Regulation Watch aims to provide members with updates on the activity of the sector's regulators, highlighting areas of specific interest.
Recommended - highlights speeches, videos and audio relating to hot topics
Recent News - a digest of some of the most relevant publications and updates released by the main regulatory bodies
Seizing the Opportunities from Digital Finance: This speech is not exactly the one deilvered by Andy Haldane, Chief Economist at the Bank of England and Member of the Monetary Policy Committee. Andy spoke of the regional economic imbalance across the UK. There were issues pre-COVID, such as gaps in financing SMEs, which are only increased by the pandemic. We will attempt to get hold of the speech as it was very informative and thought provoking. It concluded by returning to the published script and how the opportunities offered by digital might support the need to level up.
The potential long-term effects of Covid The Bank of England's Deputy Governor for Markets and Banking, Dave Ramsden, looks at the impact of the Covid pandemic on the UK economy. He examines what the long-term effects are and how the economy is likely to respond.
Strong and simple: In this speech, the PRA's CEO, Sam Woods, explains where to next for the regulator when certain limitations are removed upon our withdrawal from the EU. Without getting overly technical, this is an informative look at where we can expect changes in UK regulation of small deposit-takers and how he believes this will contribute to his vision of the future UK regulatory framework that has high regulatory standards, offers responsible openness to those seeking to invest, and a dynamism that keeps pace with developments in the sector. That is once they can decide what 'small' means!
Acting flexibly and treating customers fairly in the face of a pandemic: A worthwhile read for those working in consumer credit. In this speech, the FCA’s Jonathan Davidson outlines the priorities as the regulator sees them, during the current phase of this pandemic. This includes a focus on vulnerability, the expectations around forbearance and the oeprational challenges to be overcome.
Is home working good for you? A really interesting speech by the Bank of England's Andy Haldane, in which he looks at the impact home working has had on productivity and output, through well-being and happiness to the impact on creativity and relationships. Sadly, I couldn’t access the Engaging Business report which he refers to – if I do I’ll post the link here.
Evolution of a new model for financial regulation in the UK: As he prepares to stand down as Interim Chief Executive of the FCA on 30 September 2020, Chris Woolard looks at what lessons the regulator can should be taking from Covid-19 so far in terms of society, technology and the manner in which the FCA regulates; what changes might the FCA need to make to meet some of these challenges; and, as we transition out of the EU, what kind of regulation does the UK need?
Reinventing the wheel (with more automation): In this speech, Governor of the Bank of England, Andrew Bailey, looks at innovations in payments and the challenges they bring. He examines the benefits and risks that so-called ‘stablecoins’ present and the considerations needed for their regulation. You can also read his thoughts on the concept of a central bank digital currency.
Payments after the COVID crisis – emerging issues and challenges: The Bank of England's Christina Segal-Knowles talks about changes to the way people pay for goods and services and the impact Covid-19 has had on that. She goes on to explore how digital currencies fit in and what central banks can and are doing in response to this innovation.
A financial system to support the recovery: As we move into the next phase of the Covid-19 crisis, FCA Chair Charles Randall discusses what kind of financial system is needed for the recovery of the UK's economy, and what kind of financial conduct regulator is needed to support that system.
Emergency regulation and learning from the coronavirus crisis: The first podcast by Chris Woolard in his role as FCA Interim Chief Executive discusses how the regulator's work has had to be reprioritised. There is an interesting section relating to the transition to a carbon neutral economy too [approx. 16min in].
Financial System Resilience: Lessons from a real stress; An interesting speech from Sir Jon Cunliffe, Deputy Governor of the Bank of England. He looks at how resilient the banking system has been during the current pandemic.
COP26 Postponed: The COP26 UN climate change conference set to take place in Glasgow in November 2020 which was postponed due to COVID-19 has been rescheduled. It will now take place in Glasgow from 1st to 12th November 2021 and in partnership with Italy.
The first lesson from the pandemic: state-of-the-art technology is vital: This blog from Pentti Hakkarainen, Member of the Supervisory Board of the European Central Bank takes a look at how banking in Europe has been coping during the Covid-19 epidemic. With the necessity to adapt quickly, it considers the issues of digital transformation; the need for a focus on operational resilience and cyber security, and for boards to fully understand the risks associated with innovative technologies.
