Financial Services and Markets Round-Up

Financial Services and Markets Round-Up

Financial services is Britain’s biggest industry. It employs over two million people providing banking, insurance, fund management, investment and professional services, and who contribute 15% of the UK’s GDP and 12% of UK tax receipts. Approximately two thirds of those people work in the UK’s regional financial centres outside of London.

London itself is the leading global centre for finance where significant business is undertaken by overseas firms and investors. The UK is the largest exporter of financial services in the world, and in 2012 had a trade surplus of £64bn. As a result, London is a centre for the resolution of financial services disputes between international parties via arbitration.

It is therefore, not surprising to hear that following the global financial crisis specialist financial services regulatory and litigation lawyers in the UK have been very busy. We have been advising on international arbitrations in London and Dubai, the FCA review of interest rate hedge agreements, the failure of multiple unregulated collective investment schemes (including Key Data and Arch Cru) and professional indemnity coverage for adviser firms.

Looking forward, we anticipate a greater focus during the coming months on:

  • Conflicts of Interest – the FCA is clamping down on product provider inducements, banned and fined two directors £885,000 for breaching integrity and conflicts of interest rules and the OFT wants to strip commission out of pensions auto-enrolment.
  • IT Contracts – payments by product providers to develop and/or maintain advisory firms’ IT systems are not be used to get around the rules on inducements. This will put outsourced platform and model portfolio IT contracts under the microscope.
  • Pensions liberation – a landmark High Court ruling has clarified the powers of the Pensions Regulator to protect investor’s “pots” in both private and occupational schemes. Pension professionals and trustees need to know the warning signs.
  • Financial Ombudsman Service – a Court of Appeal decision on whether investors can accept and enforce a FOS award and sue advisers for any damages over and above the’ £150,000 threshold for FOS compensation is expected imminently.
  • Risk management – the FCA has published guidance on it power to publish warning notices about enforcement action against a firm without challenge and when it is appropriate to include the names of individuals, which will be available for six years.
  • Foreign exchange – the FCA and Swiss enforcement agencies are investigating unusual trading activity and the potential manipulation of foreign exchange markets. This follows $3bn of fines relating to libor and an ongoing EU probe into Eurobor.
  • Senior managers in banks – the Government is consulting on bringing in a new regulatory regime to approve the appointment of senior managers in banks and place more individual responsibility on them for managing the bank’s business and its risks.

Jonathan Kitchin is a member of the Financial Services team and specialist financial services litigator. Whether you need support in relation to dispute resolution, enforcement or regulatory and risk management advice Jonathan will put you in touch with the right person.

For further information please contact Jonathan Kitchin, Associate in the Financial Services Team –