RegZone

Transcription

1 RegZone Risk, Governance and ARROW January 2012

2 CMS Cameron McKenna CMS Cameron McKenna is an international commercial law firm advising businesses, financial institutions, governments and public sector bodies. We are a founding member of CMS - the alliance of independent European law firms. CMS law firms provide clients with access to integrated pan-european legal services, managed by a single point of contact and with common high calibre service standards. The organisation has over 58 offices and associated offices worldwide. In Europe, CMS Cameron McKenna is a top-ten law firm in its own right with over 130 partners and c 700 legal and tax advisers (including partners). We have the resources and experience to advise clients on a wide range of transactions and projects both in the UK and internationally. We have offices and associated offices in various key business centres worldwide including the UK, Central Europe, Russia, Asia and North America. Our lawyers have strong specialist expertise in areas such as finance and financial services; competition and European law; corporate; consumer products; tax; utilities and natural resources; real estate, hotels and environment; insurance and reinsurance; cross-border investment; technology, lifesciences and intellectual property; infrastructure and projects; human resources and pensions; arbitration and litigation. We have a strong track record in the financial services sector across Europe and are therefore very familiar with the key issues affecting clients at the moment. We are committed to providing the highest quality professional advice and building enduring relationships with our clients. We place great emphasis on the training and development of our partners and staff in both current legal and business issues. Our investment in knowhow and information systems allows us to share our knowledge and experience throughout the firm, helping to ensure that all our lawyers add value to the services they provide. We work with our clients to identify their business needs and provide them with comprehensive, cost-effective commercial guidance, we offer a clear business lead - not just legal opinion. CMS Cameron McKenna is a member of Scottish Financial Enterprise.

3 Speakers Simon Morris Partner, Financial Services T +44 (0) E simon.morris@cms-cmck.com Simon joined Cameron McKenna in 1980, qualified as a solicitor in 1982 and has been a partner since He is a member of the firm s financial services group and specialises in advising financial services institutions on commercial and regulatory matters. Simon has acted on a number of acquisitions and product launches, and has represented over 250 firms in regulatory and disciplinary proceedings. Simon is author of Financial Services: Regulating Investment Business, and is a member of the City of London Law Society Financial Services Sub- Committee. Simon was named as the Best Regulatory Lawyer of 2008 at Complinet s Fourth Annual Compliance Awards in January Alison McHaffie Partner London Office, Financial Services Disputes T +44 (0) E alison.mchaffie@cms-cmck.com Alison is a partner in the firm s Financial Services Group. Since qualification in 1995 she has specialised in advising firms and individuals in the financial services sector on contentious matters and has extensive experience of acting for financial institutions and senior individuals in relation to FSA investigations and enforcement actions covering a wide range of issues including governance, conflicts of interest, market abuse, financial crime controls, transaction reporting and retail mis-selling. She also regularly advises firms on dealing with complaints before the Financial Ombudsman Service and on dealing with FSA supervisory and thematic visits and s.166 Skilled Person reports. In 1998 she was seconded to the Enforcement Division of the FSA. UK

4 Governance, Risk & Arrow Simon Morris & Alison McHaffie January 2012

5 Looking at 1. The new agenda for risk and governance 2. How will the new regulators view governance? 3. What is a model for risk management? 4. What must senior management do? 5. Preparing for and protecting against regulatory scrutiny

6 1. The new agenda for risk & governance Role of the PRA Seeking to ensure that the business of a PRA-authorised person is carried on to avoid any adverse effect on the stability of the UK financial system; and Seeking to minimise the adverse effect that the failure of a PRAauthorised person could have on the stability of the UK financial system. Role of the FCA Protecting & enhancing confidence in the UK financial system => Increased focus on governance

7 Focus on governance a PRA firm Delivering a judgement-based model of supervision Nature & intensity to depend on assessment of risk Forward focusing risk assessment: impact, probability & resolvability Financial strength & business risk Business model Capital & liquidity Risk management Governance Culture Management Risks Controls

8 Focus on governance an FCA firm A new approach to conduct regulation Detailed business & market analysis Forward-looking assessment of potential detriment Focus on culture Increased regulatory contact for the largest firms Earlier intervention => Increased focus on governance

