Ensuring your compliance is up to date – 6 key regulatory and compliance updates in February 2021 so far

2020 brought significant changes to the regulatory landscape in the UK with Brexit and COVID 19 still causing operation issues for some firms. A lot of us had to rapidly develop and deploy new processes and procedures to ensure business continuity in an increasingly unstable market place. At Complyport, we aim to inform the financial services industry on regulatory developments as well as advise on how they can affect firms.

To ensure your firm’s regulatory compliance remains up to date, please find below 6 key compliance updates, from February 2021 so far.


Completing sterling LIBOR transition by end-2021

After many years of preparation, 2021 is the critical year for firms to complete their transition away from LIBOR. The LIBOR administrator, ICE Benchmark Administration, is consulting on ceasing publication of all sterling LIBOR settings at the end of 2021, leaving just one year for firms to remove their remaining reliance on these benchmarks.

This issue touches numerous parts of the economy. LIBOR has been embedded in the financial system for many years, used to calculate interest in everything from corporate borrowing and intra-group transfers, to complex derivatives. It is also utilised in accounting practices, system infrastructure and other supporting functions. All of these will need to be ready to use alternative reference rates, such as SONIA, by the end of this year.

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FCA warns consumers of the risks of investments advertising high returns based on cryptoassets

The FCA is aware that some firms are offering investments in cryptoassets, or lending or investments linked to cryptoassets, that promise high returns. Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money.

Firms offering these products should make sure they comply with all relevant regulatory requirements and are authorised by the FCA where this is required. Since 10 January 2021, all UK cryptoasset firms must be registered with the FCA under regulations to tackle money laundering. Operating without a registration is a criminal offence.

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FCA policy statement Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations

On 21 December, the FCA published a Policy Statement, final rule and guidance promoting better climate-related financial disclosures for UK premium listed commercial companies.

The FCA has introduced a new rule in Listing Rule (LR) 9.8 requiring that commercial companies with a UK premium listing (including sovereign-controlled commercial companies) include a statement in their annual financial report.

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FCA publishes coronavirus financial resilience survey data

On 7 January 2021, the FCA published the results of its coronavirus (Covid-19) financial resilience surveys. The surveys were sent to solo-regulated firms to inform the FCA of the impact of coronavirus on firms’ financial resilience.

In response to the crisis, the FCA has been monitoring the effects of the economic downturn on firms’ solvency by rapidly increasing the data it collects on firms. The surveys, which are one of the data sources used to monitor financial resilience, have been sent to 23,000 solo-regulated firms to understand the real-time effect the pandemic is having on the finances of the firms the FCA prudentially regulates. The FCA has also been using existing regulatory reporting data, enhanced data purchased from a third-party provider and in-depth analysis of liquidity for a number of the most significant firms.

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FCA – Brexit: information for retail investment firms in the UK

The UK retail investments sector comprises many relatively small UK firms servicing primarily UK-based customers. If these firms have EEA-based customers (including UK expats), the FCA expects these firms to have taken steps to make sure they are able to continue servicing them now that the transition period has ended.

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Brexit and UK Financial Services Compensation Scheme protection

FSCS protection for UK-based customers of UK authorised firms will not change as a result of the UK leaving the European Union (EU). This means that in most cases existing FSCS protection will continue, including after the Brexit transition period ended at 11pm GMT on 31 December 2020.

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