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The start of May marked six months of operation for the Single Supervisory Mechanism (SSM), the new framework for banking supervision in the Eurozone. The largest banks in the SSM have had their first taste of ECB-led supervision. The learning curve for them - and for supervisors at the ECB and national authorities - has been steep. And just as banks grapple with the task of responding to the new regime, the ECB has started tackling its supervisory priorities for 2015.
Last week the FCA held its first ever Prudential Supervision Forum. Now whilst it might be surprising to some that the FCA supervises firms on a prudential basis, as they have not been making loud noises about it, other firms are certainly aware of this fact. As the Head of Specialist Supervision pointed out the FCA prudentially supervises approximately 24,000 firms making their views on issues such as CRD IV key for asset managers, broker dealers and AIFM firms alike.
Last year, the PRA set out a new approach to the supervision of international banks and clarified how their new branches in the UK will be scrutinised going forward.
Regulators are placing increasing emphasis on the management of conduct risk within financial services firms. Central to this is the right management information (MI). The importance of MI is also set to increase in the UK under the Senior Managers Regime (SMR) and Senior Insurance Managers Regime (SIMR), where strong conduct risk MI will help Senior Managers to demonstrate that they have taken reasonable steps to understand conduct risks and that they have put in place appropriate controls.
This is the final part of a four-part blog series on the FCA’s Coverholder and TPA thematic review (often referred to by the FCA as its “distribution chain” thematic review).
Firms are achieving workable conduct solutions for delegated authorities in a number of ways, whether it’s by updating existing controls to add a conduct lens; increasing the evidence and documentation around existing practices; or by designing new aspects of control and oversight.
In recent years we have seen a seismic shift in the tax transparency landscape. The US Foreign Account Tax Compliance Act (US FATCA) has proved to be a watershed moment and we are rapidly moving towards a global network of automatic information exchange spearheaded by the OECD’s Common Reporting Standard (CRS).
Automation will change the character of London businesses | How will Financial Services adapt to the new environment?
Since the Industrial Revolution, technological advances have transformed business and commerce, and changed the character of jobs that people do. With the rapid progress of digitisation, a further period of major transformation is under way. London, its Financial Services industry included, will inevitably feel the change and will need to respond.
The Bank of England has published details of its 2015 stress testing exercise for the largest UK banks and building societies, its second concurrent exercise (the first was in 2014).
There has been a fundamental shift in regulatory expectation and good market practice for delegated authority control and oversight frameworks.
This shift may increase cost in key control functions reinforcing the importance of a robust conduct risk assessment (as discussed in our previous blog) to achieve a proportionate and risk-based control and oversight framework. The risk assessment shows you the higher gross risk areas of your business and why they are high risk, enabling you to direct your resource – whether it be delegated underwriting management, compliance, claims or underwriting resource - so that you get more bang for your buck.
The Bank Recovery and Resolution Directive (BRRD), a core piece of post-crisis regulation aimed at ending ‘too big to fail’, is being implemented across the EU. As part of the journey towards full and consistent implementation, the European Banking Authority (EBA) recently published a comparative analysis of the recovery plans of 27 (unnamed) European cross-border banking groups which collectively account for around half of the banking assets in the EU.
On 19th March the European Banking Authority (EBA) issued a consultation paper which sets out its approach to limiting exposures from banks to the shadow banking sector, proposing that the large exposures regime be used to restrict exposures, in addition to existing Pillar II requirements.