Contents... 1 Financial Conduct Authority (FCA) Consultation Paper (CP)... 12

Transcription

1 MONTHLY REGULATORY UPDATE DECEMBER 2017

2 CONTENTS Contents... 1 Financial Conduct Authority (FCA)... 2 Consultation Paper (CP)... 2 News 8 Statements... 8 Press release... 9 Prudential Regulation Authority (PRA) Policy Statement (PS) Consultation Paper (CP) News 17 Payment Systems Regulator (PSR) Consultation Paper Joint Money Laundering Steering Group (JMLSG) News 18 Financial Ombudsman (FOS) News 19 Alternative Investment Management Association (aima) Press Release For Further Information Contact Monthly Regulatory Update December

3 The following is a summary of the pronouncements for the financial services sector issued in December FINANCIAL CONDUCT AUTHORITY (FCA) Policy Statement (PS) PS17/25 FAMR implementation part II and consultation on retiring FG12/15 and FG14/1 Date Published 8 December 2017 The Financial Advice Market Review (FAMR) was launched jointly by HM Treasury (HMT) and the FCA in August 2015 to explore ways in which government, industry and regulators could take individual and collective steps to stimulate the development of a market that delivers affordable and accessible financial advice and guidance to everyone, particularly those who do not have significant wealth or income. In its final report in March 2016, FAMR set out a series of recommendations intended to tackle the barriers to consumers accessing advice and guidance. The proposals will most directly impact on: firms providing advice on or distributing retail investment products and financial instruments to retail clients; and trade associations and consumer groups involved in retail investment markets. The FCA will be reviewing the advice market as part of its review of FAMR implementation and the next phase of the post-implementation review of the Retail Distribution Review and publishing its findings in early Monthly Regulatory Update December

4 PS17/26 Information about current account services Date Published 12 December 2017 The FCA is publishing rules to require providers of personal current accounts (PCAs) and business current accounts (BCAs) to make information about current account services available to customers. These rules seek to promote effective competition by: enabling customers and intermediaries to make meaningful comparisons between providers of PCAs and BCAs based on quality of service; and incentivising providers to improve service and performance. In July 2017, the FCA published a Consultation Paper (CP) detailing: the research and analysis it undertook to consider whether to require publication of information about current account services; why the FCA considered that requiring publication of information about current account services would advance its objectives; and proposed changes to the Banking Conduct of Business sourcebook to require publication of additional information about current account services. This PS sets out the FCA s response to the CP and the final rules and guidance. This policy statement (PS) affects the majority of current and potential participants in the PCA and BCA markets as well as those interested in this market, including: firms that accept deposits (banks and building societies) that provide payment accounts as defined by the Payment Accounts Regulations1 (typically PCAs) or BCAs that have the features of a payment account. The rules set out in Appendix 1 of the policy will come into force on 15 August On this date, providers will be required to publish standing data related to account opening and service availability and major incident metrics. Transitional provisions will allow firms not to publish account opening metrics and debit card replacement metrics until 15 February To publish these metrics from this date, firms will need to start recording and measuring the time taken to open accounts and to replace a debit card from 1 October Monthly Regulatory Update December

5 PS17/27 Insurance Distribution Directive implementation Feedback to CP17/23 and near-final rules Date Published 15 December 2017 The FCA published a Policy Statement to set out its response to the feedback received to Consultation Paper 17/23. The Policy Statement covers the implementation of most IDD Level 1 directive matters, including the remaining conduct requirements for life policies and information disclosure in relation to non-investment insurance contracts. It also details near final rules that gives firms earlier sight of their final proposals, so they have more time to continue their plans for IDD implementation and allows the FCA to avoid making sequential changes to the same rules. This PS will interest insurance and reinsurance companies, intermediaries, other firms and customers in the insurance market, and bodies representing these groups. The FCA aims to publish the third PS in January Firms affected by these changes will need to ensure compliance from 23 February PS17/28 Handbook changes to reflect the application of the EU Benchmarks Regulation Date Published 20 December 2017 EU Benchmarks Regulation applies from the 1 of January This FCA Policy Statement provides FCA feedback on the responses they received regarding the regulation and the near final draft rules relating to the regulation. The Handbook changes will affect: benchmark administrators; firms that are already supervised under EU financial services legislation and that o contribute input data to benchmarks, or o use benchmarks Monthly Regulatory Update December