Wake up to Money: Stephen Jones of UK Finance gives his perspective on the banks' response to the Government's Coronavirus Business Interruption Loan Scheme (CBILS) on the BBC's Wake up to Money on 1st April 2020. Stephen is interviewed from approx. 25 min into the recording.
Statement from the Bank of England: In these unusual times, this provides a good outline of the measures the Bank and PRA are taking to provide flexibility to help firms maintain their safety and soundness and deliver the critical functions they provide to the economy during the Covid 19 Pandemic.
Transforming Culture in Financial Services - Driving Purposeful Cultures: The FCA has published this discussion paper [DP20/01] which contains a collection of essays on purpose. The intention is 'to share insights, highlight the importance of the topic and encourage broader discussion so firms understand the importance of focusing on their own purpose’. It features a key essay on professionalism, written by the Chartered Bodies Alliance [read here], as well as an essay on purpose in Retail Banking, written by our own CEO Simon Thompson which can be read here.
Our approach to ensuring firms treat vulnerable customers fairly: A speech by Nisha Arora, FCA Director, Consumer and Retail Policy, in which firms are reminded that the regulator’s aim is to see its forth coming Guidance on the fair treatment of vulnerable customers embedded in firms’ culture, processes and practices. It looks like the revised Guidance will be consulted upon this Spring with a view to finalised Guidance being published later this year - see below news section for background to the Guidance.
It’s time to talk about money: A very accessible and interesting speech by Sir Jon Cunliffe, Deputy Governor at the Bank of England, on the future of money. He considers money in its physical cash form, as electronic ‘commercial bank money’ through to the concept of stablecoins. Should central banks leverage new technologies to provide new electronic forms of central bank money as a complement to existing physical banknotes? It’s a good read.
The Road to Glasgow: Speech by Mark Carney, Governor of the Bank of England, at the launch of the COP26 Private Finance Agenda.in which he states: “2020 must be a year of climate action where everybody’s in”.
Big Changes in Retail Banking: A blog from the Competition and Markets Authority (CMA) which takes considers the impact on customers of the banking reforms it introduced 2 years ago and takes a look forward to what further developments we can expect this coming year.
Penalties, remediation, and General Principles: Speech by Mark Steward, FCA Executive Director of Enforcement and Market Oversight, in which he discussing financial penalties as a deterrent, how it differs from the purpose of enforcement and offers some observations from issues arising from cases regulatory over the last 12 months, involving breaches of the General Principles.
FCA Interim Chief Executive named: Chris Woolard, currently the FCA’s Executive Director of Strategy and Competition, has been named as the interim CEO of the regulator. He will take on the role when Andrew Bailey departs this March to become Governor of the Bank of England. It has also been announced that Sheldon Mills is to be the Interim Executive Director of Strategy and Competition when Mr Woolard steps into the CEO role.
Challenges and Achievements: This is the final FCA Insight podcast from outgoing CEO Andrew Bailey, in which he notes his pride in the regulator’s work, particularly with regard to vulnerable consumers and high cost credit. He flags the unique role of the FCA [when compared to other regulators internationally] in leading retail conduct regulation and calls on large technology companies to work with the regulator to help protect consumers.
Global regulation, local solutions: Thoughts from Nausicaa Delfas, Executive Director of International at the FCA, on the role of global regulators in ensuring firms can compete on a level playing field across jurisdictions, and in reducing opportunities for regulatory arbitrage. She also touches on what lies ahead for the regulator following the UK's withdrawal from the EU.
Sustainable Finance Factsheet: The EU has put together this simple but informative fact sheet outlining its commitment to three ambitious climate and energy targets by 2030.
Is this the decade of the Credit Union?: Speech by Charles Randell, Chair of the FCA, delivered at the National Credit Union Forum, in which he references recent research on unaffordable debt and highlights the work the FCA has committed to with a view to improving financial resilience and providing more alternatives to high cost credit.
Getting to the Core of Culture: John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, speaks about the importance of 'principled decision making and accountability' rather than relying exclusively on rules and policies, as the most effective safeguard against wrongdoing and unethical behaviour.
Regulation in a Changing World: This speech by Christopher Woolard, Executive Director of Strategy and Competition at the FCA, sets the context for why now is the time to consider what the future of regulation might look like. He outlines that, in addition to the anticipated consultation on Duty of Care [see below for background] and review of the Handbook, there will be an open invitation to all to engage with thoughts and ideas about the future of regulation, and a review of the Principles themselves.
