Issue 1164 / 16 June 2022

European Parliament

EU Taxonomy Complementary Delegated Act on gas and nuclear activities - Objection from ECON published - 14 June 2022

The European Parliament has published a press release containing details of an objection to a proposal by the European Commission (the Commission) for a Complementary Climate Delegated Act (C(2022) 631) (the Delegated Act) specifying the conditions under which nuclear and natural gas energy activities may be included in the list of environmentally sustainable economic activities for the purposes of the EU Taxonomy Regulation ((EU) 2020/852). The objection is set out in a draft motion for a European Parliament resolution (2022/2594(DEA)) and was adopted in a joint meeting of the Economic and Monetary Affairs Committee (ECON) and the Environment, Public Health and Food Safety Committee (ENVI). 

According to the press release, while MEPs “recognise the role of nuclear and fossil gas in guaranteeing stable energy supply during the transition to a sustainable economy …they consider that the technical screening standards proposed by the Commission, in its delegated regulation, to support their inclusion do not respect the criteria for environmentally sustainable economic activities as set out in Article 3 of the Taxonomy Regulation.” 

The resolution also asks for any new or amended delegated acts to be subject to a public consultation. It is scheduled for a vote during the European Parliament’s plenary session between 4 and 7 July 2022. The European Parliament and the Council of the EU will have until 11 July 2022 to decide whether to veto the Commission’s proposal. If an absolute majority of MEPs object to the proposal, the Commission will have to withdraw or amend it.

Draft motion for a resolution on Commission delegated regulation of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities (2022/2594(DEA))

Press release

HM Treasury

UK-Japan Financial Regulatory Forum - HM Treasury publishes joint statement following June 2022 meeting - 10 June 2022

HM Treasury has published a joint statement by members of the UK-Japan Financial Regulatory Forum following a meeting held on 9 June 2022. Participants included senior officials from HM Treasury, the Bank of England, the FCA, the British Embassy in Tokyo, the Department for Environment, Food and Rural Affairs, the Japanese Financial Services Agency (FSA) and the Japanese Embassy in London.  The joint statement builds on the arrangements for regulatory cooperation outlined in Annex 8-A of the UK-Japan Comprehensive Economic Partnership Agreement, which also provides for the establishment of new ‘working groups’ to bring experts together from both sides to examine specific issues of mutual interest. 

Forum participants discussed a wide range of topics, including the need to establish an effective regulatory framework for stablecoins based on the principle of “same activity, same risk and same rules” as well as the importance of having a transparent and efficient authorisation process for innovative firms. Separately, the parties agreed to maintain momentum to drive the transition to net zero and agreed to establish a dedicated sustainable finance working group.

The parties also reaffirmed the importance of deference and noted that they will continue to cooperate to seek out mutually beneficial opportunities to defer to each other’s regulatory and supervisory regimes.

Joint Statement: UK-Japan Financial Regulatory Forum 2022

Exchange of Letters on a Framework for Regulatory Cooperation in Financial Services


Financial Ombudsman Service

FOS future funding model - discussion paper published - 14 June 2022

The Financial Ombudsman Service (FOS) has published a discussion paper on possible changes to its funding model, building on the commitments made in its December 2021 Action Plan. The Action Plan set out the key strategic and operational changes that the FOS would be undertaking to improve its effectiveness and efficiency. 

The FOS is currently funded through a combination of case fees, a general levy on firms in the compulsory jurisdiction (CJ) (which is charged and collected by the FCA) and a levy (which the FOS charges and collects) on participants in the voluntary jurisdiction (VJ). One future funding option proposed in the discussion paper would involve updating the levy structure, so that the CJ levy would recover the FOS’s fixed overheads such as IT, property and other support functions, rather than covering a particular proportion of the FOS’s income, as is currently the case.

The discussion paper also raises the prospect of introducing a differentiated case fee model to reflect case complexity. This could involve charging a different fee depending on the stage at which a complaint is closed or varying case fees depending on the type of product or service that is the subject matter of the complaint.

The deadline for responses is 5 August 2022. The FOS will publish a feedback statement in October 2022. The options the FOS takes forward from this discussion paper will form part of its consultation on its 2023/24 budget, later this year.

FOS Discussion Paper: Creating a funding model for the future

Press release

Glasgow Financial Alliance for Net Zero

Net-zero transition - GFANZ publishes a common framework of recommendations and guidance for consultation - 15 June 2022

The Glasgow Financial Alliance for Net Zero (GFANZ) - a practitioner-led, global coalition of financial institutions working to accelerate the world’s transition to net-zero greenhouse gas emissions by 2050 - has published for consultation a draft Net-zero Transition Plan Framework (the Plan) for the financial sector. The document seeks to enable financial institutions to demonstrate, and stakeholders to judge, the credibility of transition plans to accelerate and scale clean energy and transition-related finance to levels consistent with limiting global warming to 1.5 degrees. Mark Carney, Co-Chair of GFANZ and the UN Special Envoy on Climate Action and Finance, commented as follows: 

The GFANZ common framework for net-zero transition will help ensure that capital will flow to companies that have robust and credible plans to reduce their emissions while growing jobs and our economies. The supporting tools will promote the responsible and transparent phase out of stranded assets as part of an orderly transition. Together, these tools, frameworks, and resources will guide the financial sector to support real-world decarbonisation, not the false comfort of portfolio decarbonisation. In the process, they will reveal the contribution of financial institutions to solving one of humanity’s greatest challenges.”

In the Plan, GFANZ has identified the following four essential approaches for financial institutions to support the real-economy transition to net-zero emissions:

  • financing the development and scaling of net-zero technologies or services to replace high-emitting sources;
  • increasing support for companies that are already aligned to a 1.5 degrees pathway;
  • enabling high and low-emitting real-economy companies to align business activities consistent with a 1.5 degrees pathway for their sector; and
  • accelerating managed phasing out of high-emitting assets through early retirement.

Alongside the Plan, GFANZ has published a set of connected tools, frameworks and resources, including:

  • guidance on sectoral pathways for financial institutions: this sets out guidance and a framework to help financial institutions evaluate the suitability of sectoral pathways in their transition planning process and implementation efforts;
  • an introductory note on expectations for real-economy transition plans: this introduces GFANZ’s work on supporting and accelerating the development of real economy transition plans by providing clarity around the expectations of financial institutions;
  • a concept note on portfolio alignment measurement: this describes GFANZ’s findings on the use of portfolio alignment metrics and outlines the goals and work plan of the GFANZ portfolio alignment measurement workstream. GFANZ will release a full report on portfolio alignment measurement before COP27; and
  • a report on the managed phasing out of high-emitting assets: this provides a preliminary and high-level approach to support the identification of assets where managed phase out could be appropriate. It offers an initial overview of potential financial mechanisms that could support managed phasing out and includes initial guidance on the features of a credible asset-level phasing out plan.

The recommendations and guidance are voluntary. The deadline for responses to the consultation on GFANZ’s draft Plan is 27 July 2022. GFANZ will publish an updated report containing final recommendations and guidance in autumn 2022, before COP27.

Financial Institution Net-zero Transition Plans: recommendations and guidance

Guidance: Towards a global baseline for net-zero transition planning

Guidance: On the use of sectoral pathways for financial institutions

Introductory note: Expectations for real-economy transition plans

Concept note: Portfolio alignment measurement

Report: The managed phaseout of high-emitting assets

Press release