Financial Services Regulation and Compliance - General Cross Sectoral Mar 2020
Central Bank publishes statement on essential services
On 31 March 2020, the CBI published a statement indicating its expectations for financial services firms following the new measures implemented by the Irish government regarding "essential services" in response to the COVID-19 emergency. As the Irish government has listed banking and financial services as essential services, the CBI's expectations include that: (i) the Chief Executive Officer or other relevant member of senior management is responsible for ensuring that only those in roles necessary to provide essential services are designated as essential workers; and (ii) boards and senior management actively monitor developments in order to pre-empt and react to the rapidly changing circumstances.
Central Bank publishes Consumer Protection Outlook 2020
The Central Bank published its Consumer Protection Outlook 2020 on 9 March 2020. The report sets out the key risks to consumers of financial services, as well as the Central Bank's expectations of what firms should do to minimise those risks and protect their customers.
The key cross-sectoral risks which firms must address are:
- lack of a consumer-focused culture in firms
- irresponsible unsecured lending
- ineffective disclosure by firms about the benefits, risks and costs of financial products
- poor governance and oversight of outsourcing arrangements
- information technology and cyber risks
- risks arising from Brexit
European Commission adopts a Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak
The European Commission has adopted a temporary state aid framework (the Framework) to enable Member States to support businesses affected by the COVID-19 outbreak. The Framework is adopted under Article 107(3)(b), which allows Member States to grant aid "to remedy a serious disturbance in the economy." The Framework highlights the need for close European coordination of national aid measures, and the need for appropriate state aid measures.
The Framework follows a Communication on a coordinated economic response to the COVID-19 outbreak, which set out the options available to Member States outside the scope of EU state aid control and which may be put in place without the involvement of the European Commission. These measures include wage subsidies, suspension of payments of corporate and value added taxes or social welfare contributions, or financial support directly to consumers for cancelled services or tickets not reimbursed by the relevant operators.
To complement these and other measures adopted by the European Commission, the Framework sets out temporary state aid measures, which can be approved rapidly upon notification to the European Commission by the Member State concerned. These include:
- aid in the form of direct grants, repayable advances or tax advantages
- aid in the form of guarantees on loans
- aid in the form of subsidised interest rates for loans
- aid in the form of guarantees and loans channelled through credit institutions or other financial institutions
- short-term export credit insurance
The Framework is justified by the current exceptional circumstances and will not be applied after 31 December 2020.
European Commission issues statement on consulting Member States on the proposal to extend State aid Temporary Framework
On 27 March, the European Commission sent Member States a draft proposal to extend the Temporary Framework for State aid, to provide increased support for Member States in combating the COVID-19 outbreak. The European Commission is proposing to extend the Temporary Framework by providing additional support for five types of aid measures, and is seeking comments on the draft proposal from Member States.
The proposed measures are:
- more support for coronavirus-related research and development
- more support for the construction and upgrading of coronavirus testing facilities
- more support for the production of products relevant to tackle the outbreak (such as vaccines, medical equipment or devices, protective material, and disinfectants)
- targeted support in the form of deferral of tax payments and / or suspension of employers' social security contributions to help avoid lay-offs in specific sectors or regions that have been hardest hit by the outbreak
- target support in the form of wage subsidies for employers to help avoid lay-offs
Increased aid can be granted where Member States cooperate across borders. The targeted support measures allow Member States more flexibility to intervene on the basis of greatest need.
ESMA extends consultations response dates
In light of the continuing impact of COVID-19 on all market stakeholders, ESMA has decided to extend by four weeks the response date for all ongoing consultations with a closing date on, or after, 16 March.
This announcement affects the following consultations:
- Consultation on Guidelines on Internal Controls for CRAs
- Consultation on MiFIR report on SI
- Guidelines on securitisation repository data completeness and consistency thresholds
- Consultation on MiFID II/ MiFIR review report on the transparency regime for equity
- Draft Regulatory Technical Standards under the Benchmarks Regulation
- Draft technical standards on the provision of investment services and activities in the Union by third-country firms under MiFID II and MiFIR
- Consultation paper on MiFIR Review Report on Transparency for Non-equity TOD
ESMA publishes ESEF conformance suite
ESMA has published the ESEF Conformance Suite to facilitate implementation of the ESEF Regulation.
The ESEF Regulation imposes certain technical requirements on all issuers with securities listed on an EU regulated market in relation to the preparation of their annual financial reports. The ESEF conformance Suits is aimed primarily at a technical audience (such as XBRL software developers), as a way to test software tools.
ESMA publishes advice on fines and penalties for third country CCPs
ESMA has published its final technical advice to the European Commission on procedural rules for imposing fines and penalties on third country central counterparties and alignment of those for trade repositories and credit rating agencies.
The final technical advice includes:
- the right to be heard by the independent investigation officer (IIO)
- the content of the file to be submitted by the IIO
- access to the file
- the procedure for imposing fines
- the adoption of interim decisions
- the limitation periods for imposition and enforcement of penalties
- the collection of fines and penalties
- the relevant calculation periods
The European Commission must now adopt a delegated act where they need to specify all the aforementioned aspects on which ESMA has advised.
For more information on this topic please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 6 April 2020