being better informed august 2017 - pwc uk · being . better informed ... doubt volker still holds...

Stand out for the right reasons, Financial Services Risk and Regulation September 2017

Being better informed FS regulatory, accounting and audit bulletin

PwC FS Risk and Regulation Centre of Excellence

September 2017

In this month’s edition:

• Brexit: BoE updates on firms’ contingency plans

• FinTech: In-depth analysis of the evolving global regulatory picture

• Consumer credit: Taking stock of recent developments

• Insurance: EC lays down rules for a KID under the IDD

Executive summary Staying ahead on

FinTech The changing face of consumer credit

Cross sector announcements

Banking and capital markets

Asset management Insurance Monthly calendar Glossary

FS regulatory, accounting and audit bulletin – August 2017 PwC 1

‘Welcome to this edition of ‘Being

better informed’, our monthly FS

regulatory, accounting and audit

bulletin, which aims to keep you up to

speed with significant developments

and their implications across all the

financial services sectors.’

August was a quieter month for regulatory

developments due to the usual summer

slowdown, but nonetheless brought

important news on Brexit, the IDD

and resolvability.

As the political negotiations continue, Sam

Woods, Deputy Governor of the BoE, gave

an update on firms’ Brexit contingency

plans. Responding to a letter to the Treasury

Select Committee, which asked how

prepared firms are for Brexit, Woods said

the PRA has received 401 responses to its

call for information. The PRA is analysing

the plans in detail, and will reach a view on

firms’ preparedness and the associated

financial stability risk in the autumn. Laying

bare the scale of the impact on both firms

and the regulator, Woods said the plans

reveal a number of risks, including issues

relating to continued servicing and

performance of existing contracts. He added

that firms’ restructuring plans will increase

complexity, and the PRA will need to ensure

that new structures don’t impede its ability

to supervise firms. Woods also said the BoE

expects to have to make some ‘difficult

prioritisation decisions’ as Brexit weighs

on its resources.

Insurers continue to plan for the

implementation of the IDD. The EC laid

down rules for a standardised presentation

format for the Insurance Product

Information Document, which will have to

accompany all non-life insurance policies

from 23 February 2018, when the IDD is

implemented. The EC hopes the

implementing rules will mean consumers

have all the necessary information to make

an informed decision when buying

insurance products, such as car, travel or

house insurance. Similar KIDs already exist

for life insurance and other investment

products under the PRIIPs Regulation.

Meanwhile, banks, building societies and

certain investment firms should read

carefully a consultation from the BoE

setting out its preliminary views on the

valuation capabilities firms should have in

place to support resolvability. Required

capabilities include the data, systems and

processes that support valuations of a firm’s

assets, liabilities and shares. If it goes ahead

with the proposals, the BoE will expect

firms to establish and maintain capabilities

that meet a set of principles covering areas

such as valuation models, governance, data

and transparency.

In our first feature article this month we

take an in-depth look at an issue high on

both firms and regulators’ agendas:

FinTech. As regulators across the globe

consider how to address the risks and

opportunities created by FinTech, we

analyse how their approach is likely to

evolve and what firms should be doing to

stay ahead of developments.

In our second feature article we take stock

of the raft of recent regulatory

developments in the consumer credit sector.

Consumer credit firms are facing a range of

competing regulatory demands from the

FCA and PRA, including the extension of

the SM&CR, new guidance on affordability,

and a PRA request on the resilience of

consumer credit portfolios. We look at how

these developments are set to shape the

consumer credit industry, and how firms

should adapt their business as a result.

In the coming weeks, we expect the FCA to

publish its mortgages market study interim

report, and the EBA to report on proposals

for a new prudential regime for investment

firms. For now we hope you enjoy reading

the latest updates.

Laura Cox

FS Risk and Regulation Centre of Excellence

020 7212 1579

[email protected]

Laura CoxLead Partner

PwC FS Risk and Regulation Centre of Excellence

Executive summary







How to read this bulletin?

Review the Table of Contents the relevant Sector sections to identify the news of interest. We recommend you go directly to the topic/article of interest by clicking in the active links within the table of contents.

Contents

Executive summary 1

Staying ahead on FinTech 3

The changing face of consumer credit 6

Cross sector announcements 9

Banking and capital markets 15

Asset management 17

Insurance 18

Monthly calendar 20

Glossary 27

Contacts 34







Financial services innovation has come a

long way over the past few years. Paul

Volker, former chair of the Federal Reserve

Board, claimed in 2009 that the financial

sector had not produced any useful

innovations since the Automated Teller

Machine. It’s perhaps unsurprising that

Volker thought this at the height of the

global financial crisis - a time when

financial innovation was synonymous with

instruments such as collateralised debt

obligations which had done so much

damage to the financial system.

But fast forward eight years to today and I

doubt Volker still holds such a dim view of

innovation in the financial services sector.

In the years since the financial crisis,

financial services institutions and

increasingly firms from outside the sector

have embarked on a revolution in the way

they provide financial services to their

clients and transact with each other.

At the heart of this has been financial

technology (FinTech).

With the growing importance of FinTech,

and its potential to change the financial

system, regulators and global policymakers

are increasingly focused on both regulating

FinTech and using technology to help

deliver their objectives. In this article we

explain policymakers’ current focus, how

this may evolve in future and what financial

services firms should be doing to keep

ahead of developments.

What is FinTech?

FinTech is the use of new technology to

deliver financial services. For many people

the term conjures images of start-up

companies challenging established firms.

While this is true, FinTech can equally be an

established financial services provider

innovating its service offering.

Current FinTech innovations touch most

aspects of financial service delivery. Perhaps

the most widely used developments are the

innovative payment service providers that

offer payment services through digital

wallets or eMoney. But equally, other

traditional banking activities such as

providing financial advice and retail and

commercial banking activities are being

impacted by innovations such as robo-

advice, P2P lending and big data analytics.

Wholesale and capital markets activities

have been heavily influenced by technology

for some years - with the role of high

frequency traders coming under

increasing scrutiny.

But it is perhaps the area of wholesale

payments, clearing and settlement that has

gained the most attention recently. This is

largely down to distributed ledger

technology (DLT) which is essentially an

asset database that can be shared across a

network. All participants within a network

can have their own identical copy of the

ledger, and any changes to the ledger are

reflected in all copies in minutes or even

seconds. The assets can be financial, legal,

physical or electronic. DLT is most

commonly known for its use in digital

currencies such as Bitcoin.

Current regulatory focus

As with any major innovation in the

financial sector, policymakers and

regulators have started to take note of the

implications of FinTech on financial

stability and consumer protection. Recently

they have begun to consider whether and

how to address FinTech from a regulatory

and supervisory perspective. UK authorities,

particularly the FCA, have been amongst the

most developed in the world in their

thinking about FinTech.

The FCA’s Project Innovate, launched in

2014, helps firms tackle regulatory barriers

to innovation. For example, the FCA seeks

to clarify regulatory expectations and assess

the impact of its rules on innovation. The

FCA also aims to give firms a degree of

regulatory leeway to facilitate innovation. It

does this through its regulatory sandbox

which aims to create a ‘safe space’ in which

businesses can test innovative products,

services, business models and delivery

mechanisms. A total of 55 firms, ranging in

size from large banks to small FinTech

start-ups, have been accepted into the

Staying ahead on FinTech

Conor MacManus

Prudential regulation020 7213 [email protected]

Senior Manager







sandbox since its inception. The FCA’s

sandbox was the first in the world, but a

number of regulatory authorities including

the Monetary Authority of Singapore and

the Hong Kong Monetary Authority have

now followed suit - emphasising the need

for the FCA to continue to focus on staying

ahead of other major jurisdictions. Recent

developments, such as its discussion paper

on the use of DLT in financial markets,

suggests the FCA is attempting to do

just that.

As is often the case, where the UK

authorities go, international bodies follow.

In June 2017 the FSB published a report on

Financial Stability Implications from

FinTech. The report was developed by

policymakers from a number of key

jurisdictions, including the BoE and FCA. In

the report the FSB sets out its thinking on

the supervisory and regulatory issues

resulting from FinTech. The FSB notes that

FinTech brings opportunities as well as

risks for policymakers. It identifies

managing operational risks from third party

providers (i.e. outsourcing), cyber risks and

monitoring macro-financial risks as areas

that international authorities should

particularly focus on.

The FSB also notes a number of other

issues that regulatory authorities should

address, including:

legal and regulatory issues

resulting from innovations in cross-

border lending

trading and payment activity such

as DLT

governance and disclosure

frameworks for big data

assessing the current

regulatory perimeter

sharing learning with the private sector

and building expertise in regulators

developing lines of communication

across relevant authorities

studying alternative configurations of

digital currencies.

The long list of issues the FSB has identified

suggests that global policymakers are at an

early stage of thinking about FinTech. But

what is equally clear is that FinTech is likely

to continue to move up the agenda in the

coming years.

The German G20 Presidency this year

emphasised FinTech as a key focus, while

the EC published a consultation on FinTech

in March 2017. Additionally, the EBA issued

a discussion paper last month setting out

which areas of the regulation of the FinTech

sector it plans to focus on in future. The

challenge for policymakers is substantial: to

create a flexible, internationally consistent

framework that can deal with a more fluid

financial system (in which start-ups and

technology firms disrupt the business model

of traditional financial services providers),

without overly constraining innovation.

For FinTech firms, increased regulatory

focus can be welcome if it encourages

innovative business models and provides

more certainty on rules and compliance. But

greater regulatory scrutiny is also likely to

increase costs for firms as they potentially

face having to comply with more legislation.

And for smaller firms or those new to

financial services this could be particularly

challenging. For example, FinTech firms

that collect data on EU citizens will need to

ensure they comply with the requirements

of the General Data Protection Regulation

which comes into force in May 2018 - or

potentially face fines of up to €20m or 4% of

global revenue.

Using FinTech to deliver regulation

Regulators and policymakers are not just

examining their approach towards the

regulation of FinTech, they’re also exploring

whether technology can be used to deliver

their objectives in a more effective way. Of

particular interest to regulated firms will be

the use of RegTech - using technology to

deal with regulatory challenges. RegTech

has the potential to change and improve the

way in which regulation is interpreted, how

firms ensure compliance and in reducing

the costs of regulatory reporting.

