Financial services

Crypto promo

The Financial Conduct Authority (FCA) has announced that any cryptoasset firms marketing to UK consumers, including firms based overseas, will soon need to comply with the new UK financial promotions regime. The FAC says it will take “robust action” against firms breaching these requirements. But to be clear, these requirements relate to the marketing of cryptoasset services, and are not a form of regulation of the services or assets themselves, which remain largely unregulated by the FCA.

This follows the government’s response, in January 2022, to a consultation over the regulation of financial promotions. The Cryptoassets Taskforce, consisting of HM Treasury, the Bank of England and the Financial Conduct Authority (‘FCA’) published a report in 2018, which found that misleading advertising and a lack of suitable information was a key consumer protection issue in cryptoasset markets. The government’s response to the consultation found that while ownership had risen, “the level of understanding of cryptoassets appears to be declining”.

On 1 February 2023, the Government published a policy statement on its approach to cryptoasset financial promotions regulation. The policy statement sets out the Government’s intention to introduce a bespoke exemption in the Financial Promotion Order for cryptoasset businesses registered with the FCA under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘MLRs’).

This exemption will enable cryptoasset businesses which are registered with the FCA under the MLRs, but who are not otherwise authorised persons, to communicate their own cryptoasset financial promotions to UK consumers. The FCA says it expects to “take a consistent approach to cryptoassets to that taken in our new rules, in place from 1 Feb 2023, for other high-risk investments”. As it explains:

“Cryptoassets remain high risk. We have repeatedly warned that consumers should be prepared to lose all of their money if they buy cryptoassets. Recent events such as the high-profile failure of several cryptoasset firms further highlight the riskiness of these products. There is unlikely to be any compensation under the Financial Services Compensation Scheme for consumers who lose money.”

The digital pound

Meanwhile the Bank of England has announced that it is “looking at the case for a digital pound” — which would not be a cryptocurrency, but rather a “central bank digital currency” worth exactly the same as an analog pound represented by notes and coins.

“The digital pound would be denominated in sterling and its value would be stable, just like banknotes. £10 in digital pounds would always have the same value as a £10 banknote. If we introduced it, it would not replace cash. We know being able to use cash is important for many people. That’s why we will continue to issue it for as long as people want to keep using it.”

Though the new currency might sometimes be referred to as “Britcoin”, the BoE also stressed that:

“The digital pound would not be a cryptocurrency or cryptoasset. As opposed to cryptocurrencies, which are issued privately, the digital pound would be issued by the Bank of England and be backed by the Government.”

The BoE has now published a Consultation Paper, which explores the need for the digital pound and proposes a set of design choices for it. However, the examples given in the announcement suggest that checking your balance and spending money would differ very little, if at all, from using a debit card via a banking or wallet app on your phone. The reasons for inventing or developing a digital pound seem to have more to do with the need to tame and accommodate the growing demand for new channels of commerce and book-keeping, such as blockchain and smart contracts. In this brave new world, suggests the BoE, what we need is an “anchor of confidence”.

“The money we issue as the UK’s central bank is the anchor of confidence in our monetary system. This type of money supports the UK’s monetary and financial stability. Today, banknotes are the only type of money we provide for the public to use. Having a digital pound could help us to keep providing this anchor for the UK.”

In days of yore, this anchor was provided by something called the Gold Standard, which in its original more literal meaning reflected the fact that for each unit of currency issued in banknote form by a central bank, there was a gold bar or gold reserves to the equivalent value stowed in the bank’s vaults. Once released from the Gold Standard, as happened during the Great Depression in the last century, central banks were at liberty to print money, and thereby to expand the money supply, manipulate exchange rates, provide Quantitative Easing, and so forth. All of which, once begun, proved almost impossible to reverse. But in the unstable world of cryptocurrencies, the analog pound or dollar remains an anchor of confidence, which the digital equivalent (if genuinely equivalent) may hope to emulate. In any event, the BoE still holds large amounts of our own and other nation’s gold reserves, and to the extent that these provide backing for the analog pound they could presumably also do for the digital.

Legal professions

Fees for all

Fees for criminal barristers instructed by the Crown Prosecution Service are to be increased to match the higher fees paid to defence barristers following the deal agreed with the Criminal Bar Association last October. Announcing the planned increase last week, Attorney General Victoria Prentis KC MP said:

“Like many, I have been concerned to hear reports that on occasion, the CPS has struggled to instruct suitably experienced counsel to prosecute complex cases, especially those involving rape and serious sexual offences. Ensuring that victims’ voices are heard requires prosecutors, delivering a core part of this Government’s commitment to breaking down barriers to justice.”

