Financial Services Regulatory Update – March 2020 Round Up


Anti-Money Laundering

The Financial Action Task Force (“FATF”) published guidance on digital identity (“digital ID”) (here).  The guidance aims to assist governments, regulated entities and other relevant stakeholders in determining how digital ID systems can be used to conduct certain elements of customer due diligence under FATF Recommendation 10.  It sets out the main FATF requirements relating to a digital ID along with the associated benefits and risks.

FATF also published the March 2020 edition of its private sector business bulletin (here).

Basel III

The EBA published an opinion on the treatment of credit insurance in the prudential framework (here).  This follows feedback received in its public consultations on draft Guidelines on credit risk mitigation for institutions applying the Internal Ratings-Based Approach with own estimates of Loss Given Default (“LGD”).  It concludes that no specific regulatory LGD be set for credit insurance claims and that the Basel III framework should be implemented as agreed.

Central Counterparties (“CCPs”)

ESMA published a final report containing draft regulatory technical standards (“RTS”) on CCP colleges under EMIR 2.2 (here). The proposed amendments concern certain practical arrangements for the functioning of the colleges. ESMA will submit the final draft RTS to the European Commission for endorsement in the form of a Commission Delegated Regulation.

Consumer Credit Directive 2008/48

Judgment in Case C-66/19 JC v Kreissparkasse Saarlouis (here) - Consumer credit agreements must specify clearly and concisely how the withdrawal period is to be calculated. It is not sufficient for an agreement to refer, with respect to mandatory information the communication of which to the consumer determines when the withdrawal period starts to run, to a provision of national law that itself refers to other provisions of national law.

Consumer Protection

The Central Bank of Ireland (“CBI”) published its Consumer Protection Outlook 2020 (here), which sets out the CBI’s expectations of what regulated financial service providers should do to minimise key risks posed to consumers, as identified by the CBI during its annual sector risk analysis. The report also details the CBI’s own consumer protection priorities for the year ahead which include:

  • advancing a substantial review of the Consumer Protection Code with plans to transfer the Code into Central Bank Regulations;
  • examining the practice of price differentiation in the Irish motor and home insurance markets and assessing product oversight and governance arrangements in a number of banks;
  • working to ensure the fair treatment of borrowers in mortgage arrears, including challenging firms to demonstrate how they are putting in place long-term sustainable and appropriate arrangements for those borrowers along with scrutinising firms applying for full authorisation under the Consumer Protection (Regulation of Credit Servicing Firms) Act 2018;
  • undertaking reviews in various sectors such as insurance, intermediaries, asset management and payments;
  • further enhancing the Central Bank’s gatekeeping process so that only firms that meet the standards required can provide financial products and services to consumers; and
  • influencing and shaping the domestic, European and international regulatory framework through a number of policy initiatives.

COVID-19 dominated much of the month of March, with regulators taking a variety of measures relevant to regulated financial service providers. A number of these are summarised in the following briefings:

  • COVID-19: Financial Services Round-Up for 16-22 March 2020 (here);
  • COVID-19: Financial Services Round-Up for 23-29 March 2020 (here).

The McCann FitzGerald website has a dedicated COVID-19 section containing FAQs, briefings and guidance on a range of legal and business issues that may need to be addressed (here). 

Credit Unions

The CBI has published Issue 12 of Credit Union News (here), which, among other things, sets out the CBI’s focus for 2020, namely strengthening credit union core foundations across governance, risk management and operational capabilities.  The CBI will also continue to evolve the regulatory framework where prudentially justified, facilitate ongoing voluntary sectoral restructuring and engage on sectoral business model issues.

The CBI also published a consolidated version of the Credit Union Handbook (here).


The CBI published an industry letter outlining its findings from its Thematic Inspection into the cybersecurity risk management practices in asset management firms (here). For more information see our briefing (here).

C6 Energy Derivatives

The Markets in Financial Instruments Directive 2014/65 provides for a transitionary regime for C6 energy derivative contracts, which exempts such contracts from certain requirements under the European Market Infrastructure Regulation 648/2012 (“EMIR”), until 3 January 2021. ESMA issued a report (here), which recommends extending this temporary regime.

