Financial institutions advisory and financial regulatory

What’s it all about?

Financial regulation has been in the spotlight over recent years, following the destabilising events of the financial crisis, with specialist financial teams now found at the larger City firms. Some reforms are already in place, including closer oversight by regulators and recovery and resolution plans, or “living wills”, for banks in crisis. Many more are in progress, so regulatory advice is increasingly important for businesses in the financial sector.

The clients are primarily major financial institutions including banks, investment firms, hedge funds, exchanges, clearing houses, settlement systems and trading platforms. Many clients have an in-depth understanding of the regulatory regime and deal with most ongoing compliance obligations in-house.

Generally external advice is sought in more complex or changing areas or in relation to new business products and developments.

Any new business initiative by a financial institution may have regulatory implications, so the work is immensely varied, and spans the advisory, transactional and contentious spheres. Core elements are:

setting up and obtaining authorisation for new entities including banks, exchanges and clearing houses;
establishing compliance programmes and providing ongoing advice;
advising on M&A deals, outsourcings and corporate restructurings involving financial businesses;
drafting and negotiation across a range of practice areas, such as capital markets offerings, structured finance transactions and funds;
representing clients in relation to regulatory investigations, prosecutions and enforcement proceedings.

The majority of UK financial services legislation has its origins in European law. There is a strong international element, as clients operate in global financial markets and need to understand how their obligations in different jurisdictions fit together. So we work closely with colleagues in our other offices to advise clients globally.

The working culture

The working culture is quite varied as there are transactional and contentious aspects to the work as well as advisory. Sometimes there will be tight deadlines and long hours where quick answers are needed on complex issues, but in general the hours are more predictable than core transactional groups.

Junior lawyers can expect to be challenged and stimulated by the work in this area. They typically carry out legal research and assist with preparing advice to clients. They are also involved in drafting agreements and documentation and help to prepare various regulatory applications and filings.

What other practice areas do financial regulatory lawyers work most closely with?

We work closely with a very wide range of other practice areas, including corporate, finance, employment, funds/asset management, litigation, IP/IT and tax.

What is the phrase you are most likely to hear a lawyer in this area saying?

Probably something containing a number of acronyms that would make very little sense to people outside the world of financial services!

Skills required

Clients look for focused, practical solutions and lawyers who understand how their businesses work.

As this is a technical area of law, key attributes are attention to detail, plus the ability to work logically through problems and apply first principles to new scenarios. An interest in the area is vital, given the challenge of keeping up-to-date with new developments.

Recent developments:

Financial services businesses, particularly banks, exchanges, clearing houses and insurers, are facing a raft of new European legislative proposals, as regulation is tightened to deal with perceived failures highlighted by the financial crisis. In the UK, these and other significant changes to the law will be phased in over the coming years, and the main regulatory authority (the FSA) will be replaced with new regulators. The area is busier than ever and likely to be in demand for the foreseeable future.

Anna Doyle, Associate, Shearman & Sterling