Good afternoon,
We’re back with a new instalment of the Fides Weekly Update. Read on to see what legal and business news our Researchers have been talking about this week.
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1) Paris attacks
Our sympathies go out to all friends, families and colleagues affected by the horrific terror attacks that took place in Paris on Friday. Hogan Lovells experienced great tragedy in losing one of their junior lawyers during the attacks at the Bataclan concert hall, Valentin Ribet, a litigation associate and LSE graduate. He was described as “a talented lawyer, extremely well liked, and a wonderful personality in the office.”
The loss from this event has been shocking and it is touching to see how the international legal community have united in the wake of such sorrow.
2) HBOS report leads to probe
A report released yesterday by the BoE and FCA, which looked into the failure of HBOS plc, has identified up to 10 former executives of the bank linked to its collapse.
Some of the former bank’s top executives have retained senior manager positions at other companies, including Andy Hornby, ex-HBOS Chief Executive, now COO at Gala Coral, and Mike Ellis, former group finance director at HBOS, who has taken on a position as chairman of the Skipton Building Society.
The former UK regulator, the Financial Services Authority (FSA), was also heavily criticised for its failure to deal with the reckless management of banks, with the BBC citing the report in saying the FSA had been “deficient” in the way it handled HBOS. Clive Adamson, former director of supervision at the FSA, noted that “the most culpable people were let off”.
The BoE and FCA are considering barring the executives in question and plan to take enforcement action “as early as possible next year”.
3) Back-office centres “more efficient and effective”
This week saw DLA Piper launch a low-cost centre in Warsaw to service its business globally, whilst White & Case are considering opening a further shared services centre, alongside their existing hubs in Tampa and Manila, to provide back office support across its European offices.
The Lawyer revealed DLA chief operating officer Andrew Darwin said: “Our objective is to improve our ability to provide integrated and efficient service internally so that, in turn, our lawyers can do the same for our clients.”
This outlines a trend in which international firms are launching shared services centres, many of those based in the UK. Freshfields launched their shared services centre in Manchester in February this year, with an objective to support their client-facing lawyers in the most efficient way.
Other firms to have opened low-cost centres include Baker & McKenzie, BLP and Ashurst.
4) Asset managers under the spotlight
The FCA have an issued a review on the £6.6 trillion asset management industry, arguing that the level of competition in this market needs to be examined.
The review will concern the services delivered to both retail and wholesale customers, and looks to ensure these consumers are purchasing value-for-money services. The lack of transparency in costs and charges from asset management compBanies will therefore be the one of the focal points of the study, alongside the assessment of the role of investment consultants. The FCA plan to examine how investment consultants in particular affect competition in the market, as they provide critical advice to customers on product and manager selection.
The FCA will publish interim findings in the summer of 2016 and a final report by early 2017. The FT reports.
5) Barclays shell out further $150m to regulator
Barclays will have to pay an extra £98m ($150m) fine to US regulators for misconduct through the use of their forex trading platforms, Reuters reports. The New York Department of Financial Services (DFS) has also declared the bank must let go of their global head of electronic fixed income, currencies and commodities (eFICC).
Barclays’ super-fast trading systems allowed them to take a “last look” at trades, which they then used to automatically reject clients’ orders. The regulator argued that this misuse of their trading system put the bank’s interests ahead of those of its clients.
This settlement adds to Barclays’ total for forex related fines of £1.53bn, with fines for FX manipulation across the seven implicated global banks totalling over $10bn.
Until next week,
Another week which means another Fides Weekly Update. Read on for our selection of the week’s top legal and business news. Enjoy!
1) Senior Management departures at Barclays continue
News broke in The Lawyer on Friday that Barclays Head of Risk and Regulatory Compliance Nick Kynoch was to leave the bank, taking up the a new position as GC of New Zealand’s Financial Markets Authority (FMA). It has been a tough year for Barclays, who have in the last ten months lost a string of lawyers from its in-house team.
The beginning of the year saw the resignation of Barclays Capital GC Judith Shepherd, followed by EMEA Investment GC Erica Handling and Deputy GC Michael Shaw – with Corporate Banking GC Joanna Carver making the move to Lloyds. The bank has also lost product heads Khasruz Zaman and Jonathan Peddie, both who have moved to private practice with Simmons & Simmons and Baker & McKenzie respectively.
2) Treasury enforces turnaround on Senior Managers Regime
It was announced yesterday that the Treasury has decided to scrap the “reversal of burden of proof”, a rule that assured individual accountability under the Senior Managers & Certification Regime, to be introduced in banks and financial institutions in March next year.
Instead of assuming the guilt of senior managers when a regulatory breach has occurred, executives will no longer have to have to prove they have taken all reasonable steps to prevent misconduct. The responsibility now remains with the regulator to fully investigate and decide on the severity of individual actions. The best write-up we found was from the FT’s Caroline Binham available here.
3) Blind allocation of associate work continues to be the hottest topic in legal
After Ashurst announced they were to trial a ‘blind allocation’ of work scheme, Hogan Lovells have followed suit by reassessing the way they allocate work to associates. The Lawyer explained that London partners and associates will meet with a management consultant to implement a fairer allocation of work based on capacity, skill set and career development. The firm’s real estate team will be the first to test the scheme, which could see the practice introduced firm-wide. Ashurst and Clifford Chance are other firms who have also trialled similar initiatives.
4) Bad news for Britain’s biggest lenders
Thursday also saw the release of further BoE / PRA consultation papers covering ring-fencing rules, to be implemented by Britain’s largest banks by 2019. As a result, Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland, Co-operative Bank and Santander will be expected to raise an extra £2.2-£3.3bn to ring-fence their retail banking operations and better protect consumers in the event of another crisis reported Reuters.
5) Another blow to Black Cab drivers
The High Court ruled on Friday that hailing a cab in London by the US firm Uber does not break the law. As reported by the BBC, the court had been asked to decide whether the company’s smartphones were considered meters, which are outlawed for private hire vehicles. This represents a victory for the taxi firm and TfL, who argued in October that the app was not a meter and a further blow to the LTDA which represents the 25,000 licenced taxi drivers in London. However, the firm continues to face ‘huge challenges’ over public safety, vehicle emissions and congestion.
Until next week,