Update

UK Business Conduct Regulation

	Look out for…

Look out for…

The latest edition of the FSA's Handbook Development newsletter (No 83), indicates, inter alia , that the following consultation papers, discussion papers and feedback statements, which are likely to be of interest to FOA members, are due to be published over the coming months:

* As explained in Handbook Development newsletter No 47, 3 star CPs are “high-profile consultations, and major policy changes affecting a large number of consumers or financial sectors,” 2 star CPs contain “other important policy changes” and 1 star CPs contain “minor changes.”

	Conduct of Business regime

CP06/19: Reforming Conduct of Business Regulation and CP06/20: Financial promotion and other communications

The Joint Associations' follow-up response to the non-MiFID implementation-related aspects of the above consultation papers, which the FOA participated in, is available from the FOA website here. Please note that you need to be logged on the FOA website in order to view this document.

	MiFID Permissions and Notifications Guide

The FSA has just published a MiFID Permissions and Notifications Guide. As the FSA explains in the overview to the Guide: “…implementation of MiFID will also have a number of important administrative consequences for us and for firms. Some changes to firms' permissions and passports will be necessary. MiFID introduces a number of new notification requirements and, in relevant cases, the status of firms' tied agents, approved persons and waivers from our rules will need to be reviewed and updated. Many of these changes will be relevant to non-MiFID as well as MiFID firms . They bear on firms' ability – post 1 November 2007 - to operate within the scope of their authorisation and in compliance with the relevant rules. These are significant matters which should be addressed as a priority by firms in their implementation plans. The Guide “explains the nature and extent of the changes that will need to be made under these various headings, how they will be made, and the action that firms will need to take.”

Any questions or issues in respect to the changes outlined in the Guide should be emailed to Jane Green: depending on the response, we may organise a meeting with the FSA or invite the FSA to present on this topic at a future Compliance Forum.

That is, a permission given under Part IV of the Financial Services and Markets Act (FSMA).

In this guide, we use the terms ‘MiFID firm' and ‘MiFID business' to denote, respectively, entities and investment service

and activities that fall within the scope of the Directive; and ‘non-MiFID firm' and ‘non-MiFID business' to denote,

respectively, entities and investment services and activities that fall outside, or are exempt from, the scope of the Directive.

	Have you read…?

	CP07/9: non-MIFID deferred matters

The FOA has published a consultation paper on their proposals for reforming non-MiFID related areas of the current Conduct of Business Regime (including the differentiated regimes for specialist firms such as EMPs and OMPs). The two main issues arising from the CP are the FSA's proposals re:

• the giving of private persons section 150 rights in respect of all NEWCOB rules (see Part II, Section 18 of the CP); and
• telephone recording (voice and electronic communication) (see Part II, Section 19) .

In respect of the latter, in broad terms, the FSA is proposing that firms be required "to record telephone lines used for voice conversations that involve the receipt of client orders and the negotiating, agreeing and arranging of transactions across the equity, bond and financial commodity and derivatives markets, and to retain electronic communications relevant to these activities."  The FSA propose that "firms be required to retain the records for three years from the date of creation."  The scope of the proposed provisions is also quite wide: 

"The term electronic communications has wide application and includes fax, e-mail, chat and instant messaging - but, obviously, is not limited to those."

"Activities within the scope of our proposals include proprietary trading and other principal dealing and agency broking and the associated sales functions."   

The FOA will be joining in a Joint Associations letter to the FSA on these issues. Any feedback - particularly on likely costs, other issues arising and, should the FSA decide to proceed with its proposals on telephone recording, the time needed to implement the changes – should be emailed to Jane Green.

	(More) principles-based regulation

The FSA has published a paper on Principles-based regulation: Focusing on the outcomes that matter, the aim of which is “to to state what we mean by principles-based regulation and, where possible, to answer the questions and concerns that our stakeholders have raised. The FSA has committed that it “will continue to engage with our stakeholders on how best to move towards a more principles-based approach over the coming years.” In order to help develop our position, the FOA will be arranging a principles-based regulation focused event in the coming months. In the meantime, any comments on the paper or principles-based regulation in general, should be forwarded to Jane Green.