Understanding Pay Gaps: An interesting speech by the Bank of England's Andy Haldene which gives some fascinating insight and statistics about gender and ethnic minority pay gaps.
Turning Technology Against Financial Crime: The FCA's Executive Director of Supervision, Megan Butler uses this speech to talk about on how technology can be used to detect and disrupt financial crime, and ultimately the criminals who seek to exploit the system. She refers to the establishment of the Analytics Centre of Excellence, an internal initiative to drive the use of data science, machine learning and AI across the whole of the FCA.
Machine Learning in UK Financial Services: An interesting blog by a team at the Bank of England which outlines the findings of a joint survey with the FCA in 2019 to better understand the current use of machine learning (ML) in UK financial services. This included the finding that the median firm uses live ML applications in two business areas, and this is expected to more than double within the next three years.
UN Principles for Responsible Banking: On 22 September 2019, 130 global banks became the founding signatories of the UN Principles for Responsible Banking yesterday at the UN General Assembly in New York. The Principles aim to promote sustainable and responsible banking - you will find our programmes cover these as green finance and professionalism in banking. For our response please see our news section.
Improving the suitability of financial advice: Although this speech by Debbie Gupta, Director of Life Insurance and Financial Advice Supervision at the FCA is aimed specifically at the financial advice community, there are some aspects which we might all usefully note. "Challenging misconceptions and client education is core to good advice. It is valuable. You are the experts. You will always know more than your client. And we expect your expertise to support your clients in this way. It is what we expect of the services you are paid to provide."
The future of regulation: AI for consumer good: Speech by Christopher Woolard, FCA Executive Director of Strategy and Competition which outlines recent findings on how AI is currently being used in the financial services sector as well as flagging the need for sound governance around the use of AI and machine learning. The FCA are working with the Alan Turing Institute to explore the transparency and 'explainability' of AI in the sector and we can expect more later in the year/start of 2020.
Open letter on climate related financial risks from the Governor of Bank of England Mark Carney, Governor of Banque de France François Villeroy de Galhau and Chair of the Network for Greening the Financial Services [NGFS] Frank Elderson. It outlines the role of central banks but reminds us that 'climate change is a global problem, which requires global solutions, in which the whole financial sector has a crucial role to play'. This was timed to highlight the publication of the NGFS Call for Action which is accompanied by a short explanatory video.
Avoiding the storm: Climate change and the financial system: Sarah Breeden, Executive Director, International Banks Supervision at the bank of England, adds her voice to the rallying call for firms to take climate change seriously and to take action now. This times with the release of the PRA's Policy and Supervisory Statements on Enhancing banks’ and insurers’ approaches to managing the financial risks from climate change. You can also read our blog series on climate change.
Less cash, but not cashless: Speech in which Sarah John, Chief Cashier at the Bank of England makes it clear that ensuring that people can continue to choose to use cash isn’t something that the central bank can do alone. Sarah John also spoke at one of our events recently: you can watch this online.
Guidance on the fair treatment of vulnerable customers: The FCA has revised its draft guidance and provided feedback on its consultation last summer (GC19/30) on this important topic. The aim of the proposed guidance is to make clear what firms should be doing to ensure fair treatment and to develop some consistency in outcomes. Ultimately it seeks to address what more needs to be done to embed in firms’ a culture of doing the right thing for vulnerable, and indeed all, consumers. This phase of the consultation will close on 30 September.
Regulatory Initiatives Grid: The Financial Services Regulatory Initiatives Forum has published its second grid which sets out the regulatory pipeline across the Treasury [HMT], Bank of England [BoE], Financial Conduct Authority [FCA], Prudential Regulation Authority [PRA], Payment Systems Regulator [PSR] and the Competition and Markets Authority [CMA]. It also includes some important work from the Information Commissioners Office (ICO). The GRID is published at least twice a year to help manage the operational impact on firms of implementing initiatives from the Forum members. It outlines timings for initiatives that are multi-sector as well as sector specific work. The Forum continues to encourage feedback to ensure the Grid is as useful as possible.
Mortgages and Covid -19: The Financial Conduct Authority (FCA) has updated its guidance to firms setting out enhanced support that should be available to mortgage borrowers experiencing payment difficulties as a result of coronavirus. The guidance will be fully in force from 20 November but firms are encouraged to adopt it sooner if they can. This guidance supplements the FCA’s guidance ‘Mortgages and coronavirus: Updated guidance for firms’ (‘published in June ) and sets out the FCA’s expectations of firms in relation to dealing with customers that continue to face difficulty.
