Financial Conduct Authority

The letters ask senior management to prioritise implementing the Duty.

By David Berman, Nicola Higgs, Rob Moulton, Becky Critchley, Ella McGinn, Jaime O’Connell, and Dianne Bell

On 3 February 2023, the FCA published Dear CEO/Director letters underscoring the immediate (i.e., during the implementation period up until 31 July 2023) and longer-term expectations, priorities, and demands under the Consumer Duty. For further information, see Latham’s recent blog on the FCA’s multi-firm review summarising areas of improvement for firms’ implementation plans.

The FCA has reviewed firms’ progress to embed the Duty into their businesses, providing good and poor practice examples for firms to improve and direct their implementation work.

By Nicola Higgs, Becky Critchley, Jaime O’Connell, and Dianne Bell

The Consumer Duty (Duty) rules (as set out under the FCA’s Policy Paper (PS22/9) and guidance document FG22/5) come into force at the end of July 2023. On 25 January 2023, the FCA published feedback on firms’ current implementation progress via its Multi-firm review: Consumer Duty Implementation Plans. While the FCA notes a number of positives, the overall impression is that firms need to do more and do it quickly.

PE firms face growing regulatory and litigation risks from greenwashing claims as they navigate a fragmented anti-greenwashing landscape.

By Tom D. Evans, Nell Perks, Anne Mainwaring, David J. Walker, and Catherine Campbell

Amid concerns of exaggerated or misleading sustainability claims, the UK Financial Conduct Authority’s (FCA) recent proposal for new labelling and disclosure rules to combat greenwashing (see text box) should put PE firms on alert for a growing range of greenwashing risks. The FCA proposals are just the latest in a wave of new rules and requirements being enacted and contemplated as regulators across jurisdictions look more carefully at green claims and seek to hold regulated firms (including PE sponsors) to account for exaggerated credentials and misstated investment policies.

Similarly, investor and other stakeholder claims over greenwashing are on the rise as firms and portfolio companies come under greater scrutiny and are required to publish ESG disclosures in market-facing and other public information. These claims can be brought under different and overlapping laws, including statute, securities regulations, and “soft law” provisions, making a consistent and proactive risk management approach essential.  

Recent judgments help to clarify purpose and threshold of unexplained wealth orders.

By Stuart Alford QC, Oliver Browne, and Clare Nida

The National Crime Agency (NCA) has had a mixed start to 2020, with appeals heard on unexplained wealth orders (UWOs) testing the new investigative tools provided under the Criminal Finances Act 2017 (CFA).

What is an unexplained wealth order?

UWOs were introduced by the CFA (in force from 31 January 2018), creating a new section 362A of the Proceeds of Crime Act 2002 (POCA).

The Financial Conduct Authority has published final rules creating a new category within its premium listing regime for companies controlled by a shareholder that is a sovereign country.

By James Inness, Claire A. Keast-Butler, and Koushik K. Prasad

From 1 July, 2018, an issuer with a sovereign state as its controlling shareholder will be eligible for a premium listing if the issuer complies with all the requirements applicable to premium listed issuers under the Listing Rules, other than:

The FCA seeks industry feedback to capitalise on global regulatory sandbox trend.

By Stuart Davis and Charlotte Collins

The regulatory sandbox was pioneered by the Financial Conduct Authority (FCA) back in November 2015 — a “safe space” in which businesses can test innovative products, services, business models, and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question.

The sandbox has been a success to date, helping both existing and new businesses to develop and launch innovative products and business models (see Latham’s previous blog post on the success of the first round of sandbox participants, and Client Alert that tracks the use of the sandbox model across the globe).

By James Inness and Sean Meehan

On 13 July 2017, the Financial Conduct Authority (FCA) proposed a relaxation of certain aspects of the premium listing segment for sovereign-controlled companies.

The proposed new rules will create a new premium listing category pursuant to which:

  • Related party rules will be modified so that the sovereign controlling shareholder will not be considered a related party. Transactions between the sovereign controlling shareholder and the issuer will not require shareholder consent.
  • Controlling shareholder rules will not apply to issuers in respect of the sovereign controlling shareholder. Such shareholders will not be required to enter into a relationship agreement.

The related party rules and controlling shareholder rules for all shareholders other than the sovereign controlling shareholder will continue to apply. The FCA will also retain its power to refuse an application for listing if the FCA considers that granting the application would be detrimental to the interests of investors.

By Stuart Davis, Andrew Moyle, Fiona Maclean, Christian McDermott and Charlotte Collins

The Financial Conduct Authority (FCA) has provided an update on its regulatory sandbox initiative. The sandbox is part of Project Innovate, and Toy shovel in sandallows businesses (whether already authorised or not) to test new offerings in the market under close supervision and without many of the usual regulatory consequences.

The first cohort of firms has now finished testing and the FCA states that it expects most firms to take forward their propositions to market, indicating that round one has been a success.

Meanwhile, the FCA has taken on its second cohort of 24 firms, whittled down from 77 applicants. These firms will begin testing shortly. The FCA has published a full list of these firms and short descriptions of what they will be testing on its website.