54 posts categorized "Banking"
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.
Individual Accountability in UK Banking | Details of Senior Management and Certification Regimes Emerge
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.
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.
The next few months will barely feel like a summer holiday for Eurozone banks. As banks in the single currency area prepare for the European Central Bank (ECB) to take over banking supervision under the Single Supervisory Mechanism (SSM), the balance sheets of the largest banks are being reviewed and stressed as part of the ECB’s comprehensive assessment. In October, the results – based on an asset quality review (AQR) and EU-wide stress test - will be revealed.
Asset encumbrance, also known as earmarking or pledging assets, refers to the existence of bank assets securing liabilities in the event that an institution fails to meet its financial obligations. It originates from transactions that are typically collateralised or asset-backed, such as repurchase agreements, securitisations, covered bonds, or derivatives.
Asset encumbrance not only poses risks to unsecured creditors that are unable to benefit from the liquidation of encumbered assets in case of insolvency, but also has wider stability implications since encumbered assets are generally not available to obtain emergency liquidity in case of an unforeseen stress event.
Banks in Europe are not making enough money. Since the financial crisis, they have failed to earn profits above their cost of equity and analysts don’t expect this to change any time soon. To address this, Deloitte thinks retail banking in Europe is due huge structural change that will transform its future.
The industry’s fate is being compared to what newspapers have experienced in the past decade or so. The newspaper industry was ripped open by technology. Social media, smart phones and search engines transformed how we consume information. Today, technology is making similar waves in banking, and we expect this trend to accelerate.
We have recently launched the summer instalment of the Deloitte Real Estate London Office Crane Survey. This is our flagship report (released bi-annually) which has been monitoring office construction activity in Central London for almost twenty years. The level of construction is widely used as a measure of economic activity - counting the number of cranes / construction sites across Central London is a relatively easy and accurate way to benchmark London’s economic health.
Banks play a key role in helping people manage their money. But in the digital space they haven’t always made it easy for the average customer, and as a general group haven’t always been seen as particularly user friendly! Whilst online banking has been around for over a decade, it hasn’t evolved much in that time. Exhibit A, the bank statement - which for most banks hasn’t changed much in format or function since it was handwritten, even as it has made its way onto different devices. The official copy format is regulated, sure, but the way that transactions are shown on screen outside of the PDF hasn’t changed either.