Wednesday 28 March 2018

UK: FRC publishes its strategy 2018-2021

The Financial Reporting Council has published its strategy for the next theee years: see here (pdf). As well as confirming the forthcoming review of the UK Stewardship Code, the document also sets out the FRC’s view that it is time to “test the current stautory audit model and ask whether it can be made more effective as currently established, and how audit should be developed to serve the public interest in the future, taking account of changing business models, new technology and stronger public expectations”.

Thursday 22 March 2018

UK: The Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) (Amendment) Order 2018

The Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) (Amendment) Order 2018 came into force earlier this week: see here or here (pdf). The accompanying explanatory memorandum is available here (pdf). The Order seeks to remove an area of uncertainty regarding peer-to-peer lending: whether a business borrowing funds this way might be regarded as accepting deposits "by way of business" in circumstances requiring the authorisation of the Financial Conduct Authority and Prudential Regulation Authority. The Order sets out when such authorisation is not required by making an amendment to the Financial Services and Markets Act 2000 (Carrying on Regulated Activities by Way of Business) Order 2001.

Tuesday 20 March 2018

UK: Government consultation - insolvency and corporate governance

The Government has published a consultation paper titled Insolvency and corporate governance: see here (pdf). The paper contains proposals the aim of which, to quote the Government, is to "reduce the risk of major company failures occurring through shortcomings of governance or stewardship, and to strength the responsibilities of directors of firms when they are in or approaching insolvency" (p. 5).

Amongst the proposals contained in the paper is one designed to better hold parent company directors to account in respect of the sale of an insolvent subsidiary that has an adverse impact on the interests of the subsidiary's creditors. And, amongst the questions asked, is this one: are stronger governance and transparency measures required in relation to the oversight and control of complex group structures?  The paper also asks: what more could be done through a revised Stewardship Code or other means to promote more engaged stewardship of UK companies by their investors, including the active monitoring of risk? It also seeks views on this question: whether some directors are obtaining and using professional advice without a proper awareness of their duties as directors, and in particular the requirement to exercise independent judgement.

Monday 19 March 2018

UK: AIM Rules for Companies - updated March 2018 edition published

The new AIM Rules for Companies (March 2018) have been published: see here (marked-up, pdf) or here (clean, pdf). These Rules require companies to 'comply or explain' against a 'recognised' corporate governance code. This requirement takes effect from 28 September 2018, although all new applicants from 30 March will be required to state the code they intend to follow and will have until 28 September 2018 to comply (or explain).

Friday 16 March 2018

UK: FPC statement on the risks of crypto-assets

The Financial Policy Committee published a statement today covering, amongst other things, the risks of crypto-assets to UK financial stability: see here (pdf). To quote directly from the Committee's statement:
The Committee recognises the potential benefits of the technologies underlying crypto-assets and of their potential to create a more distributed and diverse payments system ... The FPC judges that existing crypto-assets do not currently pose a material risk to UK financial stability ... The FPC will act to ensure the core of the UK financial system remains resilient if linkages between crypto-assets and systemically important financial institutions or markets were to grow significantly. In the event that one or more crypto-assets were likely to become widely used for payments, or as an asset intended to store value, the FPC would require current financial stability standards to be applied to relevant payments and exchanges."

Thursday 15 March 2018

UK: Banking Standards Board publishes its 2017/18 annual review

The Banking Standards Board has published its 2017/18 annual review: see here. This includes the results of the BSB's survey of behaviour, competence and culture in UK banks and building societies. The survey received over 36,000 responses, from those working in 25 institutions, with 750 people taking part in focus groups.  Just over a quarter of respondents reported that working in their organisation was having a negative impact on their health and well-being.  49% of employees said that people in their organisation did not get defensive when their views were challenged; 27% reported that they would be worried about negative consequences if they raised concerns about the way their organisation operated.

Wednesday 14 March 2018

UK: FCA discussion paper - transforming culture in financial services

The Financial Conduct Authority has published a discussion paper titled Transforming culture in financial services: see here (pdf). To call it a discussion paper is, perhaps, misleading: the paper is, in fact, a diverse range of essays on the topic of culture.

Jonathan Davidson, the FCA's Director of Supervision (Retail and Authorisations), begins the paper foreword: "Culture in financial services is widely accepted as a key root cause of the major conduct failings that have occurred within the industry in recent history, causing harm to both consumers and markets".

Tuesday 13 March 2018

BIS report: central bank digital currencies

The Bank for International Settlements has published a report from two of its committees - the Committee on Payments and Market Infrastructure and the Markets Committee - on central banks digital currencies: see here (pdf). The report is intended to provide a starting point for further discussion and contains an overview of the implications of central bank digital currencies for payments, monetary policy and financial stability.

Monday 12 March 2018

IFIAR publishes annual inspection findings survey

The International Forum of Independent Audit Regulators has published its annual inspection findings survey: see here (pdf). This year's survey was based on reports from 33 members and the review, in total, of 918 audits of public interest entities. The survey reports that 40% of the audits inspected had at least one "finding", i.e., a significant failure to satisfy the requirements of auditing standards.

Friday 9 March 2018

Guernsey: company wound-up for failure to provide member with accounts

The Royal Court (Ordinary division) gave judgment towards the end of February in In the Matter of Canargo Ltd (Judgment 13/2018). A copy of the judgment is available here (but note that registration, free of charge, is required to access the judgment). The decision is of interest because it appears to be the first application before the Royal Court to place a company into liquidation on the ground of its failing to provide a member with a set of accounts as required by section 251 of the Companies (Guernsey) Law, 2008. The application was granted.

Thursday 8 March 2018

UK: women on FTSE100 boards

The Department for Business, Energy and Industrial Strategy has today - International Women's Day - published data on the proportion of women on FTSE100 boards: see here. The headlines include: there are 309 women on FTSE100 boards; a quarter of FTSE350 board positions are occupied by women; and FTSE100 companies are on track to have a third of board positions occupied by women by 2020.

Monday 5 March 2018

UK: The future of money - a speech by the Governor of the Bank of England

Mark Carney, the Governor of the UK's central bank, the Bank of England, delivered a speech last week titled The Future of Money: see here (pdf). Within it he argued that the time had come to "...hold the crypto-asset ecosystem to the same standards as the rest of the financial system. Being part of the financial system brings enormous privileges, but with them great responsibilities".

Friday 2 March 2018

Pakistan: SECP publishes draft Shariah Governance Regulations 2018

The Securities and Exchange Commission (SECP) has published draft Shariah Governance Regulations: see here (pdf). In the accompanying press release, the SECP describes them as being a "...comprehensive set of regulations for governance of Shariah-compliant companies and entities, Shariah-compliant securities and Islamic financial institutions under its jurisdiction. For the first time ever, a holistic Shariah governance framework has been introduced by the apex regulator of corporate sector and capital markets".