- Independent Commission on Banking, Final Report, available at http://bankingcommission.s3.amazonaws.com/wp-content/uploads/2010/07/ICB-Final-Report.pdf.
- As defined in Part 15 of the Companies Act 2006 for the purpose of reporting and auditing requirements.
- That requirement is contained in s 172 of the Companies Act 2006, which prioritises the interests of shareholders over other stakeholders. In the case of a ring-fenced bank which is part of a corporate group the effect is to prioritise the interests of the parent company.
- The ICB recommends at para 3.86 of its Final Report that “the boards of the ring-fenced bank should have a duty to maintain the integrity of the ring-fence, and to ensure that the ring-fence principles are followed at all times”. It is not clear, however, whether this would form part of the regulatory rules (eg the APER regime) or whether it would be a statutory modification of directors' duties contained in the Companies Act 2006. Note also that the EU Commission has proposed that the boards of investment firms authorised under the Markets in Financial Instruments Directive should be required to, “ensure that the firm is managed… in a manner that promotes the integrity of the market and the interest of its clients” (Proposed revision to Art 9 of the Directive, see COM(2011) 656 final, published 20 October 2011). This appears to suggest a broader policy move to adjust the role and duties of directors of financial institutions. However, it also raises important questions about the relationship between firms and their shareholders.
- The APER regime requires individuals performing “controlled functions” to be approved by the regulator.
- The customer classification provisions of the COBS component of the FSA Handbook implement the relevant provisions of MiFID.
- Classification as a professional client triggers the application of regulatory rules which do not apply in the case of eligible counterparties. See FSA Handbook, COBS 1, Annex 1, Application, for details.
- Final Report, para 3.66.
- The underlying legal rules were reviewed by the Law Com mission in its Consultation paper No 194 “Fiduciary Duties and Regulatory rules” (1992).
- That is likely to be true both in respect of conflicts between the firm and clients and conflicts between clients.
- See generally C Bates and S Gleeson, “Legal Aspects of Bank Bail-ins” (2011) 5 Law and Financial Markets Review 264.
Law and Financial Markets Review
Volume 5, 2011 - Issue 6