1.
Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services
industry.
Listen to this week's Legal Shorts on CLTV by going to http://vimeo.com/cummingslaw
If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com
FCA consultation on authorised funds
The FCA has published a consultation paper on investing in authorised funds through nominees
(CP15/20). The FCA proposes to revoke rules and guidance in COBS 14.4, which are scheduled
to come into force at the end of 2015, because the FCA is planning two separate pieces of work
that are likely to affect the rationale for most of the rules contained in COBS 14.4, namely (i) a
discussion paper on improving firms' communications with consumers (which is due to be
published shortly) and (ii) a market study on asset management (which will start later in 2015).
The FCA intends to reconsider the substance of the rules and guidance in COBS 14.4 in 2016 in
the light of feedback from the discussion paper, a consultation on removing specific disclosures,
and any issues emerging from the market study. Responses are invited by 17 July 2015.
New remuneration rules
The FCA and the PRA have issued a joint statement on new rules on remuneration to strengthen
alignment of long-term risk and reward following their joint consultation in July 2014. The new
rules apply to banks, building societies and PRA-designated investment firms, including branches
of non-EEA headquartered firms. The rules include changes to clawback and deferral that will
apply to variable remuneration awarded for performance periods beginning on or after 1 January
2016, while other requirements will apply from 1 July 2015. In addition, the FCA has published
guidance on the application of ex-post risk adjustment to variable remuneration and
proportionality relating to the dual-regulated firms Remuneration Code (SYSC 19D).
FCA policy statement on regulated fees and levies for 2015/16

2. Following a consultation in March this year, the FCA has published a policy statement setting out,
amongst other things, the final rules on the 2015/16 periodic regulatory fees and levies for the
FCA. Although responses to the consultation generally raised concerns about the overall increase
in the annual funding requirement, the FCA believes the increase is necessary to meet its
objectives, as explained in its business plan for 2015/16. The FCA will invoice fee-payers from
June 2015 onwards for their 2015/16 periodic fees.
Delay on implementation of restrictions on corporate directors
The Department for Business, Innovation & Skills (BIS) has published an updated version of its
consultation paper on the draft Register of People with Significant Control Regulations 2015, first
published on 19 June 2015. In the updated version, the BIS announced that it will delay the
implementation of the restrictions on corporate directors under the Small Business, Enterprise and
Employment Act 2015, due to come into effect from October 2015, to 2016 and will announce
the revised timing for implementation shortly. The Act includes amendments to the Companies
Act 2006 banning the appointment of legal persons as corporate directors, subject to certain
exceptions.
MLD4 text adopted
The European Parliament has approved the EU Council's position on the proposed Fourth Money
Laundering Directive (MLD4). Under the adopted text, member states must keep central registers
of information on the ultimate beneficial owners of corporate and other legal entities. This means
that each member state must ensure that corporate and other legal entities incorporated within
their territory are required to obtain and hold adequate, accurate and current information on their
beneficial ownership, including the details of the beneficial interests held, which must be held in a
central register in each member state or a public register. MLD4 will enter into force on the
twentieth day following its publication in the OJ and member states will then have two years to
implement it.
CSDR delay
ESMA envisages a delay in submitting draft technical standards under the Regulation on
improving securities settlement and regulating central securities depositories (CSDR), which it
was due to deliver by 18 June 2015. The delay is due to the use of an early legal review process,
as agreed with the European Commission, which has resulted in additional work for ESMA in
responding to the Commission’s comments. ESMA considers that the draft TS will not be
submitted until September 2015, but that the use of the early legal review process will in fact lead
to a shorter timeframe for the adoption and entry into force of the respective regulations.
FCA publishes latest issue of Market Watch
The FCA has published issue 48 of Market Watch, its newsletter on market conduct and
transaction reporting issues. The new issue contains articles relating to: (i) direct electronic access
(DEA) pre-trade controls, which sets out the FCA's high level observations of its recent review of
pre-trade controls for cash equity DEA trading; (ii) trade volume advertising and market abuse,
which aims to highlight the potential market abuse risks of trade volume advertising and to help
firms and individual traders consider these risks and ensure they mitigate them appropriately; and
(iii) suspicious transaction reporting (STR), which sets out the FCA’s observations from its STR

3. supervisory visits to a range of firms in 2013 and 2014.
CASS and distribution of client money in a special administration
The High Court recently considered client money claims in a special administration in Re
Worldspreads Ltd v Re Investent Bank Special Administration Regulations 2011 [2015] EWHC
1719 (Ch) (19 June 2015). In this case, the court considered a request for an order to enable the
joint special administrators of Worldspreads to: (i) set a bar date for outstanding client money
claims; (ii) deal with claims to client money that are not agreed; (iii) make a final distribution to
those with agreed client money claims (notwithstanding the potential claims of others who have
not responded to communications from the administrators or not pursued a court application if
their claim has been rejected by the administrators); and (iv) make provision for costs and
expenses. The administrators requested the order as there are no provisions in either the FCA's
Client Assets sourcebook (CASS) or the Investment Bank Special Administration Regulations
2011 that provide a procedure governing the distribution of client money in a special
administration.
Unregulated CIS complaints
In its recent ombudsman news (Issue 125), the Financial Ombudsman Service (FOS) sets out case
studies on complaints relating to investments in unregulated collective investment schemes. The
FOS points out in the article that there has been some confusion over whether the FOS can look at
complaints about UCIS, as by definition they are unregulated, but concludes that although the
schemes themselves are unregulated, the actual advice given by businesses is often regulated and
therefore covered by the FOS.