The Prudential Regulation Authority's (PRA’s) first consultation paper on UK bank ring-fencing puts the ball back in industry’s court, holding back from extensive prescription in favour of an approach which gives banks some leeway to tailor solutions to their business models. In most areas there will not be a ‘one size fits all’ approach, and the onus will be on individual banks to demonstrate how their plans comply with legislation and the PRA’s objectives.
Recently Deloitte published Banking Disrupted: How technology is threatening the traditional European retail banking model. The report highlights the major challenges the industry will face in the coming years and focuses on what the future has in store for Europe’s retail banks. We think that five major threats will play a big part in shaping the industry.
The EU’s bank Recovery and Resolution Directive (BRRD) gives EU resolution authorities wide-ranging and potentially very invasive powers to mandate changes to banks’ legal, operational and financial structures in order to improve resolvability, powers which allow resolution authorities a significant amount of discretion. In the wake of the recent announcements from the US FDIC and Federal Reserve, in which they expressed their dissatisfaction with the current state of large banks’ resolution planning in the US, it would also appear that the resolvability hurdle may be higher than previously anticipated. Ensuring that banks are resolvable has been high on the policy agenda for several years, but the practical work needed to achieve this looks set to move forward in earnest over the next year.
Deloitte's recent report ‘Seismic shifts in investment management’ explores the drivers behind fundamental changes in the industry and weighs up what they mean in practice for UK-based global asset managers. In this blog post, Alex Adam, a Director in the Deloitte Guernsey office, considers the impact for the Channel Islands of this research.
The FCA have now had a few months to start showing their presence in the consumer credit market and have done so through a number of thematic reviews, firm visits and surveys. They have issued a number of fines and started s166 reviews that have specifically been focused in the pay day lender sector. Using our experience of working with the consumer credit sector over the last couple of years and understanding of the FCA’s expectations more widely, this blog post shares some insights and tips on how consumer credit firms can prepare for an FCA visit and the application process.
The PRA and FCA have published a major consultation paper on the overhaul of the Approved Persons Regime (APR) for banks, building societies, credit unions, and PRA-designated investment firms in the UK. The new framework will make senior individuals more explicitly accountable for specific issues through ‘statements of responsibility’, and a wider range of staff will be subject to a regime of certification and codes of conduct.
As part of the consumer credit authorisation process the Financial Conduct Authority (FCA) will require all consumer credit firms to detail their compliance monitoring programme and attach a compliance monitoring plan as part of their application pack. This blog post highlights the key areas for consideration for consumer credit firms to contemplate when developing their monitoring plan.
On 23 July, the IRS released a bulletin encouraging entities to renew or obtain a QI agreement by 31 July 2014. This follows on from Revenue Procedure 2014-39 that contained the new QI agreement. If you have provided the required information to the IRS as part of your FATCA registration to renew a QI Agreement no further action should be required. If you have not provided this information yet, we recommend this is completed by 31 July in order to ensure that your QI Agreement is renewed. We have set out below an overview of the main changes arising from the new QI agreement.
UK retail bank ring-fencing recently took a step forward as two important pieces of secondary legislation were laid before Parliament, where they now await approval. These documents define the activities which ring-fenced banks will and will not be allowed to carry out from January 2019. They build on last year’s drafts, but there are some significant amendments, particularly in relation to ‘simple’ derivatives, the process for taking customers out of the ring-fence, payments, the treatment of the Crown Dependencies, and risk management. Here we focus on the main changes compared to the earlier drafts.
On 7 July, the European Banking Authority (EBA) began a consultation on guidelines for common procedures and methodologies for the supervisory review and evaluation process (SREP) as provided for in the Capital Requirements Directive (CRD IV).
This is the most comprehensive document on how EU banking supervisors should assess risk issued to date - it extends the focus of the SREP from capital risk and adequacy to a much more comprehensive assessment of a bank’s business and risk profile. To put this in context the Guidelines are almost 5 times longer than those previously issued at an EU level. By providing a risk-by-risk approach, the Guidelines are intended to drive significant convergence in micro-prudential supervision across the EU. They should form the basis for SREP under the Eurozone’s Single Supervisory Mechanism (SSM), thus providing one of the first tangible insights into the practical application of supervision under the SSM.