Legislation

A heightened focus on green finance and green investments has renewed legislative impetus, culminating in a series of regulatory developments across the European Union and more recently, the UK.  Some of these notable developments encompass green efforts by the Task Force on Climate-related Financial Disclosures; the European Non-Financial Reporting Directive 2014/95/EU; and the European Commission’s ongoing Sustainable Finance Action Plan.

At the end of December 2019, as part of a package of legislative reforms published by the European Commission (the “Commission”) in March 2018, the EU Regulation on sustainability-related disclosures in the financial services sector (Regulation (EU) 2019/2088) (the “Disclosure Regulation”) came into force, with most of its provisions due to take legal effect by March 2021.
Continue Reading Sustainability in Financial Services: The EU Sustainable Finance Disclosure Regulation and the Taxonomy Regulation

On 25 January, the UK Treasury launched a wide-ranging Consultation on how to make the UK a more attractive location to set up, manage and administer funds.  The objective being to create a destination which will support a wider range of more efficient investments, better suited to investors’ needs.  The consultation has a deadline for input of 20 April 2021.

The UK Government recognizes that the UK asset management sector is already highly attractive and that the UK is a market leader in portfolio management and fund administration. These activities are key to the management of the savings and pensions of millions of people.

The Consultation stresses the UK Government’s continued commitment to supporting portfolio delegation from and to the UK as a means to promote market efficiency, investor choice and to reflect the international nature of financial markets.…

Continue Reading UK Government Consultation on the UK Funds Network

As a reminder, the UK Treasury (HMT) published its Consultation on the Second Phase of the Future Regulatory Framework Review (FRFR) in October 2020.  The Consultation is open for input until 19 February 2021.

The FRFR aims to set out how the UK’s financial services regulatory framework should change in light of the UK’s exit from the EU. The Government seeks to use the UK’s departure from the EU as an impetus to create a more coherent financial services regulation system in the UK.

Content of Review

Phase I of the Review focused on the question of coordination between the regulatory authorities in the UK. The Second Phase tackles the wider regulatory structure in the UK’s financial services – it is on this element that HMT is consulting, with a view to ascertaining the shape of a blueprint which will be the subject of a further consultation exercise later in 2021.…

Continue Reading Review of the Future Regulatory Framework

On January 1, 2021, the Senate voted to override President Trump’s veto of the National Defense Authorization Act (the “NDAA” or “Act”), which includes over 200 pages of significant reforms to the Bank Secrecy Act (“BSA”) and other anti-money laundering (“AML”) laws that have been working their way through Congress for several years.  The Senate’s…

On December 8, 2020, the House passed the National Defense Authorization Act (the “NDAA” or “Act”), which includes over 200 pages of significant reforms to the Bank Secrecy Act (“BSA”) and other anti-money laundering (“AML”) laws that have been working their way through Congress for several years. Despite some remaining objections from President Trump and…

Introduction  

On August 21, 2020, the California legislature enacted the California Consumer Financial Protection Law (CCFPL), which is to take effect on January 1, 2021.[1]  The law renames the “Department of Business Oversight” (DBO) the “California Department of Financial Protection and Innovation (DFPI)” and, among other things, empowers the department to regulate the offering and provision of consumer financial products or services under California consumer financial laws.[2]  The California legislature noted that the CCFPL strengthens “consumer protections by expanding the ability of the department to improve accountability and transparency in the California financial system and promote nondiscriminatory access to responsible, affordable credit, among other purposes.”[3]  In this blog post, we examine the DFPI’s possible authority over California’s principal privacy laws.  Covington will monitor how active the DFPI is in promulgating and enforcing privacy rules as the contours of the DFPI’s authority become apparent over time.…

Continue Reading Privacy Oversight and the California Department of Financial Protection and Innovation

Yesterday, on Sunday, March 22, 2020, U.S. Senate Republicans released the latest version of their COVID-19-related stimulus bill, the Coronavirus Aid, Relief, and Economic Security Act or CARES Act.  The bill contains several measures intended to provide relief to banks, their customers, and broader financial markets.

The latest version of the CARES Act includes the…

On March 6, 2020, the American Bankers Association (“ABA”), on behalf of the banking industry in 49 states and Puerto Rico, sent a letter to leaders of the Senate Banking, Housing and Urban Affairs Committee (the “Committee”) urging them to advance a bill that would expand banking access for legal marijuana businesses, the Secure and Fair Enforcement Banking Act of 2019 (the “SAFE Banking Act,” S. 1200).

In September 2019, the U.S. House of Representatives overwhelmingly passed H.R. 1595, the SAFE Banking Act.  The SAFE Banking Act would allow banks to serve marijuana-related businesses in states where the activity is legal.  It does not facilitate marijuana sales in states that have chosen not to legalize the drug.

In its letter the ABA stated that, while their members do not take a position on the legalization of marijuana, they are committed to serving the financial needs of their communities.  The letter explained, “thirty-three states covering 68 percent of the nation’s population have legalized marijuana for medical or adult-use, and the issue could appear on as many as 10 state ballots this November.”  Current federal law, including the Controlled Substances Act, prevents banks from providing services to marijuana businesses without fear of federal sanctions.  As a result, according to the ABA, local marijuana businesses and service providers to such businesses are forced to operate on an all-cash basis, which in turn creates serious “public safety, revenue administration and legal compliance concerns in local communities.”…

Continue Reading Financial Group Urges Senate to Advance SAFE Banking Act

The House Financial Services Committee (“HFSC”) announced that it will convene hearings this month to consider both the trend of financial technology firms partnering with chartered banks to provide financial services and the rise of mobile payments. More information about the hearing schedule is available on the HFSC’s website.
Continue Reading House Financial Services Committee to Consider Two Fintech Issues In January

On January 7, 2020, the presidential campaign of Senator Elizabeth Warren released a plan to overhaul the consumer bankruptcy system in the United States. The plan would repeal means testing and other provisions of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. It would also implement enhanced protections for consumer debtors who file for bankruptcy.

Perhaps most significantly, the plan would abolish the “undue hardship” standard for the discharge of student loans. Under current law, borrowers seeking to discharge student loans must file a separate adversary proceeding alongside their non-adversary bankruptcy case and make a significant showing of hardship. The plan would treat student loans identically to other types of consumer debt, allowing for their discharge without any special showing.
Continue Reading Warren Proposes Far-Reaching Consumer Bankruptcy Reforms