January 2021: The month ahead in financial services regulatory developments…

22 December 2020

In this blog post, we round-up forthcoming developments in the UK and at EU and International levels in financial services regulation which are expected for January 2021.

1 Jan	FCA product governance rules for firms to consider whether products offer fair value to customers come into force FCA PS20/15: Ban on marketing of speculative securities to retail consumers (incl minibonds) comes into force New mortgage lending and administration return (MLAR) reports to be submitted to FCA (from 1 Jan depending on accounting periods) Updated performance sales data mortgage reporting requirements come into force In-scope firms must comply with Bank of England (BoE) Valuations Statement of Policy (SoP) Bearer Certificates (Collective Investment Schemes) Regulations 2020 come into force Sanctions and Anti-Money Laundering Act 2018 (SAMLA) comes fully into force UK Bank Levy to be chargeable only on the UK balance sheet equity and liabilities of in-scope banks and building societies for accounting periods ending on or after this date Bank levy rates reduced to 0.10% for short-term liabilities and 0.05% for long-term liabilities UK central counterparty (CCP) regime deemed equivalent by European Commission (until 30 Jun 2022) Amendments to EU Market Abuse Regulation (MAR) made by Art 1 of the SME Growth Market Reform Regulation apply European Banking Authority (EBA) guidelines on probability of default (PD) estimation, loss given default (LGD) estimation and treatment of defaulted exposures and downturn LGD estimation apply European Insurance and Occupational Pensions Authority (EIOPA) guidelines on outsourcing to cloud service providers (CSPs) to take effect for new or amended arrangements European Supervisory Authorities (ESAs) to report on Securitisation Regulation (under Art 44) by this date, and every 3 years thereafter Regulatory Technical Standards (RTS) on specification of nature, severity and duration of economic downturn (Art 181(3)(a) and 182(4)(a) CRR) applies Pay-out to reduce to 10 working days under Art 8 of Deposit Guarantee Scheme Directive (DGSD) until 31 Dec 2023 Although European Central Bank (ECB) originally recommended banks refrain from share buy-backs, dividend payments until this date, it has since issued a recommendation on 15 Dec 2020, calling on banks to refrain from or limit dividends until 30 Sep 2021 Updated European Code of Good Conduct for Microcredit Provision expected to enter into force
2 Jan	PRA rule modification to minimum provisioning requirements available to credit unions (until 31 Dec 2022)
3 Jan	European Markets Infrastructure Regulation (EMIR) clearing obligation/risk mitigation techniques to apply to C6 energy derivative contracts entered into by non-financial counterparties (NFCs) (may be extended)
4 Jan	Investment Association guidance on electronic instructions due to expire as FCA confirmed industry guidance Deadline for responses to European Securities and Markets Authority (ESMA) consultations on technical advice on fees for data reporting service providers (DRSPs) and on criteria for identifying DRSPs Margin requirements for non-centrally cleared over-the-counter (OTC) derivatives which are single-stock equity options or index options under EMIR apply Deadline for responses to European Commission's consultation on draft Delegated Regulation supplementing EMIR on procedure for penalties imposed on trade repositories (TRs)
5 Jan	Deadline for responses to HM Treasury (HMT) CfE on UK listings regime Deadline for responses to EIOPA CP on its draft opinion on the supervision of the use of climate change risk scenarios in ORSA
6 Jan	FCA ban on sale of derivatives and exchange traded notes (ETNs) referencing cryptoassets to retail customers comes into force Deadline for responses to FCA CP on changes to Handbook due to Breathing Space Regulations
7 Jan	C19 delay: Deadline for responses to FCA call for input (CfI) on accessing and using wholesale data
8 Jan	Deadline for responses to PRA CP on Holding Company regulatory transaction fees Deadline for responses to ECB CP on revisions to oversight requirements for systemically important payment systems Deadline for responses to Financial Stability Board (FSB) discussion paper (DP) on regulatory and supervisory issues relating to outsourcing and third-party relationships
10 Jan	Cryptoasset businesses that had not applied for FCA registration before 16 December 2020 must return cryptoassets to customers and stop trading by this date
11 Jan	Deadline for responses to ESMA CP on draft guidelines on Markets in Financial Instruments Directive (MiFID II) market data obligations Deadline for responses to European Commission CP on uniform rounding rules for cash payments in euro Reporting obligations for (NFC) counterparties to report to TRs under SFTR into effect (UK opting out)