6 PS17/28 Handbook changes to reflect the application of the EU Benchmarks Regulation The FCA will make final rule changes to the Handbook once it has the necessary legislative authority to do so. If you are a benchmark administrator, you should continue your preparation for the application of the BMR from 1 January 2018, taking into account, where applicable, the transitional period between then and 1 January You will generally need to comply with the BMR and the Handbook rules from the date on which you are authorised or registered as an administrator. If you are already supervised by the FCA and you use or provide input data for a benchmark, you should consider whether you are a supervised user or a supervised contributor as defined in the BMR. The FCA is already accepting draft applications for authorisation and registration from UK administrators. From 2 January 2018, the first working day on which the BMR applies, the FCA will be accepting final applications for authorisation and registration, and also applications for recognition of third-country benchmark administrators and endorsement of third-country benchmarks. The FCA will consult separately next year on: extending the Senior Managers & Certification Regime (SM&CR) to benchmark administrators (see paragraph 2.10); and applying the BMR rules on users of benchmarks to supervised UK branches of third country firms to the extent that they are not supervised entities for the purposes of the BMR (see paragraph 5.6). Consultation Paper (CP) CP17/40 Individual Accountability: Transitioning FCA firms and individuals to the Senior Managers & Certification Regime Date Published 13 December 2017 The Senior Managers and Certification Regime aims to make individuals more accountable for their conduct and competence. Earlier this year, the FCA consulted on how the regime will apply to firms and individuals. This consultation paper focuses on how the FCA will move firms and their senior staff over to the new the regime. The proposals in this consultation relate to all firms authorised by the FCA under FSMA, except for: insurers; the FCA are consulting separately on the proposals for moving insurers to the Senior Managers and Certification Regime; and deposit takers; the Senior Managers and Certification Regime is already in place for these firms. Next steps: Comments to the FCA by the 21 of February Monthly Regulatory Update December

7 CP17/41 Individual Accountability: Transitioning Insurers and individuals to the Senior Managers & Certification Regime Date Published 13 December 2017 This consultation paper sets out how the FCA propose to move firms and their senior staff over to the new regime. They are calling this process 'conversion', and their aim is to make conversion simple, clear and proportionate. To do this, the FCA have proposed different approaches depending on whether the insurer is: a firm subject to Solvency II or a large Non-Directive firm; a small Non-Directive firm or a small run-off firm; and an Insurance Special Purpose Vehicle. The proposals in this consultation apply to all dual-regulated insurance firms. As well as the firms themselves, the proposals will affect everyone performing financial services roles at those institutions. Next steps: Comments to the FCA by the 21 of February CP17/42 Individual Accountability: Transitioning Insurers and individuals to the Senior Managers & Certification Regime Date Published 13 December 2017 This paper sets out how the FCA plan to apply the Duty of Responsibility to insurers and solo-regulated firms once the Senior Managers and Certification Regime is extended. This Consultation Paper will be of interest to insurers, FCA solo-regulated firms and the senior management of both. Next steps: Comments to the FCA by the 21 of February Monthly Regulatory Update December

8 CP17/43 Credit card market study: persistent debt and earlier intervention remedies - feedback to CP17/10 and further consultation Date Published 14 December 2017 In this Consultation Paper (CP), the FCA sets its responses to the feedback it received to CP17/10: Credit card market study: consultation on persistent debt and earlier intervention remedies (April 2017) The FCA also: describe the changes it is making to its draft rules and guidance on persistent debt as a result of the responses received; set out revisions to its original cost benefit analysis (CBA); and seeks further views. Consultation has caused the FCA to revisit its estimates of the costs associated with implementing this policy, and - as appropriate and in line with its statutory and public law consultation duties it seeks further views on this. This is a short, focused consultation and the FCA anticipates finalising rules in early This paper affects: firms that offer credit cards to consumers; consumers who hold credit cards. Specifically, those who carry a balance over a long period of time without making significant repayments and customers at risk of financial difficulties; firms that provide debt advice; and trade bodies representing credit card firms, consumers and consumer representative organisations. Next steps: The rules and guidance on which the FCA is consulting are in the draft Instrument in Appendix 1 of the document. The FCA will consider the comments received and then publish its feedback and final rules and guidance. CP17/44 PSR Regulatory Fees Date Published 13 December 2017 The FCA have set their decision on the way they will collect their regulatory fees in 2018/19 and in subsequent years, and are consulting further on their proposed fees allocation method. This document is relevant to participants in regulated payment systems under FSBRA, IFR regulated persons and PSD2 regulated persons. Next steps: The confirmation of the PSR fee rates for 2018/19 will be published in June Monthly Regulatory Update December

