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- Preliminary Material
- Main Text
- Part I Regulatory Structure
- 1 UK Financial Services Reform
- Financial Services Regulation
- Market Change and Financial Instability
- Statutory Structure
- Bank of England
- Agency Coordination and Crisis Management
- 2 Statutory Framework for UK Financial Services Regulation
- 3 European Financial Services
- Introduction
- Sources of EU Law
- Impact on UK Law
- Establishing the Single Market in Financial Services
- From Single Market to Banking Union
- Emerging Trends
- Single Market Legislation: Banking
- Single Market Legislation: Credit Rating Agencies
- Single Market Legislation: Benchmarks
- Single Market Legislation: Payment Services
- Single Market Legislation: Electronic Money
- Single Market Legislation: Mortgage Credit
- Single Market Legislation: Insolvency
- Single Market Legislation: Insurance
- Single Market Legislation: Collective Investment Schemes
- Single Market Legislation: Investment Services
- Single Market Legislation: Compensation
- Single Market Legislation: Consumer Protection
- Single Market Legislation: Issuer Disclosure
- Single Market Legislation: Insider Dealing and Market Abuse
- Single Market Legislation: Money Laundering
- 4 International Agreements and Supranational Bodies
- Preliminary Material
- Global Markets, Local Regulation
- International Bodies and International Agreements
- The World Trade Organization and Financial Services
- WTO Agreements
- Dispute Resolution under WTO Proceedings
- Financial Services under the WTO
- Regional Trade Agreements
- The Security and Prosperity Partnership of North America
- Trans-Pacific Partnership
- Transatlantic Trade and Investment Partnership
- Global Bankers—the World Bank and the International Monetary Fund
- The Bank for International Settlements
- Financial Stability Board
- International Association of Insurance Supervisors
- The Basel Committee
- The Basel Accord
- Basel II
- Basel III
- Financial Stability Institute
- The Committee on Payment and Settlement Systems
- Securities and the International Organisation of Securities Commissions
- Joint Forum
- The Organisation for Economic Co-operation and Development
- The Financial Action Task Force
- IASB and International Accounting Standards
- The Financial Accounting Standards Board
- Sarbanes–Oxley and its Impact on Non-US Entities
- Global Regulatory Convergence: The Credit Crunch and the Role of Supranational Bodies in Creating Financial Stability in the Global Market
- The IMF as the Lender of Last Resort
- The Global Economy and the Future of Supranational Bodies
- 1 UK Financial Services Reform
- Part II Financial Services Regulation
- 5 The PRA and FCA
- The Prudential Regulation Authority and the Financial Conduct Authority
- General Functions, Statutory Objectives, Regulatory Principles, and General Duties
- The FCA
- The PRA
- The boundary between FCA and PRA responsibilities
- Arrangements for the supervision of regulated firms and for enforcement
- Requirements to consult
- Coordination between the regulators
- The PRA’s power of direction
- Directions relating to consolidated supervision
- Government and Parliamentary oversight
- 6 The FCA Handbook and the PRA Rulebook
- Introduction
- What Material Goes into the FCA Handbook and the Rulebook?
- An introduction to the FCA Handbook
- An introduction to the Rulebook
- An overview of the structure and content of the FCA Handbook
- An overview of the structure and content of the PRA’s Rulebook
- High-level standards and the rise and fall of principles-based regulation
- The Powers Exercised to Make the FCA Handbook and the PRA Rulebook
- Handbook and Rulebook Processes
- Interpretation of the FCA Handbook and PRA Rulebook
- 7 Regulatory Processes— Authorisation and Supervision
- 7.01
- 7.02
- 7.03
- 7.04
- 7.05
- 7.06
- 7.07
- Exemption and Exempt Persons
- Authorisation
- Supervision Process
- Enforcement Processes
- 8 Individual Accountability
- Introduction
- 8.01
- 8.02
- 8.03
- 8.04
- Background
- The Senior Managers’ Regime
- Financial institutions within scope of the Senior Managers’ Regime
- Senior Insurance Managers’ Regime
- Regulatory pre-approval
- PRA and FCA rules
- Senior management functions
- Territorial scope
- Prescribed responsibilities
- Other overall responsibility senior management function
- Statements of responsibilities
- Management responsibilities map
- FCA supervisory review
- Presumption of responsibility and the statutory duty of responsibility
- Criminal Offence
- Introduction
- 9 Enforcement
- Overview
- Power to Impose Sanctions
- Action Against Individuals
- Decision to Commence an Enforcement Investigation
- Referrals Within the FCA
- Powers to Investigate Breaches of Regulation
- Powers of Investigation
- Powers of the Investigators
- Powers and Procedure to Conduct and Settle Enforcement Proceedings
- Statutory notices
- Enforcement procedures
- FCA enforcement decision-making procedures: Regulatory Decisions Committee and contested cases
- FCA enforcement decision-making procedures: Settlement decision-makers
- PRA enforcement decision-making procedures: Contested cases
