Investment Management in Financial Services UK

A focus on vulnerability and competition: What firms can expect from FCA following the publication of its Mission and Business Plan 2017/18

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On 18 April 2017, the Financial Conduct Authority (FCA) published several important documents, including its Mission, Business Plan 2017/18 and – for the first time – Sector Views. Together, these documents are intended to provide a complete picture of the way the FCA identifies and assesses risks, and hence identifies its regulatory priorities, in the sectors that it regulates. 

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Posted on 05/05/2017 | 0 Comments

EU Benchmark Regulation: Are you ready for implementation?

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The European Commission’s Regulation on indices used as financial benchmarks in financial instruments and financial contracts (the Regulation) forms part of the EU’s response to a series of high profile investigations in recent years into the alleged manipulation of key financial benchmarks, including LIBOR. These investigations raised concerns over the reliability and integrity of financial benchmarks, which underpin transactions worth trillions of dollars. The Regulation aims to reduce the risk of manipulation, bolster the reliability of benchmarks administered and ultimately provide a safer environment for the use of benchmarks in the EU.

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Posted on 30/03/2017 | 0 Comments

No margin for error: Making the margin requirements for non-cleared OTC derivatives happen

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The implementation of the mandatory exchange of initial and variation margin for non-cleared OTC derivative trades in the EU commenced on 4 February for financial counterparties with the largest derivatives portfolios. The introduction of these rules – which was part of the G20’s mandate to reduce the systemic risk posed by the OTC derivatives trading – is expected to lead to an increase in the cost of trading for non-cleared trades.

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Posted on 09/03/2017 | 0 Comments

IT Risk Management practices – still fit for purpose?

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The demand for IT risk management is rapidly increasing in response to the rise in threats and the unprecedented wave of innovation spreading across the financial services industry.  Now is the time for senior financial services risk professionals to begin preparing for the array of changes that are altering the world in which we live.

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Posted on 03/03/2017 | 0 Comments

Make sure you’re on the right track - Internal audit of remuneration

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In recent years, the regulatory and governance framework in financial services organisations has become increasingly complex. A key area of focus has been in the area of remuneration structures, policies and processes, where there has been a significant amount of regulatory development.

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Posted on 20/02/2017 | 0 Comments

Bank provisions – an unavoidable legacy?

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Last month, RBS announced it is to increase its provisions by over GBP 3 billion in relation to investigations and litigation centred on the US residential mortgage-backed securities it underwrote.i  At the same time, the US DoJ has levied further fines exceeding USD 12bn on two European banks to settle claims of abuse within the RMBS market.ii On this backdrop, and prior to the 2016 reporting season, we thought it a suitable time to reflect on the level of provisions within European banking institutions and to explore whether the tide of regulatory penalties is starting to turn.

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Posted on 14/02/2017 | 0 Comments

IFRS 9 and the “is it a bird, or is it a bomber?” problem

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With the adoption of the IFRS 9 accounting standard into EU law, it is full steam ahead for banks to deploy credit models that estimate Expected Credit Loss (ECL) accounting values. The standard requires firms to account for lifetime ECL on loans that have experienced a “significant increase in credit risk” (SICR), but allows firms to reach their own conclusions as to just how much credit risk ought to be viewed as “significant”.

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Posted on 10/02/2017 | 0 Comments

Biased Expectations: Will biases in IFRS 9 models be material enough to impact accounting values, as well as other applications such as pricing?

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As European IFRS reporters enter 2017, the first generation of Expected Credit Loss (ECL) models have generally been developed, and granular transitional impacts quantified.

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Posted on 17/01/2017 | 0 Comments

Complaint identification and reporting: The impact of recent rule changes

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‘We want to ensure that the process of complaining is straightforward, transparent and fair to consumers, while allowing firms to handle complaints as efficiently as possible and for consumers to have effective access to the ombudsman service if they remain dissatisfied.’ Financial Conduct Authority (FCA)

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Posted on 19/12/2016 | 0 Comments

Regulating cyber-resilience

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Looking ahead to 2017, one of the most important areas of regulatory development that we see in financial services is rising supervisory expectations of firms’ cyber resilience. A spate of recent incidents of cyber-crime and IT failure have sharpened the focus of firms on their cyber preparedness, but management and boards should now also expect to be more routinely challenged by their supervisors on how well they understand and what they have done to limit their exposure to cyber and IT risks.

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Posted on 14/12/2016 | 0 Comments