9 News FCA statement on ESMA s ongoing work on possible product intervention measures applicable to retail Contracts for differences (CFD) and binary option products - The European Securities and Markets Authority (ESMA) has made an announcement today on its work in relation to the provision of (CFDs), including rolling spot forex, and binary options to retail clients. ESMA is considering the possible use of its product intervention powers under Article 40 of the Markets in Financial Instruments Regulation (MiFIR) to address risks to investor protection. In particular, ESMA is considering measures to: o prohibit the marketing, distribution or sale of binary options to retail clients. o restrict the marketing, distribution or sale to retail clients of CFDs, including rolling spot forex. ESMA statement on LEIs - On 20 December, ESMA issued a public statement to support the smooth introduction of the Legal Entity Identifier (LEI) requirements for MIFID II implementation. This statement outlines the temporary measures in respect of LEI for clients that are legal persons and issuers. LEIs of legal persons will last for six months from the 3 January The approach requires the FCA to temporarily amend validation rule in their transaction system, the Market Data Processor (MDP). The ESMA statement on LEI for issuers, which allows venues for a period of six months, to use their own LEI in place of missing issuer LEIs in respect of non-eea issuers. Venues should continue their efforts to populate missing LEI data for issuers. Supervisors will be in contact with venues to discuss their progress in reducing the number of missing LEIs. FCA publishes Feedback Statement on Distributed Ledger Technology (DLT)- The FCA has today published feedback on its Discussion Paper on DLT. Respondents expressed particular support for the FCA maintaining a technology-neutral approach to regulation and welcomed the FCA s open and proactive approach to new technology, including our Sandbox and RegTech initiatives. The feedback also suggested that current FCA rules are flexible enough to accommodate the use of DLT by regulated firms and no changes to specific rules were proposed. Many respondents suggested that DLT solutions could deliver regulatory requirements more efficiently than current systems, substantially reducing costs for firms and regulators alike. Statements FCA Statement on authorising and supervising insurance special purpose vehicles - In this Statement the FCA sets out its approach and expectations when authorising and supervising insurance special purpose vehicles (ISPVs) in line with the FCA s objectives and Threshold Conditions. This statement should be read in conjunction with our Policy Statement 17/24 Handbook changes to reflect the new regulatory framework for Insurance-Linked Securities. FCA statement on Insurance Distribution Directive (IDD) Implementation - The FCA published a Policy Statement to set out its response to the feedback received to Consultation Paper 17/23. The Policy Statement covers the implementation of most IDD Level 1 directive matters, including the remaining conduct requirements for life policies and information disclosure in relation to non-investment insurance contracts. FCA statement on Handbook changes to reflect the application of the EU Benchmarks Regulation - EU Benchmarks Regulation applies from the 1st of January This FCA Policy Statement provides FCA feedback on the responses they received regarding the regulation and the near final draft rules relating to the regulation. FCA statement on EU Withdrawal - The EU confirmed that sufficient progress had been made to move to the 2nd phase of negotiations. The FCA released this statement to support the intention to provide for an implementation period, allowing firms to continue to benefit from passporting between UK and EEA. Monthly Regulatory Update December

