FCA Publishes Final Rules Removing Certain Ineffective Disclosure Requirements

The FCA published a policy statement on 11 October 2016, removing certain ineffective disclosure requirements from the FCA Handbook (PS16/23). The policy statement provides the results of the FCA’s October 2015 consultation (CP15/32).

The FCA explained that respondents were generally supportive of the proposals in CP15/32 and therefore broadly speaking will proceed with the rule changes as consulted on. The text of the final Handbook changes is set out in the Disclosure Documents (Amendment no 2) Instrument 2016 (FCA 2016/59).

In summary, the rule changes reflect the FCA's decision to remove:

• The requirement for alternative fund managers (AFMs) of UCITS schemes and non-UCITS retail schemes (NURS) to produce a short report, with effect from 22 November 2016.
• The templates for the initial disclosure document (IDD), the combined initial disclosure document (CIDD), and the services and costs disclosure document (SCDD) from the relevant conduct of business rules. These rule changes take effect from 1 February 2017. The FCA reminded firms that the Insurance Distribution Directive ((EU) 2016/97) will introduce new disclosure requirements, including a new standardised form called the insurance product information document, for non-life insurance products. The FCA has decided not to introduce to its Handbook a checklist of the required disclosures, due to concerns that this might reintroduce a tick box approach to providing information to consumers. The FCA also reminded firms of the continuing obligation to meet the information needs of the customer including in relation to issues such as scope and cost of a service.
• The requirement for firms operating with-profit business to produce a consumer-friendly principles and practices of financial management (CFPPFM), with effect from 22 November 2016. The FCA explained that firms will still have to consider the information needs of consumers, but they will have greater freedom to decide how to engage with them.

These rule changes form part of the FCA's wider smarter communications strategy on which the FCA published a discussion paper (DP15/5) in June 2015. Alongside PS16/23, the FCA has also published a feedback paper setting out its response to DP15/5.

Read the FCA's policy statement in full. 

Disclosure Documents (Amendment No 2) Instrument 2016, FCA 2016/59

FCA Opens Website for New Market Data Processor System for MiFID II Reporting

The FCA has opened a website for its new Market Data Processor (MDP) system, which it intends to use to manage the large volumes and ranges of data that firms and other entities with an obligation to report any of the market data types need to submit to under MiFiD II.

Via this website, the Market Interface Specification is currently available for MiFID II transaction reports, instrument reference data, transparency reports and double volume cap reports. A revised version to include commodity position reports and an on-boarding application form are expected to be made available later in the fourth quarter 2016.

The FCA states that it will support industry testing with a dedicated Industry Test Environment (ITE) during 1 July 2017 to 31 December 2017. During this period all submitting entities seeking to demonstrate conformance and compliance with the FCA’s technical specification from 3 January 2018 will be on-boarded on to the MDP. The successful on-boarding will form part of the FCA’s Authorisation and Supervisory process for submitting entities. The ITE will continue to be available beyond the MiFID II implementation date of 3 January 2018 to support new entrants wishing to connect to the FCA’s MDP system and other change projects.

Further details can be found on the FCA’s MDP website.

FCA Letter on Post-Brexit Financial Services Regulatory Landscape and Role of Passporting

The House of Commons Treasury Committee published a letter (dated 28 October 2016) on 8 November 2016 from Andrew Bailey, FCA Chief Executive, to Andrew Tyrie, Treasury Committee Chair, in which the former provides further details on the questions raised at a committee hearing with the FCA on 20 July 2016.

The letter covers a number of issues, including:

• An assessment of the regulatory landscape for financial services if, post-Brexit, the UK were to be considered a "third country" by the remaining EU member states, with access rules essentially governed by World Trade Organisation protocols.
• The role of passporting.
• The main elements of what an optimal future framework would look like.
• The potential advantages of removing passporting requirements.
• An assessment of the practicalities of improving global standards of regulation.

Read the letter in full.