There remains the unresolved issue of legal aid for criminal solicitors, who have also been lobbying for an increase. Now that may be the subject of judicial review. Last month the President of the Law Society, Lubna Shuja, announced that they had sent a pre-action letter to the UK government challenging its approach as “unlawful and irrational”.

“We argue the Lord Chancellor’s decision not to remunerate solicitors by the bare minimum 15% recommended by the government’s own independent review is unlawful” said Lubna Shuja. “The government is choosing to ignore the economic advice and analysis which Lord Bellamy’s review team painstakingly produced, using data the government itself supplied. Instead, the government is implementing policies that run against the rationality of the review it commissioned and accepted.”

Civil review

Also waiting for a raise are civil legal aid practitioners. Although the government announced its review of civil legal aid last month, the review is not expected to report till next year. Announcing the review, Lord Bellamy KC (who chaired the independent review on criminal legal aid himself, but is now a justice minister) said:

“It will encompass all categories of civil legal aid provision, with in-depth analysis into areas including family, housing, mental health, education, discrimination and immigration. It will also consider value for taxpayers’ money of future policy options and take into account wider budgetary restraints on the department. As well as an assessment of how such systems work in other comparable countries, the review will also include publications of further data on how civil legal aid is accessed and delivered across England and Wales to help inform future decisions.

The government has issued a tender inviting third parties to bid to undertake the external analysis. But how generous will it be, given the “wider budgetary restraints on the department”? Whatever figures the review comes up with, Lord Bellamy, who in a previous life was chairman of Linklaters global competition practice, might find himself wondering where the decimal point has gone.

Still not happy?

Money isn’t everything, of course. The general perception is that solicitors in big city firms have little to worry about on that score, but the latest Lawyer Satisfaction Survey from Law360 UK Pulse (January ’23) suggest they may have other gripes. The survey quizzed what it quaintly calls “attorneys” at law firms ranging in size from high street to the Magic Circle. Some revealing answers have been collected under the heading “Common Misconceptions About Practising Law”:

  • “Nonlawyers think we are high earning and money-hungry: it’s more often that we are exploited by clients wealthier than our- selves who are reluctant to pay.”
  • “The study of law is fascinating. The practice of it is, for the most part, routine and uninteresting. Recent ‘advances’ in IT have left some parts of my job as little more than box ticking.”
  • “Yes, incomes are high in the City but when this just goes towards large mortgages for modest housing in the South East then the job does not provide the financial security that it did for older generations, which calls into question whether the deal is still fair.”
  • “Can’t think of anything good about it. The first five years were interesting. It has been downhill since then.”

Oh dear! But there are others who evidently relish the challenges of the job and the opportunity to help their clients. Under the heading “What Makes It All Worthwhile”, they offer:

  • “Involvement in a range of clients and complementing sectors, so a broader aspect of life than if you were pigeon holed into one sector or company (and more opportunities for a booze-up).”
  • “As a family lawyer, it is helping people end a difficult and painful chapter and start a new one. Helping parents spend time with their children if there have been issues.”

New Law Journal: UK Pulse Survey finds work-life balance worsening

Media law

UK ranked low on media freedom

Major new global free expression index sees UK ranking stumble across academic, digital and media freedom, according to the Index On Censorship, announcing the publication of its new global ranking of freedom of expression (aka the “Index Index”). Factors such as the government’s Online Safety Bill were said to represent “backward steps for a country that has long viewed itself as a bastion of freedom of expression”.

“In the overall rankings, the UK fell below countries including Australia, Israel, Costa Rica, Chile, Jamaica and Japan. European neighbours such as Austria, Belgium, France, Germany and Denmark also all rank higher than the UK.

The Index Index, developed by Index on Censorship and experts in machine learning and journalism at Liverpool John Moores University (LJMU), uses innovative machine learning techniques to map the free expression landscape across the globe, giving a country-by-country view of the state of free expression across academic, digital and media/press freedoms.”

Lest this give too gloomy an impression, the UK seems to be ahead of most countries, its overall ranking being Partially Open, equivalent to the USA, though less open than Australia and the Nordic countries. The worst countries were places like China, Saudi Arabia and Belarus, categorised as Closed; rather surprisingly, Russia is categorised as slightly less bad, being merely Heavily Restricted, along with Egypt and Cambodia.