In 2016 the FCA held two so-called

TechSprints - events which bring together

technology developers and organisations

such as PwC to examine how technology can

be used to find solutions to challenges (such

as regulatory reporting) in the financial

services industry. It’s welcome that the FCA

is taking a leading role in examining the use

of RegTech, and the more certainty the

regulator can provide in its future use, the

more likely firms are to invest in it.

In addition to regulatory authorities, central

banks around the world are examining the

use of FinTech in their operations. The BoE

recently announced that a new generation

of non-bank payment service providers can

apply to use its Real Time Gross Settlement

system. This will give these firms direct

access to the UK’s sterling payment systems

for the first time.

Some of the other options being considered

by central banks, such as the potential for a

central bank digital currency (as opposed to

private currencies such as Bitcoin), would

have profound implications for the financial

system. Currently the only central bank

currency the public is able to access is cash.

The emergence of digital currencies has led

to questions around whether a central bank

could create its own digital currency and

allow businesses, non-financial companies

and even individuals to make electronic

payments in central bank money, using

accounts held at the central bank and DLT

technology. A number of central banks,

including the BoE, Bank of Canada and the

People’s Bank of China are exploring this

option. If they pursue it, this would have

significant implications for the business

models of a range of financial services firms.

http://www.fsb.org/wp-content/uploads/R270617.pdf

http://www.fsb.org/wp-content/uploads/R270617.pdf







What should firms be doing?

FinTech is here to stay and has the potential

to change many aspects of financial

services. Regulators and policymakers

around the globe are increasingly alive to

the potential benefits and risks of FinTech -

expect recent developments to be just the

start of authorities’ thinking process on the

subject. Use of technology by public

authorities has the potential to radically

impact the financial system, and it’s

important that financial services firms

position their business model accordingly.

But of equal importance is that FinTech

firms are alive to the potential benefits and

risks that regulation poses to their business

models. The FCA in its 2017/18 business

plan warned that: ‘FinTech firms may not

fully understand the scope of regulation and

its impact on their business model. This

could lead to cases of non-compliance with

our rules, which could pose risks to

consumer protection and market integrity.’

FinTech firms should ensure that they

closely monitor regulatory developments,

both domestically but increasingly at an

international level, to ensure the growth in

their business is not undermined by a lack

of understanding of the developing

regulatory landscape.

And the FCA - and other regulators - must

continue to ensure that their understanding

of the scope of FinTech doesn’t lead to cases

of innovation-stifling, or a preoccupation

with existing rules and regulatory

approaches which undermines the

developing FinTech landscape. This is an

exciting time for firms and regulators, but

we must get this right for the benefit of all.






FS regulatory, accounting and audit bulletin – September 2017 PwC 6

Megan P CharlesManager

020 7804 0904

[email protected]

Megan P CharlesManager

020 7804 [email protected]

Financial services firms can usually expect a

break in regulatory developments over the

quieter summer period. But that hasn’t been

the case for consumer credit firms this year.

With a flurry of policy statements,

consultations and promised reviews, not to

mention PPI deadlines, the FCA and PRA

have given consumer credit firms a lot to

think about over the past few months.

Since April 2014 when the FCA took over

responsibility for regulating the consumer

credit market, the sector has been subject to

constant review and supervision and at

times has been found wanting in the eyes of

the FCA.

In the last three years, the consumer credit

market has changed significantly, becoming

more tightly regulated and controlled.

Despite this, it’s clear the FCA and PRA

believe further regulatory action is needed

to improve the market. So what do the

regulators have in store for the sector? And

how will further regulatory action change

the shape of the consumer credit industry?

A busy year

The regulators have been busy this year

consulting on and reviewing a range of

topics affecting consumer credit firms. It

began in April when the FCA set out plans

to tackle what it called ‘persistent debt’. In

CP17/10: Consultation on persistent debt

and earlier intervention remedies, the FCA

proposed a series of measures including

early and continuing intervention to prevent

consumers descending into debt as well as

helping those already struggling. The

consultation closed in July, and the FCA

plans to issue a policy statement by the end

of 2017, but firms would be wise to think

about how to address the potential impact

of new rules now.

The FCA’s 2017/18 Business Plan was next,

in which it announced a strategic review of

retail banks’ business models. Phase one of

the review commenced in Q2 2017. Here the

FCA will delve into firms’ business models,

looking at the profitability of different

product types and parts of the value chain,

and how they relate to each other. It will

also seek to understand the impact of

changes such as the rise of digital

transactions and reduced branch use on

business models. The review will consider

product areas such as savings and consumer

lending. Overdrafts will no doubt come

under the spotlight as will multiple

rollovers, multiple default charges and

repeated continuous payment authority

attempts. Firms may find it challenging to

convince the FCA that such products and

practices are in their customers’ interest.

The FCA expects to give an update on the

project outlining its findings from phase one

in Q2 2018.

A quiet June was followed by a barrage of

regulatory publications in July. In CP17/20:

Staff incentives, remuneration and

performance management in consumer

credit, the FCA proposed requirements to

ensure consumer credit firms manage risks

related to how they pay and manage the

performance of their staff. A review of the

incentives and performance management

policies and practices for sales and

collection staff at 98 consumer credit firms

revealed high risk financial incentives

and/or performance management practices

likely to encourage high-pressure sales or

collections. The FCA’s concerns were

exacerbated by inadequate or ineffective

controls, and a poor appreciation of the

risks the incentives pose.

Next it was the turn of the PRA, with a

policy statement in which it asked firms to

prove they are adequately protected against

credit risks. In March 2017, the BoE’s FPC

hinted at regulatory action in this area, as it

raised concerns about the risk posed by the

‘rapid growth in consumer credit’ and the

‘easy terms’ under which unsecured loans

were being offered.

Firms must now assure their supervisors by

September 2017 of the resilience of their

consumer credit portfolios. They will need

to evidence that the regulator’s concerns

about weaknesses in asset quality and

underwriting practices for consumer credit

products, particularly credit cards,

unsecured personal loans and motor

The changing face of consumer credit

https://www.fca.org.uk/publications/consultation-papers/persistent-debt-earlier-intervention-cp17-10

https://www.fca.org.uk/publications/consultation-papers/persistent-debt-earlier-intervention-cp17-10

https://www.fca.org.uk/publication/business-plans/business-plan-2017-18.pdf

https://www.fca.org.uk/publications/consultation-papers/cp17-20-staff-incentives-remuneration-performance-management










finance, are unfounded or at least being

adequately managed. Firms that have

robust monitoring, documentation and

reporting processes are likely to find this an

easier task than others, but all firms must

ensure their processes and procedures are

aligned with regulatory requirements such

as the FCA’s Consumer Credit Sourcebook.

Back came the FCA later in July with its

extension of the SM&CR to all FCA

regulated firms. Banks, building societies,

credit unions, and PRA-designated

investment firms have had to comply with

the SM&CR since May 2016 but this

extension will bring the regime to all other

firms authorised to provide financial

services under FSMA. Implementing the

SM&CR will be complex for every affected

firm. Under the new regime, consumer

credit firms must implement sound systems

and controls to ensure senior management

are acting appropriately, they have in place

appropriate corporate governance

arrangements and ensure all relevant staff

are certified as fit and proper. Failure to do

so not only runs regulatory risks but

criminal too, with the threat of a new

criminal offence under s36 Financial

Services (Banking Reform) Act 2013 for

reckless misconduct by a Senior Manager.

The FCA plans to issue a policy statement

confirming its SM&CR proposals in 2018

and to implement the extension of the

regime later the same year. So the timetable

for this major compliance task is tight, and

comes while consumer credit firms are

grappling with implementing a number of

other regulatory measures.

Hard on the heels of the SM&CR

consultation came the FCA’s affordability

guidance, in which it is seeking to help firms

design effective affordability checks that are

appropriate and proportionate in relation to

individual lending decisions. At the same

time the FCA, while it confirmed that it was

maintaining the HCSTC price cap at the

same level, raised a red flag on unarranged

overdrafts. The FCA questions whether

unarranged overdrafts have any place in a

modern banking market, and makes clear

its intention to make changes in this

market, saying that maintaining the status

quo is not an option. This statement is a

clear prompt for banks to review their terms

and conditions surrounding this product.

Counting the cost of regulation

Consumer protection comes at a cost. Strict

requirements around lending, interest and

charges and arrears management have

implications for the nature and type of

products firms can offer and ultimately,

their profit margins.

We’ve seen the effects of this in the HCSTC

market. Prior to April 2014, the HCSTC

sector was regulated by the OFT under a

relatively ‘light-touch’ regime. When the

FCA took over responsibility for the sector,

the industry was subjected to a barrage of

new requirements with the FCA imposing

strict rules around affordability checks, risk

warnings and financial promotions. At the

genesis of the FCA’s new consumer credit

regime, Martin Wheatley, the then Chief

Executive of the FCA, estimated that up to a

quarter of firms, particularly those in the

payday lending sector, would be forced out

of the industry by the weight of regulation.

A year later, only 247 of the 400 companies

with a payday licence had applied to the

regulator to continue operating. Today, the

formerly profitable HCSTC market is

unrecognisable and almost extinct.

The regulators’ aim in introducing tougher

rules for the sector is to protect consumers,

but for firms these initiatives have meant a

heavily regulated market place and not just

in relation to consumer credit. Many firms

are simultaneously grappling with

implementing upcoming legislation such as

MiFID II, CRD IV, BRRD and ring-

fencing requirements, to name a few.

Managing implementation costs is high on

firms’ agendas.

The FCA’s dilemma

The FCA’s recent efforts on consumer credit

highlight the tension between two of its

operational objectives: it must both secure

an appropriate degree of protection for

consumers, while also promoting effective

competition in the interests of

consumers. The case of the HCSTC industry

illustrates how challenging it can be to

balance these competing objectives. While

the FCA clearly has a duty to act where it

believes that practices or products are

harmful to consumers, there are potential

risks associated with reshaping markets.

The various regulatory changes on the

horizon could result in firms offering

a limited range of heavily regulated and

controlled products, sold only to consumers

that meet select criteria. We need to ask

ourselves whether all consumers will still

have access to the financial products

they need.

The FCA’s review of banks’ business models,

for example, could change the face of retail

banking. The FCA is concerned that firms

may be profiting at the expense of more

vulnerable customers through cross-

subsidisation. If the FCA decides to

intervene, it could lead to banks

withdrawing less profitable products.

