In April 2017, the PRA issued a Dear CEO letter to all its regulated firms asking for information on their contingency planning for the UK’s withdrawal from the EU.
It is now almost 18 months since the PRA and FCA implemented the Senior Insurance Managers Regime (for insurers) and the Senior Managers & Certification Regime (the SM&CR) for banks, building societies and other ‘dual-regulated firms’. It is fair to say that the ‘honeymoon’ period is over, and we are starting to see more instances of the regulators challenging firms who have not properly implemented the regime / not met the applicable requirements across both the PRA Rulebook and the FCA Handbook.
The FCA has published a consultation paper setting out how it intends to extend the Senior Managers & Certification Regime (the ‘SM&CR’) to the wider financial services industry.
So the moment the financial services industry has been waiting for with bated breath has arrived. The FCA has published its consultation paper setting out proposals to extend the Senior Managers & Certification Regime (aka the SM&CR) to the wider financial services industry.
Bovill, the international financial services regulatory consultancy, has commented to the FCA’s Consultation Paper on extending the Senior Managers and Certification Regime to all financial services firms.
Is a more strategic and integrated approach achievable?
Since the financial crisis, regulators worldwide have taken a much more proactive and intrusive approach. Insurance regulation has been no exception to this trend, which has led to an unprecedented volume of new regulations that place huge demand on firms’ capacity to manage change and ongoing compliance. Against this backdrop, we pose the question of whether a more integrated and strategic approach to regulatory change is possible. While we think the answer is YES, we recognise that it is not easy and certain challenges will remain.
The EBA is close to finalising its report into a new prudential regime for investment firms. This is in response to a call for advice from the European Commission (EC).
The FCA has published the final report of its Asset Management Market Study and accompanying consultation paper (CP17/18). The study is intended to apply the themes and thinking around fairness to clients and transparency that we have seen in the distribution market through RDR, further up the value chain.
The General Data Protection Regulation (GDPR) is the EU legal framework which is set to replace the Data Protection Directive 1995 which was transposed into the UK Data Protection Act 1998 (the DPA). The GDPR will apply in the UK from 25 May 2018 and the government has confirmed that the decision to leave the EU will not affect the GDPR implementation date. The key question is, do you know what changes are needed and do you have time to ensure your business complies with the new requirements with less than 12 months to implementation?
Extracting business value via ORSA
All acquisitions involve risk. It’s the cost of doing business in the M&A world. However, regulatory risk brings an additional layer of uncertainty. Particularly in the lending and insurance sectors, and in retail and automotive (where firms may be undertaking regulated activity). Issues can arise, where potential mis-sales and poor customer outcomes lead to regulatory attention and the threat of fines and costly redress exercises. Risks range across Donald Rumsfeld’s whole spectrum from ‘known knowns’ to ‘unknown unknowns’.
In the first of two consultations scheduled for 2017, the FCA has outlined its proposals for implementing the Insurance Distribution Directive (IDD) (CP17/7). The IDD applies to any person or firm which distributes insurance and reinsurance products.
International financial services regulatory consultancy launches new benchmarks team.
The Fourth EU Money Laundering Directive (4MLD) is designed to bring a more risk-based approach to the prevention of money laundering and terrorist financing. The effect of 4MLD is that firms will need to reinforce their existing risk-based approaches across all aspects of their anti-money laundering (AML) and counter-terrorist financing (CTF) compliance programmes. 4MLD implementation date is 26 June 2017.
With the finalisation of OFSI’s guidance on monetary penalties for breaches of financial sanctions (‘Guidance’) and the UK emphasising the need to have its own independent framework for sanctions compliance post Brexit, now seems an opportune time to look into one of the more important aspects of the current guidance published by OFSI – voluntary disclosures.
On the evening of 8th June, 11 intrepid explorers departed from Bovill headquarters to take on the Three Peaks Challenge – climbing the three highest peaks in Scotland (Ben Nevis 1,344m), England (Scafell Pike 978m) and Wales (Snowdon 1,085m) in just twenty-four hours – in order to raise money for a brilliant charity Young Futures.