10 FCA statement on IDD application date the European Commission has announced a proposal to push back the application date of the IDD by seven months to 1 October 2018, following requests from the European Parliament and Member States for a postponement. Member States (including the UK) will still be required to transpose the IDD into national law by the original date, 23 February However, under the current proposals, firms will not be required to comply with the IDD until 1 October Press releases High-cost credit review: Feedback from roundtables On 31 July 2017 the FCA published a Feedback Statement which set out its priorities for the next stage of our review of the high-cost credit sector. The FCA explained that it is particularly concerned about rent-to-own, home-collected credit and catalogue credit, as well as wider concerns about consumers long-term indebtedness. The FCA also explained that it would take a leading role in supporting collaboration to share best practice and foster innovative thinking in relation to provision of alternatives to high-cost credit and would convene a forum to encourage cross-agency public policy solutions. Data Bulletin: Issue 11 The FCA is focusing on trends in regulated mortgage lending over the last ten years. This bulletin looks at how mortgage activity reduced in the wake of the crisis and the extent to which it has changed since. The FCA highlights some notable trends in lending characteristics shown by the data over the period. It also provides a focus on lending to home purchasers and in particular first-time buyers, as well as selected analysis of data by UK region. FCA Mission: Our Approach to Competition The FCA looks at how it delivers its competition objective, to promote competition in the interests of consumers and not for its own sake. The FCA focuses on keeping markets open to entry and innovation, tackling anti-competitive conduct and intervening to ensure competitive forces drive good outcomes for consumers. FCA Mission: Our Approach to Authorisation The FCA explains the purpose of, and its approach to, authorisation, the public value it delivers and changes it is making to improve its approach. The FCA describes how it uses authorisation as a tool, primarily to prevent harm from occurring, by ensuring that all regulated firms and individuals meet common sets of minimum standards. Monthly Regulatory Update December

11 PRUDENTIAL REGULATION AUTHORITY (PRA) Policy Statement (PS) PS28/17 PRA fees and levies: model transaction fees, fees and FSCS levies for insurers and fees for designated investment firms Date Published 08 December 2017 This PRA policy statement provides feedback to responses to Consultation Paper 16/17 PRA fees and levies: model transaction fees, fees and FSCS levies for insurers and fees for designated investment firms. This PS is relevant to insurers and DIFs, as well as firms that have to, or intend to apply in the future for, Solvency II or CRR models. The proposals relating to FSCS levies are relevant to insurance firms falling within FSCS levy classes B1 (general insurance) and C1 (life and pensions), the FSC Ltd as scheme manager, the Society of Lloyd s and policyholders. Next steps: The final amended forms are available on the PRA s website. PS26/17 Authorisation and supervision of insurance special purpose vehicles Date Published Updated on 8 December 2017 This PRA Policy Statement (PS) provides feedback to responses to CP 42/16 Authorisation and supervision of insurance special purpose vehicles and sets out the PRA s final approach and expectations in relation to the authorisation and supervision of insurance special purpose vehicles (ISPVs), subject to the Risk Transformation Regulations 2017 (RTR) being passed through parliament. This PS is relevant to all parties who wish to apply to the PRA for, or have obtained authorisation as, an ISPV. It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II. Next steps: The PS is available on the PRA website. Monthly Regulatory Update December

12 PS29/17 Recovery planning Date Published 11 December 2017 This PS provides feedback on responses to Consultation Paper (CP) 9/17 Recovery planning 1 and sets out the PRA s final expectations on the content of recovery plans and on the approach to recovery planning for groups containing a ring-fenced body (RFB). This PS is relevant to UK banks, building societies, PRA-designated investment firms and qualifying parent undertakings ( firms ) to which the Recovery Planning Part of the PRA Rulebook applies Firms should consider the content of the PS. PS23/17 Pillar 2A capital requirements and disclosure Date Published 12 December 2017 This PS provides feedback to responses to CP 12/17 Pillar 2A requirements and disclosure. It sets out final amendments to Supervisory Statement (SS) 31/15 The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP), and Statement of Policy (SoP) The PRA s methodologies for setting Pillar 2 capital, intended to provide additional clarity and transparency on the PRA s Pillar 2A framework. This PS is relevant to banks, building societies and PRA-designated investment firms. Next steps: Firms will be invited to simultaneously apply for a waiver by consent. This waiver will be introduced to ensure there is no confusion over the fact Maximum Distributable Amount trigger points include Pillar 2A, as set via the VREQ. Both the updated VREQ and the waiver by consent will be available on Waivers and Modifications of rules in due course. Monthly Regulatory Update December