Ultimately, the most significant change

could be the end of the traditional model of

‘free-if-in-credit’ banking as banks cope

with the rising cost of operating their retail

arms. How this balances with banks’

requirement to make bank accounts

accessible to all irrespective of their

financial situation under the PAD remains

to be seen.

Is more regulation really the answer?

Perhaps it’s time for the FCA to have more

faith that its culture agenda is working. The

FCA has said that culture is both a key

driver, and potential mitigant, of conduct

risk. Arguably, strengthening the drive for

good culture, together with enforcing the

existing rules, would better fulfil all the

FCA’s objectives than imposing more and







more rules. It’s important that the FCA

looks at ways to work with firms to bring

them progressively in line with its standards

rather than having the industry buckle

under the weight of regulation.

What should firms do now?

In reality the FCA and the PRA are unlikely

to let up on the regulatory pressure. The

FCA recently announced that it’s planning

further work in relation to debt

management, point of sale and motor

finance products, as well as

unarranged overdrafts.

So as the regulation continues to flow,

firms need to think about how they manage

implementation. Careful planning and

prioritisation will be important, as will

engagement with the FCA and PRA to

ensure firms understand the regulators’

expectations, and that regulators

appropriately tailor their policy to

the market.

Practically, firms should approach the

implementation of regulation holistically.

Culture is at the heart of this and firms

should ensure they create a culture which

ensures that everyone in the business takes

responsibility for doing the right thing, aims

to achieve fair customer outcomes and has a

fuller appreciation of the reputational risks

of ‘not getting it right’. Firms need to put in

place sound governance structures and

ensure their products are appropriate to

customers’ needs. Forbearance measures

must be fair, clear and effective, taking into

account customers who may be vulnerable.

Consumer credit has changed significantly

and will continue to do so as the FCA and

PRA shape the market to achieve better

consumer outcomes and competition. It’s

important that firms work with the

regulators so that their voices are heard in

this process. But firms must be mindful that

the regulators do not necessarily act without

cause, as the FCA’s market studies continue

to highlight a number of concerns in

consumer credit firms’ practices. So there’s

work to be done on both sides to build a

sustainable, ethical and profitable consumer

credit sector.







In this section:

Regulation 9 Advice 9 Brexit 9 Client money 10 CMU 10 Financial crime and enforcement 10 Innovation 11 Market infrastructure 11 MiFID II 11 Pensions 11 Tackling pension scams 11 Recovery and resolution 12 Retail products 12 Supervision 12 Wholesale products and markets 12

Accounting 13 IFRS 9 13 Our publications 13

Also this month 13 A brief round up of other regulatory

developments

Regulation

Advice Providing FAMR guidance

The FCA proposed Handbook changes as

well as guidance for consultation under

FAMR on 1 August 2017. The regulator

wants the newly expanded category of

‘guidance’ (as opposed to investment advice

that results in a personal recommendation)

to still be subject to robust investor

protections. This includes access to the FOS

complaints process, the FSCS, the

applicability of broader FCA Principles of

Business and the client’s best interest

conduct rule.

The FCA also proposes perimeter guidance

to clarify when implicit recommendations

count as a personal recommendation, and

therefore would be in scope for heightened

RAO permission requirements. The FCA

outlines some of the considerations specific

to automated advice, such as only providing

personal recommendations when the

investor’s goals and objectives have been

defined with appropriate granularity. The

FCA also warns against taking advantage of

side-by-side advised and non-advisory

services as a way of circumventing adviser

charging requirements.

Finally, the FCA clarifies how firms should

handle ‘insistent clients’ who want to make

an investment decision against the adviser’s

recommendations. Advisers must clearly

explain their reasoning and highlight the

risks posed by ignoring their

recommendations. The consultation closes

on 2 October 2017.

Brexit Focus on Brexit contingency plans

A letter dated 2 August 2017 from Sam

Woods, Deputy Governor of the PRA, to

Nicky Morgan MP, Chair of the TC,

responded to her earlier letter regarding

what firms and the PRA would do in the

event of a ‘no-deal’ Brexit scenario. This

summer, the PRA wrote to banks, insurers

and designated investment firms

undertaking cross-border business between

the UK and EU, to request details of their

Brexit contingency planning. The aim of this

initiative is to reduce the risk of unexpected

breaks in the provision of financial services

to end users and to mitigate risks to

financial stability.

Woods reveals in the letter that the PRA

received 401 responses detailing

contingency plans from UK and EEA firms.

The PRA is examining firms’ plans

individually and collectively to identify any

financial stability risks which could arise

from their collective execution. He describes

the four categories of risk which could arise

as a result of Brexit:

direct effects on the provision of

financial services and the possibility of

disruption to the UK real economy

cross-sectoral risks relating to the

continued servicing and performance of

existing contracts and restrictions on

data transfer

complexity created by firms

restructuring to mitigate risk to

their businesses

the extra burden on PRA resources from

the authorisation and supervision of a

number of additional firms that will

arise during the Brexit process.

Woods notes that some form of Brexit

implementation period is desirable to

enable UK and EU firms to have more time

to make changes and adjust to the UK’s new

relationship with the EU. And he adds that

the BoE expects to have to make some

‘difficult prioritisation decisions’ as Brexit

weighs on its resources.

Scant progress in latest Brexit talks

Michel Barnier, the EU’s chief Brexit

negotiator, said ‘no decisive progress’ was

made in the latest round of Brexit talks, at a

press conference on 31 August 2017. He said

the two sides are ‘quite far’ from a position

where he could report sufficient progress

and recommend that talks begin on future

trading arrangements in October, as per his

preferred timetable. But he acknowledged


https://www.fca.org.uk/publication/consultation/cp17-28.pdf


https://www.nickymorgan.org/sites/www.nickymorgan.org/files/2017-08/Woods%20to%20Morgan%20Letter.pdf

https://www.nickymorgan.org/sites/www.nickymorgan.org/files/2017-08/Woods%20to%20Morgan%20Letter.pdf

https://www.nickymorgan.org/sites/www.nickymorgan.org/files/2017-08/1.%20Morgan%20to%20Woods%20-%20Contingency%20Plans.pdf







the two sides had a fruitful discussion on

the Irish border.

David Davis, Secretary of State for Exiting

the EU, said the two sides are making

progress, but called for the EU to take a

more flexible and imaginative approach to

the negotiations. He added that the UK has

a duty to its taxpayers to look at the EU’s

exit bill proposals rigorously. The exchange

reflects the growing stalemate over the

sequencing of the negotiations, and the

UK’s exit bill. Davis wants to discuss the

UK’s future relationship with the EU

alongside its exit terms, but Barnier insists

they need to make a certain level of progress

on key divorce issues before the talks can

progress to a discussion on future trade.

Client money Facilitating longer term client money deposits

The FCA published CP17/29 Client money

and unbreakable deposits on 1 August 2017.

Under the CASS 7 client money rules, firms

can’t place client money on deposit for

unbreakable terms longer than 30 days. But

banks find that the cost of prudential

liquidity requirements associated with 30-

day term deposits is reducing their appetite

to offer such deposit accounts.

To address this issue the FCA proposes

allowing firms to deposit an appropriate

proportion of their client money in bank

accounts with 31 - 90 day unbreakable

terms or notice periods, subject to certain

conditions. To do so, firms would need to

have a written policy setting out:

the maximum proportion of client

money that the firm can hold as 31 - 90

day deposits and its supporting rationale

the measures the firm has in place to

manage the risk of being unable to

access client money when required,

considering factors such as its historic

and expected client money receipts and

payments and its own analysis of its

risk exposure.

Under the new rules firms would have to

advise clients in writing about the risks

arising from longer notice periods for

withdrawals. They would also have to apply

appropriate measures to manage the risk in

line with their policy, keep their policy

under review and amend it when necessary.

And they would have to report details of

their 31 - 90 day term deposits to the FCA.

These proposals don’t apply to insurance

intermediaries and debt management firms

holding client money under CASS 5 and 11

rules, respectively.

The FCA expects these changes to come into

force on 3 January 2018, along with the

MiFID II CASS rule changes. The

consultation closes on 1 November 2017.

CMU Reviewing integration of post-trade services

As part of the wider CMU project, the EC

published a consultation on 23 August 2017

seeking input on how best to address

remaining barriers to pan-EU integration of

post-trade services. The EC is also looking

for insight into the opportunities and

challenges posed by technological

innovations (such as distributed ledger

technology) on post-trade services.

The EC invites views on which areas of post-

trade services are most susceptible to

systemic risk; how EU providers can be

more competitive internationally; and how

to make the internal EU market for such

services more competitive. Specifically,

the EC seeks to address a lack of

harmonisation across Member States in the

following areas:

registration and investor identification

rules and processes

legal frameworks for book

entry securities

legal treatment of exchange traded funds

inconsistent information

messaging standards.

The consultation period closes on

15 November 2017.

Financial crime and enforcement CMA clarifies penalties guidance

The CMA launched a consultation on its

draft revised CMA guidance on the

appropriate amount of a penalty on 2

August 2017. It proposes updating the

current guidance, which was published by

the OFT in 2012, to reflect its experience in

applying the guidance to decision-making.

It aims for greater transparency in the

penalty-setting process rather than making

fundamental changes.

In particular, the CMA would like to give

greater clarity on how it assesses the

seriousness of an infringement and applies

the starting point range. For the most

serious infringements, it will use a starting

range of 21-30% of turnover with a range of

10-20% applying to less serious

infringements. But it notes that a starting

point of less than 10% may be considered if

the particular circumstances require.

After setting the starting point range, the

CMA will consider whether an upwards or

downwards adjustment is appropriate to

reflect a number of factors, such as the

nature of the product, market coverage and

harm to consumers. As a final check, it will

consider whether the starting point is

sufficient to deter other firms from

similar conduct.

Other proposed changes include a new

aggravating factor based on non-compliance

with a prior warning letter and the



https://ec.europa.eu/info/sites/info/files/2017-post-trade-consultation-document_en_1.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/634982/consultation-document-draft-penalty-calculation-guidance.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/634982/consultation-document-draft-penalty-calculation-guidance.pdf







possibility of a discount where the CMA

considers approving a voluntary redress

scheme. The CMA asks for comments on its

proposed changes and suggestions for other

areas that could usefully be clarified.

