European Commission
Priorities as European Commissioner – Mairead McGuinness delivers speech – 4 March 2021
Mairead McGuinness (European Commissioner for Financial Stability, Financial Services and the Capital Markets) has given a speech before the Finance and EU Affairs Committees of the French Senate articulating the areas which she wishes to prioritise in her role as Commissioner. Among other things, these priorities include addressing the impact of COVID-19, ensuring the resilience of the banking sector, developing the Capital Markets Union (CMU) and addressing sustainable finance issues.
In relation to COVID-19, Ms McGuinness emphasised the importance of financial support schemes to aid recovery, such as the Recovery and Resilience Facility (RRF) which makes €672.5 billion available in loans and grants to EU Member States. She further underscores the essential role the CMU will play in supporting COVID-19 recovery. She asks for support in moving forward with the CMU and delivering on all 16 actions set out in the CMU action plan in September 2020.
Among other things, Ms McGuinness also highlights the need to prevent a build-up of non-performing loans on banks’ balance sheets, the Commission’s plans to adopt a legislative proposal on the implementation of the final Basel III standards in July 2021 and details of the Commission’s plans to meet its climate and environmental goals. Alongside the European Green Deal and the EU Taxonomy, she explains that the Commission is also working on a proposal for an EU Green Bond Standard and a Renewed Sustainable Finance Strategy, the latter of which will be released later this year.
Speech by Mairead McGuinness before the Finance and EU Affairs Committees of the French Senate
HM Treasury
UK Fintech – HM Treasury publishes Kalifa review - 26 February 2021
HM Treasury has published a report setting out the findings of the Kalifa Review of UK FinTech. This review, led by Ron Kalifa OBE, was announced in the 2020 Budget and formally launched in July 2020 with objectives for supporting the growth and widespread adoption of UK fintech.
The review sets out proposals for how the UK can build on its existing strengths in fintech, create the right framework for continued innovation and support UK firms to scale up. It notes that UK fintech has had a ‘bumper’ decade but that it is at a critical point in its development. While there is significant opportunity for further growth, there are a number of risks to its position as a ‘world leader’ in fintech, including competition globally, regulatory uncertainty as a result of Brexit, and from COVID-19.
The report’s recommendations include:
- amendments to the UK Listing Rules to make the UK a more attractive location for initial public offerings (IPOs). This could entail, for example, reducing the free float requirements on the premium segment from 25% to 10%, for a limited time post-IPO;
- improvements to tech visas to attract global talent and boost the fintech workforce;
- the creation of a regulatory fintech ‘scalebox’ to provide additional support to growth stage fintechs; and
- a Centre for Finance, Innovation, and Technology, to strengthen national coordination across the fintech ecosystem and boost growth.
The reports calls on the government to develop a comprehensive fintech strategy covering policy and regulation and sectorial matters not specific to financial services, such as data. The report recommends that the strategy should have clear objectives, actions and timescales.
Policy Paper: Kalifa Review of UK Fintech
Executive summary
Webpage
FPC – Treasury sets out remit, recommendations and priorities for 2021/22 – 3 March 2021
HM Treasury has published a letter from Rishi Sunak (Chancellor of the Exchequer) to Andrew Bailey (Bank of England (the Bank) Governor) setting out the remit and recommendations for the Financial Policy Committee (FPC) in 2021/22. The recommendations are largely similar to those made in previous years, and include the following noteworthy points:
- the FPC should build on the work of the Financial Stability Board (FSB) to develop a robust regulatory framework for non-banks;
- the FPC should outline how it can support the government’s economic priorities (competition and innovation, openness and competitiveness, environmental sustainability and climate change and housing) for financial services in a manner that is consistent with its objectives; and
- the FPC should act with a view to supporting the development of the Long-Term Asset Fund (LTAF) and continue to engage with the work of the industry working group convened by HM Treasury, the Bank and the FCA to facilitate investment in productive finance.
The FPC must respond to the government, outlining any action it has taken or intends to take in response to the recommendations.
Letter from Rishi Sunak to Andrew Bailey on the remit and recommendations for the FPC
Webpage
Financial Conduct Authority
Pre-paid funeral plans - FCA publishes Consultation Paper CP21/4 – 2 March 2021
The FCA has published a Consultation Paper (CP21/4) on its proposed regulation of the pre-paid funeral plans sector. Its proposals are intended to protect consumers that have, or will in future take out, a pre-paid funeral plan product and the FCA is particularly conscious of the presence of vulnerable customers in the market. It considers that many of the concepts in those rules will be recognisable to many firms, given they reflect good business practice, but for a subset of firms their standards could necessitate a significant change in business operations.
In summary, the FCA’s proposals are that:
- from 29 July 2022, activities involving the provision and distribution of pre‑paid funeral plans will become fully subject to FCA regulation, and firms conducting these activities will need to be authorised by the FCA; and
- all relevant firms in this sector will need to: (i) apply directly to the FCA for authorisation from September 2021 or, if appropriate, submit notification to become an Appointed Representative (applications made after 1 November 2021 may incur a higher application fee); (ii) ensure they meet FCA standards to be authorised and, once authorised, follow FCA rules; and (iii) pay an application fee and then annual fees, based on turnover.
The FCA anticipates that the Funeral Planning Authority will continue to regulate providers of prepaid funeral plans registered with them until FCA regulation begins.
The consultation closes on 13 April 2021.
FCA Consultation paper CP21/4
Funeral plan providers and intermediaries: half-yearly prudential return
Funeral plan providers: quarterly conduct review
FCA video transcript
Funeral plan authorisation form
Website
Press release