13 Statement of Policy (SoP) SoP: The PRA's methodologies for setting Pillar 2 capital Date Published 12 December 2017 This Statement of Policy sets out the methodologies that the PRA uses to inform the setting of Pillar 2 capital for firms to which CRD IV applies. There are two sections: Section I: Pillar 2A methodologies. This sets out the methodologies we will use to inform the setting of a firm s Pillar 2A capital requirement for credit risk, market risk, operational risk, counterparty credit risk, credit concentration risk, interest rate risk in the non-trading book (hereafter referred to as interest rate risk in the banking book (IRRBB)), pension obligation risk and RFB group risk. Section II: Pillar 2B. This provides information on the purpose of the PRA buffer, how it is determined and how it relates to the CRD IV buffers. Section II also provides details on the PRA s approach to tackling weak governance and risk management under Pillar 2B and RFB group risk. Firms to which CRD IV1 applies. Next steps: Firms are required by the Reporting Pillar 2 part of the PRA Rulebook, or may be asked, to submit data to inform the PRA s approach to setting Pillar 2A capital requirements. Data may be requested on an individual, consolidated and/or sub-consolidated basis as applicable. Consultation Paper (CP) CP26/17 Model Risk Management Principles for Stress Testing Date Published 06 December 2017 This consultation paper sets out the PRA s proposals to support effective practices in model risk management for stress testing. A set of principles has been developed in the context of the annual concurrent stress testing process, which tests the resilience of the banking system and some of the largest firms within it. The PRA proposes to embed these principles further for firms participating in the annual concurrent stress tests, while also extending them, in a proportionate manner, to the wider banking sector. The CP is relevant to PRA-authorised banks, building societies and PRA-designated investment firms ( firms ). Credit unions are not in scope and there is currently no proposal to extend the principles to insurance and reinsurance firms. This consultation closes on Tuesday 6 March Monthly Regulatory Update December

14 CP25/17 Pillar 2: Update to reporting requirements Date Published 06 December 2017 In this consultation paper (CP), the Prudential Regulation Authority (PRA) proposes a: new data item (PRA111) to capture stress testing data currently included in firms Internal Capital Adequacy Assessment Process (ICAAP) documents; reduction in the frequency of reporting of the data items in the Reporting Pillar 2 Part of the PRA Rulebook ( Pillar 2 data items ) for some firms; and consolidation of definitions in several reporting Parts of the PRA Rulebook into the Glossary. The PRA is also proposing to update the reporting instructions in Supervisory Statement 32/15 Pillar 2 reporting, including instructions for completing data items FSA071 to FSA082. This CP is relevant to banks, building societies and PRA-designated investment firms. This consultation closes on Tuesday 6 March The PRA invites feedback on the proposals set out in this consultation. Address any comments or enquiries to CP25_17@bankofengland.co.uk. CP25/17 Solvency II: Internal models update Date Published 12 December 2017 The PRA has reviewed the effectiveness of certain aspects of the model change process. This review, together with the recent discussions with the ABI and industry participants, has resulted in the proposed updates to the PRA s guidance on the model change process, model change policies and the reporting of minor model changes. In this consultation paper (CP), the PRA proposes updated expectations of firms in respect of the model change process set out in Supervisory Statement (SS) 12/16 Solvency II: Changes to internal models used by UK insurance firms and internal model change policies set out in SS17/16 Solvency II: internal models assessment, model change and the role of non-executive directors. This CP also proposes a process for quarterly model change reporting. This CP is relevant to all UK Solvency II firms, the Society of Lloyd s and its managing agents. It is most relevant to firms that have an internal model approval. It may also be of interest to UK Solvency II firms seeking approval to use an internal model and to UK Solvency II firms that are part of the European Economic Area (EEA) or non-eea groups with a group internal model. This consultation closes on Tuesday 20 March The PRA invites feedback on the proposals in this consultation set out by chapter. Address any comments or enquiries to CP27_17@bankofengland.co.uk. Monthly Regulatory Update December