The consultation closes on

27 September 2017.

Innovation EBA identifies FinTech focus

The EBA published a discussion paper on

the EBA’s approach to financial technology

(FinTech) on 4 August 2017. It applies to all

financial services firms using financial

technologies.

Further to the EBA’s 2017 FinTech mapping

exercise, it has decided to undertake further

work in this area. It outlines key areas of

further work including:

authorisation and sandbox regimes

prudential risks for credit

institutions, payment and electronic

money institutions

impact of FinTech on business models,

and resolution of these firms

impact of FinTech on AML and

countering terrorism

consumer protectionism and retail

conduct of business issues.

The EBA outlines perceived regulatory gaps

and its intended additional work. It invites

comments on the comprehensiveness and

viability of its plans by 6 November 2017.

Market infrastructure Transferring transaction data

ESMA published Guidelines on Portability

of Data between TRs on 24 August 2017.

EMIR requires TRs registered or recognised

by ESMA to record and retain records of

derivative contracts received, withdrawn,

matured, terminated or transferred to other

TRs. ESMA's guidelines provide principles

and procedures for transferring data on

derivative contracts to another TR. The

guidelines apply from 16 October 2017.

MiFID II EC clarifies liquid package orders criteria

The EC published Commission Delegated

Regulation (EU) No …/.. Supplementing

Regulation (EU) No 600/2014 of the EP

and of the Council on markets in financial

instruments with regard to package orders

on 14 August 2017. It sets criteria to identify

package orders which are standardised and

frequently traded enough to be considered

as having a liquid market.

The EC perceives package orders with all

components subject to MiFID II’s trading

obligation, made up of four components or

less and where components are sized below

large-in-scale thresholds as orders which

have a liquid market. It also gives asset-

class specific criteria for package orders

consisting exclusively of interest rate,

equity, credit and commodity derivatives.

The regulation will come into force on

3 January 2018.

FCA gives commodities position limits detail

The FCA published Q&As MiFID II

commodity derivatives on 9 August 2017. It

provides detail on its approach to

implementing MiFID II commodity

derivatives rules and covers:

ancillary activity notifications

position limit calculations (it plans to

publish limit details in Q4 2017)

position limit exemption applications

position reporting obligations.

First MiFID II commodities limits published

ESMA published three opinions on MiFID

II commodity derivatives position limits on

10 August 2017. It confirms limits proposed

by the French regulator, the Autorité des

marchés financiers (AMF), on rapeseed,

milling wheat and corn contracts:

OPINION on position limits on

RAPESEED contract


MILLING WHEAT No. 2 contract


CORN contract.

ESMA sets out the AMF’s proposed

rationale for the limits and outlines spot

and other months’ limits for each contract.

It noted that the AMF’s limits are in line

with the correct methodology. The limits

will apply from 3 January 2018.

FCA offers position limit guidelines

MiFID II requires NCAs to establish and

apply position limits based on ESMA’s

methodology. The FCA published guidelines

on the regime for MiFID II commodity

derivative position limits and reporting on 9

August 2017, with instructions for:

trading venues notifying the FCA of new

commodity contracts prior to launch as

of 1 August 2017

non-financial entities applying for

exemptions from position limits as of

October 2017

trading venues and investment

firms reporting positions as of

11 September 2017

firms and individuals trading on a

professional basis who are planning to

apply for ancillary activity exemptions.

The commodity derivative position limits

apply from 3 January 2018.

Pensions Tackling pension scams

The Government issued a response to its

earlier consultation on proposals to tackle

pension scams, in Pension scams:

consultation response on 21 August 2018. It

intends to take forward its proposals for a

ban on pensions cold calling, working on

the final details of the ban during the course

of this year and then putting

forward legislation.

https://www.eba.europa.eu/documents/10180/1919160/EBA+Discussion+Paper+on+Fintech+%28EBA-DP-2017-02%29.pdf



https://ec.europa.eu/transparency/regdoc/rep/3/2017/EN/C-2017-5611-1-EN-MAIN-PART-1.PDF





https://www.fca.org.uk/publication/minutes/mifidii-commodity-derivatives-qa.pdf

https://www.fca.org.uk/publication/minutes/mifidii-commodity-derivatives-qa.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_rapeseed_eco_oco_0.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_rapeseed_eco_oco_0.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_milling_wheat_ebmobm.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_milling_wheat_ebmobm.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_corn_ema_oma_0.pdf

https://www.esma.europa.eu/sites/default/files/library/amf_corn_ema_oma_0.pdf

https://www.fca.org.uk/markets/mifid-ii/commodity-derivatives

https://www.fca.org.uk/markets/mifid-ii/commodity-derivatives

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/638844/Pension_Scams_consultation_response.pdf

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/638844/Pension_Scams_consultation_response.pdf







The Government also intends to engage

with stakeholders by the end of 2017 on how

to implement restrictions on individuals’

statutory rights to transfer occupational

pension schemes. It recognises the need to

consider how the legislation will align with

its rollout of an authorisation regime for

master trusts, which is planned for 2019.

Recovery and resolution Improving valuation capabilities in resolution

The BoE launched a consultation on The

BoE’s proposed policy on valuation

capabilities to support resolution on 17

August 2017. It sets out seven principles

that it expects firms to meet to support

timely and robust valuations of their assets,

liabilities and shares in resolution. If they

do not, the BoE would consider using its

powers of direction to ensure firms make

the necessary improvements.

The policy is aimed at those firms whose

preferred resolution strategy is bail-in or

partial transfer. Smaller firms whose

resolution strategy is modified insolvency

would be out of scope. But the policy would

also capture a firm that is a material UK

subsidiary of an overseas-based banking

group where the BoE has determined that

the firm must hold internal MREL in

addition to regulatory capital requirements.

Any firm within scope should have

valuation capabilities in place in respect of

itself and all material subsidiaries, including

subsidiaries in other jurisdictions. But the

technical specifications of the valuations

will depend on the firm’s home jurisdiction.

For firms that would be subject to a UK-led

resolution, Appendix 1 to the consultation

gives a useful overview of the UK

requirements and how these align with the

recent EBA final draft RTS on

resolution valuations.

The BoE intends to survey in-scope firms to

give it a better understanding of their

current capabilities and the costs of

complying with the proposed policy. The

questions for the survey are in Appendix 2

to the consultation paper.

Once the BoE issues its final statement of

policy, firms will have around 18 months to

implement the necessary changes to comply

with it. The consultation closes on

17 November 2017.

Retail products KID requirements for PRIIPs

The ESAs published further guidance on the

KID requirements for PRIIPs on 18 August

2017. The guidance consists of common

supervisory approaches and practices in the

implementation of the KID and includes an

additional Q&A.

The ESAs also published diagrams

explaining the risk and reward calculations

required to prepare the KID. The diagrams

set out the calculation steps for the

‘summary risk indicator’ (market risk and

credit risk assessment) and ‘performance

scenario’ calculations described in the

regulation.

MoJ gives PPI clarity

The MoJ published guidance for claims

management companies (CMCs) on

handling PPI cases relating to the Plevin

Supreme Court ruling on 18 August 2017. In

Plevin guidance for claims management

companies, the MoJ clarifies its

expectations for CMCs. This follows final

rules and guidance on handling PPI

complaints in light of Plevin published by

the FCA in March 2017, which came into

effect on 29 August 2017.

The FCA is requiring firms that have sold

PPI to write to previously rejected

complainants, who are eligible to complain

again in light of Plevin. In its guidance, the

MoJ informs CMCs that they must be clear

and transparent about Plevin when

communicating with clients. CMCs must

also ensure they have sought clients’

instructions to act on their behalf in relation

to Plevin complaints, says the MoJ, noting

that firms are likely to require a new letter

of authority.

The FCA is launching a campaign to raise

awareness of the 29 August 2019 deadline

to complain about PPI.

Supervision

The PRA published consultation paper,

CP16/17 PRA fees and levies: model

transaction fees, fees and FSCS levies for

insurers and fees for designated investment

firms on 8 August 2017. It outlines changes

in the methodologies for determining and

allocating various fees and levies for PRA-

designated investment firms and insurers.

The PRA aims to implement the changes

applying to different components of the fees

on several different dates between

December 2017 and April 2018. The

consultation closes on 24 October 2017.

The PRA updated the consultation

document on 30 August 2017 with the

correct definition of ‘best estimate liabilities’

for life insurers.

The BoE published consultation paper,

Levying fees for FMI supervision on

4 August 2017. It outlines a new funding

model for the 11 UK FMIs it supervises

comprising CCPs, payments systems and a

CSD. The BoE does not currently levy

supervision fees on FMIs. If it proceeds with

the plans, the BoE intends to issue more

detailed proposals for consultation, with

new arrangements commencing in

2018. This consultation closes on

6 October 2017.

Wholesale products and markets Corporate bond transparency

IOSCO consulted on regulatory reporting

and public transparency in the secondary

corporate bond markets on 14 August 2017,

setting out seven recommendations to

improve transparency of corporate bond

markets and increase information on

https://esas-joint-committee.europa.eu/Pages/News/European-Supervisory-Authorities-publish-QA-on-the-Key-Information-Document-.aspx

https://esas-joint-committee.europa.eu/Publications/Technical%20Standards/JC%202017%2049%20(JC_PRIIPs_QA_Final).pdf

https://esas-joint-committee.europa.eu/Publications/Technical%20Standards/JC%202017%2049%20(PRIIPs_flow_diagram_risk_reward).pdf

http://www.bankofengland.co.uk/pra/Documents/publications/cp/2017/cp1617.pdf




http://www.bankofengland.co.uk/financialstability/Documents/fmi/levyingfeescp0817.pdf

http://www.iosco.org/library/pubdocs/pdf/IOSCOPD578.pdf









secondary corporate bond markets available

to both regulators and the public.

IOSCO’s consultation follows the

publications of its findings on an

examination of the liquidity of secondary

bond markets, published in March 2017.


16 October 2017.

Accounting

IFRS 9 Amending supervisory reporting for IFRS 9

Regulation (EU) 2017/1443 amending

Implementing Regulation (EU) No

680/2014 laying down ITS with regards to

supervisory reporting of institutions

according to CRR was published in the

Official Journal on 17 August 2017.

