Issue 1159 / 12 May 2022

European Commission

SFDR disclosures - European Commission requests ESAs to propose amendments to RTS - 6 May 2022

The European Securities and Markets Authority (ESMA) has published two letters sent from the European Commission (the Commission) to the Joint Committee of the European Supervisory Authorities (ESAs) requesting that they propose amendments to the regulatory technical standards (RTS) in Commission Delegated Regulation C(2022) 1931 final (SFDR Delegated Regulation), which were adopted on 6 April 2022 under the Sustainable Finance Disclosure Regulation ((EU) 2019/2088) (SFDR).

In the letter dated 8 April 2022, the Commission notes that amendments to the SFDR Delegated Regulation are necessary to ensure that investors receive information reflecting the provisions set out in the proposed Complementary Climate Delegated Regulation, which is due to be adopted later in 2022 to cover natural gas and related technologies as transitional activity in as far as they fall within the limits of the EU Taxonomy Regulation ((EU) 2020/852). The ESAs are therefore invited to propose amendments to the RTS in relation to the information that should be provided in pre-contractual documents, on websites, and in periodic reports about the exposure of financial products to investments in fossil gas and nuclear energy activities. In view of the urgency of the matter, these amendments should be submitted by 30 September 2022 at the latest.

In the letter dated 11 April 2022, the Commission highlights its previous announcement that the RTS laid down in the SFDR Delegated Regulation are to be reviewed both to cater for the increased requests for transparency in areas that extend beyond the environment, and to strengthen the disclosure and effectiveness of decarbonisation actions by financial market participants for all financial products. In light of this, the Commission is inviting the ESAs to develop draft RTS and sets out detailed points for consideration. This input should be provided within 12 months of the ESAs receiving the letter.

European Commission letter: Re: amendments to regulatory technical standards under the Sustainable Finance Disclosure Regulation ((EU) 2019/2088) (Ares(2022)278608) (dated 8 April 2022)

European Commission letter: Re: amendments to regulatory technical standards under the Sustainable Finance Disclosure Regulation ((EU) 2019/2088) (Ares(2022)2937873) (dated 11 April 2022)

Distance marketing of consumer financial services - European Commission adopts legislative proposal for a Directive - 11 May 2022

The Commission has adopted a proposal for a Directive which reforms the current EU rules on distance marketing of consumer financial services, amending Directive 2011/83/EU concerning contracts concluded at a distance and repealing the Distance Marketing of Financial Services Directive (2002/65/EC) (COM(2022)204 final).

The proposal seeks to strengthen consumer rights and foster the cross-border provision of financial services in the single market, responding to the overall digitisation of the sector and the new types of financial services that have been developed since the rules were first introduced in 2002. To this end, the proposal introduces actions across several areas, including:

  • easier access to the 14-day withdrawal right for distance contracts for financial services;
  • clear rules on what, how and when pre-contractual information is to be provided;
  • special rules to protect consumers when concluding financial services contracts online;
  • an extension of the rules on enforcement and penalties; and
  • full legal harmonisation to ensure the same high level of consider protection across Member States.

The proposal will now be discussed by the European Parliament and the Council of the EU.

Proposal for a Directive of the European Parliament and of the Council amending Directive 2011/83/EU concerning financial services contracts concluded at a distance and repealing Directive 2002/65/EC (COM(2022)204 final)

Impact assessment (SWD(2022)141 final)

Impact assessment: Executive summary (SWD(2022)142 final)

Updated webpage

Press release

European Parliament

EU digital finance package - Political agreement reached on DORA - 11 May 2022

The European Parliament has published a press release announcing that political agreement has been reached on the proposed Digital Operational Resilience Act (2020/0266(COD)) (DORA). DORA aims to establish a comprehensive regulatory framework on digital operational resilience with a view to ensuring that all firms within scope can withstand information and communication technology- (ICT-) related disruptions and threats. DORA forms part of the Commission’s digital finance package, published on 24 September 2020, as previously reported in this Bulletin. The Council of the EU (the Council) adopted its negotiating mandate on DORA on 24 November 2021.

Under the provisional agreement, banks, stock exchanges, clearinghouses and other financial firms will have to respect strict standards to prevent and limit the impact of ICT-related incidents. The agreement also introduces an oversight framework on service providers that provide critical services such as cloud computing to financial institutions.

The European Parliament and the Council must now approve the provisional agreement before it goes through the formal adoption procedure. Once the DORA proposal is formally adopted, it will be passed into law by each EU member state. The European Supervisory Authorities will then develop technical standards for all financial services institutions to abide by. National competent authorities will take the role of compliance oversight and enforce DORA as necessary.