15 CP28/17 Strengthening accountability: implementing the extension of the SM&CR to insurers and other amendments Date Published 13 December 2017 In the consultation paper (CP), the PRA sets out the proposed changes to forms and other consequential changes and minor administrative amendments related to the extension of the Senior Managers and Certification Regime (SM&CR, the regime ) to insurers. It also sets out proposals for the removal of gendered language from the SM&CR for banking firms and insurers, amongst other changes. It should be read in conjunction with CP8/17, which proposed optimisations to the existing Senior Insurance Managers Regime (SIMR), and CP14/17, which proposed the extension of the SM&CR to insurers. This CP is relevant to PRA-authorised UK banks, building societies, credit unions, including UK branches of non- EEA firms and PRA-designated UK investment firms ( banking firms ), Solvency II insurers (ie UK Solvency II firms, the Society of Lloyd s and Lloyd s managing agents, third country (re)insurance branches), insurance special purpose vehicles (ISPVs), large non-directive firms (NDFs), small NDFs and Swiss general insurers. Consultation concludes Wednesday 21 February Supervisory Statement (SS) SS8/17 Authorisation and supervision of insurance special purpose vehicles Date Published 8 December 2017 The supervisory statement (SS) has been updated to insert the statutory reference to the Risk Transformation Regulations 2017, and include a reference to the FCA Statement. This SS sets out the PRA s approach and expectations in relation to the authorisation and supervision of insurance special purpose vehicles (ISPVs). This SS is relevant to parties who wish to apply for, or have obtained authorisation as, an ISPV. It is also relevant to insurers and reinsurers seeking to use UK ISPVs as risk mitigation in accordance with Solvency II. Firms should consider the content of the SS. Monthly Regulatory Update December

16 SS16/16 The minimum requirement for own funds and eligible liabilities (MREL) - buffers and Threshold Conditions Date Published 11 December 2017 On 11 December 2017, SS16/16 was updated following Consultation Paper CP15/17 The minimum requirement for own funds and eligible liabilities (MREL) buffers. This version of SS16/16 updates the version issued on 8 November In CP15/17, the PRA consulted on updates to SS16/16 to clarify its expectations regarding: the amount of CET1 that firms should not count simultaneously towards buffer requirements and MREL (ie an amount equal to the size of the usable buffer derived from the two going-concern regimes); and the consequences of not maintaining sufficient CET1 to meet both the usable buffer requirement and MREL. This supervisory statement (SS) is aimed at PRA regulated banks, building societies and PRA designated investment firms (firms). This SS should be read in conjunction with the Bank of England s (the Bank s) statement of policy on its approach to setting MREL, PRA SS6/14 on capital buffers, and PRA SS31/15 on leverage buffers. SS8/16 Ring-fenced bodies (RFBs) Date Published 11 December 2017 The purpose of this statement is to set out the PRA s expectations of an RFB and members of its group in relation to the ring-fencing of core activities and services. This SS is aimed at ring-fenced bodies (RFBs), as defined in Section 142A of the Financial Services and Markets Act 2000 (the Act), parent undertakings of RFBs as defined in Section 192JA of the Act and other PRA-authorised persons that are members of a group containing an RFB. This supervisory statement is also aimed at firms currently below the core deposits threshold for ring-fencing of 25bn but which may approach that threshold over time. This statement should be read alongside the PRA Rulebook, the Capital Requirements Regulation (CRR) and ringfencing legislation set out in the Act and statutory instruments. The ring-fenced bodies part of the PRA Rulebook in particular sets out PRA rules applicable to RFBs. Monthly Regulatory Update December