This follows the EBA’s draft final report on

changes to financial reporting (FINREP)

templates published in November 2016.

While most changes arise from the

introduction of IFRS 9, other changes

reflect experience gained through submitted

data and feedback received from reporting

firms. These affect both the IFRS and

national GAAP templates and reporting

instructions. The first reporting reference

date is 31 March 2018 for a firm with a

31 December year end adopting IFRS 9

from 1 January 2018.

Our publications IFRS news

IFRS news August 2017 includes the

following articles:

New standard implementation:

Investor expectations

IFRS 13 Fair Value

Leases lab - IFRS 16

Demystifying IFRS 9 for Corporates

IFRIC Rejections - IAS 38

The IFRS 15 Mole

Modification of financial liabilities –

IFRS 9 accounting change confirmed.

It also highlights a summary of feedback

collected by the IASB on IFRS 17, Insurance

Contracts. It reports that investors and

analysts welcomed a number of the

developments in IFRS 17 such as more

clarity about sources of profits from

insurance contracts from disclosures of

contractual service margin (unearned

profit) and risk adjustment for non-

financial risks, consistency of revenue

recognition policies with other industries

and considering time value of money for

incurred claims.

But investors and analysts expressed

concerns about expected remaining

inconsistency in accounting for insurance

contracts due to significant judgements

involved in measurement and choices

available under IFRS 17.

Accounting briefing

Accounting briefing August 2017 includes

articles on:

The new revenue, leases and financial

instruments standards – Do they affect

FRS 102?

Reduced disclosures for FRS 101

reporters applying IFRS 16

Premium thinking – An insurance

standard for the future

Simplifications for small companies –

Shareholder director loans

Tackling the triennial review – Simpler

purchase price allocations.

It also lists current UK GAAP standards and

exposure drafts in issue.

Implementing the non-financial reporting regulations

For periods beginning on or after 1 January

2017, Public Interest Entities with over 500

employees will be required to include a non-

financial information statement in their

strategic report. Our report The non-

financial reporting regulations: What do

they mean in practice?, looks at the new

regulations, how they compare to the

existing strategic report regulations and

offer suggested steps towards compliance.

Also this month

EBA

The EBA updated the list of public sector

entities for the calculation of capital

requirements on 1 August 2017. It included

three public sector entities from Hungary,

which may be treated as regional

governments, local authorities or central

governments for the calculation of

capital requirements.

EC

The EC published the Commission

implementing regulation (EU) 2017/1486

of 10 July 2017 amending Implementing

Regulation (EU) 2016/2070 as regards

benchmarking portfolios and reporting

instructions in the Official Journal on 31

August 2017. It applies to banks, building

societies and PRA designated investment

firms in the UK.

ESMA

ESMA updated its Guidelines on

Transaction reporting, order record

keeping and clock synchronisation

under MiFID II on 7 August 2017. It

amends previous drafting errors and

clarifies factual mistakes identified.

ESMA published a Guidelines

Compliance table on 28 August 2017

listing the NCAs that comply with

MAR guidelines on the definition of

inside information in relation to

commodity derivatives. NCAs were

http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32017R1443&from=EN





http://www.eba.europa.eu/documents/10180/1679431/Final+draft+ITS+amending+ITS+on+Supervisory+reporting+of+FINREP+%28EBA-ITS-2016-07%29.pdf

https://inform.pwc.com/inform2/content?action=resource&id=0000019371913642.pdf

https://inform.pwc.com/inform2/content?action=resource&id=0000019406927433.pdf

https://www.pwc.co.uk/audit-assurance/assets/pdf/non-financial-reporting-regulations-2017.pdf



http://www.eba.europa.eu/-/eba-updates-list-of-public-sector-entities-for-the-calculation-of-capital-requirements



https://www.esma.europa.eu/sites/default/files/library/2016-1452_guidelines_mifid_ii_transaction_reporting.pdf










required to comply with the guidelines

by 17 March 2017.

FCA

The FCA proposed Market

Infrastructure Providers - 2017/18 fee

rates on 17 August 2017. The FCA asks

for responses by 16 October 2017.

The FCA together with the FCA

Practitioner Panel published the

findings from their 2017 survey of FCA-

regulated firms – FCA Practitioner

Panel Survey 2017 Report - on 3 August

2017. The survey questions more than

2,000 regulated firms on the FCA’s

performance as a regulator.

The FCA published MiFID II

commodities derivatives position limits

on 28 August 2017. The list covers

commodities derivatives contracts

currently traded on UK trading venues

and will be updated as the regulator

authorises additional trading venues.

PRA

The PRA updated its CRD firms –

Reporting requirements webpage on 16

August 2017 concerning firms due to submit

financial regulatory reporting templates

(FINREP), forecast balance sheet and

income statement data (PRA104-107). This

will replace existing PRA regulatory

reporting from 1 January 2018. The PRA

seeks information on the reporting

schedules firms are planning to use.

TPR

TPR published its policy statement on

monetary penalties policy on 10 August

2017. It also published a statement on its

professional trustee description policy on

the same day.




https://www.fca.org.uk/publication/market-studies/ms15-2-3-amms-remedies-timeline.pdf


http://www.bankofengland.co.uk/pra/Pages/regulatorydata/formscrdfirms.aspx

http://www.bankofengland.co.uk/pra/Pages/regulatorydata/formscrdfirms.aspx

http://www.thepensionsregulator.gov.uk/docs/monetary-penalties-policy.pdf

http://www.thepensionsregulator.gov.uk/docs/professional-trustee-description-policy.pdf







In this section:

Regulation 15 Innovation 15 Payments 15

Accounting 16 IFRS 9 16


developments

Regulation

Innovation FinTech and the future of banking

The Basel Committee published a

consultation Sound Practices: Implications

of FinTech developments for banks and

bank supervisors on 31 August 2017.

In this analysis, the Committee considers

various potential scenarios, their risks and

opportunities as well as case studies on

technology developments and FinTech

business models. A common theme arising

from the analysis is that the current

operating models of banks will be

increasingly difficult to maintain. The Basel

Committee argues that new technologies

will enable new business models, and

maintaining strong customer relationships

will be key for future banking models.

The Committee provides a forward looking

perspective on FinTech and its potential

impacts. It outlines ten key observations

and related recommendations on the

supervisory issues for banks and their

supervisors to consider.


31 October 2017.

Payments PSD2 fraud reporting proposals

The EBA launched a consultation on its

draft Guidelines on fraud reporting

requirements under Article 96(6) of PSD2

on 2 August 2017. It aims to improve

security for EU retail payments through

consistent fraud reporting and the

production of comparable and reliable data.

Guidelines 1–7 set out reporting

requirements for all PSPs (except account

information service providers) while

guidelines 8–10 contain the obligations of

NCAs to aggregate and submit data to the

EBA and ECB.

Because PSD2 does not define payment

fraud, the EBA suggests a definition of

‘fraudulent payment transactions’, to cover

unauthorised payment transactions and

transactions where the payer was

manipulated or acted fraudulently.

PSPs are expected to provide high-level data

quarterly and more detailed data annually.

The guidelines set out the level of detail

required according to the type of payment

instrument and the payment service

provided. Both PSPs and NCAs will follow

the same data breakdown for both

individual and aggregated reporting. But

NCAs will have discretion to decide on the


https://www.eba.europa.eu/documents/10180/1917559/Consultation+Paper+on+the+Guidelines+on+fraud+reporting+under+PSD2+%28EBA-CP-2017-13%29.pdf

https://www.eba.europa.eu/documents/10180/1917559/Consultation+Paper+on+the+Guidelines+on+fraud+reporting+under+PSD2+%28EBA-CP-2017-13%29.pdf







format and means of communication and

technology for reporting by PSPs.

The final guidelines apply from 13 January

2018, so the EBA proposes that PSPs start

recording data on payment transactions and

fraudulent payment transactions from that

date. But it suggests quarterly reporting

begins in the second half of 2018 in respect

of Q2 2018. And the EBA suggests annual

reporting begins in the first half of 2020 in

respect of the period commencing on the

date of application of the RTS on strong

customer authentication and common and

secure communication (not yet finalised).


3 November 2017.

Switching direct debit providers

The PSR consulted on Direct Debit

Facilities Management: Switching

providers (CP17/1) on 4 August 2017. It also

published a letter from GoCardless Ltd

calling for the PSR to use its powers under

FSBRA to change the rules under the Bacs

scheme for switching Facilities Management

(FM) provider.

Larger businesses wanting to collect money

from customers via Direct Debit (DD) must

be sponsored by a bank or building society

that is a Bacs member. Smaller

organisations (mainly SMEs, clubs and

societies) that cannot get sponsorship may

use an FM provider to collect and

administer DD payments on their behalf.

But the PSR has found that clients of FM

providers face significant issues changing

FM provider. If the existing provider does

not consent to a bulk transfer under Bacs

scheme rules, the FM client faces having to

ask all its customers to sign new DD

instructions.

Based on its research, the PSR has reached a

provisional conclusion that the potential for

existing FM providers to raise cost barriers

to switching is inappropriate and harms

competition and innovation.

Bacs Payment Schemes Limited (BPSL) that

operates the DD scheme introduced new

guidance in March 2017 to encourage FM

providers to use the bulk change process to

facilitate switching. But the PSR is not

convinced that best practice or voluntary

codes of conduct will work. Instead the PSR

proposes using its powers to require

BPSL to draft new rules to address the

issues identified.

The consultation closes on 15 September

2017. The PSR plans to publish its response

to the consultation by the end of 2017.

Accounting

IFRS 9 ECB amends supervisory reporting for IFRS 9

The ECB published Regulation of the ECB

amending Regulation (EU) 2015/534 on

reporting supervisory financial

information (ECB/2017/25) and

supporting regulation (ECB/2017/26) on

28 August 2017. The amendments mainly

reflect similar changes the EC has

introduced to its supervisory reporting

regulation that the EBA collects to align its

reporting on financial information

(FINREP) with the introduction of IFRS 9,

the financial instruments accounting

standard. The amending regulation also

includes further changes and clarifications

based on experience gained since its

implementation in 2015. This follows a

consultation in March 2017.