Access to Cash: The FCA published a limited period consultation on draft guidance for firms with regard to maintaining customer access to cash. The draft guidance set out the regulator's expectations for banks, building societies and credit unions when considering the closing of branches or ATMs, or converting a free to use ATM to pay to use. The consultation closed at the end of July and the draft guidance can be accessed via the FCA's website.
New FCA CEO announced - HM Treasury have announced the appointment of Nikhil Rathi as the new permanent Chief Executive of the Financial Conduct Authority (FCA). A statement from the FCA can be viewed here.
Consumer Credit - The FCA Board has announced a review of the unsecured credit market, to be led by Chris Woolard. The Review will concentrate on how regulation can better support a healthy unsecured lending market. It will take into account the impact of the coronavirus on employment security and credit scores, changes in business models and new developments in unsecured lending including the growth of unregulated products in retail and the workplace. For more details view the FCA press release here.
To read about the existing expectations of the regulator with regards to the support firms should be providing for customers with credit cards and other revolving credit (store card and catalogue credit) and personal loans coming to an end of a payment freeze, please visit the FCA website.
Access to Cash - As High Streets prepare to re-open, more shops will rely on the availability of cash and the ability to access banking services such as deposit facilities to be able to operate. The Financial Conduct Authority and the Payment Service Regulator have outlined their approach to ensure that those who need to access and deposit cash can do so. Read more here. They have also collaborated with other regulators and the sector to create a single database of the UK’s cash access points. This will be used to monitor where access to cash ‘cold spots’ are emerging and coordinate the industry response to ensure that vulnerable and self-isolating groups can continue to access cash.
Senior Managers and Certification Regime (SM&CR) and coronavirus (Covid-19): The FCA continues to update its guidance with regard to its expectations of Senior Managers and firms. It refers back to its advice on identifying key workers and the work/travel responsibilities of Senior Managers. Keep track of the full set of FCA guidance and news with regard to the current epidemic here. Further guidance has also been published on the FCA expectations under the Approved Person Regime during the current pandemic.
FCA Business Plan 20/21: This much shorter than usual plan outlines the regulator's priorities whilst acknowledging that under the current circumstances [Covid 19] it may be some time before it can fully action these plans. Priorities include protecting the vulnerable, ensuring customers and small firms are treated fairly and tackling scams. you can view the plan and a short introductory video on the FCA website.
Basel 3.1 implementation delayed: The Group of Central Bank Governors and Heads of Supervision (GHOS) have announced that the implementation of the Basel 3.1 standards will be delayed by one year. This is to provide operational capacity for banks and supervisors to respond to the immediate financial stability priorities from the impact of Covid-19. In a joint statement the PRA and HMT welcomed this announcement and committed to the timetable to ensure implementation in the UK consistent with the delay.
Sector Views: The Financial Conduct Authority [FCA] has published its annual Sector Views. These are used to inform the FCA’s Business Plan, helping the regulator assess where its focus should lie. Amongst the concerns is the fact that 7.4 million UK adults are over-indebted and find their financial commitment a burden. The analysis also shows that many of the harms are created by a significant number of regulated smaller firms regulate or firms beyond the FCA’s remit.
Cash Savings: The Financial Conduct Authority [FCA] has published a consultation Introducing a Single Easy Access Rate for cash savings. This forms part of the work resulting from the Competition and Markets Authority (CMA) recommendations to address the so-called 'loyalty penalty' and is in line with the FCA's own priorities with regard to the fairer treatment of long-standing and vulnerable customers. The proposals focus on reducing the number of interest rates offered on easy access savings accounts. The consultation closes on 9 April 2020. The CMA appears to welcomes these steps and the fact there is a clear timetable set out for implementing any new rules and assessing their impact in a speedy way.
FCA Register: The FCA has replaced its Financial Services Register with an enhanced Financial Services Register. The enhanced Register has a new look and includes improvements made in response to user feedback. The intention is that these changes will make it easier to find and understand information on the Register - why not take a look and sending your feedback! We also await further information about how the directory of certified and assessed persons will be added to the Register, which is expected to happen later this year. At this time this leaves some confusion as, for example, advisers offering regulated investment advice and falling under the Certification regime, rather than the Senior Managers regime, appear with the message 'Regulatory approval no longer required'. We anticipate once the new directory is added this will read something like 'Approved by firm'.
