Chartered Accountants and Professional Business Advisers

Financial Services News - April 2016


Our winter newsletter covered the principal changes due with the implementation of MiFID II. The original implementation date has been pushed further back and is now planned to be 3 January 2018. While this feels like a way off, it would be advisable to begin preparations soon so your business hits the ground running with MiFID II.


Investment Funds currently registered under Undertakings for Collective Investments in Transferable Securities (UCITS) are now governed by UCITS V, which came into force on 18 March 2016. These rules bring UCITS funds in line with similar rules covered by the Alternative Investment Fund Managers Directive (AIFMD). These are covered in more detail in our previous newsletter.

High Earners Report

Some firms are now required to submit a REP005 High Earners Report. This applies to those caught under CRD IV and therefore the remuneration rules. This is required in a format called XML, so is not something which can be completed on screen. Most of our clients will be submitting a “nil” return as there are no individuals paid over €1m. A template “nil” return can be downloaded from the FCA website, and edited for submission to the FCA. Shipleys can assist with this so please get in touch, if required.

Fees and Levies

Annual fees for 2016/17 have been released in a consultation paper which show how they are proposed to change for each fee block. Broker dealers are generally in block A.13 and the good news for them is fees are proposed to fall from £3.15 per £1,000 of income to £2.97.

Fees for small AIFMs and other fund managers are also set to fall slightly, although the calculations are a little more complex. See (CP16/9) on the FCA website for full details. Note these are not finalized and the FCA may change them in due course.

Recovery and Resolution Directive

Your firm may be required to submit a recovery plan through GABRIEL shortly, which describes how it would recover in the event of a significant financial downturn. This needs to be reasonably detailed and should also include an explanation of how the firm would conduct a wind down, if such an event took place.

The recovery plan must detail how would the firm deal with its capital, assets, client money, staff premises and any out sourcing agreements, leases or contracts. (See PS15/02).

Senior Managers Regime

The Senior Managers & Certification Regime for the banking sector and the Senior Insurance Managers Regime both came into force on 7 March 2016.

The new regimes hold individuals working at all levels within relevant firms to appropriate standards of conduct and ensure that senior managers are held to account for misconduct that falls within their area of responsibility. What this means is, firms are required to report individuals if they know or suspect they have failed to comply with the rules. (PS16/06).

Peer-to-Peer lending and ISAs

A new ISA is available which allows Peer-to-Peer (P2P) agreements to be held in an ISA wrapper, within a new component known as the Innovative Finance ISA (IFISA). Advising on P2P agreements is also now a regulated activity. This will mean that some forms of crowdfunding have now come within the scope of the FCA (PS16/08). These include rules on segregation of client money on crowdfunding platforms and how advice can be given on P2P investments.

Fair and Reasonable Access to Benchmarks (FRAND)

The FCA is considering proposals which amend how administrators of regulated benchmarks (such as LIBOR) operate. The FCA has said that these administrators have a degree of power over access to, and the price of benchmarks, with limited fear of customers switching to an alternative. The FCA is awaiting guidance from an EU directive (MiFIR Article 37) to be finalized, but is proposing to put rules in place including limiting prices administrators can charge, and powers to enforce uncompetitive behavior. (CP15/18).

Other changes

Some small AIFMs and fund managers are governed by the IPRU-INV (intern prudential sourcebook). For a long time this has been a PDF on the FCA handbook website, rather than a web page with links to the glossary and other sections like the rest of the handbook. This has finally been updated and included within the rest of the handbook as a web-page so should be much easier to navigate in the future.

Hot Topic

The Mossack Fonseca Panama Papers scandal has been in the spotlight in the last few months. The FCA has responded by giving 20 banks a deadline to check if they have links to Mossack Fonseca. This will be used to check that these entities have not been used to commit financial crime.  At the time of writing, the results of this have not been released. The full fall-out of the Panama papers scandal is likely not to be obvious for some time, and some suggest this could be just the tip of the iceberg.

Specific advice should be obtained before taking action, or refraining from taking action, in relation to the above.

Need more help? Please contact us at or +44 (0)20 7312 0000