12 Jan	Deadline for responses to PRA CP16/20 on PRA’s approach to overseas Internal Ratings Based (IRB) models Deadline for responses to EIOPA CP on advice on relevant ratios to be mandatorily disclosed by insurers and reinsurers within the scope of the Non-Financial Reporting Directive (NFRD) under Art 8 of Taxonomy Regulation Deadline for responses to International Association of Insurance Supervisors (IAIS) draft application paper on supervision of climate-related risks in the insurance sector
13 Jan	European Commission to publish review under art. 108, Payment Services Directive 2 (PSD2)
14 Jan	Deadline for responses to HMT consultation on insolvency changes for payment institutions (PIs) and electronic money institutions (EMIs)
15 Jan	Deadline for insurance undertakings to submit responses to their group NCA for EIOPA study on diversification in internal models Deadline for responses to ECB Working Group on Euro Risk-Free Rates consultations on €STR-based fallback rates for EURIBOR
18 Jan	Deadline for responses to FCA guidance consultation (GC) on approach of insolvency practitioners to regulated firms
19 Jan	Deadline for responses to HMT call for evidence (CfE) on Solvency II Review Deadline for responses to HMT CP on Future Regulatory Framework (FRF) - second phase (responses will inform a second CP with final proposals on FRF to be published during 2021) Deadline for responses to European Commission CP on functioning of European long-term investment funds (ELTIF) regime
20 Jan	Payment Systems Regulator (PSR) will run the merchant survey confidentiality ring (in relation to its market review into card-acquiring services) for three weeks starting on this date
22 Jan	Deadline for responses to FCA CP on changes to policy on raising regulated fees and levies from 2021/22 Deadline for responses to IAIS CP relating to draft definition of comparable outcomes and high-level principles to assess the outcomes of the Aggregation Method against those of the Insurance Capital Standard National Supervisory Authorities (NSAs) to report to EIOPA in respect of EIOPA study on diversification in internal models
25 Jan	Deadline for responses to FCA CP on Handbook changes arising from its general insurance pricing practices market study Deadline for responses to ICE Benchmark Administration consultation on intention to cease publication of certain LIBOR settings Effective date for International Swaps and Derivatives Association (ISDA) IBOR Fallbacks Protocol and Supplement
29 Jan	Deadline for responses to EBA CP on revisions to final guidelines on sound remuneration policies Deadline for responses to European Commission CP on Alternative Investment Fund Managers Directive (AIFMD) review Deadline for responses to United Nations Environment Programme Finance Initiative (UNEP FI) CP on draft guidance for reporting on Principles for Responsible Banking
30 Jan	Deadline for responses to PRA CP on IRB UK mortgage risk weights and change to SS11/13
31 Jan	Deadline for customers to request a payment deferral - FCA draft further guidance to support mortgage borrowers Date set by FCA guidance on Mortgages before which home repossessions should not be enforced Deadline for responses to PRA CP on amendments to reporting and disclosure dates for resolution assessments Deadline for responses to PRA CP on revising policy on operational continuity in resolution Deadline for responses to BoE CP on updates to approach to assessing resolvability Deadline for applying for loan under Covid-19 loan guarantee schemes C19 measure: PRA suspension of guidance levels on fixed rate lending limits for building societies due to expire C19 measure: Amendments to PRA Rulebook increasing coverage period of THBs from six months to twelve months apply up until and including this date Expiry date of EU economic sanctions on business with Russian energy, defence and financial sector (unless renewed)
Jan	Period for FCA portfolio strategy for firms in Personal & Commercial Lines Insurer (PL&CL) insurer portfolio ends FCA Policy Statement (PS) to Consultation Paper (CP) on Breathing Space Regulations PRA CP on supervisory expectations of international banks expected ESMA due to have developed RTS for the assessment of suitability of members of the management body of DRSPs ESMA final report on fees for benchmark administrators under Benchmark Regulation (BMR)
Early 2021	FCA to write to high cost lenders on key risks and supervision plans FCA to write to Boards of firms in PL&CL insurer portfolio to advise on supervisory priorities Woolard Review of unsecured credit market regulation to report to FCA Board C19 delay: Interest Rate Hedging Products (IRHP) Lessons Learned Review expected PSR CP on PSR’s draft strategy (may incl proposals on open banking) The Pensions Regulator (TPR) to hold consultation on code of practice on trustee knowledge and understanding (TKU) C19 measure: Capital Markets Recovery Package including amendments to CRR expected to be finalised FSB to publish final report on too-big-to-fail (TBTF) reforms Climate Disclosure Standards Board (CDSB) to release Water Guidance, the second in a series of guides on nature-related financial disclosure