From Gabriel to RegData: The first firms will be moved from the FCA reporting system Gabriel to the new RegData platform over the weekend of 17 and 18 October. Those firms will then complete their regulatory reporting on RegData. Firms will continue to be moved to RegData from Gabriel in the coming months as remaining users are moved across in stages, based on their reporting requirements. See the FCA website for more details.
Regulators Focus on Climate Change Related Risks: In October 2019 the FCA published its Feedback Statement to the 2019 Discussion Paper on Climate Change and Green Finance. Consistent with our feedback, the regulator appears to favour a “comply or explain” approach to encourage more consistent disclosures in capital markets and has committed to taking a tougher stance on “greenwashing” by firms. We anticipate a consultation paper in early 2020 proposing new disclosure rules for certain issuers aligned with the TCFD’s recommendations and clarifying existing disclosure obligations relating to climate change risks. The FCA also published a statement on the joint work with the Financial Reporting Council in this regard, the latter updating its Stewardship Code for 2020.
The Bank of England meanwhile has published a discussion paper to consult on its proposals for stress testing the financial stability implications of climate change as part of the 2021 biennial exploratory scenario (BES). This is designed to test the resilience of the current business models of the largest banks, insurers and the financial system to climate related risks and therefore the scale of adjustment that will need to be undertaken in coming decades for the system to remain resilient. This follows on from the Prudential Regulatory Authority supervisory statement aimed at enhancing banks’ and insurers’ approaches to managing the financial risks from climate change, published in April 2019.
Duty of Care: The FCA had originally indicated that a consultation paper would be published in Autumn 2019. The feedback to the original discussion paper, indicated that the FCA was looking at how it applies the existing regulatory framework, and considering revision of/addition to its Principles for Business. We were satisfied with this approach as it follows the recommendations made in our response to the discussion and look forward to engaging with the next steps which we now hope to see published in late 2020.
Financial Inclusion and Capability: The Treasury has released its first report outlining the progress made against its objectives. It does not reveal much that is new to followers of this topic, but neatly summarises the number of government led/supported initiatives ongoing.
Cryptoassets: The FCA is now the anti-money laundering and counter terrorist financing (AML/CTF) supervisor for businesses carrying out certain cryptoasset activities under the amended Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLRs). This means that UK businesses undertaking cryptoasset must register with the regulator. Details can be found on the FCA website. In 2019 the FCA published two pieces of research looking at UK consumer attitudes to cryptoassets, such as Bitcoin or Ether. The research includes qualitative interviews with UK consumers and a national survey. Christopher Woolard, the FCA’s Executive Director of Strategy and Competition commented: 'This research gives us evidence we haven’t had before about how consumers interact with cryptoassets'.
High Cost Credit reforms: In June 2019 the FCA published the Policy Statement (PS19/6) outlining a package of remedies designed to make overdraft pricing simpler, fairer and easier to manage. This was followed in October by PS19/25 which requires firms to publish overdraft pricing information alongside information on current accounts. The intention is that this will allow easier comparison between products in the market and will increase transparency of costs of an overdraft. The PS also amends the definition of private bank. The new rules will come in to force on 6 April 2020, apart from refused payment fees guidance, which took effect immediately and the repeat use rules, which came into force on 18 December 2019. The FCA has also produced a useful summary of its interventions since taking on responsibility for the regulation of consumer credit in 2014.
Financial Stability Board [FSB] its toolkit for Strengthening Governance frameworks to Mitigate Misconduct Risk sets out 19 steps that regulators and firms can take to tackle the causes and consequences of misconduct. Tool 8 notes that ‘Individuals are subject to professional standards of competence and conduct in the discharge of their duties’. The FSB is also developing a cyber lexicon aimed at ensuring clear and common understanding of the issues and threats in this field. It comprises a set of 50 core terms related to cyber security and cyber resilience in the financial sector.
BSB’s Principles for Strengthening Professionalism in Banking: Output from the BSB’s year-long project to explore ways of strengthening professionalism in the UK banking sector for the benefit of employees, customers, clients and wider society. CB:PSB and Institute colleagues actively participated in this project which can be found here.
Innovation: The FCA has also published a report outlining lessons learned during the first year of its regulatory sandbox. The sandbox allows firms to test innovative products, services or business models in a live market environment, while ensuring that appropriate protections are in place. Read more here.
Live and Local to check if the FCA are running any events, in your area on a topic of interest follow this link to their website.