9 2. How will the new regulators view governance? The key issue during the financial crisis was not a lack of governance rules but a lack of effective implementation of these rules. EBA guidelines on internal governance 9/11 What does governance mean in 2012? What will the PRA & the FCA expect to see? In deciding whether a firm has effective governance arrangements, the FSA looks at the design of its governance structure as well as any evidence of its practical operation FSA Preliminary Investigation Report January 2012

10 What does governance mean for a regulator? Governance is the process of senior management Setting strategy Understanding risk Creating a control framework PRA/FCA will want evidence of governance in action Identifying and managing risk Orderly decision taking Meeting regulatory requirements Evidence calls for Quality of reporting & analysis Documentation & record keeping

11 What does governance mean for a firm? An active board Sets strategies & policies Receives appropriate information Oversees risk functions Board oversees management Clear performance objectives Holds management to account Suitable risk management Robust mechanism to identify & monitor risk Procedure to ensure compliance Robust risk function

12 Elements of governance include 1. Clear governing documents 2. Risk-attuned strategy 3. Robust procedures and controls 4. Strong risk function attuned to business 5. Business grasps governance 6. Established corporate culture 7. Decision making and actions linked to this culture All means to the end of good governance Board + management + risk

13 What will a regulator ask? Show us the structure of your governance Show us the papers, the minutes & the evidence And then, show us how it works How was the decision taken? How were conflicts handled? What alternatives were evaluated? How was the decision maker competent? Was the process orderly? Why was the exposure to risk acceptable?

14 And four further drivers of good governance 1. An appropriate corporate structure Clarity Transparency Form follows function Comprehensible & capable of oversight 2. Management structure What is it? Board & committee appropriate terms of reference Reporting lines match legal & operational structure

15 3. Clear organisational structure Clear & consistent lines of responsibility Does form follow function? Within a matrix, is there local information capture? Do you remember the NAB example? Is every task mapped & managed? Show us the business flows & risk maps Have you applied the Soc Gen test? Does it pass the job description test? This are my responsibilities This is to whom I report, with what information This is who reports to me, with what information

16 4. Culture Management must be satisfied that the firm s culture is delivering the right outcomes Prudence Risk alertness Remuneration Ethical tone Treating customers fairly

17 3. What is a model for risk management? 1. Know your risks Risk = non-achievement of goal Negative impact on firm s financial position, performance, reputation, customers Liquidity market counterparty operational... Can you show a comprehensive risk mapping? 2. Adaptable and flexible Ensure comprehensive Reviewed periodically New products and strategies Can you show dynamic risk management?

18 3. Management prepares a risk statement/matrix What are the risks? How are they managed or mitigated? How does this match the ICAAP/ILA? Can you demonstrate comprehensive overview of risk profile? 4. Suitable organisational framework a 1 st yield Defines and coordinates duties & responsibilities Separates incompatible functions business types, or risk + monitoring, initiation + settlement Identifies and manages conflicts

19 5. Adequate risk management function a 2 nd yield Seniority, resources & independence Prepares procedures Monitors, assesses & reports, provides early warnings of risks and errors that generate risks 6. Each business unit a 3 rd yield Understands & owns its risks Documents its risk processes to the common standard Follows risk policies Submits to monitoring Provides adequate MI Takes appropriate remedial action

20 7. Management oversees a 4 th yield Ensures consistent processes & documentation Assumes responsibility for Ownership of risk Authority to incur risks Approval of new risks Oversight of risk Receives and acts on the right MI Show me Conflicts Remuneration

21 4. What must senior management do? 1. Discharge the overriding regulatory obligations Currently APER Participate in the firm s governance arrangements 3. Ensure their area is well organised and controlled 4. Identify and manage risks within their remit 5. Receive and act on MI 6. And constantly challenge Because...

22 The board should Directors competent with spread of skills Who can challenge and show me Promote right culture Evidence of effective governance Operations overseen MI received and actioned How major issue or development handled Performance objectives set & monitored Risk overseen

23 The regulatory expectation of an executive is... Executive What did you know What did you do On what information Who did you ask How did you monitor What improvement? Non-executive Did you know Did you understand? Did you attend What did you ask What did you hear What further challenge?

