The US government shut down temporarily over budget funding disagreements between the Democrats and Republicans before a three-week reprieve was agreed. The European Banking Authority launched new bank stress tests which would include Brexit related scenarios. Donald Trump appeared at the Davos forum to reassure world markets that he was seeking ‘America first, not America alone’; he met with UK Prime Minister Theresa May and gave public support to the UK’s Brexit plans. The Irish Central Bank described Credit Union home purchase lending as ‘concerning’. Below we set out the main stories in finance and regulation over the last two weeks.


The European Commission concluded that the National Asset Management Agency did not breach EU rules on state aid. The agency was subject to a complaint that it received illegal state aid and granted advantages to property developers. Commissioner Margrethe Vestager, in charge of competition policy, said NAMA had “acted as a private operator would have done, and in line with its objective to obtain the best possible financial return for the State and Irish taxpayers."

The Department of Finance published a Feedback Paper on the Regulation of Crowdfunding in Ireland under the 2017 IFS 2020 Action Plan. The paper followed a consultation in the summer of 2017 and provides details of crowd funding activity in Ireland and a comparison to international activity. The responses showed that there was agreement on the need for proportionate and tailored regulation of the sector. The paper notes that the European Commission also commenced its own initiative on crowd funding regulation.


MiFID II’s requirements on the transparency of fees had an immediate impact with the Financial Times illustrating that some of the most popular funds charge fees up to four times higher than previously thought. The new rules require disclosure of ‘hidden charges’, including transaction costs, and prevent the use of the industry standard ‘on-going costs’ figure. Meanwhile the European Securities and Markets Authority raised concern on the lack of transparency of fees charged by trade repositories and Credit Rating Agencies.

The Joint Committee of the three European Supervisory Authorities published an Opinion on the use of innovative solutions by credit and financial institutions when complying with customer due diligence obligations. The opinion notes that EU law is currently neutral as to the use of technology and innovation as compliance tools and aims to set standards across national competent authorities for their responses to such techniques.

   United Kingdom

The Financial Conduct Authority published decision notices on insurance intermediary One Call Insurance Services Limited and its chief executive John Radford. One Call was subject to a fine of £684,000 and restricted from business for 121 days because of a failure to protect client money, resulting in a breach of Principle 10. Mr. Radford was subject to a fine of £469,000 for failings in his duty to protect client money, and breaches of Principles 6 and 7. He was further prohibited from having any responsibility for client money. The notices were provisional subject to an appeal to the Upper Tribunal by a connected company One Insurance Limited.

The Financial Conduct Authority fined Interactive Brokers (UK) Limited £1,049,412 for poor market abuse controls and failures to report suspicious transactions. The on-line broker specialises in CFDs and used a team in the United States for reporting. It was found to have no quality assurance or reviews of reporting and to have not provided adequate training for staff. The FCA identified three specific instances of failure to report suspicious transactions.

The Financial Conduct Authority issued Consultation Paper 18/3 on SME access to the Financial Services Ombudsman, together with feedback from Discussion Paper 15/7 on SMEs as users of financial services. The consultation paper considers widening the redress to the Financial Services Ombudsman to allow complaints from smaller businesses.

Prime Minister Theresa May promised tougher sanctions against “executives who try to line their own pockets” at the expense of pension plans. A new white paper is promised for March. Failed construction company Carillion was accused of ‘wriggling out’ of pension funding requests made by trustees ten years previously. British Telecom’s application to change part of its pension calculations from retail price index to the consumer price index was rejected by the High Court in London. The move was part of plans to reduce the company’s £14bn pension deficit.

In Brexit news Chancellor Philip Hammond’s comments on regulatory alignment with the EU post-Brexit resulted in outcry, and contradiction by the Prime Minister’s office, showing the level of divergence in opinions on the question of hard or soft Brexit. Brexit Secretary David Davis pushed back on any obligation on the UK to adopt new EU laws during a transition period. The continued use of English as an official language in the European Union was questioned as after Brexit only Malta and Ireland would be classed as English-speaking members (although neither has English as their official language). The Guardian newspaper reported that a new poll showed a 16-point lead for a second referendum on Brexit; the same poll still saw strong signs of division in the country between leave and remain supporters. A position paper on the financial services industry promised by the government appeared to have been shelved, whilst a negative impact study on growth projections after Brexit was the subject of a political storm. The European Union warned that the EU would become a third country with effect from March 2019 for the purposes of data protection. The House of Lords Constitution Committee criticised the EU withdrawal bill as fundamentally flawed and in need of re-writing.


IOSCO chief Greg Medcraft recommended that cryptocurrency providers should compensate customers for instances of fraud in a similar manner to banks. Meanwhile, 260,000 customers of Coincheck, a cryptocurrency exchange in Tokyo suffered combined losses of over €400m in a hack and suspended withdrawals. The exchange promised to refund their losses. Switzerland embraced the cryptocurrency revolution, announcing a working group of regulators and law makers to encourage the market to prosper without compromising standards.

Legislation was proposed in Hong Kong to make the Financial Reporting Council an independent body, following a series of corporate governance failings. The FRC would have full responsibility for investigating and disciplining auditors of Hong Kong listed companies.

Singapore’s stock exchange is to allow companies to list dual class shares. The move follows the decision of the Hong Kong Stock Exchange to allow ‘innovative’ companies to list dual class shares. The Singapore exchange is to publish proposals this quarter. However, dual class shares have been criticised by investors where they are issued with no voting rights.

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