In addition to consolidated FINREP

reporting to the EBA by banking groups that

apply IFRS, the ECB requires FINREP

reporting on a consolidated basis for

banking group reporting under national

accounting frameworks and on an

individual entity basis. The changes take

effect from 1 January 2018 with a first

reporting reference date of 31 March 2018.

At the request of the French and German

NCAs, the ECB defers the application to less

significant institutions of these Member

States until 1 January 2019.

Also this month

Basel Committee

The Basel Committee published its current

data collection exercise for monitoring the

impact of Basel III rules on 18 August 2017,

which applies to international banks. It also

published the monitoring workbook,

accompanying instructions and a list of

frequently asked questions for banks

participating in the exercise.

CMA

The CMA announced it has provisionally

cleared the acquisition of DirectCash

Payments by rival ATM provider

Cardtronics, in a Provisional findings

report on 25 August 2017. It provisionally

concludes the merger would not result in

higher charges at pay-to-use cashpoints.

EBA

The EBA updated the list of public

sector entities for the calculation of

capital requirements on 14 August 2017.

The updates relate to public sector

entities in France and Croatia.

The EBA published guidelines on

disclosure requirements under Part

Eight of Regulation (EU) no 575/2013

on 4 August 2017, reflecting their

translation into all official EU languages.

These guidelines were originally

published in an EBA final report in

December 2016 but incorporate minor

corrections made in June 2017. The

guidelines apply from 31 December 2017

to G-SIIs and O-SIIs within the scope of

CRD IV Pillar 3 disclosure requirements.

PSR

The PSR consulted on regulatory fees on 17

August 2017. For 2018/19 it will collect fees

directly from fee payers, rather than

indirectly via operators of payment systems.

https://www.psr.org.uk/sites/default/files/media/PDF/PSR-CP17-1-Direct-Debit-Facilities-Management-August-2017.pdf



https://www.psr.org.uk/sites/default/files/media/PDF/PSR-CP17-1-DD-Annex-3.pdf

http://www.bis.org/bcbs/qis/index.htm

http://www.bis.org/bcbs/qis/index.htm

http://www.eba.europa.eu/documents/10180/585167/List+of+public+sector+entities+treated+as+exposures+to+regional+governments%2C%20local+authorities+or+central+governments+%28Article+116+CRR%29



http://www.eba.europa.eu/documents/10180/1918833/Guidelines%20on%20disclosure%20requirements%20under%20Part%20Eight%20of%20Regulation%20575%202013%20(EBA-GL-2016-11)_EN.pdf



https://www.eba.europa.eu/documents/10180/1696202/Final%20report%20on%20the%20Guidelines%20on%20disclosure%20requirements%20under%20Part%20Eight%20of%20Regulation%20575%202013%20(EBA-GL-2016-11).pdf

https://www.psr.org.uk/sites/default/files/media/PDF/CP17-30-PSR-fees-18-19.pdf







In this section:

Also this month 17 A brief round up of other

regulatory developments

Also this month

FCA The FCA published its asset management market study timeline on 2 August 2017. It sets out the expected timeline for implementing its market study remedies, from July 2017 to April 2018.

Asset management









In this section:

Regulation 18 Disclosure and distribution 18 Solvency II 18 Supervision 18


developments

Regulation

Disclosure and distribution EC adopts IPID rules

On 11 August 2018, the EC adopted

Commission Implementing Regulation

(EU) 2017/1469 laying down a standardised

presentation format for the insurance

product information document (IPID) rules.

The IPID will have to accompany all non-

life insurance policies from 23 February

2018. These new rules are expected to allow

consumers to have all information

necessary to make an informed decision

when buying insurance products, such as

car, travel or house insurance.

This type of KID already exists for life

insurance policy and other investment

products under the Regulation on KIDs

for PRIIPs.

Solvency II ESRB calls for further regulatory advances

The ESRB published a report on Regulatory

risk-free yield curve properties and

macroprudential consequences on 17

August 2017. It recommends that a greater

part of the Solvency II risk-free yield curves

used to determine the value of insurers’

liabilities should be derived using market-

based inputs to increase the resilience of the

insurance sector.

The ESRB also published a report on

Recovery and resolution for the EU

insurance sector: a macroprudential

perspective on 17 August 2017. It sets out

proposals to introduce a pan EU

harmonised recovery and resolution

framework for insurers to ensure that

failures are effectively managed.

Supervision IAIS consults on revisions of ICP 24

The IAIS published a revised version of

ICP 24 - Macroprudential Surveillance and

Insurance Supervision on 1 August 2017. It

updates guidance for national supervisors

on monitoring macroprudential factors that

may impact the insurance sector. The

comment period ends on 1 October 2017.

The IAIS plans to review this ICP again on

completion of work on its activities-based

approach to systemic risk assessment in the

insurance sector.

Insurance

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R1469

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32017R1469

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/consumer-financial-services/key-information-documents-packaged-retail-and-insurance-based-investment-products-priips_en

https://ec.europa.eu/info/business-economy-euro/banking-and-finance/consumer-finance-and-payments/consumer-financial-services/key-information-documents-packaged-retail-and-insurance-based-investment-products-priips_en

http://www.esrb.europa.eu/pub/pdf/reports/esrb.reports170817_regulatoryriskfreeyieltcurveproperties.en.pdf?bf7c2cf34637cbe5a755b50b2df96659



http://www.esrb.europa.eu/pub/pdf/reports/esrb.reports170817_recoveryandresolution.en.pdf?2482b63192aa290441664f8acc92e6b8



https://www.iaisweb.org/news/public-consultation-on-draft-revisions-of-icp-24-comment-invited-by-1-october-2017

https://www.iaisweb.org/news/public-consultation-on-draft-revisions-of-icp-24-comment-invited-by-1-october-2017







Also this month

EIOPA EIOPA updates Q&As

In August 2017, EIOPA updated its

questions and answers on:

Commission Delegated Regulation (EU)

2015/35 supplementing Directive

2009/138/EC

(EU) No 2015-2450 with regard to the

templates for the submission of

information to the supervisory

authorities.

https://eiopa.europa.eu/regulation-supervision/q-a-on-regulation

https://eiopa.europa.eu/Publications/Guidelines/Commission%20Delegated%20Regulation%20%28EU%29%202015-35%20supplementing%20Directive%202009-138EC.xlsx



https://eiopa.europa.eu/Publications/Guidelines/%28EU%29%20No%202015-2450%20with%20regard%20to%20the%20templates%20for%20the%20submission%20of%20information%20to%20the%20supervisory%20authorities%2018-Aug.xlsb










Open consultations

Closing date for responses

Paper Institution

12/09/17 CP11/17: Changes to the UK leverage ratio framework relating to the treatment of claims on central banks PRA

14/09/17 Guidelines on Internalised Settlement Reporting under Article 9 of CSDR ESMA

15/09/17 Draft RTS and ITS on the EBA register under PSD2 EBA

15/09/17 CP17/1: Direct Debit Facilities Management – Switching service provider PSR

18/09/17 CR05/2017 Open-ended Fund Liquidity and Risk Management – Good Practices and Issues for Consideration IOSCO

18/09/17 CR04/2017 Consultation on CIS Liquidity Risk Management Recommendations IOSCO

21/09/17 CP17/16: Advising on Pension Transfers FCA

21/09/17 CP9/17: Recovery planning PRA

21/09/17 GFXC request for feedback on last look practices in the Foreign Exchange market Global Foreign Exchange Committee

22/09/17 Framework for supervisory stress testing of CCPs IOSCO

22/09/17 (for chapters 2 and 3; 14/08/17 for chapter 4)

CP8/17: Strengthening accountability in banking and insurance: optimisations to the SIMR and changes to SMR forms PRA

Monthly calendar


https://www.esma.europa.eu/sites/default/files/library/esma70-151-457_consultation_paper_on_csdr_guidelines_on_internalised_settlement_reporting.pdf

http://www.eba.europa.eu/documents/10180/1911083/Consultation+Paper+on+the+draft+RTS+and+ITS+on+the+EBA+Register+under+PSD2+%28EBA-CP-2017-12%29.pdf





http://www.bankofengland.co.uk/pra/Pages/publications/cp/2017/cp917.aspx

http://www.globalfxc.org/docs/consultation_process.pdf


http://www.bankofengland.co.uk/pra/Documents/publications/cp/2017/cp817split.pdf








Paper Institution

22/09/17 Blueprint for the Future of UK Payments Payments Strategy Forum

25/09/17 CP17/24: Information about current account services FCA

27/09/17 Simplified alternative to the standardised approach to market risk capital requirements Basel Committee

27/09/17 CA98 penalties guidance CMA

28/09/17 CP17/18: Consultation on implementing asset management market study remedies and changes to Handbook FCA

28/09/17 Draft technical advice on content and format of the EU growth prospectus ESMA

28/09/17 PSR regulatory fees 2018/19 PSR

29/09/17 CP15/17: The minimum requirement for own funds and eligible liabilities (MREL) – Buffers PRA

29/09/17 Consultation on the draft ECB regulation on statistical reporting requirements for pension funds ECB

01/10/17 ICP 24 Macroprudential Surveillance and Insurance Supervision IAIS

02/10/17 CP17/28: FAMR implementation Part II and insistent clients FCA

04/10/17 CP17/20: Staff incentives, remuneration and performance management in consumer credit FCA

05/10/17 Capital treatment for simple, transparent and comparable short-term securitisations Basel Committee

06/10/17 Levying fees for financial market infrastructure supervision BoE

08/10/17 Consultation on the targeted revision of EU consumer law directives EC

16/10/17 CP17/31: Market infrastructure providers - 2017/18 fee rates FCA

16/10/17 Regulatory Reporting and Public Transparency in the Secondary Corporate Bond Markets IOSCO

https://implementation.paymentsforum.uk/sites/default/files/Consultation%20Document.pdf


http://www.bis.org/bcbs/publ/d408.pdf

https://www.gov.uk/government/consultations/ca98-penalties-guidance


https://www.esma.europa.eu/file/22576/download?token=z3hE_cwT

https://www.psr.org.uk/sites/default/files/media/PDF/CP17-30-PSR-fees-18-19.pdf


https://www.ecb.europa.eu/stats/ecb_statistics/governance_and_quality_framework/consultations/html/pension_funds.en.html

https://www.iaisweb.org/page/consultations/current-consultations/revision-icp-24/file/67834/icp-24-for-consultation




http://www.bankofengland.co.uk/financialstability/Documents/fmi/levyingfeescp0817.pdf

http://ec.europa.eu/info/consultations/public-consultation-targeted-revision-eu-consumer-law-directives_en










