The FCA highlights the importance of firm culture and customer vulnerability as part of its debt management thematic review


The FCA recently published the findings of its thematic review of the debt management sector (TR19/01), following up on its first review of the sector in 2015.

The first review found that the quality of debt advice received by consumers was often “very poor” and that “firms were treating customers unfairly.” These poor practices led the FCA to include the debt management sector as a priority area as part of its 2017/18 Business Plan.

This blog explores the main findings from the most recent review and sets out the wider lessons that can be drawn both for debt management firms and the consumer credit sector more generally.

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Posted on 24/04/2019 | 0 Comments

The EU ratifies its flagship bank capital package – but the story is far from over


On 16 April, the European Parliament formally ratified the EU’s Risk Reduction Measures (RRM) package on bank capital and liquidity, clearing the way for the finalisation of one of the most significant pieces of EU-level banking regulation in years.

This has been more than two-and-a-half years in the making, with a long period of difficult political negotiations following the RRM’s proposal by the European Commission in November 2016. The RRM is a combination of the EU’s fifth Capital Requirements Directive (CRD5), the second Capital Requirements Regulation (CRR2), and the second Bank Recovery and Resolution Directive (BRRD2).

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Posted on 23/04/2019 | 0 Comments

Boosting Pillar Strength: PRA consults on enhancements to the Pillar 2 Framework

In March 2019, the Prudential Regulation Authority (PRA) published consultation paper (CP 5/19) to update the Pillar 2 capital framework and to reflect on-going enhancements in setting the PRA buffer (Pillar 2B).

As the CP states, its key objective is to “...bring greater clarity, consistency and transparency to the PRA’s capital setting approach. In promoting a greater level of transparency, the PRA seeks to promote financial stability, the safety and soundness of PRA-authorised firms, and facilitate more informed and effective capital planning for banks.”

This CP is relevant to PRA-authorised banks, building societies and PRA-designated investment firms (‘firms’). This CP is not relevant to credit unions, insurance and reinsurance firms. It is open for review, question or comment by 13 June 2019 and the PRA proposes to implement it from 1 October 2019.


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Posted on 17/04/2019 | 0 Comments

Let it flow: liquidity management and ILAAPs for banking applicants


Any prospective bank going through the authorisation process will need to deliver three core documents, the Regulatory Business Plan (RBP), the Internal Capital Adequacy Assessment Process (ICAAP) and the Internal Liquidity Adequacy Assessment Process (ILAAP). The key elements of the ICAAP and ILAAP are presented in the RBP, and while the ICAAP and ILAAP serve different purposes, the regulator will expect to see consistent underlying messages across all three documents.

Liquidity is the lifeblood of a bank and the margin between loans and deposits defines how a traditional bank makes money. It is therefore essential that this element is adequately addressed and presented to the PRA in a way that gives it confidence that the applicant firm understands its liquidity and funding risk profile.

Providing inadequate detail on deposits and liquidity risks is one of the reasons that applicant banks sometimes face delays in the process. A robust ILAAP is not a supplement to an application for authorisation, but a core component of it.

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Posted on 29/03/2019 | 0 Comments

Time for change: Elevating the role of the risk function

Risk Function

For the last decade, risk functions have spent considerable time and energy ensuring they are effective and compliant with regulatory change. Many have capitalised on the significant advances in technology to improve efficiency, but are still not yet realising a level of transformation that is possible. Mark Ward, Lead Partner for our Future of Risk and Compliance programme encourages Chief Risk Officers (CROs) to critically assess if they are fit for the future and consider:

  • What does transformation mean to you?
  • How can you deliver an effective transformation programme?

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Posted on 01/03/2019 | 0 Comments

A ride up Capit(a)l Hill


As a key determinant of bank solvency and therefore a critical component of financial system stability, a banking applicant’s capital assessments receive significant scrutiny from regulators as part of the application process.

Alongside the Regulatory Business Plan (RBP), The Internal Capital Adequacy Assessment Process (ICAAP) is therefore one of the most important pieces of work you will need to perform in the run up to receiving your authorisation, and thereafter on an on-going basis.

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Posted on 18/02/2019 | 0 Comments

The Bank of England and PRA’s Resolvability Assessment Framework: end-state resolvability in firms’ hands

Banner_ImageIn December, the Bank of England (the Bank) and Prudential Regulation Authority (PRA) consulted on the Resolvability Assessment Framework (RAF) for firms[1] in the UK.

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Posted on 23/01/2019 | 0 Comments

The 6th Anti-Money Laundering Directive - the battle continues…


On 12 November 2018, approximately 6 months after the adoption of the 5th EU Anti-Money Laundering Directive (5AMLD), the European Parliament published further rules to strengthen the fight against money laundering through the 6th EU Money Laundering Directive (6AMLD).


Member States are required to transpose the 6AMLD into national law by 3 December 2020.  After which, relevant regulations must be implemented by firms within Member States by 3 June 2021.


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Posted on 16/01/2019 | 0 Comments

The new age of Basel Pillar 2 Economic Capital modelling – Article 1: Introduction


This article represents the first in a Deloitte UK Risk Advisory series on the new age of Basel Pillar 2 Economic Capital (‘EC’) modelling in banking with a particular focus on Credit Risk models. In article 1 we look at the changing use of this well-seasoned model type, starting with an overview of the resurgence of EC, challenges for both retail and corporate parameterisation, and the Concentration Risk question. We finish by considering the best way to prioritise development effort between model design & parameterisation, how EC can be used and some of our EC expert’s considerations for enhancing an EC framework. 

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Posted on 09/01/2019 | 0 Comments

Developing a persuasive Regulatory Business Plan (RBP)

Regulatory Business Plan

Banks have the same challenge as any new business: how to convince investors and lenders that your business has a viable model, can generate sufficient returns and can repay its liabilities. Candidate banks face this challenge and one more – they must convince the regulators of the viability and sustainability of their business plan.

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Posted on 04/01/2019 | 0 Comments