- PRA enforcement decision-making procedures: Settlement
- The Regulators’ approach to financial penalties
- Third Party Rights
- The Tribunal
- Reform of the Enforcement Process
- 10 Financial Redress—Complaints, Disputes, and Compensation
- Introduction
- Complaint Handling by Firms
- Financial Ombudsman Service
- The Financial Services Compensation Scheme
- Introduction
- The Scheme Manager
- The Scheme
- Provisions of the Scheme
- The FCA sub-schemes
- Special Administration Regime
- Proposals amending the scope of FSCS protection included in the Funding Review
- Amendment of the definition of ‘financial advice’
- The deposits sub-scheme
- Role in a deposit-taker insolvency
- Contribution to resolution costs
- Payment of non-scheme compensation
- Banking Union
- The insurance provision sub-scheme
- FSCS funding and recoveries
- 11 Listing and Public Offers
- Introduction
- The Prospectus Directive Regime
- Public Offers and Admission to Listing and Trading in the United Kingdom
- 11.50
- Basic premise
- Scope: exemptions
- Scope: transferable securities and exempt transferable securities
- Public offers and exemptions
- 11.65
- 11.66
- 11.67
- 11.68
- Offer of securities to the public
- Exempt offers to the public
- Exempt offers: offers to qualified investors
- Exempt offers: offers to fewer than 150 persons
- Exempt offers with a minimum consideration or minimum denomination
- Exempt offers: total consideration less than €100,000
- Exempt offers: consent
- Admission to listing and trading in the United Kingdom
- Drawing up the Prospectus
- 11.100
- Format of prospectus: single document or tripartite
- General contents of a prospectus
- Specific contents of a prospectus
- Prospectus summaries
- Risk factors
- Incorporation by reference
- Languages
- Responsibility for a prospectus
- Supplementary prospectuses and withdrawal rights
- Withdrawal rights
- PD3: what lies ahead? A summary overview
- The UK Listing Regime
- 11.155
- 11.156
- Listing: general
- Listing categories: premium and standard
- Listing obligations: Listing Principles
- Listing obligations: premium equity listing, sponsors
- Listing obligations: premium equity listing, other obligations
- Listing obligations: standard listing, other securities
- Listing obligations: listing particulars for professional securities market and certain other securities
- The Disclosure Guidance and Transparency Rules Sourcebook (‘DTRs’)
- 12 Market Abuse
- Introduction: What is Market Abuse?
- Development of the Market Abuse Regime
- 12.04
- 12.05
- The pre-FSMA regime: criminal offences
- The FSMA regime 2001–05
- The MAD regime: the Market Abuse Directive 2005–16
- UK superequivalent provisions: the legacy offences
- UK safe harbours under the MAD regime: the COMC
- Corporate finance and takeovers
- Safe harbours relating to disclosures of inside information
- Persons Discharging Managerial Responsibilities (PDMRs)
- EU MAR
- UK statutory exceptions
- Statutory defence under FSMA
- European Commission review of MAD
- Overview of the Market Abuse Regulation (EU MAR)
- Scope and Exemptions
- New markets and trading venues
- Spot commodity contracts and related derivatives
- Emission allowances and related auctioned products
- Inside information
- Benchmarks
- Territorial scope and extraterritorial reach of EU MAR
- Notifications and centralised list of in-scope instruments
- Algorithmic and High-frequency trading
- Market Abuse: The Civil Offences
- Unlawful Disclosure of Inside Information
- Safe Harbours: Market Soundings, Legitimate Behaviour, and Accepted Market Practices
- Market soundings
- Review of cases
- Enforcement action for breaches of FCA principles
- Vicarious liability
- UK implementation of MAR
- Impact on safe harbours
- Impact on statutory exceptions
- Impact on issuer obligations
- PDMRs
- Impact on investment recommendations
- The Significance of the Distinction Between Criminal and Civil Offences
- Sanctions for Market Abuse
- Enforcement Trends and Future Developments
- 13 Insider Dealing and Misleading Statements and Impressions
- Introduction
- CJA Insider Dealing
- Criminal Justice Act 1993, Part V
- Territorial Scope
- The Offences
- Having ‘Inside Information’ as an ‘Insider’
- Defences
- Penalties and Prosecution
- Key Steps in Proving CJA Insider Dealing
- Review of Cases
- Part 7 Financial Services Act 2012: Offences in Relation to Financial Services
- Misleading Impressions
- Sanctions for Misleading Statements or Impressions
- Relevant Investments and Relevant Agreements
- No Civil Law Right of Action Under Sections 89 and 90 FSA 2012
- Effectiveness of the Offences
- Misleading Statement etc. in Relation to Benchmarks
- Other Regulatory Provisions Relating to Undesirable Market Conduct
- Introduction
- FCA and exchange rules
- Listing Rules, Prospectus Rules, EU MAR, and the Disclosure Guidance and Transparency Rules
- Regulatory and Prosecuting Bodies
- Overview of the UK’s Prosecuting Bodies
- Other Powers of Review, Enquiry, and Discipline
- Interaction Between the FCA and Other Prosecuting Bodies
- 14 Money Laundering and Financial Crime
- What is Money Laundering?