Paper Institution

20/10/17 Consultation on the development of secondary markets for non-performing loans and distressed assets and protection of secured creditors from borrowers’ default

EC

20/10/17 CP17/23: Insurance Distribution Directive implementation – Consultation Paper II FCA

23/10/17 GC17/7: Proposed guidance on a sourcebook for professional body supervisors on anti-money laundering supervision FCA

24/10/17 CP16/17: PRA fees and levies: model transaction fees, fees and FSCS levies for insurers and fees for designated investment firms

PRA

30/10/17 Consultation on transparency and fees in cross-border transactions in the EU EC

31/10/17 Implications of FinTech developments for banks and bank supervisors Basel Committee

31/10/17 CP17/27: Assessing creditworthiness in consumer credit FCA

01/11/17 CP17/29: Client money and unbreakable deposits FCA

03/11/17 CP17/25: Individual accountability - extending the SM&CR to all FCA firms FCA

03/11/17 Consultation Paper on Draft Guidelines on fraud reporting requirements under Article 96(6) of PSD2 EBA

03/11/17 CP17/26: Individual accountability - extending the SM&CR to insurers FCA

03/11/17 CP14/17: Strengthening individual accountability in insurance: extension of the SM&CR to insurers PRA

15/11/17 Consultation on post-trade in a Capital Market Union: dismantling barriers and strategy for the future EC

17/11/17 Proposed policy on valuation capabilities to support resolvability BoE

https://ec.europa.eu/info/consultations/finance-2017-non-performing-loans_en

https://ec.europa.eu/info/consultations/finance-2017-non-performing-loans_en




http://ec.europa.eu/info/consultations/finance-2017-cross-border-transactions-fees_en





http://www.eba.europa.eu/documents/10180/1917559/Consultation+Paper+on+the+Guidelines+on+fraud+reporting+under+PSD2+%28EBA-CP-2017-13%29.pdf



https://ec.europa.eu/info/consultations/finance-2017-post-trade_en

http://www.bankofengland.co.uk/financialstability/Documents/resolution/valuationscapabilities_cp.pdf







Forthcoming publications in 2017

Date Topic Type Institution

Accounting

TBD 2017 RTS on consolidation methods Technical standards EBA

TBD 2017 Developments in the market with regard to providing statutory audit services to public interest entities

Advice EBA

TBD 2017 Accounting for expected credit losses Guidelines EBA

TBD 2017 Policy statement to CP46/16 – IFRS 9: changes to reporting requirements

Policy statement PRA

Asset management

TBD 2017 UCITS V Level 2 Regulation, SFTR and consequential changes to the Handbook – PS to CP16/14

Policy statement FCA

Authorisations

TBD 2017 ITS and RTS on authorisation of credit institutions under CRD IV Technical standards EBA

CASS

TBD 2017 Asset segregation under AIFMD Guidelines ESMA

Conduct

Summer 2017 Mortgage market study interim report Report FCA

September 2017 FAMR implementation part 1 Finalised guidance FCA

November 2017 FCA response to MiFID II implementation consultation VI Policy statement FCA








December 2017 FAMR implementation part 2 – PS to CP17/28 Policy statement FCA

TBD 2017 Consultation on new rules for firms running crowdfunding platforms Consultation FCA

TBD 2017 Remuneration benchmarking and high earners data under Articles 75(1) and (3) CRD IV

Report EBA

TBD 2017 The collection exercise of approved higher maximum ratios for variable remuneration under Article 94(1)(g)(ii) CRD IV

Guidelines EBA

TBD 2017 Suitability of members of the management body and key function holders under Article 91(12) CRD IV

Guidelines EBA

Q1 2018 Mortgage market study final report Report FCA

Financial crime, security and market abuse

TBD 2017 Enhanced due diligence under AMLD4 Guidelines EBA

TBD 2017 Simplified due diligence under AMLD4 Guidelines EBA

TBD 2017 RTS on central contract points under AMLD4 Technical standards EBA

TBD 2017 MAR Technical standards ESMA

Insurance

Summer 2017 Policy statement to CP38/16 Solvency II: group supervision Policy statement PRA

September 2017 IDD implementation – CP3 Consultation FCA

September 2017 IDD implementation – PS to CP1 Policy statement FCA

September 2017 FCA regulated fees and levies: insurers’ tariff data for 2018/19 Consultation FCA








Q4 2017 Proposed Handbook changes to reflect the new regulatory framework for insurance-linked securities – PS to CP17/3


TBD 2017 Policy statement to CP47/16: Maintenance of the ‘transitional measure on technical provisions’ under Solvency II

Policy statement PRA

January 2018 IDD implementation – PS to CP3 Policy statement FCA

Market infrastructure

December 2017 Market infrastructure providers 2017/18 fee rates – PS to CP17/31 Policy statement FCA

TBD 2017 The supervision of delegated credit institutions and central securities depositories authorised to provide banking type of ancillary services

Guidelines EBA

Payments

TBD 2017 RTS on central contact points under PSD2 Technical standards EBA

TBD 2017 RTS on standardised terminology for payment services linked to a payment account under PAD

Technical standards EBA

TBD 2017 ITS on the standardised format of documents and symbols (including consumer testing) under PAD


Pensions

September 2017 Transaction cost disclosure of workplace pensions – PS to CP16/30 Policy statement FCA

TBD 2017 Secondary annuity market – PS to CP16/13 Policy statement FCA

Prudential

TBD 2017 Disclosure of LCR Guidelines EBA

TBD 2017 Incremental default and migration risk Guidelines EBA








TBD 2017 Stress in correlation trading portfolios Guidelines EBA

TBD 2017 Integrity of the modelling process Guidelines EBA

TBD 2017 Incremental default and migration risk Guidelines EBA

TBD 2017 ITS amending the Commission Implementing Regulation with regard to the LCR


TBD 2017 Stressed VaR Guidelines EBA

TBD 2017 Netting Guidelines EBA

TBD 2017 The Supervisory Formula Method on securitisation under Article 262(3) of CRR

Guidelines EBA

TBD 2017 Intraday liquidity risk Guidelines EBA

Securities and markets

TBD 2017 SFTR RTS and ITS Technical standards ESMA

Supervision, governance and reporting

October 2017 FCA regulatory fees and levies: policy proposals for 2018/19 Consultation FCA

Q4 2017 Reviewing the funding of the FSCS – PS to CP16/42 and further consultation


H2 2017 Supervision of significant branches Final guidelines EBA

TBD 2017 ITS and RTS on the authorisation of credit institutions Technical standards EBA

TBD 2017 Credit Rating Agencies Regulation Technical standards ESMA

Main sources: ESMA work programme; EBA work programme; EC work programme; FCA policy development updates.







ABC Anti-Bribery and Corruption

ABI Association of British Insurers

ABS Asset Backed Security

ACER Agency for the Cooperation of Energy Regulators

AIF Alternative Investment Fund

AIFM Alternative Investment Fund Manager

AIFMD Alternative Investment Fund Managers Directive 2011/61/EU

AIMA Alternative Investment Management Association

AML Anti-Money Laundering

AMLD3 3rd Money Laundering Directive 2005/60/EC

AMLD4 4th Money Laundering Directive 2015/849/EU

AMLD5 5th Money Laundering Directive

AQR Asset Quality Review

ASB UK Accounting Standards Board

Banking Reform Act (2013)

Financial Services (Banking Reform) Act 2013

Basel II Basel II: International Convergence of Capital Measurement and Capital Standards: a Revised Framework

Basel III Basel III: International Regulatory Framework for Banks

Basel Committee Basel Committee of Banking Supervision (of the BIS)

BBA British Bankers’ Association

BCR Basic capital requirement (for insurers)

BIBA British Insurance Brokers Association

BIS Bank for International Settlements

BoE Bank of England

BMR EU Benchmarks Regulation

BRRD Bank Recovery and Resolution Directive 2014/59/EU

CASS Client Assets sourcebook

CCA Consumer Credit Act 1974 (as amended)

CCB Countercyclical capital buffer

CCD Consumer Credit Directive 2008/48/EC

CCPs Central Counterparties

CDS Credit Default Swaps

CEBS Committee of European Banking Supervisors (predecessor of EBA)

CESR Committee of European Securities Regulators (predecessor of ESMA)

CET1 Common Equity Tier 1

CFTC Commodities Futures Trading Commission (US)

CGFS Committee on the Global Financial System (of the BIS)

Glossary







CIS Collective Investment Schemes

CMA Competition and Markets Authority

CMU Capital markets union

COBS FCA conduct of business sourcebook

CoCos Contingent convertible securities

Co-legislators Ordinary procedure for adopting EU law requires agreement between the Council and the European Parliament (who are the ‘co- legislators’)

COREP Standardised European common reporting

Council Generic term representing all ten configurations of the Council of the European Union

CRA1 Regulation on Credit Rating Agencies (EC) No 1060/2009

CRA2 Regulation amending the Credit Rating Agencies Regulation (EU) No 513/2011

CRA3 Proposal to amend the Credit Rating Agencies Regulation and directives related to credit rating agencies COM(2011) 746 final

CRAs Credit Rating Agencies

CRD ‘Capital Requirements Directive’: collectively refers to Directive 2006/48/EC and Directive 2006/49/EC

CRD II Amending Directive 2009/111/EC

CRD III Amending Directive 2010/76/EU

CRD IV Capital Requirements Directive 2013/36/EU

CRR Regulation (EU) No 575/2013 on prudential requirements for credit institutions and investment firms

CSD Central Securities Depository

CSDR Central Securities Depositories Regulation (EU) 909/2014

CSMAD Criminal Sanctions Market Abuse Directive 2014/57/EU

CTF Counter Terrorist Financing

DEPP The FCA’s Decision Procedure and Penalties Manual

DFBIS Department for Business, Innovation and Skills

DG FISMA Directorate-General for Financial Stability, Financial Services and Capital Markets Union

DG MARKT Internal Market and Services Directorate General of the European Commission

