Helen Marshall, Christopher Leonard Talk UK Financial Services Regulation with MCC

Akin Gump financial regulatory partners Helen Marshall and Christopher Leonard were interviewed by Metropolitan Corporate Counsel, the resulting Q&A titled “Risky Business: The perilous landscape of UK financial services regulation.”

Among the topics discussed by Marshall and Leonard were:

  • Andrew Bailey as new Financial Conduct Authority (FCA) head: “There’s been a lot of speculation in the media that the announced move signals a softer approach, and that may be the case. In some of his public statements since the appointment, he’s said that he intends to take a more measured approach than his predecessor, Martin Wheatley.” (Marshall)
  • FCA consideration of a firm’s “culture” in its assessments: “The concept of ‘culture’ within a financial services business is so nebulous that it serves as an easy hook on which a regulator can hang, if not necessarily an enforcement action, then some form of public criticism. Management therefore have to be aware, for example, of what sort of behaviors within the business are rewarded and how they are rewarded – remuneration or promotion?” (Leonard)
  • FCA and penalties against senior executives: “The FCA has not done very much on that score – and they’ve been quite roundly criticized for it…The new Senior Managers Regime took effect on March 7 and, basically, says that certain senior management functions carry certain responsibilities. The firm will have to provide the FCA with a detailed map of who’s responsible for what, so in the event something goes wrong, it will have a very clear route as to whom it should look in connection with an investigation and possible enforcement action. That’s a big change, and the plan is that that’s going to be rolled out to cover senior managers in all FCA-regulated firms by the end of 2018. I think the expectation is that it will allow the FCA to bring more cases against individuals, but we’re going to have to wait and see how it works out in practice.” (Marshall)
  • “Brexit” and financial regulation: [W]ere we to vote to leave on June 23, the date the Brexit referendum will be held, the law on June 24 will be exactly as it is today. Nothing will change overnight. That said, it is expected that a leave vote would trigger Article 50 of the Lisbon Treaty, which…provides for a two-year notice period in which the exit would be negotiated. There is a school of thought that, during that period, the UK would effectively agree to adhere to existing EU financial services law to continue to have access to the EU’s capital markets. One of the reasons why this is so significant for the financial services industry, at least in the UK, is that the vast majority of the nation’s financial services law is derived, in one way or another, from European legislation, directives and regulations.” (Leonard)

Read the full interview here.