- UK Policy Drivers
- The UK’s Fight Against Money Laundering: The Policy Backdrop
- International Nature of the Fight against Money Laundering
- Law and Regulation
- The First and Second Money Laundering Directives
- The Third Money Laundering Directive
- 14.50
- 14.51
- 14.52
- Customer due diligence
- Beneficial owner
- Simplified due diligence
- Enhanced due diligence
- Politically exposed persons
- Performance by third parties
- Reporting obligations
- Record keeping
- Enforcement and implementing measures
- 3MLD and 4MLD: correlation table
- The Fourth Money Laundering Directive
- Scope of the Directive
- Customer due diligence
- Simplified due diligence
- Enhanced due diligence
- Beneficial ownership information
- Reporting obligations
- Data protection, record retention, and statistical data
- Policies, supervision, and procedure
- Risk assessments
- Looking forward: 4MLD amendments and future implementation
- The Wire Transfer Regulation
- Revised Wire Transfer Regulation
- UK Legislation
- The Terrorism Act 2000 (‘TA’) (as amended by the Anti-terrorism, Crime and Security Act 2001)
- 14.187
- 14.188
- 14.189
- 14.190
- 14.191
- 14.192
- 14.193
- Changes to PoCA introduced by SOCPA
- Case law and PoCA
- Changes to PoCA introduced by Serious Crime Act 2015
- Application of the MLR 2007
- Criminal offence
- Duty to identify
- Offences committed by a body corporate
- Identification procedures
- Identification in practical terms
- Identification procedures should be risk-based
- Customer due diligence
- Exceptions to the duty to identify
- Long-term insurance
- Electronic money
- Record-keeping, procedures, and training
- Appointed representatives
- Internal reporting procedures
- Risk-based regulation
- Registered businesses
- Supervision
- Enforcement
- Power to impose civil penalties
- Criminal offences
- The status of the JMLSG Guidance
- The revised JMLSG Guidance
- JMLSG Guidance: risk-based regulation
- Identifying and assessing the risks
- Design and implementation of controls
- Monitor and improve operation of control
- Judging firms against their own standards
- JMLSG Guidance: CDD
- JMLSG Guidance: suspicious activities, reporting, and data protection
- JMLSG: record-keeping, procedures, and training
- Appendix I Financial Conduct Authority Handbook (Extracts)
- Appendix II Summary of UK Legislation
- 15 Financial Regulation in Commercial Disputes
- Introduction
- Part 1: Statutory Causes of Action
- Section 138D
- Disputes about the Consequences of Unauthorised Business
- Part 2: Common Law Causes of Action
- Introduction
- Advice-related claims: breach of contract
- Advice-related claims: contracting out of the tort of negligence
- Advice-related claims: tort of negligence
- 15.68
- The nature of bank’s business in fact, or as held out
- Wisdom of commercial project versus transaction(s) with bank
- Ordinary/usual banking transaction
- Existence of any duty of care by bank to advise investor
- Advice as distinct from factual information
- Factors relevant to whether a bank has a duty of care to advise an investor
- 15.76
- 15.77
- 15.78
- 15.79
- Factor 1: Absence of a contractual duty to advise
- Factor 2: Whether the investor paid the bank for advice
- Factor 3: Whether, in relation to the investor in question, the bank followed its internal procedures applicable to the provision of advice
- Factor 4: Investor’s financial sophistication
- Factor 5: Whether the pre-dispute conduct of investor ever indicated an expectation that the bank would provide advice
- Factor 6: The character of the bank’s advice to the investor
- Factor 7: The investor relied on advice provided by the bank
- Factor 8: Risks of the transaction
- The scope of the bank’s duty to advise the investor
- Advice-related claims: misrepresentation
- Advice-related claims: breach of fiduciary duty
- 5 The PRA and FCA
- Part III Financial Sectors and Activities
- 16 Banks and Banking
- Introduction
- UK Banking Supervision
- Financial Crisis
- Bank of England
- Financial Services and Markets
- Handbook of Rules and Guidance
- 16.74
- 16.75
- 16.76
- 16.77