There is an interactive map and table here. But this just gives the rankings of each country under Academic, Digital, and Media/press freedom: there doesn’t appear to be an accessible set of underlying data to understand what factors drove these rankings. Perhaps that’s because the whole thing was put together using machine learning, a process inherently somewhat lacking in transparency.

International rule of law

New Indonesian penal code

Indonesia’s new penal code threatens human rights, according to the International Bar Association. The government of Indonesia announced a finalised version of its new criminal code at the end of 2022, to replace the version imposed on the country by the Dutch during their colonial rule.

But critics say it diminishes human rights and is representative of a broader trend of suppression taking place across Southeast Asia, where freedom of expression is already under threat. The new code will criminalise insulting the president and other national figureheads, alongside state institutions and the national flag. Blasphemy, rallies and demonstrations and the spreading of views that run counter to the secular national ideology, known as the Pancasila, will also be outlawed.

“The new code’s rules on defamation, alongside the country’s lack of action on the spread of misinformation, infringes upon human rights and shrinks the civic space further, says Wirya Adiwena, Deputy Director of Amnesty International Indonesia. ‘[The code] will give the tools to those who are in power to criminalise people who are voicing their dissent peacefully,’ he adds.”

Recent case summaries from ICLR

A selection of recently published WLR Daily case summaries from ICLR.4:

EXTRADITION — European arrest warrant — Grounds for non-execution: Criminal proceedings against Puig Gordi, 31 Jan 2023 (Case C-158/21); EU:C:2023:57; [2023] WLR(D) 73, ECJ

HOUSING — Homeless persons — Suitability of accommodation: R (Yabari) v Westminster City Council, 31 Jan 2023 [2023] EWHC 185 (Admin); [2023] WLR(D) 71, KBD (Ritchie J)

INSOLVENCY — Winding up — Fraudulent trading: Bilta (UK) Ltd v Tradition Financial Services Ltd (Bilta (UK) Ltd v SVS Securities plc), 10 Feb 2023 [2023] EWCA Civ 112; [2023] WLR(D) 75, CA

NUISANCE — Private — Japanese knotweed: Davies v Bridgend County Borough Council, 03 Feb 2023 [2023] EWCA Civ 80; [2023] WLR(D) 70, CA

PRACTICE — Civil proceedings — Economic sanctions: PJSC National Bank Trust v Mints, 27 Jan 2023 [2023] EWHC 118 (Comm); [2023] WLR(D) 69, KBD

SOCIAL SECURITY — Welfare benefits — Universal credit: R (K) v Secretary of State for Work and Pensions, 07 Feb 2023 [2023] EWHC 233 (Admin); [2023] WLR(D) 74, KBD (Steyn J)

Recent case comments on ICLR

Expert commentary from firms, chambers and legal bloggers recently indexed on ICLR.4 includes:

Free Movement: Immigration officers don’t have to corroborate your story: R (Pereira Campos v Secretary of State for the Home Department) [2022] EWHC 3299 (Admin), KBD

A Lawyer Writes: Complacency bordering on cynicism: Senior family judge shocked to see Department for Education washing its hands of chronic problem: Re X (Secure Accommodation: Lack of Provision) [2023] EWHC 129 (Fam), Fam D

Law and Policy Blog: Whole Life Orders when there is not loss of life: R v Carrick (David) Sentencing remarks, Crown Ct

Law and Policy Blog: Is it, at last, time to say “good bye” to Thoburn and the idea of “constitutional statutes”? Thoburn v Sunderland City Council [2002] EWHC 195 (Admin); [2003] QB 151; [2002] 3 WLR 247; [2002] 4 All ER 156, DC

A Lawyer Writes: Open justice in the Court of Protection: New guidance says closed hearings must be a last resort: Closed Hearings’ and ‘Closed Material’: Guidance [2023] EWCOP 6, Ct of Protection

Law & Religion UK: Ordination training and employment status: Grabe v United Reformed Church: Judgment PDF, ET

And finally…

Tweet of the week

Relates to a leading lawyer’s support for, and by, the beautiful game:

As Adam Wagner explains in the thread, Lord Pannick KC has been engaged by Manchester City FC to represent them in a case about their finances. The wording of the banner is a reference to an old song by Mancunian rock band The Smiths.

That’s it for now. Thanks for reading, and thanks for all your toots, tweets, posts and links. Work hard, be kind, take care.

This post was written by Paul Magrath, Head of Product Development and Online Content. It does not necessarily represent the opinions of ICLR as an organisation.