Orrick, Herrington & Sutcliffe

This Practice Note provides an overview of the UK close links regime, including the threshold conditions that authorised firms with close links must satisfy to ensure that they can be effectively supervised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), and the requirements for firms to keep the FCA and/or PRA informed about their close links on an ongoing basis.

This Practice Note explores the requirements of chapters 15, 16 and 17 of the Financial Conduct Authority (FCA) Handbook’s Supervision Manual (FCA SUP 15, 16 and 17A) in relation to standing data and keeping it up to date. The PRA works closely with the FCA in the collection and management of regulatory data. Much of the regulatory data for PRA firms continues to be collected by the FCA. This includes reporting via the FCA’s RegData system, the submission of firms’ controllers and close links reports and the reporting of changes to firms’ standing data. The Practice Note also outlines the FCA RegData and Connect systems and the Financial Services Register. The consequences of providing inaccurate information are also addressed. It is very important that the standing data that the FCA and/or PRA hold about firms is accurate and up-to-date. Each authorised firm is responsible for ensuring that it discloses any changes in its standing data to its relevant regulator.

Financial services law and regulation is predominantly governed by policy and legislation with supra-national origins. This Practice Note explains the legislative process in Europe, where the development and enforcement of rules by supra-national bodies is governed by the Lamfalussy process. It considers the main bodies involved in emerging legislative proposals, with diagrams to show the interaction between them. The process of national implementation of pan-European proposals is also significant and plays a role in the degree of harmonisation achieved for each proposal. Economic conditions since 2007 have highlighted the significance of the co-ordinated legislation, supervisory approaches and enforcement in the financial services sector since regulatory arbitrage and contagion were shown to be severe risks to global stability.

This Practice Note introduces the concept of judicial review and its relevance to the financial services industry. The Practice Note discusses the implications of the 2013 Court of Appeal decision on the Emptage case, which allowed judicial review for FSCS-related decisions as well as the 2012 case R(C) v Financial Services Authority, in relation to a failure to give clear reasons for a type of enforcement being taken.

This Practice Note introduces the web-based Connect system, when firms must use it and when they cannot. The Practice Note also indicates who should use Connect within a firm and provides other useful information on how firms and principal users within firms can manage the system.

This Practice Note examines what a non-financial foreign entity (NFFE) is, what an excepted NFFE is, what foreign financial institutions (FFI) agreements are and what an intergovernmental agreement (IGA) is. A major point of concern that the Internal Revenue Service identified in connection with under-reporting of income by US taxpayers is the use of (non-financial) foreign corporations to hold assets offshore. This Practice Note considers the mechanisms incorporated into the Foreign Account Tax Compliance Act (FATCA) regime to address this concern. It also discusses the various different types of agreement that both FFIs and NFFEs can use to (in the majority of cases) ease the compliance burden imposed by FATCA. This Practice Note is produced in partnership with Orrick, Herrington & Sutcliffe LLP.

Financial Services analysis: The Financial Services Authority (FSA) has outlined proposals to clarify existing reporting requirements that apply to regulated firms holding client money and assets and to allow more flexibility in the annual stratification process (see Consultation Paper CP12/15). Tony Katz, partner at Orrick Herrington & Sutcliffe (Europe) LLP, looks at some of the pitfalls of the current system.

On 12 December 2013, the PRA issued a Supervisory Statement: 'Solvency II: applying EIOPA's preparatory guidelines to PRA-authorised firms (SS4/13). Orrick, Herrington & Sutcliffe (Europe) LLP, outlines the main provisions of SS4/13'.

In this news analysis, Orrick, Herrington & Sutcliffe (Europe) LLP discusses the White Paper which was published on 14 June 2012 around banking reform and the ring-fencing of retail from more risky forms of banking activity, plus increased loss-absorbency provisions. This Practice Note also outlines the UK proposals from Vickers to the Government’s White Paper.