXIT, which commentators interpreted as a ‘hard’ exit. Her threats to walk away rather than accept a bad deal went down well in the UK’s tabloid media but less well with European politicians. In Northern Ireland, Sinn Féin refused to nominate a replacement for deputy first minister Martin McGuiness following his resignation in protest at the ‘cash-for-ash’ scandal. This triggered fresh elections. In America Donald Trump was inaugurated into office, with a declaration that it was ‘America first’ from now on, but the new President’s approval ratings were the lowest since the 1940s. The inauguration ceremony was followed by women’s protest marches around the world. Here are the key stories in finance and regulation for the last two weeks.


   Ireland

The Central Bank published its first Prohibition Notice under the Fitness and Probity Standards 2011. Colette Murphy, a sole trader insurance intermediary, was prohibited from providing financial services for a period of two years. Ms Murphy was found to have diverted client funds for her own benefit and to have mismanaged the petty cash box. The regulator concluded that her actions showed poor judgment and an inability to discharge her duties in accordance with the standards.

The Central Bank issued a feedback statement for Consultation Paper 105 on amendments to the Central Bank UCITS Regulation, which summarised the responses received. The Central Bank set out its plans to amend the regulations, along with amendments resulting from CP 86 on fund management company effectiveness, in the first quarter of 2017.


   Europe

The European Ombudsman confirmed that it is to investigate the European Central Bank’s links with private financiers, specifically the issue of President Mario Draghi’s membership of a private forum for top bankers. The ‘Group of Thirty’ contains central bankers from other jurisdictions but also many heads of banks supervised by the ECB. The inquiry follows a complaint from Corporate Europe Observatory, whose previous complaint in 2012 was dismissed. However, the fact of the ECB taking over a supervisory role of banks since then was said to justify the need for a fresh investigation.

The European Union and the United States successfully concluded the Bilateral Agreement on Insurance and Reinsurance Prudential Measures. The agreement removes the need for EU and US insurers to hold collateral under both EU and US regulations. EU insurers are estimated to be currently posting $40bn of collateral in the US. The agreement further recognised that supervision of insurance groups with entities in both jurisdictions should now be from a single jurisdiction, based on the group’s head office.


   United Kingdom

The Financial Conduct Authority commenced the first criminal case against an unlicensed consumer credit lender. Mr Dharam Prakash Gopee appeared in Westminster Magistrates Court following an investigation into his affairs and those of his companies Reddy Corporation Ltd, Speedy Bridging Finance Ltd and Barons Finance Ltd. Mr. Gopee is alleged to have lent over £1m in the last four years without being licensed.

The UK government issued a call for evidence on Corporate Liability for Economic Crime, as part of potential reform of the law on corporate liability for crimes such as fraud, false accounting and money laundering when committed by companies. It is seeking evidence on the extent to which the identification doctrine is deficient as a tool for effective enforcement of the criminal law against large modern companies.

Manjeet Mohal, a former employee of Logica Plc, was sentenced to 10 months imprisonment, suspended for two years, on two counts of insider dealing. He was further ordered to undertake 180 hours of community work. Reshim Birk, a neighbour of Mr Mohal’s, was also sentenced to 16 months imprisonment, suspended for two years, on one count of insider dealing. He was also given 200 hours of community work and subject to a confiscation order of £162,876. Mr Mohal used inside information relating to a takeover of Logica by CGI Holdings (Europe) Ltd which he disclosed to Mr. Birk, and another.

The Markets Committee issued its analysis of the ‘flash event’ in October 2016 where the value of sterling fell 9% on early Asian trading. The report concluded that there were a range of factors which caused the event, including the time of day, the lack of experienced trading staff and the existence of significant sell orders. The report was prepared by members of the Bank of England and the Bank for International Settlements.

HSBC voluntarily agreed to set up a redress scheme for customers who paid an unreasonable debt collection charge imposed by HFC Bank Ltd and John Lewis Financial Services Limited. Customers who fell into arrears were referred to the bank’s solicitors and were charged 16.4% which the Office of Fair Trading previously identified as unreasonable, and not reflective of the costs of recovery. The total payment is estimated to be £4m. Separately, the Competition Appeals Tribunal was considering whether there should be a full trial in a class action against card charges imposed by Master Card. The action could impact 46m UK consumers if it proceeds.


   International

Western Union was fined $586m for violations of United States money laundering regulations following revelation that it ignored evidence that its agents were sending cash to criminals, including to human traffickers in China. The company was accused of regularly ignoring transfers which fell just short of the $10,000 trigger for notification for a transaction.

The United States Department of the Treasury’s Office of Foreign Asset Control reached a settlement agreement with Toronto-Dominion Bank over breaches of sanctions against Cuba. The bank self-disclosed the violations and agreed to pay over $560,000. The violations related to letters of credit issued to customers with connections to Cuba, which were not investigated by the bank. The violations were deemed non-egregious.

Topics covered by Better Regulation include
  • AIFMD
  • 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