- 16.78
- 16.79
- 16.80
- Fundamental rules and Principles for Businesses (‘PRIN’)
- Systems and Controls
- Managers and General Provisions
- Regulatory Processes
- Business Standards
- Redress
- Banking Supervision
- Prudential Regulation
- PRA Prudential Rules
- 16.181
- 16.182
- Internal Capital Adequacy Assessment
- Definition of capital
- Capital buffers
- Benchmarking of internal approaches
- Credit Risk
- Counterparty Credit Risk
- Market Risk
- Groups
- Large Exposures
- Liquidity
- Leverage
- Pillar 2 Supervisory Review and Reporting
- Reporting and Pillar 3 Disclosure
- Waivers, Transitional Provisions, and Permissions
- Ring-Fencing
- Recovery and Resolution Plans
- Resolution
- Banking Standards and Culture
- Financial Stability
- 17 Insurance Regulation
- Introduction
- Evolution of the Regulatory Approach to Insurance
- European Union Law
- UK Law and Regulation: FSMA and Other Applicable Legislation
- 17.77
- Defining contracts of insurance
- FCA Guidance: what constitutes a contract of insurance?
- European insurance contract law and regulation
- Unfair contract terms
- Contracts (Rights of Third Parties) Act 1999
- Applicable law of the contract
- Jurisdiction
- Regulated activities under FSMA
- Financial promotions
- Appointed representatives
- Misleading statements and impressions
- Part VII Transfers
- Threshold conditions for authorisation
- UK Regulation: The Regulatory Rulebooks
- Introduction
- High-level principles
- Senior Management Arrangements and Systems and Controls
- Conduct of business
- Conduct of Business Rules: insurance investment products (‘COBS’)
- Conduct of Business Rules: non-investment insurance (‘ICOBS’)
- Scope and EU implementation
- Differential requirements for pure protection policies
- Communications, financial promotions, and distance communications (ICOBS 2.2 and 3)
- Inducements and information about the firm, its services, and remuneration (ICOBS 2.3 and 4)
- Identifying client needs and advising (ICOBS 5)
- Preparation and provision of product information (ICOBS 6)
- Cancellation (ICOBS 7)
- Claims handling (ICOBS 8)
- Client money
- 17.223
- 17.224
- Scope of CASS 5
- Statutory and non-statutory accounts
- Operating segregated accounts
- Insurer monies: acting as agent of insurers, client money, and subordination
- Appointed representatives
- Reconciliation, insurance debtors, and letters of credit
- Review of the Client Assets Sourcebook
- Conflicts of interest
- Prudential standards: insurers
- Prudential standards: insurance intermediaries
- Senior insurance managers and approved persons
- Cross-border Business
- UK Regulation: FOS and the FSCS
- 18 Wholesale Investment Firms
- Evolution
- Current State of EU Financial Services Regulation
- Current UK Financial Services Regulation
- Clients and Commissions
- Financial Promotions and Client Communications
- Dealing in Securities
- Investment Research
- Clients’ Assets
- Takeovers and Listing Rules
- Holdings and Dealings by 1 per cent Shareholders
- 19 Retail Investment Firms
- Introduction: Retail Financial Scandals
- General Principles of Conduct for Investment Firms
- The Conduct of Business Sourcebook (‘COBS’)
- Background to COBS
- The Markets in Financial Instruments Directive
- Effect of the ‘cut-over’ from FSA to FCA
- The recast Markets in Financial Instruments Directive (MiFID II)
- The contents of COBS
- Scope and application
- General conduct of business obligations
- Client categorisation
- Communication with clients and financial promotion
- Principal conduct of business rules for retail firms
- Distance communications
- Information about the firm, its services, and remuneration
- Excessive charges
- Client agreements
- Client assets and client money
- Suitability (including basic advice)
- The suitability rule
- Appropriateness (for non-advised services)
- ‘Execution only’ business
- Product information and explanation of risk
- Cancellation rights
- Specialist rules on pensions, with profits and permitted assets
- Case law on retail investment business
- The Retail Distribution Review and the Financial Advice Market Review