17 SS9/17 Recovery Planning Date Published 11 December 2017 This supervisory statement (SS) sets out the PRA s expectations on the content of recovery plans and group recovery plans (jointly referred to as recovery plans ). This SS reflects the PRA s current expectations and may be revised as recovery planning becomes further embedded in firms risk management practices. It supersedes SS18/13 Recovery planning. The SS is relevant to UK banks, building societies, PRA-designated investment firms and qualifying parent undertakings ( firms ) to which the Recovery Planning Part of the PRA Rulebook applies. This SS complements and should be read in conjunction with: the Recovery Planning Part of the PRA Rulebook; the Commission Delegated Regulation (EU) 2016/1075; the European Banking Authority (EBA) Guidelines on the range of scenarios to be used in recovery plans ; the EBA Guidelines on the minimum list of qualitative and quantitative recovery plan indicators ; and the EBA Recommendation on the coverage of entities in a group recovery plan. SS31/15 The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP) Date Published 12 December 2017 The PRA supervisory statement (SS) provides further detail on the high-level expectations outlined in The Prudential Regulation Authority s approach to banking supervision. This PRA supervisory statement (SS) is aimed at firms to which CRD IV applies and replaces PRA SS5/13 and PRA SS6/13. This SS should be read in conjunction with the Statement of Policy The PRA s methodologies for setting Pillar 2 capital. For ring-fenced bodies (RFBs), as defined in the Financial Services and Markets Act 2000 (FSMA), section 142A, and banking groups containing RFBs, this statement should be read alongside SS8/16 Ring-fenced Bodies (RFBs). Monthly Regulatory Update December

18 News The Bank of England s approach to the authorisation and supervision of international banks, insurers and central counterparties As discussions on the UK's future relationship with the EU continue the Bank of England is announcing today that it is consulting on an updated approach to authorising and supervising international banks and insurers, and it is issuing guidance on its approach to international central counterparties (CCPs). The bank is also publishing letters to relevant firms which set out its approach to the authorisation of those firms, so that this process can proceed in an orderly manner. The foundation of the banks approach is the presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU. On this basis, EEA banks and insurers may (if they are not conducting material retail business) apply for authorisation to operate as a branch in the UK. There are expected to be no implications of the proposed policy for the current operations of banks and insurers from non-eea countries such as the US, Switzerland and Japan. General Insurance Stress Test 2017 Feedback The PRA s main findings were: o o resilience The UK general insurance sector in aggregate, and regulated firms at an individual level, are resilient to those scenarios within the regulatory threshold of Solvency II; and reinsurance interconnectedness There is no evidence that the level of interconnectedness, reflected by the concentration to specific reinsurers, has increased. The results indicate that concentration to individual reinsurers has fallen marginally since 2015, with alternative capital remaining an important part of reinsurance panels. Statement Solvency II: PRA review of model change related processes, policies and reporting - In its Business Plan 2017/18, the PRA set out that it would undertake work to streamline its Solvency II major model change and other applications processes without compromising the need for firms to continue to meet tests and standards of the regime. As part of this assessment, the PRA has investigated: o o o the time it has taken to assess model change applications approved since the implementation of Solvency II on 1 January 2016; how firms had completed the Common Application Package (CAP) when making model change applications; and how firms have defined model changes in model change policies. The PRA has also reviewed quarterly (or more frequent) model change reporting. Press Release Firms preparations for the UK s withdrawal from the European Union (EU): planning assumptions This letter is relevant to those banks, insurers and designated investment firms that undertake cross-border activities between the UK and the rest of the EU. Many firms have highlighted risks to the continuity of existing cross-border contracts, and to the cross-border flow of personal data, following UK withdrawal. Firms may choose to solve these issues through their own actions where appropriate, and the PRA will work with firms on those actions. However, the PRA believes it will be difficult, ahead of March 2019, for firms on their own to mitigate fully the risks of disruption to financial services, and the PRA is also therefore seeking appropriate mitigations from the UK government and its EU counterparts. Monthly Regulatory Update December