This month we are featuring the sixth in a series of MiFID Busters. Each edition will explore a MiFID II theme, setting out the key changes and practical implications for financial institutions. The June MiFID Buster focuses on third country firms.
In the first of two consultations scheduled for 2017, the FCA has outlined its proposals for implementing the Insurance Distribution Directive (IDD). The most effective way for firms to assess the impact of the IDD on their business is to undertake a gap analysis. This will provide clarity on the requirements and enable the firm to plan for, and implement, the necessary changes in an efficient, focussed and effective way.
The PRA has started another round of cross-firm reviews of the accuracy of 31st December 2016 COREP returns. We understand the reviews cover an expanded set of returns than was specified in a Dear CEO letter sent to some firms in early 2016, adding the FSA001 (balance sheet), COR012 (ALMM) and COR011 (liquidity) to the COR001 (own funds and leverage), COR002 (large exposures) and COR005 (Asset Encumbrance) returns. The reviews also require an assessment of the effectiveness of the systems and controls over regulatory reporting..
The FCA has consistently challenged firms on the way they handle customer complaints. The Regulator considers that failures in this area are symptomatic of wider potential failings in firms.
The future of ABC
‘To some degree it matters who’s in office, but it matters more how much pressure they’re under from the public’, Noam Chomsky. It could be argued that it is worldwide public outcry that has been the trigger for governments around the globe to sit up, take notice and commit to actions to tackle bribery and corruption.
The 2017/18 business plan has made clear that the FCA intends to shift some of its focus from consumer issues to market structures, incentives and distribution in the GI and Protection sector. Whilst the regulator will continue to monitor and review the issues directly affecting individual and small and medium sized enterprise (SME) consumers, this is a sure sign that it intends to focus more directly on competition issues.
What is the current landscape for corruption and bribery?
Historically, there hasn’t been a large number of high profile enforcement actions in relation to bribery. The low numbers could be taken as a sign that regulators are not focusing on this risk or conversely that firms have improved systems and controls so much that bribery is a thing of the past.
How taxing are the new requirements for firms?
The Criminal Finances Act 2017 has received Royal Assent and will come into force this Autumn. It enshrines into law the new criminal offence for corporations that fail to prevent the facilitation of tax evasion. This is modelled on the ‘failure to prevent bribery’ offence in the Bribery Act 2010.
On Friday (12 May 2017) we saw what may very well be the highest profile “ransomware” attack to date. The impacts for many of the institutions involved will be costly. The impacts for their customers, or users, have ranged from inconvenience to ultimately being life threatening.
This month we are featuring the fifth in a series of MiFID Busters. Each edition will explore a MiFID II theme, setting out the key changes and practical implications for financial institutions. The May MiFID Buster focuses on Costs and Charges.
The LIBOR and FX fixing scandals undermined the reputation of global financial markets. As a direct consequence, UK and European regulators have focused upon corporate governance and culture as a means of improving standards of conduct and restoring trust in financial markets. In addition, the administration of and submission to Benchmarks has become a regulated activity for the first time.
Weʼre raising £4,500 to help Young Futures provide financial capability training to young people leaving care in our local community.
One of the common problems we see in our wealth manager clients are firms that do not have a settled view of why they exist and what they offer to clients. Often we see firms who do not have a forensic approach to their position in the value chain or do not have defined boundaries within their proposition. As a consequence, daily we see muddled thinking that leads not only to variable client experience and outcomes, but in many cases unnecessary regulatory and operational risks.
The FCA published a consultation paper (CP 17/11) on 13 April 2017 explaining how it will implement the long awaited Payment Services Directive 2 (PSD2). As this is a maximum harmonising Directive, there is limited opportunity to diverge from the prescribed provisions, and HM Treasury have taken the approach of implementing these requirements through the Payment Services Regulations 2017 (PSRs 2017). The FCA’s consultation therefore focuses on its approach to interpreting and applying the regulations.