Wed. Sep 18th, 2019

Planet Compliance

Innovation & Regulation in Finance

FCA issues Guidance on the implementation of ring-fencing and ring-fencing transfer schemes

3 min read

The Financial Conduct Authority (FCA) has today published guidance on the FCA’s approach to the implementation of ring-fencing and ring-fencing transfer schemes.

The FCA’s Finalised Guidance is relevant to firms and their groups that are subject to ring-fencing, as well as to skilled persons that are commissioned to author a scheme report for the purposes of RFTS court proceedings. It may also be of interest to other firms and consumers dealing with ring-fenced bodies.

This Finalised Guidance should be read in conjunction with the Prudential Regulation Authority’s (PRA) Statement of Policy setting out the PRA’s approach to RFTSs. For the related post on the PRA’s publications, please see here.

In addition, the FCA is also required under the secondary legislation on ring-fencing to make rules specifying the information that non ring-fenced bodies must provide to certain individuals. The FCA published the consultation on the proposed rules in this area in July 2015 (CP15/23).

The regulator’s responses to the feedback it has received on GC15/5 are set out in the introduction to its finalised guidance. The FCA does not consider that the feedback received requires substantial changes to our guidance and proposed approach as set out in GC15/5. However, in some areas it has amended the draft guidance, mostly to clarify our approach. It should be noted that the FCA’s ability to make changes to its approach is limited by the provisions related to RFTSs in Part VII of the Financial Services and Markets Act 2000 Act.

The main feedback issues were:

– the extent to which adverse impacts are assessed for persons other than direct customers of the transferee/transferor
– items to be included in the scheme report
– consideration of alternative group arrangements
– communications plan
– reliance on regulators’ assessments and decisions
– exposure to regulatory consequences following the court’s sanction
– timing and nature of adverse effects
– independence of the skilled person
– reliance on firm data and analysis by the skilled person
– clarifying the RFTS process and FCA/PRA interactions
– protecting confidential information

The FCA statement as well as related information can be found here.

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