19 PAYMENT SYSTEMS REGULATOR (PSR) Consultation Paper CP17/44 PSR Regulatory Fees Date Published 15 December 2017 In light of previous feedback from stakeholders and upcoming industry developments, PSR launched a review of their existing approach to fees collection and allocation. This CP details their set decisions on the way they will collect their regulatory fees in 2018/19 and in subsequent years, are seeks further consultation on their proposed fees allocation methods. This document is relevant to participants in regulated payment systems under FSBRA, IFR regulated persons and PSD2 regulated persons. PSR welcomed stakeholder feedback on their proposals. JOINT MONEY LAUNDERING STEERING GROUP (JMLSG) News Further Amendments to JMLSG Guidance - After reviewing comments received on the consultation version of amendments to its June 2017 Guidance, published in November, JMLSG published revised versions of its June 2017 Guidance, which have been submitted to HM Treasury for Ministerial approval. JMLSG has confirmed the proposed amendments published in November, subject to further amendment to Part I, paragraph 6.15, and has made a number of minor editorial amendments to Part I, paragraph 1.20, and Part II, sector 16: Correspondent relationships. Although the amended Guidance will only take over the legal status of the existing Guidance once it has been approved by a Treasury Minister, firms are free to use the provisions of the new Guidance immediately, if they wish to do so. Monthly Regulatory Update December

20 FINANCIAL OMBUDSMAN (FOS) News Consultation opens on Financial Ombudsman Service s proposed plans and budget - The Financial Ombudsman Service on the 13 th of December 2017 published updated figures on the problems consumers are raising this financial year (2017/2018) along with the proposed plans and budget for the next financial year 2018/2019. The ombudsman forecasts in the current financial year (2017/18) it will: o deal with 7,000 more complaints than forecast; o tackle 4,500 more short-term lending complaints than expected; and o look at 2,500 fewer packaged bank account complaints than expected. And in the next financial year (2018/19) the ombudsman forecasts it will: o tackle 410,000 new cases; o deal with 250,000 new PPI cases; o take on 20,000 new short-term lending complaints; o freeze the case fee at 550 for the sixth consecutive year, with 25 free cases and maintain the current group funding arrangements. ALTERNATIVE INVESTMENT MANAGEMENT ASSOCIATION (AIMA) Press Release AIMA signs MoU with Insurance Asset Management Association of China (IAMAC) - has signed a Memorandum of Understanding (MoU) with the Insurance Asset Management Association of China (IAMAC), a self-regulatory organisation for China s national insurance asset management industry. AIMA and IAMAC signed an agreement in Beijing that outlines areas of cooperation and collaboration, including educational programmes and joint events. The MoU further strengthens AIMA s presence in China and its relationships with China s asset management industry and its regulators. AIMA and BAI in cooperation agreement AIMA and Bundesverband Alternative Investments (BAI), the German-based advocacy association for alternative investments, have struck a cooperation agreement that includes commitment to jointly engage with policymakers and regulators in the EU and globally on issues of interest to their respective memberships. Monthly Regulatory Update December

21 FOR FURTHER INFORMATION CONTACT Jonathan Pepper RSM Springfield House 76 Wellington Street Leeds LS1 2AY Tel No: Mob No: rsmuk.com The UK group of companies and LLPs trading as RSM is a member of the RSM network. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm each of which practises in its own right. The RSM network is not itself a separate legal entity of any description in any jurisdiction. The RSM network is administered by RSM International Limited, a company registered in England and Wales (company number ) whose registered office is at 50 Cannon Street, London EC4N 6JJ. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. RSM Corporate Finance LLP, RSM Restructuring Advisory LLP, RSM Risk Assurance Services LLP, RSM Tax and Advisory Services LLP, RSM UK Audit LLP, RSM UK Consulting LLP, RSM Employer Services Limited, RSM Northern Ireland (UK) Limited and RSM UK Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in England and Wales. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. RSM Legal LLP is authorised and regulated by the Solicitors Regulation Authority, reference number , to undertake reserved and non-reserved legal activities. It is not authorised under the Financial Services and Markets Act 2000 but is able in certain circumstances to offer a limited range of investment services because it is authorised and regulated by the Solicitors Regulation Authority and may provide investment services if they are an incidental part of the professional services that it has been engaged to provide. Baker Tilly Creditor Services LLP is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities. RSM & Co (UK) Limited is authorised and regulated by the Financial Conduct Authority to conduct a range of investment business activities. Before accepting an engagement, contact with the existing accountant will be made to request information on any matters of which, in the existing accountant s opinion, the firm needs to be aware before deciding whether to accept the engagement RSM UK Group LLP, all rights reserved