European Parliament press release

Council of the European Parliament press release

European Commission press release

UK Government

Pro-competition regime for digital markets - DCMS and BEIS publish government response to consultation - 6 May 2022

The Department for Digital, Culture, Media & Sport (DCMS) and the Department for Business, Energy & Industrial Strategy (BEIS) have published the government response to its July 2021 consultation on the proposed new pro-competition regime for digital markets, and the establishment of the Digital Markets Unit (DMU).

The vast majority of respondents to the consultation supported the government’s proposals for the regime. Many provided evidence of the need for urgent action to ensure the government has the regulatory tools needed to address the challenges arising from weak competition in digital markets. Respondents also emphasised the need to equip the Digital Markets Unit (DMU) with the ability to respond rapidly and flexibly to fast moving issues in digital markets.

Taking account of this feedback, the government outlines the core tenets of its new regime, which include:

  • a DMU with the core objective to promote competition in the digital markets for the benefit of consumers, with a duty to consult with other regulators where proportionate and relevant;
  • a targeted focus on a small number of firms with substantial and entrenched market power, which gives them a strategic position (‘Strategic Market Status’) in one or more activities, determined by a minimum revenue threshold;
  • a DMU which is empowered to make pro-competitive interventions, such as those made to support interoperability; and
  • a DMU with the power to impose financial penalties of up to 10% of a firm’s global turnover for regulatory breaches, and to apply to the court to disqualify individuals from holding directorship roles in the UK.

The government also intends to introduce new requirements for firms with Strategic Market Status to report merger transactions to the Competition and Markets Authority (CMA) prior to their completion. The proposed changes to the Phase 2 merger review threshold are not being taken forward.

The government intends to legislate to implement these reforms when parliamentary time allows.

Government response to the consultation on a new pro-competition regime for digital markets


Queen’s Speech - Financial Services and Markets Act Bill - 10 May 2022

The Queen’s Speech has been delivered by Prince Charles at the Opening of Parliament, setting out the government’s legislative agenda for the next parliamentary session.​​​​​​​

The speech touched on three bills that will be of interest to financial market participants: the Retained EU Law Bill, also known as the Brexit Freedoms Bill; the Financial Services and Markets Bill; and the Economic Crime and Corporate Transparency Bill. The Retained EU Law Bill and the Economic Crime and Corporate Transparency Bill are covered in the Brexit and Financial Crime sections of this Bulletin, respectively.

The Financial Services and Markets Bill (the Bill) builds on the Financial Services Act 2021 and will “strengthen the UK’s financial services industry, ensuring that it continues to act in the interest of all people and communities”. The main elements of the Financial Services and Markets Bill are:

  • revoking retained EU law on financial services (including Solvency II) and replacing it with an approach to regulation that is designed for the UK;
  • updating the objectives of the financial services regulators to ensure a greater focus on growth and international competitiveness;
  • reforming the rules that regulate the UK’s capital markets to promote investment;
  • ensuring that people across the UK continue to be able to access their own cash with ease; and
  • introducing additional protections for those investing or using financial products, to make it safer and support the victims of scams.

In an associated press release, HM Treasury notes that the Bill will also enable the Payment Systems Regulator (PSR) to require banks to reimburse authorised push payment (APP) scam losses, totalling hundreds of millions of pounds each year. This statement coincides with the publication of a policy paper in which the government sets out its approach to APP scam reimbursements, covered in the Banking and Finance section of this Bulletin.

Queen’s Speech 2022

Briefing pack

HM Treasury press release: New law to protect access to cash announced in Queen’s speech

Policy Paper: Government approach to authorised push payment scam reimbursement

Green Finance Strategy - BEIS publishes call for evidence - 12 May 2022

The Department for Business, Energy and Industrial Strategy has published a call for evidence as part of the government’s update to the UK’s Green Finance Strategy (the Strategy). The Strategy, originally published in July 2019, with the update planned for publication in late 2022, sets out a comprehensive approach to greening financial systems, mobilising finance for clean and resilient growth, and capturing the resulting opportunities for the UK.​​​​​​​

The government explains that the updated Strategy will take stock of progress so far and set out how the UK can better ensure the financial services industry is supporting the UK’s energy security, climate and environmental objectives. It highlights key actions taken so far by the government, including:

  • publishing the Net Zero Strategy on how it will decarbonise the economy by 2050 (October 2021);
  • setting out a new Energy Security Strategy, which is designed to boost Britain’s energy security and independence following Russia’s invasion of Ukraine and rising global energy prices (April 2022);
  • adopting the landmark Environment Act 2021, which puts environmental goals such as reversing the decline in biodiversity on a statutory footing (November 2021); and
  • following the National Adaptation Programme, which sets out what the UK government, businesses and society are doing to better prepare for the impacts of climate change (July 2018 - July 2023).

In light of these developments, the call for evidence contains 39 questions on four key objectives:

  • capturing the opportunity of green finance;
  • mobilising finance for the UK’s energy security, climate and environmental objectives;
  • greening the financial system; and
  • leading internationally.

