Welcome to the latest edition of our investment management update.
This publication has been tailored to highlight topical news, cases and changes in the law impacting the investment management sector.
UK
- On 27 June 2024, the FCA published its regulation round-up for
June 2024 which includes (amongst others) items on the Consumer
Duty and investment labels regime. The round-up reminds firms of
the upcoming Consumer Duty milestones including the deadline for
firms to produce their first annual board report and the
application of the Consumer Duty to closed products and
services.
Regulation round-up June 2024
- On 27 June 2024, the FCA published a new web page for firms
with overseas appointed representatives (OARs) which sets out the
challenges and expectations for principal firms with OARs. The web
page was published in response to feedback received on the
FCA's consultation on improving the appointed representatives
regime (CP21/34).
Overseas appointed representatives
- On 20 June 2024, the FCA published a note on their online
research experiment which investigated the effect of digital
engagement practices (DEPs), including gamification, on consumer
trading behaviour. The experiment tested the DEPs of flashing
prices, push notifications, trader leader boards, points and prize
draws, and found that the use of DEPs can lead to changes in
trading frequency and investment risk, whilst providing no
additional information to the consumer which could improve their
trading.
Research Note: Digital engagement practices: a trading apps experiment
- On 12 June 2024, the Financial Ombudsman Service (FOS)
published a press release announcing that the FOS will continue its
proactive settlement scheme following a trial over the last couple
of years. The proactive settlement scheme allows firms to offer to
resolve complaints with customers before the FOS carries out a full
investigation.
Proactively settled complaints to continue
Europe ex UK
- On 28 June 2024, the Joint Committee of the European
Supervisory Authorities (the EBA, EIOPA and ESMA) published an
updated version of its Q&As relating to the Regulation on key
information document (KID) requirements for packaged retail and
insurance-based investment products (PRIIPs) ((EU) 1286/2014) and
related delegated acts.
JC_2023_22_-_Consolidated_JC_PRIIPs_Q_As
- On 25 June 2024, three Commission Delegated Regulations on the
classification of ICT-related incidents, contractual arrangements
policy and risk management tools, supplementing the Regulation on
digital operational resilience for the financial sector ((EU)
2022/2554) (DORA), were published in the Official Journal of the
European Union. These Delegated Regulations will enter into force
on 15 July 2024.
Delegated regulation - EU - 2024/1772 - EN - EUR-Lex
Delegated regulation - EU - 2024/1773 - EN - EUR-Lex
Delegated regulation - EU - 2024/1774 - EN - EUR-Lex
- On 19 June 2024, the Regulation on the prevention of the use of
the financial system for the purposes of money laundering or
terrorist financing (AML Regulation), the Regulation establishing
the Anti-Money Laundering Authority (AMLA Regulation) and the Sixth
Money Laundering Directive (MLD6) were published in the Official
Journal of the European Union. The AML Regulation and the MLD6
enter into force on 9 July 2024 and the AMLA Regulation came into
force on 26 June 2024.
Regulation - EU - 2024/1624 - EN - EUR-Lex
Regulation - EU - 2024/1620 - EN - EUR-Lex
Directive - EU - 2024/1640 - EN - EUR-Lex
- On 18 June 2024, the European Securities and Markets Authority
(ESMA) published the Joint ESAs Opinion on the assessment of the
Sustainable Finance Disclosure Regulation (SFDR) (often termed SFDR
2.0). This opinion considers the merits of introducing a
categorisation system and/or an indicator of sustainability for
financial products to allow for simplified disclosures, as well as
reviewing the definition of "sustainable investment"
under Article 2(17) SFDR, the simplification of documentation, and
the transparency of adverse sustainability impacts at financial
product level. The opinion provides recommendations for a coherent
sustainable finance framework, including strongly recommending that
disclosures cater to different investor needs and take into account
different distribution channels, to prioritise only essential
information for retail investors.
JC 2024 06 Joint ESAs Opinion on the assessment of the Sustainable Finance Disclosure Regulation (SFDR)
- On 18 June 2024, the European Commission launched a
consultation on the use of artificial intelligence (AI) in the
financial sector. The consultation is aimed at understanding the
developments in the different financial services use cases of AI.
The deadline for responses is 13 September 2024.
Consultation document - Targeted consultation on artificial intelligence in the financial sector
- On 12 June 2024, the Council of the European Union published a
press release announcing that it has agreed its negotiating mandate
on the retail investment package, consisting of the proposed
Directive on retail investment protection and the proposed
Regulation amending the PRIIPs Regulation ((EU) 1286/2014). The
retail investment package aims to offer retail investors the same
level of information, treatment and protection regardless of which
investment products, marketing and distribution channels they
use.
Retail investment package: Council agrees on its position
- On 3 June 2024, the EBA and ESMA published a discussion paper
relating to the European Commission's call for advice on the
investment firms prudential framework which is set out in the
Investment Firms Regulation ((EU) 2019/2033) (IFR) and the
Investment Firms Directive ((EU) 2019/2034) (IFD). The discussion
paper addresses issues raised by market participants and
supervisors which may lead to changes to the IFR, IFD or related
delegated regulations, and seeks views on such changes. The
deadline for responses to the discussion paper is 3 September 2024.
The EBA and ESMA intend to publish the final report in response to
the Commission's call for advice by December 2024.
Discussion paper on CfA on IFDR
International
- On 3 June 2024, IOSCO published its final report on good
practices in the leveraged loan and collateralised loan obligation
(CLO) markets. The report provides an overview of the leveraged
loan and CLO markets, their vulnerabilities, and sets out twelve
good practices designed to support market participants in their
decision making when operating in these markets.
FR03/2024 Leveraged Loans and CLOs Good Practices for Consideration
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