Banking in Financial Services UK
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Swings and roundabouts
The long-term success of the marketplace lending model in the UK will depend on how enduring its competitive advantages are, and how well marketplace lenders (MPLs) mitigate risks. In this blog, we explore some of the principal sources of competitive advantages for MPLs in the UK, and also some of the strongest headwinds facing them.
Following the entry into force of the revised Payment Systems Directive (PSD2) on 12 January 2016, in August the European Banking Authority (EBA) published the draft regulatory technical standard (RTS) to define how, in practice, Access to Accounts for Third Party Providers (TPPs) 1 and enhanced security and authentication requirements, two key pillars of the directive, will be implemented.
On 14 September, the EU Parliament voted to reject the EU Commission’s Delegated Regulation on the Packaged Retail and Insurance-based Investment Products Regulation (PRIIPs). This is the first time that the EU Parliament has formally rejected technical rules on financial services legislation. The Delegated Regulation, based on the final draft Regulatory Technical Standards (RTS) prepared by the European Supervisory Authorities (ESAs), dated 31 March 2016, was rejected as “so flawed and misleading that it could actually lose [retail investors] money”. MEPs overwhelmingly passed the resolution rejecting the RTS (by 602 votes to 4, with 12 abstentions), calling for the EU Commission to submit a new RTS taking into account the EU Parliament’s concerns about the text. The Parliament also called on the EU Commission to postpone the application date of PRIIPs.
Deloitte’s report “Marketplace lending – a temporary phenomenon?” explores whether marketplace lenders (MPLs) represent a truly disruptive threat to the UK banking industry. As part of our research, we commissioned YouGov to carry out a survey of individuals and small and medium-sized enterprises (SMEs) to find out more about the awareness, usage and growth potential of marketplace lending in the UK.I
Firms subject to Senior Managers and Certification Regimes (SMCR) are obligated to capture, assess, and report breaches of Conduct Rules by individuals who are in scope of the rules. Holding individuals to account is a core concept of the new regime.
The Financial Conduct Authority (FCA) has published its further consultation paper on the future of payment protection insurance (PPI) complaints. CP 16/20 adds further detail to the regulator’s plans to bring the ongoing issues raised by the historic sales of PPI to an orderly close, with a final date for making new complaints now estimated for June 2019.
A perfect storm
In the wake of the global financial crisis, UK banks pulled back from lending, owing to higher regulatory capital requirements and greater regulatory and shareholder scrutiny of their business models. They have adopted more risk-averse lending strategies in this environment, with more stringent reviews of the creditworthiness of borrowers.
Despite the many years that have passed since the global financial crisis, its causes and consequences continue to demand attention from industry and policymakers alike.