EMEA Centre for Regulatory Strategy in Financial Services UK

The FCA’s Coverholder and TPA thematic review | Due Diligence, Audits and MI

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This is the third 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).

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. 

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Posted on 30/03/2015 | 0 Comments

EBA critiques critical functions in recovery plans

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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.

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Posted on 27/03/2015 | 0 Comments

EBA guidelines on limits on exposures to shadow banking entities

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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.

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Posted on 26/03/2015 | 0 Comments

FCA Business Plan ǀ What firms can expect from the FCA in 2015-16

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Yesterday, the Financial Conduct Authority (FCA) published its Business Plan. Firms should read this document closely, as it outlines the FCA’s view on the key risks to its objectives, its priorities, and the activities it intends to undertake in 2015-16. 

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Posted on 25/03/2015 | 0 Comments

Senior Managers Regime ǀ Top Five Lessons Learned

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Her Majesty’s Treasury announced on 3 March 2015 that the commencement date for the Senior Managers Regime (“SMR”) will be 7 March 2016, and the Financial Conduct Authority (“FCA”) published its feedback statement on accountability on 16 March 2016. The timeline for commencement of the new regime is set; banks will have until 8 February 2016 to notify the Prudential Regulation Authority (“PRA”) and FCA of the names of all those, including people currently approved, who will be senior managers under SMR.

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Posted on 17/03/2015 | 0 Comments

PRA and FCA consult on measures designed to encourage and protect whistleblowers

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The PRA and FCA have published a joint consultation paper (CP) on a series of measures to formalise whistleblowing procedures in firms. The aim is to encourage employees to raise concerns and protect whistleblowers from victimisation. This initiative responds to the Parliamentary Commission on Banking Standards’ recommendation to put in place effective mechanisms to allow employees to raise concerns internally.

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Posted on 24/02/2015 | 0 Comments

UK regulators refine the scope of the Senior Managers Regime and clarify how the ‘Presumption of Responsibility’ will be applied

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The Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have confirmed how the new Senior Managers Regime (SMR) and Senior Insurance Managers Regime (SIMR) will apply to Non-Executive Directors (NEDs) in banks and insurers respectively. This follows the responses received to the Consultation on Strengthening accountability in banking: a new regulatory framework for individuals –CP14/14 published in July 2014, which expressed concern about the proposed approach to NEDs under the SMR.

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Posted on 24/02/2015 | 0 Comments

FCA competition study may come to have far-reaching implications for investment and corporate banking

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The Financial Conduct Authority (FCA) has announced that it will kick-off a market study looking at competition in investment and corporate banking services in spring 2015. This comes as part of its review into competition in the wholesale sector, published yesterday, and follows its call for inputs last July. The FCA has found that limited transparency over both price and quality may make it difficult for clients to assess the value for money of investment banking and corporate banking services, and that bundling and cross-selling of services may make it difficult for new or smaller firms to compete against the established investment banks and universal banks.

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Posted on 20/02/2015 | 0 Comments

Capital Markets Union: Positive First Steps

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The European Commission has fired the starting gun on the Capital Markets Union (CMU), the flagship agenda to deliver a single market for capital, by publishing its widely trailed first green paper (GP). In December we set the scene for the rapidly evolving CMU agenda and, although the GP is wide ranging, it contains little new information. 

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Posted on 19/02/2015 | 0 Comments

Proposed revisions to the standardised approach to credit risk | More risk sensitivity, more complexity

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On 22 December, 2014 the Basel Committee on Banking Supervision (BCBS) published a consultation paper on “Revisions to the standardised approach for credit risk”(CRSA) (Footnote 1). The aim of the revised CRSA as proposed by the BCBS is to tackle weaknesses in the current approach, including:

• over-reliance on external credit ratings;

• lack of granularity and risk sensitivity;

• out-of-date calibration;

• lack of comparability across different banks and jurisdictions; and

• misalignment of treatment between the current CRSA and exposures risk weighted under the internal ratings based (IRB) approach.

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Posted on 4/02/2015 | 0 Comments