Regulatory Affairs Newsletter: November 2024

The Importance of Workplace Culture: FCA’s Take on Non-Financial Misconduct

The FCA recently released its non-financial misconduct survey, spotlighting how firms in the wholesale sector, including investment banks and brokers, are handling misconduct allegations. With reported cases on the rise, particularly in bullying, harassment, and discrimination, the FCA is sending a strong message: culture matters. Healthy workplaces lead to healthy markets – a concept equally relevant in precious metals as it is in finance.

While high complaint numbers might initially look concerning, they could indicate a culture that encourages transparency and accountability. The FCA hopes firms will benchmark against these results to strengthen their internal processes. For us in the precious metals sector, fostering an environment where employees feel safe reporting issues is not just compliance – it’s key to maintaining trust and confidence across the industry.

Check out the latest episode of our podcast where LBMA's Compliance Officer Graham Jelf discusses the significance of culture with Katharine Leaman, the CEO at Leaman Crellin, a consultancy specialising in regulatory compliance services.

The Future of Money and Payments: BoE's Andrew Bailey on Digital Modernisation

Andrew Bailey (Governor, Bank of England) recently spoke on “The Future of Money and Payments,” outlining a vision to modernise payment systems, especially in cross-border transactions. He emphasised the role of digital technology in preventing fraud and managing payments efficiently. Bailey acknowledged the complexities, particularly the cost of modernising infrastructure and the potential disruption to traditional systems. However, the message is clear: progress waits for no one, and the industry must keep pace. You can find the full speech on the Bank of England's website.

Digital Securities Sandbox: UK's Testbed for Innovation

The Bank of England and the FCA have launched the Digital Securities Sandbox (DSS), designed to test emerging technologies like distributed ledgers in the issuance, trading, and settlement of securities. The DSS aims to foster innovation while upholding financial stability, offering a glimpse into how digital tools might streamline post-trade processes. Whether it’s tokenised assets or smoother trade settlements, the sandbox could promote innovation in our industry’s infrastructure.

Sanctions Talk: The G7's Potential Sanctions on Russian Metals

The G7 is contemplating sanctions on Russian palladium and titanium, a move spearheaded by the U.S. to further isolate Russia economically. It’s a space we’re watching closely, given the impact of such sanctions on supply and responsible sourcing.

Balancing Protection and Progress: LBMA Supports IPMI and ReMA's Call for Thoughtful Legislation on Catalytic Converter Theft

Sticking with PGMs, LBMA is supportive of the International Precious Metals Institute (IPMI) and the Recycled Materials Association (ReMA) in their proactive efforts to address the issue of catalytic converter theft while safeguarding the integrity of the precious metals recycling industry. The recent joint call for a collaborative approach, in response to Senate Amendment 2422 of the proposed National Defense Authorisation Act (NDAA) for Fiscal Year 2025, underscores the need to balance legislative action with the economic sustainability of key industries. LBMA recognises the essential role the recycling industry plays in the circular economy, ensuring critical metals are recovered and reused effectively. We echo the sentiment that solutions to theft must be crafted carefully to avoid unintended disruptions to domestic smelting operations and the broader supply chain, which are vital to both the economy and national security. LBMA stands in support of IPMI and ReMA’s continued advocacy for legislative approaches that foster safety and sustainability without compromising industry progress.

ESG Corner

Global Investor Commission on Mining 2030

The Global Investor Commission (GIC) on Mining 2030 has published its Landscape Report, pushing for a sustainable mining industry through investor engagement and stronger regulatory frameworks. With backing from asset managers and pension funds representing over $15 trillion in assets, the GIC’s objectives align well with LBMA’s ongoing commitment to responsible sourcing and ESG practices. Highlights include promoting equity and transparency in decision-making and working towards safe mine closures. This initiative reinforces the idea that the future of mining is as much about social responsibility as it is about profitability.

Australia's Mandatory Climate Disclosures

Australia has finalised its mandatory climate disclosure standards (AASB S2), due to take effect in January 2025. These standards require companies to report on climate-related risks and impacts, aligning closely with the IFRS Sustainability Standards. Australia is also setting the groundwork for mandatory climate-related disclosures, adding further pressure on global mining companies to keep sustainability at the forefront.

Canada's Move Toward Mandatory Climate Disclosures

Canada is also stepping up with plans to mandate climate-related disclosures for federal corporations. Alongside this, Canada is developing a voluntary sustainable investment taxonomy to drive private capital toward lower-emission activities. As ESG-focused investing continues to gain traction, these frameworks serve as a reminder that our industry’s commitment to sustainability must remain robust and adaptable.

Greenwashing: CMA Issues Guidance for the Fashion Industry

The UK’s Competition and Markets Authority (CMA) recently released guidance for the fashion industry on avoiding greenwashing in environmental claims, and thus may apply to the jewellery sector. The CMA warns that vague terms like “green” or “sustainable” without concrete backing are misleading. This proactive stance reflects broader trends, particularly as the CMA prepares to enforce the Digital Markets, Competition, and Consumer Act 2024, which could result in fines up to 10% of global turnover for misleading practices.

Compliance Roundtables: Let's Talk About What Matters

Our recent Compliance Roundtables brought to light a range of topics members want to dive deeper into, from ESG to financial crime. We’re planning future sessions to include sector-specific insights while ensuring an inclusive approach. Watch this space for dates and agendas – your feedback has been invaluable in shaping these sessions to make sure we’re addressing the topics that matter most to you.

Podcast Spotlight

Don’t forget to tune into our latest episodes:

• Behind the Numbers: I sit down with Neil Harby (Chief Technical Officer, LBMA) to discuss the new 2022 Country of Origin report and what it means for transparency and responsible sourcing.

• Building a Responsible Supply Chain: I chat with Alan Martin (Head of Responsible Sourcing, LBMA) about the challenges and progress in formalising artisanal mining into the precious metals supply chain.

Thank you for taking the time to engage with this latest update in regulatory affairs. Navigating these evolving dynamics can be complex, but staying informed is half the battle. We’ll be back soon with our insights on what’s on the horizon for 2025. Until then, we welcome any questions or feedback you may have. Please reach out to us at compliance@lbma.org.uk.