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The FCA’s Feedback Statement focuses on greenwashing, disclosure and integration of material climate change risks and opportunities into business, risk and investment decisions.
Illiquid retail funds: FCA strengthens investor protection but drops some measures trailed in its consultation
With the spotlight falling increasingly on fund liquidity risks, not least from central banks concerned about emerging systemic risks, the Financial Conduct Authority (FCA) has published its final rules on liquidity risk management for non-UCITS retail schemes (NURS). The FCA started reviewing these rules after several property funds were suspended in the wake of the 2016 EU referendum. The FCA has stated that it has also taken into account lessons from the Woodford Equity Income Fund suspension in June 2019. Importantly, however, the new rules will not apply to UCITS funds such as the Woodford fund. We therefore expect further rule changes for such mainstream retail funds in the near term.
Two years of significant loss events, many of which have experienced significant loss deterioration, have exposed some limitations and areas of improvement of the ILS fund management industry. This should be expected of an industry whose core product hadn’t been tested through to the end of its lifecycle for several years, due to a series of benign cat years. The key lies in how the industry responds to these challenges, and determining how issues can be mitigated in the future to support the (still nascent) insurance securitisation process.
Many financial services firms operate globally and are faced with numerous regulators and regulations covering market abuse. Firms answer to a combination of the SEC and CFTC in the United States, HKMA, MAS, JFSA and ASIC in Asia Pacific, and the FCA, AMF, BaFin and other national regulators in Europe. These European regulators enforce the EU’s Market Abuse Regulation (MAR) alongside their own domestic laws stemming from the Market Abuse Directive (MAD).
This is the first in a series of posts focusing on themes and hot topics relevant to Internal Audit functions in organisations in the process of adopting IFRS 17 Insurance Contracts.
IFRS 17 is the most significant change in insurance accounting for a generation. For many insurers, particularly in the Life Insurance industry, understanding and delivering the necessary changes is complex and permeates the entire organisation. With this in mind, it is clear that an effective implementation plan that is well understood by its users is critical to an organisation’s IFRS 17 project running successfully.
The enormous growth of alternative capital in to property catastrophe reinsurance is arguably the single most significant change in the overall (re)insurance market of the last decade. The supply/demand balance for property catastrophe reinsurance in particular has fundamentally altered, with Guy Carpenter’s Rate on Line index falling 31% between 2013-2017 (of course helped by benign cat years). Even after 2 years of significant losses, it is unlikely prices will return to what was seen in the ‘hard market’ of 2010 and 2011 again.
The FCA recently published the Interim Report of its General Insurance Pricing Market Study. The report sets out the FCA’s findings on the pricing of motor and home insurance, and outlines a package of hard hitting remedies the FCA is considering; these will have important implications for all non-life insurers and insurance brokers.
In summary, the package of remedies being considered reflects the trends we have observed in the FCA’s approach; greater price intervention coupled with an increasingly proactive use of the accountability provisions within the Senior Managers Regime. The package has the potential to change fundamentally the nature of general insurance pricing and its competitive dynamics. Firms will need to carefully consider how best to engage with the developing debate and prepare for forthcoming changes to the FCA’s rulebook.
Financial services firms are grappling with transition away from IBORs but what kinds of conduct risks can they expect to face as a result of this? And how can these risks be managed effectively? In the first of a series of blogs exploring key themes in the PRA & FCA’s Feedback on the Dear CEO letter on LIBOR transition we consider these issues.
Measure client lifetime value to maximise value for the organisation and for the organisation’s clients
The journey to optimise the client experience at an institutional level is far from over. For the majority of corporate and investment banking (“CIB”) institutions, including corporate banking, global markets, and investment banking; client centricity is viewed as the holy grail to maintaining and increasing the share of wallet and thus securing the bank’s profitability and competitiveness in the market.
Here at Deloitte, we are working with our clients to re-discover client centricity within the management of the customer lifecycle, including prospecting, on-boarding, ongoing maintenance, and off-boarding and exit. This is with a view to enable further value to be accessed for both the bank and for their clients.