Digital Finance

José Manuel Campa, EBA Chair (here) gave a speech, Digital Finance: Towards a Common EU Approach in which he addressed removing obstacles to the application of innovative technologies in the banking and payments sectors.

According to Mr Campa, to improve the functioning of the single market in financial services, measures will be needed to address divergences between Members States:        

  • in conduct of business requirements, cybersecurity and other aspects of operational resilience, and approaches to remote customer onboarding;
  • in terms of the acceptability and regulation of the use of specific technologies.

In addition, the EBA has identified areas where additional legislation is needed, including as regards third party service providers and cryptoassets.

Steven Maijoor, ESMA’s Chair and Fausto Parente, Executive Director at EIOPA spoke at the same event (here) and (here).


The following Delegated Regulations were published in the EU’s Official Journal:

  • Commission Delegated Regulation (EU) 2020/448 amending Delegated Regulation (EU) 2016/2251 as regards the specification of the treatment of OTC derivatives in connection with certain simple, transparent and standardised securitisations for hedging purposes (here);
  • Commission Delegated Regulation (EU) 2020/447 supplementing Regulation (EU) No 648/2012 with regard to regulatory technical standards on the specification of criteria for establishing the arrangements to adequately mitigate counterparty credit risk associated with covered bonds and securitisations, and amending Delegated Regulations (EU) 2015/2205 and (EU) 2016/1178 (here).

The Delegated Regulations apply on 16 April 2020.

ISDA published a document capturing some of the operational considerations and potential steps that financial counterparties may need to take to adhere to the new requirement to report on behalf of both themselves and their non-financial counterparty clients that are not subject to the clearing obligation (here).


ESMA published its Supervision Annual Report 2019 and Work Programme 2020 (here), which covers ESMA’s:

  • direct supervisory activities during 2019 regarding credit rating agencies (CRAs) and trade repositories (TRs) and outlines its main priorities in these areas for 2020;
  • preparations for its new supervisory mandates under the Securities Financing Transactions Regulation 2015/2365, the Securitisation Regulation  2017/2402, the Benchmarks Regulation  2016/1011 and the Markets in Financial Instruments Regulation 600/2014;
  • Work regarding the recognition and monitoring of third country CCPs and central security depositories in 2019 and going forward into 2020.
Fines and Penalties

ESMA published final technical advice to the European Commission on procedural rules for the imposition of penalties on third country CCPs, credit rating agencies and trade repositories (here).  The technical advice will now be submitted to the European Commission.

Fundamental Review of the Trading Book (“FRTB”) (CRR 2 Regulation 2019/876)

The EBA published final draft RTS on the new Internal Model Approach (“IMA”) under the FRTB (here).  These consist of the following:

  • Final draft RTS on liquidity horizons for the IMA;
  • Final draft RTS on back-testing and profit and loss attribution (PLA) requirements;
  • Final draft RTS on criteria for assessing the modellability of risk factors under the IMA.

The adoption of those RTS is expected, under the current CRR2 Regulation, to trigger the three-year period after which institutions with the permission to use the FRTB internal models are required, for reporting purposes only, to calculate their own funds requirements for market risk with those internal models.

Interchange Fee Regulation 2015/751

The European Commission has published a study on the application of the Interchange Fee Regulation for card-based payment transactions (here). According to the study, the interchange fees for consumer cards have decreased by 35% between 2015 and 2017. Furthermore, increased cross-border acquiring services and card transactions have led to a higher degree of market integration.

Market Abuse Directive 2014/57

The European Commission published a report on the implementation of the Directive on Criminal Sanctions for Market Abuse (here). The European Commission does not make any recommendations for revisions to the Directive.

Money Market Funds Regulation 2017/1311 (“MMFR”)

ESMA announced that the first reports under the MMFR should be submitted in September 2020, instead of April 2020 (here).The change in timeline is due to the fact there will be an update to the XML schemas that should be used for the reporting and Money Market Fund managers will need additional time to comply with the reporting obligation.

ESMA also published the official translations of its guidelines on stress test scenarios under the MMFR (here). 

