Greg Kilminster
Head of Product - Content
Australian fees discussion paper published
The Australian Treasury department has published a discussion paper: Proposed Financial Institutions Supervisory Levies for 2024-25, which seeks to establish industry views on the proposed Financial Institutions Supervisory Levies (FISLs) that will apply for the 2024–25 financial year. The FISLs are established to recover the majority of the operational costs of the Australian Prudential Regulation Authority (APRA), and other specific costs incurred by certain Commonwealth agencies.
The discussion paper notes that the total funding required under the FISLs in 2024-25, for all relevant agencies, is $294.0 million. This is a $29.3 million (11.1 per cent) increase from the 2023-24 requirement. The increase is attributable to a 10.3 per cent increase in APRA’s levies requirements, which in turn is largely due to ensuring cyber security and Improving Registers 2024-25 Budget Measure and the effects of wage cost index movements.
The deadline for comments on the proposals is 10 June 2024.
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Joint EU-UK financial regulatory forum statement
On 22 May 2024, the second meeting of the Joint EU-UK Financial Regulatory Forum took place in Brussels. Co-chaired by the European Commission’s Director General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and HM Treasury’s Director General for Financial Services, the forum saw participation from various EU and UK financial authorities.
Shared objectives and key focus areas
Both sides highlighted the importance of regulatory cooperation to maintain financial stability, market integrity, and investor and consumer protection. Discussions centred on six main areas: regulatory and market developments, banking and anti-money laundering (AML), sustainable finance, capital markets, asset management, and digital finance including artificial intelligence (AI).
Economic and financial stability outlook
Participants reviewed the current economic outlook, expressing concerns over geopolitical challenges, including Russia's actions in Ukraine and the Middle East crisis. Despite resilience in the EU and UK financial sectors, risks such as commercial real estate and geopolitical tensions require ongoing monitoring.
Banking and anti-money laundering
The forum highlighted the significance of Basel III implementation and international banking standards. Updates included the UK’s Strong & Simple framework and the EU's crisis management and deposit insurance review. In AML, close cooperation was emphasised, with updates on the EU’s AML package and the UK's efforts to enhance its AML regime.
Sustainable finance
Discussions covered multilateral efforts for a net zero transition, sustainability disclosures, and the work of the International Sustainability Standards Board (ISSB). Both sides stressed the need for international coordination to ensure consistency in sustainable finance standards.
Capital markets and asset management
There was a useful exchange on shortening the settlement cycle (T+1) and coordination on securitisation. Vulnerabilities in the non-bank financial intermediation (NBFI) sector were discussed, with an emphasis on global standards to enhance resilience.
Digital finance and artificial intelligence
The forum explored digital innovation, including operational resilience, tokenisation, and Central Bank Digital Currencies (CBDC). Both sides shared insights on AI’s implications for financial stability and regulation, highlighting recent legislative developments and ongoing international cooperation.
The EU and UK agreed to maintain dialogue on these topics and to follow up as necessary before the next Forum meeting.
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PSR writes to firms on APP scams reimbursements policy
The UK’s Payment Systems regulator has written to firms to set out three key areas for firms to focus on prior to the implementation on 7 October 2024 of the new mandatory FPS APP scams reimbursement policy.
The new mandatory FPS APP scams reimbursement policy encompasses all Payment Service Providers (PSPs) that send or receive payments over the Faster Payments System (FPS). Details of the policy were published in December 2023.
The three areas are:
- Understanding the new reimbursement requirements: ensuring firms understand if the requirements apply to them either as a sending PSP or as a receiving PSP providing a relevant account to a service user. The requirements apply to both direct and indirect participants of the system.
- Understanding the claim management and data reporting process through Pay.UK: a reimbursement claims management system (RCMS) accessible via Pay.uk will allow firms to report data and to communicate with each other and to manage APP scam claims. Firms need to register with Pay.uk by 20 August at the latest.
- Consumer awareness: firms will need to be transparent in communicating the reimbursement requirements to consumers and take proactive steps to notify them of the protections available under the new reimbursement requirement.
The letter notes that “These requirements are coming, backed by legal directions from the PSR. You need to take steps now to protect customers and manage your risks appropriately.”
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ESMA MiFID report on marketing communications
The European Securities and Markets Authority (ESMA) has published a report on the 2023 Common Supervisory Action (CSA) and Mystery Shopping Exercise (MSE) on disclosure requirements relating to marketing communications under the Markets in Financial Instruments Directive (MiFID II).
The 2023 CSA covered firms’ internal policies, processes and procedures adopted to ensure compliance with MiFID II requirements applicable to marketing communications including advertisements. The purpose of the MSE was to review examples of marketing communications (including advertisements) and to assess their compliance with MiFID II disclosure requirements.
The report sets out ESMA’s analysis and conclusions on the CSA and MSE and presents ESMA’s views on the findings. Areas for improvement noted in the report include
- A need for marketing communications to be clearly identifiable and to contain a clear and balanced presentation of risks and benefits.
- Where products and services are marketed as having ‘zero cost’, they should also include references to any additional fees.
- A need for adequate approval and review processes for marketing communications, including advertisements, whether these are prepared by the firm or by third parties.
- Compliance with legal requirements on the part of distributors for all marketing communications.
- Implementation of adequate record-keeping measures for all marketing material including social media posts.
- Involvement of control functions and senior management in internal processes and procedures related to development, design, and oversight of marketing materials.
The report notes that ESMA will continue liaising with the National Competent Authorities and will liaise on follow-up actions.
Click here to read the full RegInsight