Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services industry. Listen to this week's Legal Shorts on CLTV by going to http://vimeo.com/cummingslaw If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers. Claire Cummings 020 7585 1406 claire.cummings@cummingslaw.com www.cummingslaw.com

1.
Welcome to Legal Shorts, a short briefing on some of the week’s developments in the financial services
industry.
Listen to this week's Legal Shorts on CLTV by going to http://vimeo.com/cummingslaw
If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com
Autumn Statement
HM Treasury announced on 8 September 2016 that the Chancellor, Philip Hammond, will deliver
his first Autumn Statement to Parliament on Wednesday 23 November 2016. The date of
publication of draft legislation for the Finance Bill 2017 has yet to be announced.
CMU update
The European Commission has announced that it will be accelerating its Capital Market Union
reforms and has provided an update on the state of play of the CMU action plan initiatives. In a
communication this week, the Commission has outlined its plans for finalising the first wave of
CMU measures, for accelerating delivery of the next phase of CMU actions, and for developing
further priorities. The communication is addressed to the European Parliament, the EU Council,
the ECB, the European Economic and Social Committee (EESC) and the Committee of the
Regions. The CMU action plan, which identified the priority actions needed to put the building
blocks of the CMU in place by 2019, was launched in September 2015.
Commission publishes speech by Lord Hill’s replacement
The European Commission has published a speech by Vice-President Valdis Dombrovskis, which
sets out his approach to the financial services portfolio he has taken over from Lord Hill, which
includes the CMU action plan. Vice-President Dombrovskis explains that the approach taken will
be in part shaped by the political challenge presented by the UK referendum result. The priorities

2. identified by Vice-President Dombrovskis include: (i) a mid-term review of all CMU actions by
the Commission in 2017; (ii) to focus on how to safely reduce burdens from the dual reporting
obligation, particularly for non-financial firms in the EMIR review; and (iii) to set out the
Commission’s proposed way forward in the light of the responses it received to its call for
evidence on financial services legislation by the end of 2016.
ECB opinion on EuVECA and EuSEF Regulations
The European Central Bank has published an opinion on the proposed Regulation amending the
EuVECA Regulation and the EuSEF Regulation. In the opinion, the ECB supports the aims of the
proposed Regulation, which it sees as a key part of the CMU action plan. The ECB's opinion
includes comments on the conditions to be met by managers when registering EuVECA and
EuSEF funds. The ECB considers that the information should include the global LEI for
identifying the funds and their authorised managers, as well as the ISIN to identify the shares to
be marketed. The ECB believes that this will improve the reliability of this information and
enable effective implementation of monetary policy.
EMIR: ESAs reject final draft RTS on risk mitigation techniques
The European Supervisory Authorities (ESAs) have rejected the European Commission's
proposed amendment to the final draft RTS on risk mitigation techniques for OTC derivatives that
are not cleared by a CCP under Article 11(15) of EMIR. Key concerns of the ESAs include: (i) the
need for clarity that non-centrally cleared derivatives concluded by CCPs are not covered by
EMIR; (ii) the need for clarification of the application of the RTS to transactions concluded with
third country counterparties, in particular non-financial counterparties; and (iii) that the
calculation of the threshold against non-netting jurisdictions should consider both legacy and new
contracts. The ESAs consider that the proposed amendments in each case could lead to
unintended consequences. Where the ESAs reject the Commission's amendments, they invite the
Commission to restore the original proposals. The ESAs have also requested that some of the
points among the Commission's changes that have been made to clarify the RTS be reviewed or
improved.
Court rules on negligent financial advice
The recent case of O'Hare and another v Coutts & Co [2016] EWHC 2224 (QB) concerned the
duty of care when giving financial advice. The court adopted the approach taken by the Supreme
Court in a Scottish medical negligence case (Montgomery v Lanarkshire Health Board [2015]
UKSC 11) by focusing on what the claimant, as an informed investor, would expect to be told and
not on whether the defendant had advised in accordance with a practice accepted as proper by a
responsible body of persons skilled in the giving of financial advice. The judge was influenced in
his decision by the fact that the expert evidence indicated that there was little consensus in the
industry about how to manage the risk appetite of clients. The decision suggests that the giving of
investment advice is not simply an exercise of professional skill; an informed investor, like a
medical patient, is entitled to decide the risks that he is willing to take and has to take
responsibility for his own mistakes. The negligence claim was dismissed and the court held that
the defendant had not breached its duty (in contract and in tort) to exercise reasonable skill and
care when advising the claimants on making certain investments.

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Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
16 September 2016