Compliance Monitor

Governance gains sought post-Walker in new CP FSA is backing its rhetoric on more intrusive supervision and enhanced scrutiny of senior management with a broad set of new corporate governance proposals. CP10/3 contains a new classification..

A centrepiece of the Government’s regulatory response to the credit crunch, outlined in the HM Treasury paper ‘Reforming Financial Markets’, is the idea that ‘investment firms’ should be obliged to produce a ‘recovery and resolution plan’, colloquially termed a ‘living will’. The aim is to simplify the regime for breaking up failed investment firms and thereby minimise systemic damage and delays in returning client assets, problems that were acutely highlighted by the collapse of Lehman Brothers. Jacqui Hatfield and Sebastian Barling of Reed Smith look at the proposals.

Further changes to UK consumer credit law are needed to meet the Consumer Credit Directive (2008/48/EC). All providers of consumer credit services must assess how it will affect their procedures and documentation. Ian Roberts and Matthew Hodgson of Denton Wilde Sapte study the latest changes.

In December, the FSA finally produced its follow-up to CP 09/18, its June consultation on the Retail Distribution Review. That had left open questions about professional standards and had floated whether the ban on product providers setting the terms of remuneration should not be extended to the group personal pension and protection markets. CP 09/31 endeavours to cover these topics. We asked our regular contributor on retail matters, Adam Samuel to take a look.

If a firm discovers an issue in its business or FSA alerts it to supervisory concerns, a common response is for the firm to commission its own report into the matter, usually by instructing its lawyers or accountants. Increasingly, firms are looking to share these reports with FSA, says Alison McHaffie of CMS Cameron McKenna, in the hope that they will convince the regulator that it does not need to carry out its own investigation or require the firm to appoint a skilled person to produce another report. This is an area in which the FSA has recognised that good cooperation between it and the industry can produce “tangible benefits” and last year FSA introduced provisions into the Enforcement Guide setting out its expectations and the approach it takes with firms that are looking to use their reports in this way.

Ian Mason (+44 (0)20 7643 7265, imason@blg.co.uk) is a partner and Head of the Financial Services & Regulatory team at Barlow Lyde & Gilbert LLP.

Sara George (+44 20 3088 3859, sara.george@allenandovery.com) is a specialist in investigations into criminal and regulatory contraventions. She joined Allen & Overy LLP in 2006 from the Enforcement Division of the FSA where she led the first prosecution of a director for making a misleading statement to the market. She has extensive experience of regulatory investigation and advocacy before the Financial Services and Markets Tribunal and the Crown Court.