This week we discuss the end of LIBOR, appeal success for the FCA and fine for Starling Bank, plus other stories.
Media
The FCA says it has now published the last synthetic LIBOR settings, and that LIBOR has now officially come to an end. A press release by the regulators says the transition away from LIBOR will be key to have safer and more stable financial markets that are fit for modern use.
Over the past decade regulators in the UK and abroad, as well as market participants, have been working hard to replace LIBOR with more risk-free-rates (RFRs).
Andrew Bailey, Governor of the Bank of England, has said: “The financial stability risks from LIBOR in the UK have been effectively mitigated and allowed for an orderly cessation. It has been a long road, but markets are now operating on more robust and resilient foundations.”
Nikhil Rathi, CEO of the FCA, has called the transition away from LIBOR one of the most significant events in markets in this generation.
The Bank of England and the FCA have reminded market participants that “credit sensitive rates (CSRs) should not emerge as successor rates because these rates are not robust or suitable for widespread use as a benchmark.”
Enforcements
The FCA has fined Starling Bank Limited £28,959,426 for financial crime failings related to its financial sanctions screening, according to a press release by the regulator.
The FCA has also said the bank also repeatedly breached a requirement not to open accounts for high-risk customers.
According to the regulator the bank failed to put in necessary measures to prevent financial fraud despite impressive growth over the past seven years, a period in which it increased its customers from 43,000 to 3.6 million.
Read our full story on the FCA’s decision here.
Separately, the FCA has said in a statement it has won an appeal at the Upper Tribunal in a case against BlueCrest Capital Management (UK) LLP.
In December 2021, the FCA had announced it was planning to fine BlueCrest for conflict of interest failings and wanted the firm to pay redress to clients.
BlueCrest took the matter to the Upper Tribunal and won. But the FCA appealed against the decision and that appeal has now been successful, meaning that the case could now possibly proceed to a full hearing.
The regulator has said its successful appeal “has important wider implications both for the FCA’s ability to secure redress for consumers and its ability to conduct litigation before the Upper Tribunal effectively.”
Also last week, the FCA announced it will begin criminal proceedings against two individuals, Mathew and Nikolas West, who were “jointly charged with conspiracy to deal in 4 stocks while having inside information.”
A press release by the regulator says: “Matthew West has additionally been charged with insider dealing in relation to 2 stocks. He has been charged with disclosing to and encouraging Nikolas West to deal in 2 stocks, and Nikolas West has been charged with dealing in those same 2 stocks based on that insider information.”
They are accused of making profits of around £110,000 from the offences, which are said to have happened between 2016 and 2020.
The hearing took place at Westminster Magistrates Court. Both individuals can appeal against the decision at Southwark Crown Court.
Speeches
On Tuesday 8 October, 2024 FCA Chief Executive Nithil Rakhi delivered a speech at the FCA International Capital Markets Conference 2024.
He spoke about the unpredictability of the financial world and referred to a number of shocks, crashes and other incidents during his long career in the government and other agencies.
Rathi also highlighted the increase in major market shocks, from just 9 between 1994-2007, to a staggering 82 during the recent pandemic.
Other key highlights of his speech, which we reported at more length yesterday, were:
- We are living in an era of predictable volatility and must now expect to face this as a constant.
- The UK has a chance to lead and demonstrate how capital markets can drive economic growth and development.
- We need to nurture liquidity, shift regulation from reactive to proactive and adopt new mindset towards risk.
- No single entity has all the answers and solutions will take action from us all.
FCA chair Ashley Alder also spoke at the same conference last week, and invited participants to discuss ways to “maximise the ability of sustainable, vibrant capital markets to drive greater volumes of investment into the real economy.”
He said: “I have seen first-hand how capital markets can work well. How they can drive business – with factories built, shops opened, goods delivered, people employed; how they can support long-term risk taking to deliver more secure retirements for millions of people; and how they can spur wider economic growth. I’ve also seen how market fragmentation and de-globalisation can stall cross-border capital formation.”
Other key highlights of the speech included:
- Opportunities unique to market-based finance explain why we delivered the most significant reforms of the UK’s public equity markets in a generation.
- Our review of the financial advice and guidance boundary aims to unlock innovation so people can get the support that suits their financial needs.
- We will continue to collaborate as we seek a common goal: capital markets that deliver the returns people need, and the investment that growth requires.
