Hello everyone and welcome to this week’s financial services updater.
Like last week’s updater the highlights this week are two FSA publications.
The first highlight is Consultation Paper 12/22: Client assets regime: EMIR, multiple pools and the wider review.
CP12/22 is a combined FSA Consultation Paper and Discussion Paper which consults on the FSA’s client assets regime to adhere to the European Market Infrastructure Regulation (known as EMIR). It also proposes to introduce a change in the client money rules applicable to investment firms and opens a discussion on the wider regime.
When you look at CP12/22 it has three parts. Part I discusses segregation and porting measures in articles 39 and 48 of EMIR and consequential changes to the FSA‘s Client Assets sourcebook (known as CASS).
Part II sets out proposals for introducing multiple pooling. The FSA states that its proposals here could result in the most significant changes it has made to the client assets regime in over 20 years. Multiple client money pools is not a new idea but it is interesting that EMIR has been the trigger to start turning the idea into reality several years since it was first floated after the Lehman Brothers International (Europe) administration. It could be a big change to the regime depending on how far firms and clients take it up.
Part III discusses the wider client assets review currently underway. This is focused on getting a better result in the context of client assets in a firm’s insolvency.
The deadline for comments on Part I of CP12/22 is 16 October 2012. The deadline for Parts II and III of CP12/22 is 30 November 2012.
The second highlight this week is that the FSA has launched a major initiative to tackle poorly designed incentive schemes that are thought to result in customers being sold products they do not need or cannot use, while boosting the earnings of the sales person.
The FSA’s managing director and CEO designate of the proposed Financial Conduct Authority, Martin Wheatley, has encouraged firms to change the way their incentive schemes are run so that they work for the customer and not just the sales person. He has also said that the initiative would undoubtedly be the beginning of a long journey and that the first step would be for firms to look inwards. On this point Mr Wheatley, has called for culture change within firms and has said that CEO’s of firms are ultimately accountable for the way their staff are incentivised and the FSA expects them to take a real interest in this initiative.
To assist firms using incentive schemes the FSA has published the results of a review which contains proposed guidance on the steps they can now take to help customers get a fair deal. The deadline for responding to the proposed guidance is 31 October 2012.
It’s also worth noting that the FSA also states that the introduction of new rules is also being considered to make certain that this new, fairer, approach is hard-wired into the way firms do business, and enforceable if they disregard them.
That’s this week’s highlights.
Perhaps one final point to remember is that in the seminars section of the updater there is a link to the new online programme for our 40 minute client briefings. The new programme covers briefings from October 2012 to January 2013.
I hope you find this week’s updater helpful, good bye.
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