Germany’s coalition government talks were able to move forward following political agreement between the parties. In the UK, a promised government reshuffle proved to be overstated, with nearly all senior figures remaining in post and most changes taking place at junior level. MiFID II entered into force on 3rd January to generally positive reaction. In Ireland, a further 13,600 customers were added to the tracker mortgage review by banks, whilst the levels of redress came close to €300m. In South Africa, Jacob Zuma bowed to pressure to hold a judicial inquiry into claims of state looting. Here is our first round up of 2018.


Finance Minister Paschal Donohoe welcomed an initiative to rebuild trust in the Irish banking industry lead by the Chief Executives of A.I.B., Bank of Ireland, KBC, Permanent TSB and Ulster Bank. The banks will form a Banking Standards Board, similar to that operating in the UK. The board will be chaired by a non-banking candidate and should be operational in late 2018.

The Central Bank reached a Settlement Agreement with Merrion Stockbrokers Limited for breaching Section 21 of the Central Bank (Reform) Act 2010 relating to controlled functions and pre-approval controlled functions. The company was reprimanded and fined €200,000 following an onsite inspection by the regulator.

The Central Bank released an update on the Financial Condition of the Credit Union Sector, which noted positives of a growth of new lending and reduction in loan arrears. However, the continued low interest rate environment and low loan-to-asset ratio continued to be an issue for the sector. The regulator also issued guidance to credit unions on Long Term Lending, noting that it was generally supportive of credit union activity in the sector where it was prudently undertaken. New stabilisation regulations were also signed into law, to support the creation of a €30m stabilisation fund for credit unions.

The Central Bank reached a Settlement Agreement with B.C.P. Asset Management DAC for breaches of MiFID conduct of business rules. The regulator found significant breaches in respect of client categorisation requirements which denied its clients available investor protections. The company was fined €210,000 and reprimanded.

The Central Bank joined other European regulators in confirming that it would forebear in enforcing EMIR obligations to provide variation margin on FX forwards transactions with effect from the introduction of MiFID II. The move followed the statement by the European Supervisory Authorities on the roll back of the original requirement which is part of the European Markets Infrastructure Regulation.

The Central Bank issued guidance on discontinuing business relationships as a result of anti-money laundering concerns. In its Anti-Money Laundering Bulletin, it confirmed firms are expected not to allow an inability to verify customers to perpetuate and are expected to have remediation plans in place. The regulator also noted that money laundering checks should be part of the due diligence process entered into before acquiring books of business.


The European Securities and Markets Authority granted a six-month reprieve from the obligation to have in place Legal Entity Identifiers for the purposes of MIFID II. The new rules require all clients to have an LEI, which is to be used for the purposes of reporting and transacting. Firms were believed to be struggling to obtain client LEI’s particularly from clients based outside of the EU. Trading venues were also given regulatory relief and were allowed to report only their own LEI and not the customers during the six-month period.

Political agreement between the EU Parliament and Presidency was reached on further revisions of the EU’s Money Laundering Regulations. An agreed text was produced which amends the Fourth Money Laundering Directive (2015/849). One central change is to allow enhanced access to beneficial ownership registers to the public. The next step is for the formal adoption of the proposal by the Parliament.

   United Kingdom

The Financial Conduct Authority froze the authorisation of financial advisors Active Wealth following complaints over its advice on the transfer of pension funds of workers in British Steel. The company had moved its pension liabilities in an effort to save UK sites, leaving 130,000 workers with a decision to make on transferring to new pension schemes. A number of financial advisors were accused of charging high fees and giving bad investment advice.

In Brexit news, UK Chancellor Philip Hammond and Brexit Secretary David Davis visited Germany to reach out to business leaders to garner support for the country in the second phase of negotiations with the EU. The Chancellor confirmed in an interview that any trade deal absolutely required coverage of financial services and not just goods. The visits followed UK government reassurances that financial services would be a priority in the next round of negotiations. Former UKIP leader Nigel Farage raised the prospect of a second referendum on Brexit, although with a view to confirming the result of the first and ending the continued opposition to the plans by committed Remain supporters.


The United States announced it would not immediately break with the multi-country negotiated diplomatic agreement and impose sanctions on Iran relating to its nuclear programme. President Trump demanded agreement on the issue with other nations within four months, failing which the US would break with the current diplomatic agreement. However, the administration did announce the imposition of further sanctions not related to Iranian nuclear activity.

Cryptocurrencies enjoyed mixed fortunes as companies such as Kodak and MoneyGram saw their share prices jump on announcement of plans to adopt blockchain and currency technology. However, successful Bitcoin investors in the UK were finding a lack of willingness from mortgage lenders to accept deposits from funds generated by investment in the currency, as they cited money laundering concerns and asked for documentary proof of the money’s source. South Korea was reported to be ready to rein in Bitcoin trading whilst China also planned to end mining operations in the country.

Auditors PWC were subject to a two-year ban on auditing listed companies by the Securities and Exchange Board of India, following their failure to spot a $1.7bn fraud in Satyam Computer Services. The firm was found to have neglected to check ‘glaring anomalies’ in one of the worst financial scandals in the country’s history. Satyam was found to have submitted over 7,500 fake invoices in a five-year period.

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