Q1	FCA guidance on advising on pension transfers expected FCA CP on non-workplace pensions – proposed remedies FCA retirement outcomes review implementation FCA to publish PS in response to CP on the extension of annual financial crime reporting obligation Implementation of FCA’s approach to international firms C19 delay: Feedback statement to FCA CfI on open finance (expected Jan - March 2021) C19 delay: PRA to publish PS to CP29/19 on operational resilience and PS to CP30/19 on outsourcing / FCA to publish PS to CP19/32 on building operational resilience PRA CP on changes to PRA110 reporting template Firms to have significantly reduced stock of LIBOR referencing contracts; all new issuances of sterling LIBOR-referencing loan products that expire after end 2021 to cease by end Mar 2021 UK financial technology (FinTech) strategic review report Final stages of Open Banking implementation ESMA report/technical advice on Art 44 Securitisation Regulation ESMA expects to publish final report and guidelines on outsourcing to cloud service providers ESMA final report (and submission of technical advice to Commission) on technical advice on fees for DRSPs and on criteria for identifying DRSPs ESMA MiFID II review reports on algo trading, organised trading facilities (OTFs), and transaction reporting Joint RTS on ESG disclosure standards for financial market participants C19 delay: ESMA report on highly liquid instruments under EMIR REFIT C19 delay: EMIR 2.2 RTS on definition of extension of activities or services and on significant changes to risk models and parameters, information in application for recognition and guidelines on SREP EBA 2020 benchmarking report on market risk models, RTS on initial margin model validation, revised decision on use of unsolicited credit assessments EBA report on monitoring of LCR implementation, follow up report on IFRS9 qualitative implementation and feedback to IFRS9 benchmarking models (or Q2) EBA to report on status of SCA compliance by issuing and acquiring PSPs EBA Consumer Trends Report 2020/21 EBA review of guidelines on assessment of suitability of members of the management board and key function holders, and of guidelines on internal governance Joint Committee spring risk report International Organization of Securities Commissions (IOSCO) annual work programme Single Resolution Board (SRB) decisions implementing Minimum Requirement for own funds and Eligible Liabilities (MREL) framework to be based on new policy in 2020 resolution planning cycle European Commission review of CRR/CRD European Commission to publish legislative proposal regarding an EU anti-money laundering/countering financing of terrorism (AML/CTF) single rulebook EBA opinion on ML/TF risks in the financial sector in the EU European Commission to publish legislative proposal to establish a support and coordination mechanism for financial intelligence units (FIUs) European Commission expected to adopt proposal regarding NFRD European Commission follow-up to the White Paper on Artificial Intelligence (AI) (incl safety, liability, fundamental rights and data) European Commission to adopt an implementing act on high-value data-sets under the Open Data Directive European Forum for Innovation Facilitators first Annual Report

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mar ai aifmd algo aml bank of england benchmarks bmr breathing space regulations ccp cdsb cft climate change cloud service providers commission consultation paper covid cp crypto csps ctf dgsd discussion paper dp drsp drsps eba ecb eiopa eltif emir emir refit esas esma fallbacks protocol and supplement fca financial crime frf fsb future regulatory framework hmt iais ibor insurance iosco isda libor listings regime market abuse mifid ii mlar nfrd opres outsourcing policy statement pra product governance ps psd2 psr rts samla securitisation regulation solvency ii srb taxonomy regulation tbtf tpr trade repositories woolard review

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Bank Accounts and Payment Services Banking Climate Change Corporate Crime Corporate Governance Credit and Loans Crisis Management Cross-border EU FinTech Insurance International Investment Management LIBOR Discontinuation Market Abuse / Insider Trading Markets Money Laundering Operational Resilience Outsourcing Prudential Regulatory Reporting Retail Investments and Pensions UK

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January 2021: The month ahead in financial services regulatory developments…

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