Insurance in Financial Services UK
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Culture in financial services firms has moved towards the top of the agenda for regulators, investors and consumers in the wake of excessive risk-taking by some firms in the run-up to the financial crisis and a string of misconduct scandals. Despite this, there can be a tendency on the part of some in the industry to see culture as “someone else’s problem”. A Deloitte survey on culture in banking carried out in 2013 found that 65% of senior bankers believed there were significant cultural failings across the industry, while only 33% believed the same of their own bank.
The FCA published its 2016-17 Business Plan on 5 April. The document is shorter and less detailed than in previous years, with only a brief Risk Outlook section, and makes limited announcements of new work. This may reflect the fact that the new CEO, Andrew Bailey, will not join the FCA until July, although as a member of the FCA Board, he will already have had an opportunity to influence the Plan. Like last year, the FCA has continued with its magic number of seven priority areas, rolling over five areas and prioritising two new areas – wholesale markets and the provision of advice.
The Insurance sector has a high potential exposure to the downside risks of a Brexit. A highly integrated regulatory framework across EU, highly globalised organisations and large balance sheets exposed to market volatility mean that Boards are considering the risks already and investors, analysts and regulators are beginning to focus on where risks may lie.
Some say that technology revolutionized knowledge. Once controlled by a privileged few, knowledge is now becoming available to everybody. What if the same were about to happen with trust?
Defining vulnerability and ensuring staff understand and apply the definition has long presented a challenge to firms.
One of the Financial Conduct Authority’s (FCA’s) main observations, in its occasional paper (number eight), was an acknowledgement that vulnerability is difficult to define and that currently firms apply a range of definitions. It concluded that vulnerability itself is a very fluid, changeable state but for some individual consumers it can indeed be a permanent state. Nonetheless, it made clear that the firms need to work around these difficulties as access to services for all consumers is seen as central to core conduct.
We explore some of the challenges a firm may face when implementing a vulnerability definition across an operation.
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?
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.
By 2050, the UK population is projected to grow by almost 20%, to 77 million. By contrast, the populations in Germany, Italy, and the Netherlands are projected to decline. The investment management industry stands to benefit from the long-term opportunity presented by population growth in the UK, in spite of the challenges brought on by changing regulation, the pace of innovation, and the growing demand for low-cost products and services.
Regulators are placing increasing emphasis on the management of conduct risk within financial services firms. Central to this is the right management information (MI). The importance of MI is also set to increase in the UK under the Senior Managers Regime (SMR) and Senior Insurance Managers Regime (SIMR), where strong conduct risk MI will help Senior Managers to demonstrate that they have taken reasonable steps to understand conduct risks and that they have put in place appropriate controls.