Greg Kilminster
Head of Product - Content
Enforcement
The month began with a relatively rare financial penalty from the Financial Conduct Authority (FCA), which fined three money transfer companies £150,000. This modest fine was put into perspective on the same day by the Financial Industry Regulatory Authority’s (FINRA) $24 million fine for Bank of America Securities for spoofing offences. But it was the Commodity Futures Trading Commission (CFTC) which imposed the largest of December's fines, a hefty $91 million on Freepoint Commodities LLC, a commodities merchant, for engaging in bribery. The CFTC followed up this enforcement with three additional enforcement actions towards the holiday period for Forex and pig butchering offences.
Elsewhere in the US, the Securities and Exchange Commission (SEC) fined Credit Suisse $10 million for providing prohibited underwriting and advising services.
In Australia, RACQ Insurance Limited was fined $10 million by the Australian Federal Court for misleading customers in its product disclosure statements and the Australian regulators maintained their focus on greenwashing offences with charges being brought against Vanguard Investments as well as Northern Trust.
Consultations
December marks a good point in the year, of course, to take stock and consider new directions and the regulators did not disappoint with numerous consultations being announced for stakeholders to consider into the New Year.
The Basel Committee released a consultation paper (CP) proposing a new framework for climate-related financial risk disclosures and followed up, later in the month, with a further consultation seeking feedback on stablecoin regulation.
The European Insurance and Occupational Pensions Authority (EIOPA) issued a CP about the prudential treatment of sustainability risks as well as one setting out principles to be observed when providers make sustainability claims.
In the UK, the FCA and the Prudential Regulation Authority (PRA) issued numerous consultations including a discussion paper on a retail reform around financial advice, proposals to update the money market fund regulations as well as commodity derivatives and a proposal for new rules requiring Capital Requirement Regulation (CRR) firms and CRR consolidation entities to assess their step-in risk and apply the European Banking Authority (EBA)’s limits on exposure to shadow banking entities and connected clients.
Both regulators also consulted on proposed new rules for critical third-party service providers. The PRA also consulted on its overall approach to policy via CP 27/23. Finally for the UK, the FCA consulted on issuing new regulations to ensure access to cash for consumers and businesses in the increasingly digital world. In an ironic twist, on the same day we reported that the Australian Treasury were consulting on winding down Australia’s cheques system. Also in Australia, the Australian Prudential Regulation Authority (APRA) issued a discussion paper on strengthening data collection in the superannuation industry in areas including trustee board governance, investment liquidity, and valuations.
December also seems as good a time as any for annual reviews and a number of regulators issued such documents including the UK’s Financial Ombudsman, Office of Financial Sanctions Implementation and Bank of England (supervision report). Not to be outdone, the FCA also issued its roadmap for the next two years.
Policies and Procedures
Regulators never sleep when it comes to implementing new policies and procedures for firms to get to grips with. December saw little let up in the flow with the PRA and FCA issuing final rules on remuneration requirements for small firms and dual-regulated firms early in the month. We reported on the PRA’s policy statement on its Strong and Simple framework on the same day. Later in the month, the PRA published its near-final policy statements on Basel 3.1 standards and the FCA issued final regulations for insurance companies that transfer and replace retained EU law provisions from the Insurance Distribution Directive.
Elsewhere, the Hong Kong Monetary Authority (HKMA) announced the launch of the revised Code of Banking Practice and the Financial Accounting Standards Board (FASB) published an Accounting Standards Update (ASU) intended to improve the accounting for and disclosure of certain crypto assets.
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