Banking Law: Private Transactions and Regulatory Frameworks - Banking Law: Private Transactions and Regulatory Frameworks -

Preface I: Banks and their regulators The banking system The historical development of banks and the global financial crisis The economic functions of banks The special nature of banks The classification of banks and the business of banks The banking system, business of banks and legal definition of banks Co-operative banks, building societies and virtual banks The rationales for regulating banks Banks and financial markets Systemic risk and systemic stability in the prudential banking framework Systemic risk and the prudential regulation of banks Macro-prudential vs micro-prudential regulation The enhanced role of macro-prudential supervision Significant banks and G-SIBs Conclusions The regulatory architecture of the UK banking system The evolution of the UK banking regulation until the 2007–2009 financial crisis The Bank of England and HM treasury: the moral suasion tool Financial Services and Markets Act 2000: the Financial Services Authority Principles-based regulation and reliance on market discipline The Northern Rock crisis and the Banking Act 2009 The Financial Services Acts 2012 and 2016 An overview of the new regulatory architecture The governance of the regulatory bodies An evaluation of the current UK regulatory architecture Outcomes- and judgement-based regulations Conclusion EU harmonisation of the banking regulatory framework The EU Banking Directives The freedom of establishment and mutual recognition of banks The Financial Services Action Plan The Lamfalussy report: the role of CEBS The MiFID Directive The de Larosière Report and the ESAs The MiFIR and MiFID II The European Systemic Risk Board The centralised system of supervision and financial stability The structure of the Banking Union and the SSM mechanism The joint supervisory teams The principles of separation and co-operation between authorities II: The business of banks The relationship between banks and customers The bank–customer relationship The bank customer The non-fiduciary nature of the standard relationship Banks’ duty of care and other duties Customers’ duties Banks’ duty of confidentiality Statement and legal nature of the duty of confidentiality The scope of the duty of confidentiality Banks and customer data: the GDPR and Data Protection Act 2018 framework The four qualifications to the duty of confidentiality Compulsion by law Public duty to disclose Disclosure in the bank’s own interest Disclosure with the customer’s authority Conclusion Business conduct regulation and financial consumer protection The consumer protection objective of the FCA Overview of consumer protection legislation applicable to banks Retail investor protection in the context of provision of investment advice The Financial Ombudsman Service The Money Advice Service Conclusion Accounts and payment methods The current account Overview The legal nature of the current account relationship The core obligations of the parties The joint current account The savings account Combination of accounts Cheques The decline in the use of cheques and the future of the cheque The obligation of the paying bank to honour the customer’s cheques Consequences of wrongful payment of a cheque Debit cards and other payment cards The electronic transfer of funds Conclusion Clearing and settlement process Introduction: the evolution of the banking payment system The dematerialisation of securities The mechanics of payment services: the clearing houses The EU regulatory framework: the PSD 1 and the PSD 2 The EU Settlement Finality Directive The EMIR regulation Online banking and digital payment systems Conclusion Business and consumer lending Bank lending in general Overdrafts: legal nature and principal terms Term loans A brief overview of security interests in English law The transfer of loans Business lending Common terms in business loans Syndicated loans Consumer lending The regulation of overdrafts Credit cards Personal loans Residential mortgages Conclusion Money laundering and terrorist financing ML and TF activity and the UK financial system The development of the UK, EU and international AML and CTF framework The internal governance for AML and CTF compliance in banks and the role of the Financial Conduct Authority Risk assessments and the duty to have adequate controls Customer due diligence The supervisory role of the FCA The scope of banks’ duty to report suspicions: the substantive ML and TF offences The ML offences The terrorist financing offences The internal process to generate a SAR The bank-customer relationship after the submission of a SAR Evaluating the UK AML and CTF framework III: Preventing banking crises Regulation of bank capital and liquidity International bank supervisory standards The role of bank capital The Basel Accords Basel I: credit risk and the capital adequacy ratio Basel II: flexible capital requirements and market discipline Basel III and Capital Requirements Directive IV: enhanced capital and liquidity requirements Improving the quality of capital The capital conservation buffer, counter-cyclical buffer and Pillar 2 capital Additional capital requirements for banks that pose systemic risk Leverage ratios and associated buffers Regulation of bank liquidity Capital adequacy rules for insurance firms The reforms known as Basel IV The regulation of bank corporate governance, executive remuneration and senior managers accountability An overview of the conventional UK corporate governance framework Bank corporate governance: the Walker Review and the report of the Parliamentary Committee on banking standards The regulatory framework on bank board structure and risk management The regulation of executive remuneration on banks The general legal framework for executive remuneration in listed companies The regulatory framework for bank executive remuneration: general principles The regulatory framework for bank executive remuneration: the bonus cap The Senior Managers Regime Regulatory accountability mechanisms for bank directors and senior managers Conclusion FinTech and automation in banks FinTech in banks: rules, principles and automation Risks and challenges of FinTech RegTech in the banking sector The role of automation and AI in banks The virtual banking markets: Bitcoin Blockchain and digital platforms Towards banking disintermediation Conclusion IV: Managing bank failures UK banking resolution and the EU Single Resolution Mechanism Ensuring banks are resolvable: ring-fencing of domestic banking The UK Special Resolution Regime The Bank Recovery and Resolution Directive Recovery plans and resolution plans The bail-in tool MREL and total loss absorbing capacity (TLAC)The mechanics of SRM and the Single Resolution Board Stress testing Precautionary recapitalisation and State aid Conclusion Deposit insurance and banking stability The European Financial Stability Facility The European Stability Mechanism The Deposit Guarantee Scheme Directives The LOLR and deposit insurance schemes The Deposit Guarantee Network and the Capital Markets Union Conclusion The regulation of non-performing loans The implications of NPLs on bank balance sheets The regulatory treatment of NPLs The restructuring regime of NPLs Resolution options for NPLs: AMCs Out-of-court proceedings and securitisation mechanisms The EU regulatory initiatives Conclusion The impact of Brexit on the banking sector The possible Brexit scenarios and their legal impact on the banking sector EEA membership and the banking sector UK-EU free trade agreement covering financial services The UK as a third country: the equivalence framework and banks Brexit and UK bank branches in the EU Brexit and bank resolution Conclusion Post scriptum: temporary modifications to banking law and regulation in response to the Covid-19 public health emergency Overview of the global pandemic and its implications for the financial services Prudential regulatory suspensions to facilitate financing of the real economy Regulatory measures providing relief to personal borrowers Fiscal support for businesses raising debt financing during the emergency Concluding remarks Bibliography