Pillar 3 Disclosures under the Capital Requirements Regulation 575/2013 (“CRR”)

The EBA has published its report on an assessment of institutions’ disclosures under Pillar 3 of the CRR (here). The aim of the report is to assess the implementation by institutions of the Pillar 3 framework as well as identifying best practices and potential areas for improvement.


The EBA has published the chapter on how resolution authorities should assess institutions’ management systems for its handbook on valuation for purposes of resolution (here), which aims at fostering convergence in resolution practices throughout the EU.

Shareholders’ Rights

The revised Shareholders’ Rights Directive 2017/828 (“SRD II”) has been transposed into Irish law by the European Union (Shareholders’ Rights) Regulations 2020 (the “Regulations”) (here). This follows the adoption of SRD II by the EU in 2017, which amends the Shareholders’ Rights Directive 2007/36 in several respects.

Among other things, the Regulations impose new transparency and disclosure requirements on certain asset managers, including UCITS Managers and Alternative Investment Fund Managers. These new requirements started to apply from 30 March 2020. For more information, see our briefing here.

Sustainable Finance

The EU technical expert group on sustainable finance (“TEG”) published a usability guide for the EU green bond standard (“GBS”) (here). The user guide sets out recommendations from the TEG on the practical application of the EU GBS intended to assist potential issuers, verifiers and investors of EU green bonds.

The TEG also published their final report on Taxonomy (here), containing its final recommendations relating to the overarching design of the Taxonomy, as well as guidance on how users of the Taxonomy can develop Taxonomy disclosures. It contains a summary of the economic activities covered by the technical screening criteria.

Unfair Terms Directive 93/13

Case C-125/18 Marc Gómez del Moral Guasch v Bankia SA (here) - The Spanish courts must verify that the contractual term in mortgage loan agreements providing for the application of a variable interest rate based on the index of the Spanish savings banks is plain and intelligible.

Case C-511/17 Györgyné Lintner v UniCredit Bank Hungary Zrt.(here) - A court before which a consumer claims that certain contractual terms are unfair is required to review, of its own motion, other terms of the contract insofar as they are connected to the subject matter of the dispute before it and it must, where necessary, take investigative measures in order to obtain the legal and factual elements necessary to make that review.

Selected Consultations/Discussion Papers Published

EBA – Consultation to update methodology to identify G-SIIs (here).  The closing date is 5 August 2020.

ESMA – Consultation on draft RTS under the Benchmarks Regulation (here).  The closing date is 9 June 2020.

ESMA – Consultation on MiFID II/ MiFIR review report on the transparency regime for non-equity instruments and the trading obligation for derivatives (here).  The closing date is 17 May 2020.

ESMA – Consultation on draft guidance to address leverage risks in the Alternative Investment Fund (AIF) sector (here).  The closing date is 1 September 2020.

ESMA – Consultation on Post-Trade Risk Reduction Services under EMIR (here).  The closing date is 15 June 2020.

ESMA – Consultation on draft ITS under the Regulation on cross-border distribution of collective investment schemes (here).  The closing date is 30 June 2020.

ESMA - Call for evidence on the availability and use of credit rating information and data (here). The call for evidence is open until 3 August 2020.

European Payments Council – Consultation on 2020 change requests for the SEPA Credit Transfer and SEPA Direct Debit Scheme Rulebooks (here).  The closing date is 9 June 2020.

Working Group on euro risk-free rates – Consultation on possible recommendations for interest rate swaptions, as a result of the proposed transition from EONIA to €STR (here).  The closing date is 3 April 2020. See also the earlier released consultation on swaptions based on U.S. dollar (USD) LIBOR that could be affected by the discounting change for cleared derivatives from the use of the Effective Federal Funds Rate (EFFR) to the Secured Overnight Financing Rate (SOFR), published by the Alternative Reference Rates Committee (here).

You may also be interested in---

McCann FitzGerald regularly publishes briefings on topics relevant to financial services regulation, among others. In addition to our wide range of briefings relating to COVID-19, referenced above, you may also be interested in the following briefings:

  • Recent Regulatory Updates for Fund Managers (here)
  • Asserting Privilege in the Email Era (here)
  • Financial Services Regulatory Update – February 2020 (here)
  • Highlights of the EDPB’s evaluation of the GDPR and the Annual Report of the Data Protection Commission 2020 (here)

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.