DGS Deposit Guarantee Scheme

DGSD Deposit Guarantee Schemes Directive 2014/49/EU

Dodd-Frank Act Dodd-Frank Wall Street Reform and Consumer Protection Act (US)

DPM Data point model

D-SIBs Domestic Systemically Important Banks

EBA European Banking Authority

EC European Commission

ECB European Central Bank

ECJ European Court of Justice







ECOFIN Economic and Financial Affairs Council (configuration of the Council of the European Union dealing with financial and fiscal and competition issues)

ECON Economic and Monetary Affairs Committee of the European Parliament

EDIS European Deposit Insurance Scheme

EEA European Economic Area

EEC European Economic Community

EIOPA European Insurance and Occupations Pension Authority

ELTIF European long-term investment fund

EMIR Regulation on OTC Derivatives, Central Counterparties and Trade Repositories (EU) No 648/2012

EP European Parliament

EPC European Payments Council

ESA European Supervisory Authority (i.e. generic term for EBA, EIOPA and ESMA)

ESCB European System of Central Banks

ESEF European Single Electronic Format

ESMA European Securities and Markets Authority

ESRB European Systemic Risk Board

EU European Union

EURIBOR Euro Interbank Offered Rate

Eurosystem System of central banks in the euro area, including the ECB

EuVECA European Venture Capital Funds Regulation (EU) 345/2014

FAMR Financial Advice Market Review

FASB Financial Accounting Standards Board (US)

FATCA Foreign Account Tax Compliance Act (US)

FATF Financial Action Task Force

FC Financial counterparty under EMIR

FCA Financial Conduct Authority

FDIC Federal Deposit Insurance Corporation (US)

FiCOD Financial Conglomerates Directive 2002/87/EC

FiCOD1 Amending Directive 2011/89/EU of 16 November 2011

FMI Financial Market Infrastructure

FMLC Financial Markets Law Committee

FOS Financial Ombudsman Service

FPC Financial Policy Committee

FRC Financial Reporting Council

FSA Financial Services Authority

FSB Financial Stability Board

FSBRA Financial Services (Banking Reform) Act 2013

FS Act 2012 Financial Services Act 2012

FSCP Financial Services Consumer Panel







FSCS Financial Services Compensation Scheme

FSI Financial Stability Institute (of the BIS)

FSMA Financial Services and Markets Act 2000

FSOC Financial Stability Oversight Council

FTT Financial Transaction Tax

G30 Group of 30

GAAP Generally Accepted Accounting Principles

G-SIBs Global Systemically Important Banks

G-SIFIs Global Systemically Important Financial Institutions

G-SIIs Global Systemically Important Institutions

HCSTC High Cost Short Term Credit

HMRC Her Majesty’s Revenue and Customs

HMT Her Majesty’s Treasury

IA Investment Association

IAIS International Association of Insurance Supervisors

IASB International Accounting Standards Board

IBA ICE Benchmark Administration

ICAAP Internal Capital Adequacy Assessment Process

ICAS Individual Capital Adequacy Standards

ICOBS Insurance: Conduct of Business Sourcebook

IDD The Insurance Distribution Directive (EU) 2016/97 – Also known as IMD2

IFRS International Financial Reporting Standards

ILAA Internal Liquidity Adequacy Assessment

ILAAP Internal Liquidity Adequacy Assessment Process

ILS Insurance-Linked Securities

IMAP Internal Model Approval Process

IMCO The European Parliament’s Committee on Internal Market and Consumer Protection

IMD Insurance Mediation Directive 2002/92/EC

IMF International Monetary Fund

IORP Institutions for Occupational Retirement Provision Directive 2003/43/EC

IOSCO International Organisations of Securities Commissions

IRB Internal Ratings Based

ISDA International Swaps and Derivatives Association

ITS Implementing Technical Standards

JCESA Joint Committee of the European Supervisory Authorities

JMLSG Joint Money Laundering Steering Committee

JURI Legal Affairs Committee of the European Parliament

KID Key Information Document

KYC Know your client

LCR Liquidity coverage ratio







LEI Legal Entity Identifier

LIBOR London Interbank Offered Rate

MA Matching Adjustment

MAD Market Abuse Directive 2003/6/EC

MAR Market Abuse Regulation (EU) 596/2014

Material Risk Takers Regulation

Commission Delegated Regulation (EU) No 604/2014 of 4 March 2014 supplementing Directive 2013/36/EU of the EP and of the Council with regard to regulatory technical standards with respect to qualitative and appropriate quantitative criteria to identify categories of staff whose professional activities have a material impact on an institution’s risk profile

MCD Mortgage Credit Directive 2014/17/EU

MCOB Mortgages and Home Finance: Conduct of Business sourcebook

MCR Minimum Capital Requirement

Member States Countries which are members of the European Union

MiFID Markets in Financial Instruments Directive 2004/39/EC

MiFID II Markets in Financial Instruments Directive (recast) 2014/65/EU – Also used to refer to the regime under both this directive and MiFIR

MiFIR Markets in Financial Instruments Regulation (EU) No 600/2014

MLRO Money Laundering Reporting Officer

MMF Money Market Fund

MMR Mortgage Market Review

MoJ Ministry of Justice

MoU Memorandum of Understanding

MPC Monetary Policy Committee

MREL Minimum requirements for own funds and eligible liabilities

MTF Multilateral Trading Facility

NBNI G-SIFI Non-bank non-insurer global systemically important financial institution

NCA National competent authority

NDF Non-Directive Firms – Firms that do not fall within Solvency II

NFC Non-financial counterparty under EMIR

NIS Directive Proposal for a directive of the EP and Council concerning measures to ensure a high common level of network and information security across the EU

NSFR Net Stable Funding Ratio

NST National specific template

NURS Non-UCITS Retail Scheme

OECD Organisation for Economic Cooperation and Development

Official Journal Official Journal of the European Union

OFSI Office of Financial Sanctions Implementation

OFT Office of Fair Trading

Omnibus II Second Directive amending existing legislation to reflect Lisbon Treaty and new supervisory infrastructure (2014/51/EU). Amends the Prospectus Directive (Directive 2003/71/EC) and Solvency II (Directive 2009/138/EC)

ORSA Own Risk Solvency Assessment







O-SIIs Other systemically important institutions

OTC Over-The-Counter

OTF Organised trading facility

PAD Payment Accounts Directive 2014/92/EU

PIFs Personal investment firms

PPI Payment Protection Insurance

P2P Peer to Peer

PERG Perimeter Guidance Manual

PRA Prudential Regulation Authority

Presidency Member State which takes the leadership for negotiations in the Council: rotates on 6 monthly basis

PRIIPs Packaged retail and insurance-based investment products

PSD2 The revised Payment Services Directive (EU) 2015/2366

PSP Payment service provider

PSR Payment Systems Regulator

QIS Quantitative Impact Study

RAO Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544)

RDR Retail Distribution Review

REMIT Regulation on wholesale energy markets integrity and transparency (EU) 1227/2011

RFB Ring-fenced bank

RONIA Repurchase Overnight Index Average

RRPs Recovery and Resolution Plans

RTS Regulatory Technical Standards

RWA Risk-weighted assets

SCR Solvency Capital Requirement (under Solvency II)

SCV Single customer view

SEC Securities and Exchange Commission (US)

Securitisation Regulation

Proposal for a Regulation of the EP and Council laying down

common rules on securitisation and creating a European framework

for simple, transparent and standardised securitisation and

amending Directives 2009/65/EC, 2009/138/EC, 2011/61/EU and

Regulations (EC) No 1060/2009 and (EU) No 648/2012

(COM(2015)472/F1)

SEPA Single Euro Payments Area

SFT Securities financing transaction

SFTR Securities Financing Transactions Regulation (EU) 2015/2365

SFO Serious Fraud Office

SIMF Senior Insurer Manager Function

SIMR Senior Insurer Managers Regime

SM&CR Senior Managers and Certification Regime

SME Small and Medium sized Enterprises

SMF Senior Manager Function

SOCA Serious Organised Crime Agency







Solvency II Directive 2009/138/EC

SONIA Sterling Overnight Index Average

SPV Special purpose vehicle

SREP Supervisory Review and Evaluation Process

SRB Single Resolution Board

SRF Single Resolution Fund

SRM Single Resolution Mechanism

SSM Single Supervisory Mechanism

SSR Short Selling Regulation (EU) 236/2012

SUP FCA supervision manual

T2S TARGET2-Securities

TC Treasury Committee

TLAC Total Loss Absorbing Capacity

TR Trade Repository

TPR The Pensions Regulator

UCITS Undertakings for Collective Investments in Transferable Securities

UCITS V UCITS V Directive 2014/91/EU

UKLA UK Listing Authority

UTI Unique Trade Identifier

XBRL eXtensible Business Reporting Language






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Contacts

Laura Cox

020 7212 1579

[email protected]

Hortense Huez

020 7213 3869

[email protected] Prudential regulation, Basel III, liquidity and funding

Andrew Strange

020 7804 6669

[email protected]

Retail distribution, SM&CR, upcoming regulatory change

Mike Vickery

0117 309 2403

[email protected]

Insurance, Solvency II

Hannah Swain 020 7212 2433

[email protected]

Operational resilience and financial crime

David Brewin 020 7212 5274

[email protected]

Client assets and prudential regulation

Penny Bruce

020 7212 1629

[email protected]

Recovery & resolution, consumer credit, structural reform

Luke Nelson

020 7213 4631

[email protected] MiFID II, conduct risk and benchmark reform

Tania Lee 07976 687547

[email protected]

Insurance, Solvency II

Sharon-Marie Fernando 020 7804 3062

[email protected] Investment funds, insurance

Dominic Muller 020 7213 2905

[email protected]

Derivatives reform, asset management, US and cross border, structured products

Megan P Charles 020 7804 0904

[email protected]

Consumer credit, payments, mortgages

Cheryl Wallace 020 7212 6983

[email protected]

MiFID II, US & cross-border regulation and benchmarks

Suddankumar Subbaroyan

020 7212 6003 [email protected] Basel III, liquidity and funding

Tessa Norman

020 7213 2508

[email protected] Publications and retail distribution

Dan Foster

020 7212 2399

[email protected] MIFID II and wholesale regulatory supervision

Conor MacManus

020 7213 8555 [email protected] Prudential regulation

mailto:[email protected]