- 20 Home Finance Transactions
- 20.01
- 20.02
- Supervision and Regulation of Building Societies
- Building Societies before FSMA
- Building Societies under FSMA
- The Regulation of Mortgage Business and Home Finance Business
- Regulated Mortgage Business
- Definition of a regulated mortgage contract
- 20.30
- 20.31
- 20.32
- 20.33
- The occupancy requirement
- Borrowing by trustees and variation of contract terms
- Regulated mortgage contracts entered into before 21 March 2016
- Exclusions from the definition of a regulated mortgage contract
- Presumed business purpose
- Regulated activities relating to a regulated mortgage contract
- Regulated activities relating to legacy CCA mortgage contracts
- The business test
- Activities in the United Kingdom
- RAO exclusions and the MCD override
- Terminology
- Definition of a regulated mortgage contract
- Consumer Buy-to-Let Mortgage Business
- Home Reversion Plans, Home Purchase Plans, and Regulated Sale and Rent-Back Agreements
- Hybrid Home Finance Products
- The Prudential Sourcebook for Mortgage and Home Finance Firms and Insurance Intermediaries
- The Requirement for Home Finance Providers to Use Authorised Intermediaries
- Prudential Requirements for Home Finance Firms
- Professional Indemnity Insurance Requirements for Home Finance Mediation Firms
- Capital Requirements
- Capital and Liquidity Requirements for Firms to which MIPRU Applies
- Conduct of Business Requirements for Home Finance Firms
- Business Customers and High Net Worth Customers
- Pre-contractual Arrangements Made by a Home Finance Provider
- Application of MCOB to Contracts Within Scope of the Mortgage Credit Directive
- Responsible Lending and Responsible Financing
- Advising and Selling
- Disclosure
- Charges
- Arrears and Repossessions
- Post-contract Charges and Arrears
- Conduct of Business Requirements Applicable to a Consumer Buy-to-let Firm
- 21 Consumer Credit
- Background
- Special Terminology
- 21.06
- ‘Credit’
- ‘Consumer credit agreement’
- ‘Debtor–creditor–supplier agreement’ / ‘borrower–lender–supplier agreement’
- ‘Debtor–creditor agreement’ / ‘borrower–lender agreement’
- ‘Fixed-sum credit’; ‘running account credit’
- ‘Total charge for credit’; ‘APR’
- ‘Regulated’ credit and ‘regulated’ hire agreement
- ‘Exempt agreements’
- Regulated Activities
- Special Regulatory Control Applicable to Consumer Credit
- Connected Lender Liability etc.
- Restrictions on Enforcement or Termination of Agreement
- Security
- Enforcement of Regulated Agreements in the Courts
- Unfair Relationships
- Particular Transactions
- 22 Collective Investment Schemes
- Introduction
- Basic Definitions
- General
- Definition of ‘Collective Investment Scheme’ (‘CIS’): FSMA, section 235
- The core definition
- Exemptions
- General
- Paragraph 1: Individual Investment Management Arrangements
- Paragraph 2: Enterprise Initiative Schemes
- Paragraph 2A: Social investment schemes
- Paragraph 3: Pure deposit-based schemes
- Paragraph 4: Schemes not operated by way of business
- Paragraph 5: Debt issues
- Paragraph 6: Common accounts
- Paragraph 6A: Electronic systems in relation to lending
- Paragraph 7: Certain funds relating to leasehold property
- Paragraph 8: Certain employee share schemes
- Paragraph 9: Schemes entered into for commercial purposes wholly or mainly related to existing business
- Paragraph 10: Group schemes
- Paragraph 11: Franchise arrangements
- Paragraph 12: Trading schemes
- Paragraph 13: Timeshare and long-term holiday schemes
- Paragraph 14: Other schemes relating to use or enjoyment of property
- Paragraph 15: Schemes involving the issue of certificates representing investments
- Paragraph 16: Clearing services
- Paragraph 17: Contracts of insurance
- Paragraph 18: Funeral plan contracts
- Paragraph 19: Individual pension accounts; Paragraph 20: Occupational and personal pension schemes
- Paragraph 21: Bodies Corporate
- Other general CIS definitions
- Definition of ‘Open-Ended Investment Company’ (‘OEIC’): FSMA, section 236
- Regulatory Categorisation of CISs
- 16 Banks and Banking
- Part I Regulatory Structure