Banking in Financial Services UK
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For an asset class that represents just 1.4% of insurer’s asset holdings1, equity release mortgages (ERMs) have consumed a remarkable amount of firm and supervisory time. A decade or so ago, the regulatory challenge of this asset class lay on the conduct side. More recently, however, and not without some irony, the main mitigant of these conduct risks, the no negative equity guarantee2 (NNEG), has switched the focus primarily onto the inherent prudential risks of equity release, namely its illiquidity and, owing to the NNEG, the long term exposure it brings to the fortunes of the housing market without further recourse to the borrower.
Banks are confronted by an ever increasing volume of compliance challenges. These challenges are fuelled by an increase in analytical complexity associated with regulatory and accounting requirements. This increase in analytical complexity has made solutions more complex to implement in an effective and efficient manner. Furthermore, the deadlines of these new regulatory requirements can be years apart and the requirements are often targeted on a specific business function, which makes it difficult to create synergies between compliance solutions.
50% of operating model changes1 today are focussed on adoption of Agile and DevOps delivery models. While prototypes and proof of concepts have demonstrated value, scaling Agile hasn’t always been successful – here’s why.
In our report “The next frontier - the future of automated financial advice in the UK”, published in April, we noted that a key regulatory challenge for firms in providing automated advice is understanding which side of the “advice boundary” their services fall on – guidance or regulated advice. We argued that the success of automated models in the UK would therefore depend, in part, on how much clarity the Financial Conduct Authority (FCA) would be able to provide about where the boundary lies.
Earlier this year1 we shared our comments on the level of provisioning seen in Europe’s largest banks (by balance sheet size)2, based on the 2015 reporting year. Following the settlement of a number of high profile financial services disputes and fines imposed by the US Department of Justice, we have now updated our findings for the most recent reporting period. Has the trend we saw up until 2015 – of ever increasing provisions – continued?
Insurers’ recovery and resolution: EIOPA calls for extensive powers mirroring international standards already applied to banks
The European Insurance and Occupational Pensions Authority’s (EIOPA’s) recently-issued opinion on the harmonisation of recovery and resolution frameworks for the insurance sector is a landmark step for the insurance industry towards implementing the G20’s 2011 commitment to end “too big to fail” for financial services1. While a harmonised resolution regime has been implemented (and applied this year in a live context) for the European banking sector, insurance resolution has so far remained a national matter. Consequently, substantial differences in regime and approach currently apply across Europe.
In the first half of 2018, two major new pieces of regulation will “go live” as the revised Payment Services Directive (PSD2) and the General Data Protection Regulation (GDPR) come into effect from January and May respectively. Seemingly unconnected, these two regulatory initiatives do in fact share two common aims – putting customers in control of their own data and keeping that data safe.
The highly anticipated FCA Consultation Paper (CP17/25) on the extension of the Senior Managers and Certification Regime (SMCR) to all financial services firms was released yesterday, 26 July 2017. The SMCR is already place for banks, building societies, credit unions and PRA designated investment firms.
The boy who cried wolf is one of the most time-honoured parables in Western society. In its traditional telling, the shepherd boy and his flock meet an untimely end after crying “wolf” one too many times for the local villagers’ liking.
Are you ready for 1 January 2018? - Finalised PRIIPs RTS and imminent guidance pave the way for firms’ PRIIPs programmes
Many firms have swiftly resumed their PRIIPs programmes following the entry of the final Regulatory Technical Standards (RTS) on the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs) in the Official Journal of the European Union, on 12 April 2017. The Regulation requires the disclosure of Key Information Documents (KIDs) when PRIIP products (such as funds, insurance investment products, structured products and structured deposits) are sold to retail investors.