Hello everyone and welcome to the latest international edition of the financial services updater.
The two highlights in this week’s updater cover the European Securities and Markets Authority’s consultation on draft remuneration guidelines for firms providing investment services and the FSA publishing a speech on how conduct regulation will change in the new supervisory regime.
Turning to the first highlight. ESMA has published a Consultation Paper containing draft guidelines on remuneration policies and practices in the context of the rules on conflicts of interest and conduct of business under the Markets in Financial Instruments Directive.
The purpose of the draft guidelines is to strengthen investor protection in the sense of ensuring that they seek to ensure that the pay and incentive structures for sales staff and their superiors do not create false incentives when selling financial products to investors.
The draft guidelines are mainly targeted at sales activities with retail clients. However, ESMA states that they should be considered as applicable, to the extent that they are relevant, when services are provided to any type of clients.
The deadline for responding to the Consultation Paper is 7 December 2012. ESMA expects to publish a final report and the final version of the guidelines by Q2 2013.
The second highlight this week is an FSA speech by Martin Wheatley (Managing Director, FSA). Mr Wheatley’s speech is entitled How conduct regulation will be changing and how the new regulator will seek to get a fair deal for consumers.
One of the points that Mr Wheatley makes is that some firms will be expected to change their culture of viewing consumers simply as sales targets. You might remember that in an earlier speech Mr Wheatley has said that CEO’s are ultimately accountable for the way their staff are incentivised, and that the FSA expects them to take a real interest in fixing this.
Near the end of his speech Mr Wheatley covers the FCA’s objective to promote effective competition in the interests of consumers. This does not mean simply having more firms in the market. Instead, the FSA’s current thinking is that it broadly comes down to four areas:
First, firms competing for business by offering better services, better value and the types of products their clients want and need.
Second, no firms sustaining excess profits.
Third, firms innovating and developing new products, or providing services in different ways.
Fourth, a market where the successful firms are the ones that respond most effectively to consumers’ genuine needs.
At the start I mentioned that this is an international edition of the financial services updater and it contains a number of articles from our international offices.
Outside Europe this includes a client briefing note from our Dubai office concerning new Investment Funds Regulations in the UAE and an article from our office in Montreal concerning a recent publication by the Canadian Office of the Superintendent of Financial Institutions (Canada) (the OSFI) on the regulatory framework of the life insurance industry.
In Europe we have a number of articles from our office in Amsterdam including one on Dutch rules on derivatives transactions for social housing funds, an article from our Paris office on delta-adjusted reporting of cash-settled derivatives and our office in Warsaw has provided a regulatory Q&A for Poland which has just been loaded onto the third country matrix which appears on our online technical resource Pegasus.
That’s the highlights this week. But before finishing it is also worth remembering that the next 40 minute briefing is taking place on 3 October and covers money laundering. I hope you can join us for that.
Good bye.
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