The deadline for responses is 22 June 2022.

BEIS Call for Evidence: Update to Green Finance Strategy


HM Treasury

Private sector climate transition plans - Transition Plan Taskforce publishes call for evidence - 10 May 2022

The Transition Plan Taskforce (the Taskforce) has published a call for evidence on a ‘sector-neutral framework’ for private sector transition plans (the Framework).

The Taskforce, which was launched in April 2022 by HM Treasury to develop a gold standard for transition plans, explains that the Framework will aim to establish guidelines for financial and non-financial companies that set out how they will decarbonise and support economy-wide decarbonisation as part of the transition to net zero, and will directly inform emerging UK regulation.

The Framework will lay out:

  • the definition of a transition plan;
  • principles that should guide preparers of transition plans and provide a reference point for users seeking to understand the credibility of disclosed plans;
  • key elements that any private sector transition plan should cover, regardless of the sector of the organisation preparing them; and
  • accompanying guidance on the role of governance and assurance, third-party verification, and the implications of organisational transition plans for reporting.

Among other things, the Taskforce is seeking views on the prescriptiveness of the Framework (that is, whether it should take a principles-based approach, or a more prescriptive approach), and the location of transition plan disclosures.  

The deadline for responses is 13 July 2022. The Taskforce will publish a draft framework for consultation towards the end of 2022, with a view to finalising it in early 2023.

Transition Plan Taskforce: Call for Evidence: A Sector-Neutral Framework for private sector transition plans


Financial Conduct Authority

Learning from innovation - FCA publishes speech - 5 May 2022

The FCA has published a speech delivered by Nikhil Rathi, CEO of the FCA, which provides the FCA’s perspective on the last 30 years and what can be learned from them, with a particular focus on innovation. Among other things, Mr Rathi highlighted that:

  • digital skills will be integrated in all future financial services education, including at the FCA, as the boundaries become blurred between tech and the industry;
  • the Digital Regulation Cooperation Forum (DRCF), of which the FCA is a member, is focusing on protecting children online, which is relevant for the FCA as it is seeing ever younger participants (including children) in new financial products like cryptoassets; and
  • in one year, the FCA has seen over 2,000 cases of screen sharing scams where victims have lost £25 million. The ‘ScamSmart’ campaign, launched on 5 May 2022, aims to tackle this.

Speech by Nikhil Rathi, FCA CEO at the Chartered Institute for Securities and Investment 30th anniversary dinner: Learning from the last 30 years to face the next


Disclosure obligations - FCA publishes response to decision and recommendations of Upper Tribunal - 6 May 2022

The FCA has published its response to the July 2021 decision and recommendations of the Upper Tribunal (Tax and Chancery Chamber) (the Tribunal) in Forsyth v FCA and PRA [2021] UKUT 12 (TCC). In its decision, the Tribunal found serious failings by the FCA and PRA relating to their disclosure obligations in respect of a limitation period issue, and made several recommendations under section 133A(5) of the Financial Services and Markets Act 2000.

Notably, the FCA:

  • accepts the Tribunal’s recommendation that it should ensure its staff are adequately trained and have an adequate understanding of the importance of proper records management;
  • has updated its enforcement division’s disclosure training and guidance to reflect matters raised in the Tribunal’s decision about dealing with requests for document disclosure made after the usual disclosure process has been completed; and
  • states that, contrary to the recommendation of the Tribunal, it is not practicable for all internal legal professional privilege material to be separated from other material as soon as it is generated.

FCA actions in response to recommendations made by the Upper Tribunal pursuant to section 133A(5) of the Financial Services and Markets Act 2000


CryptoSprint - FCA publishes webpage - 12 May 2022

The FCA has published a webpage on the two-day CryptoSprint event it held on 10 and 11 May 2022. Forming part of the FCA’s three-year strategy to prepare financial services for the future, the CryptoSprint provided an opportunity to explore UK policy solutions for the crypto sector. It builds on the FCA’s established TechSprint approach and the Regulatory Sandbox.

The FCA notes that around 100 participants from the crypto industry, financial services firms, academia, consumer groups and subject matter experts collaborated to inform the development of future regulations on cryptoassets. This is the first time the FCA has gathered views from industry and other stakeholders to help shape future policy in this way.

The FCA will share the outputs of its CryptoSprint in summer 2022.


FICC Markets Standards Board

Name change - announced by FMSB - 9 May 2022

The FICC Markets Standards Board (FMSB) has announced that it is changing its name to the Financial Markets Standards Board. The FMSB will continue to use the same acronym.

The FMSB explains that the change will help support engagement with a wider range of users of wholesale markets who may be less familiar with the FICC acronym, and reflects the broader relevance of the FMSB’s work across wholesale financial markets.

Press release