Capital Markets in Financial Services UK
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It is striking, and perhaps not entirely coincidental, that since the start of November two very senior regulators have each used examples from maritime history in their speeches about the future of bank capital regulation. Neither example is a happy one. Stefan Ingves, Governor of the Swedish Riksbank and Chair of the Basel Committee on Banking Supervision (BCBS), referred to the fate of the Vasa. The Vasa when it was completed in 1628 was the most impressive vessel in the Swedish navy. But it sank on its maiden voyage, a casualty of significant design flaws. Nobuchika Mori, Commissioner of the Japan Financial Services Agency, drew on another tragic tale. The SS Eastland sank on Lake Michigan in 1915, having overloaded itself with life rafts to meet a regulation that had been introduced after the sinking of the Titanic. 841 lives were lost, more than on the Titanic itself.
November 4, 2014 marked a turning point in European banking supervision. It was the day the Single Supervisory Mechanism (SSM) took over responsibility for banking supervision in the Eurozone. Compared to many other European endeavours, the SSM was set up quickly; the vision for the Banking Union, of which the SSM is a part, was created only in 2012. During this period a whole new organisation had to be made operational, with supervisory approaches and processes drawn from best practices across Europe, and staffing and governance adapted to the new arrangements. On its first birthday, how is the SSM getting on?
The first year of the Single Supervisory Mechanism (SSM) was a busy one for banks – and for supervisors. There is much still to do, but even as they continue to tackle the near-term challenges, many banks are asking what the SSM will look like in the future, and what the implications will be for their business models, and for the banking industry more broadly.
MiFID II will have significant and wide-ranging implications for the strategy, operations, conduct and governance of a broad range of firms in Europe. It raises many important questions for the investment management industry. What are the key challenges and implications of MiFID II? How can investment managers gain a competitive advantage? And how much progress have investment managers made in implementation? We discussed these questions with 15 investment managers and two independent external experts to inform our new paper Navigating MiFID II - Strategic decisions for investment managers. The key findings are highlighted below.
On 17 September 2015, HM Revenue and Customs (HMRC) released their draft guidance on the Automatic Exchange of Financial Account Information guidance. The guidance is intended to help Financial Institutions (FIs) with the four different Automatic Exchange of Information regimes; the US Foreign Account Tax Compliance Act (FATCA), the Crown Dependencies and Overseas Territories (CDOT) and the Common Reporting Standards (CRS) and the EU Directive on Administrative Cooperating (DAC) in tax matters.
With the end of the final authorisation landing slots looming in early 2016, the majority of firms in the consumer credit market will have now submitted their applications for Financial Conduct Authority (FCA) authorisation.
But what comes next?
Affordability of credit and the way firms assess this is a key focus area for the Financial Conduct Authority (FCA). The FCA is using the authorisation process as a means of gathering information on the affordability assessment processes used by firms. It is likely to use this information to determine whether or not further rules or guidance are required in this area. This blog explores the insights that we have gained from both our client work and our interactions with the FCA. So what have we learnt and how should the affordability assessment rules be applied in practice?
The European Commission has published the much anticipated action plan for the Capital Markets Union (CMU). There is no big, bold individual step at the heart of the CMU to capture attention. Instead the action plan includes 33 initiatives across six chapters which individually would not carry much weight, but cumulatively have the potential to turn fragmented pieces of legislation into a cohesive regulatory framework “to mobilise capital in Europe” and understand how regulatory reforms are affecting the financial services industry.
Complaint reduction should be a priority for every firm. A robust and structured complaint reduction strategy can deliver many advantages, for example:
- The customer experience is improved as issues which could have caused complaints are identified and resolved.
- The morale of front-line staff can improve if they are given the knowledge and skills to resolve customer concerns before they become complaints.
- The potential to reduce reputational risk through the identification and elimination of common complaint causes, leading to less likelihood of negative regulatory or media activity.
- A potential reduction in complaint processing costs as incoming volumes, ombudsman referrals and re-worked complaints decrease.
The PRA has proposed that large UK banks meet a minimum 3% leverage ratio requirement from 1 January 2016. The requirement would apply to banks with more than £50 billion in deposits.