Orrick - Finance 20/20 (JD Supra United Kingdom)

A draft of the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the “Regulations”) was published on July 15, with a view to implementing the scheme in England and Wales. It is anticipated that the Regulations will come into force on May 4, 2021.

Since March, governments around the world have implemented unprecedented measures in an attempt to avoid a severe economic downturn as a result of the COVID-19 pandemic. In the United Kingdom, HM Treasury (“Treasury”) has spearheaded these efforts for the government.

In the recent case of Tecnicas Reunidas Saudia (TRS) v The Korea Development Bank (the Bank), for which the judgment was published last week, the High Court, Queen’s Bench Division (Technology and Construction Court (the TCC)) considered a demand guarantee executed by the Bank in favor of TRS, which formed part of an agreement around certain advance payments made by TRS to a subcontractor.

The UK Government’s Future Fund, a co-investment initiative to help UK start-ups, is now live and accepting applications. Under the scheme, which was announced on April 20, the government will provide convertible loans ranging from £125,000 to £5 million to certain UK-based high-growth innovative companies, subject to at least equal match funding from private investors, and will be managed by the

Background and Context - On March 9 and 10, The Financial Policy Committee (“FPC“) met to discuss developments since its meeting on October 2, 2019 and the consequences of Covid-19. Questions have arisen as to how the government, individuals and businesses can respond to the potentially devastating economic effects resulting from the expanding spread of the Covid-19 and the social lockdowns

The present and future impacts of climate change, human rights violations, environmental, labor and regulatory violations and poor corporate governance on the quality of investments and credit risks have spurred widespread recognition for the importance of environmental, social and governance (ESG) considerations in lending and investment activities.

Overview - The United Kingdom made headlines when it voted to leave the European Union in June 2016. Popularly named “Brexit”, the move began a tumultuous four-year voyage that seemingly came to completion on January 31, 2020 when the UK’s withdrawal became official.

On May 14, the Financial Conduct Authority (FCA) updated its webpage on its July 2018 discussion paper on price discrimination in the cash savings market (DP18/6).

On April 8, the Money and Pensions Service (MAPS) published a press release announcing its official launch, and a listening document on a national strategy for money and pensions and MAPS’ three-year corporate plan (together with an executive summary).

On March 21, the Financial Conduct Authority (FCA) published a speech given by Nausicaa Delfas, FCA Executive Director of International, on Brexit. Among other things, in her speech, Ms. Delfas explains that all of the FCA’s activity has been aimed at reducing the impact of Brexit on firms.

The FCA has published a new webpage setting out the key findings of its multi-firm supervisory review of MiFID II costs and charges disclosure.

On February 25, the Bank of England (BoE), the Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC) published a joint statement detailing the measures that will be taken to ensure the continuity of UK-US derivatives trading and clearing activities after Brexit.

On February 19, EIOPA published recommendations (EIOPA-BoS-19/040) on providing guidance on the treatment of UK insurance undertakings and distributors with regard to cross-border services in the EU in the event of the UK leaving the EU without a deal.

On December 21, the Working Group on Sterling Risk-Free Reference Rates published a paper aiming to help market participants prepare in advance of 2021, when LIBOR may not be available.

On December 4, the Securitization Regulations 2018 (SI 2018/1288) were published on legislation.gov.uk, together with an explanatory memorandum. The Regulations reflect the application of the Securitization Regulation ((EU) 2017/2402)) in the UK.

On October 11, UK Finance published a Brexit quick brief on equivalence in a future EU-UK trade framework for financial services (“BQB12“). This was developed in collaboration with Clifford Chance LLP and Global Counsel LLP.

In the UK, guidance to support the implementation of advanced standards for professional bankers was published on August 15, 2018. The guidance is in fact dated January 2018, the same date as the advanced standard which was published in May 2018.

Highlights: - Why firms need to end their reliance on LIBOR by end-2021. - Why overnight risk-free rates (“RFRs“) are the right foundation for interest rate markets.

While there is a way to go until the end of 2021 when panel banks will no longer be required to provide LIBOR quotes to the FCA, we expect to see more and more discussion regarding alternative benchmarks that might be used on outstanding and on new financings, the issues raised by the possible alternatives, overnight and term financing considerations, credit spreads and all related issues.

On March 19, 2018, the UK government and the European Commission published a draft withdrawal agreement which includes the legal text agreed by the negotiators on the post-Brexit transition period.

The Financial Conduct Authority (“FCA“) is considering allowing Small and Medium Sized Enterprises (“SMEs“) access to Financial Ombudsman Service (“FOS“). On January 22, 2018, the FCA published a consultation paper, available here, exploring this option.

On January 22, 2018, the Association for Financial Markets in Europe (“AFME“) published a paper on cliff-edge risks in wholesale financial services resulting from Brexit. It defined a ‘cliff edge risk’ as one that is likely to cause severe disruption to markets and commercial activity on the day of Brexit if no regulations or legislation are in place.

The UK Chancellor of the Exchequer, delivered the November 2017 Budget on November 22, 2017. The UK government re-iterated its commitment to supporting competition in banking in its Budget, setting out initiatives designed to enable innovation in banking services, strengthen challenger banks, and improve access to affordable credit for consumers.

On October 24, 2017, the Dutch development bank FMO announced that FMO and the Shell Foundation, in cooperation with the U.K. Department for International Development, will cocreate a fund to provide growth capital to social entrepreneurs. According to a press release by FMO, FMO and the Shell Foundation signed a Memorandum of Understanding agreeing to cooperate in the field of access to...

On August 18, 2017, the Competition and Markets Authority (“CMA“) published the final version of its rules of procedure (CMA65) which governs appeals made under section 79 of the Financial Services (Banking Reform) Act 2013 (“FSBRA“) in respect of certain decisions made by the Payment Systems Regulator (“PSR“) under the same Act.

On May 18, 2017, the FCA published a new Web page on cyber resilience. The FCA notes that cyber risks pose a threat to all financial services firms. Firms should be aware of the threat, able to defend themselves effectively, and respond proportionately to cyber events.

On May 10, 2017, the British Bankers’ Association (BBA) published a Brexit quick brief: “External trade policy and a UK exit from the EU – the UK’s WTO profile and beyond”. The UK’s decision to leave the EU means that the UK will cease to make trade policy collectively with the EU and will need to reestablish a trade policy within the context of the World Trade Organization (“WTO“).

On November 3, 2016 the UK High Court handed down a ruling preventing the UK government from triggering Article 50 TFEU – the EU legislation triggering the start of the administrative procedure for the UK’s exit from the EU – without parliamentary approval. Following the referendum on June 23, 2016, where the UK voted to leave the EU, Prime Minister Theresa May and the UK government...

The UK’s Prudential Regulation Authority (“PRA“) has issued a policy statement on its approach to identifying other systemically important institutions (“O-SIIs“). The statement is relevant to all credit institutions, investment firms, EEA parent institutions, EEA parent financial holding companies and EEA parent mixed financial holdings companies within the domestic financial sector at their...

On October 8, Fitch published a report clarifying the application of its United Kingdom RMBS criteria during the ongoing consultation period. On October 12, DBRS published a report describing its methodology for generation of consistent interest rate stresses across currency markets.