24 And personally, and at all times... Understand and can challenge what is happening Satisfied firm is identifying material risks which are being Monitored Managed Mitigated Firm s strategy is based on understood risks Firm s business matches strategy & risk appetite Management is getting the right information and acting on it Clear escalation of issues and clear lessons learned And that the culture is right

25 5. Regulatory scrutiny preparing & protecting The new agenda The new touch points Preparing And the continuing focus on senior management

26 The Relationship Judgemental, Intrusive and Interventionist Judgmental A more challenging relationship with the regulator Judgements may differ from the firm s view More skilled supervisors Intrusive and Interventionist Increased regulatory contact Forward looking assessment of potential detriment Earlier intervention: in the development of new products and distribution paths where threat to safety and soundness of a firm

27 Potential consequences of a poor relationship NO No to the new product launch before forensic reviews No to the Part VII because of management stretch No to the new business because of instability of business model/potential customer detriment No to the proposed CRO/NED YES Yes to overhaul your systems & controls Yes to review past business Yes to requiring restructuring/disposal/new CEO Yes to Skilled Person appointments Yes to Enforcement action Against the firm Against its management

28 Looking at the key areas of supervisory interaction. Supervisory/thematic visits and ARROW equivalents The new PRA close & continuous The new FCA thematic & large firm concentration SIF Interviews The model is still being determined, but in all cases preparation is vital to protect the firm and regulatory relationship

29 What is the supervisory target? Risk + Governance +Senior management PRA firms and key FCA firms Periodic review of risks & controls Smaller less risky firms thematic focus Key to firm s relationship Determines overall intensity of regulatory approach Can trigger serious remedial action Remedial Looks to management to address Failure will be costly Intervention Capital

30 And the design template for the new ARROW? Central to its design..will be simplicity and a recognition that the approach must be understandable not just to regulatory specialists but to boards as a whole (Hector Sants 29 June 2011 on FCA) Replacing ARROW with new simplified framework for assessing risks Will identify a core handful of issues for management to focus on Same key risk elements: Impact of firm coming under stress or failing Probability looking at macroeconomic and business risk to viability Resolvability or mitigation operational, financial and structural

31 Preparing for a supervisory visit 1. Understand and identify the issues 2. Prepare 3. Manage

32 The timetable 1. Notification of date of visit 2. Appoint project team (if not already in place) 3. Fulfil pre visit information request 4. Handle the visit 5. Seek debrief 6. Deal with resulting issues 7. Receipt of draft report 8. Acting on final report

33 1. Understanding & Identifying key regulatory concerns keeping ahead of the game FSA s Financial & Retail Risk Outlook and Business Plan Corresponding PRA/FCA material Current regulatory developments Sector specific Issues ENF cases Dear CEO letters Consultation papers/ speeches General market knowledge Firm Specific Issues Last ARROW Recent dialogue with regulator Recent events impacting on risk/strategy

34 2. Preparing for interview Reading pack Establish the party line Strategy & Business Plan Risk management Governance Known issues & weaknesses TCF Rehearse interviews Tips

35 At the interview 1. Be accompanied 2. Read the papers & do your homework 3. Answer from your personal knowledge 4. Seek clarity on vague questions 5. Give clear brief answers 6. Think before you speak 7. Don t accept PRA/FCA assertions unless correct 8. Don t be drawn into controversy 9. Stay calm

36 Six key messages to convey 1. I know my role 2. I challenge I do not rely 3. I know the strategy 4. I know the risks 5. I understand the management process 6. I understand the world in 2012

37 3. Manage the visit Seek an agenda for interviews Note-taker at all times Daily de-briefings Befriend & enquire

38 SIF Interviews initial & ongoing Our more intrusive approach continues to place a great deal of emphasis on governance and therefore senior management at firms Dear CEO letter of October 2009 Close vetting of SIF appointments: - Focus on competence & capability - Interviews of SIF candidates - Questioning due diligence undertaken not just references and credit checks

39 What will the regulator look for? Focus is on competence to do the job & it will examine: Past experience Market knowledge of the sector Understanding of the business strategy and model Ability to identify the risks the business is exposed to Ability to interpret and act on the firm s financial information Understanding of the firm s governance, oversight and controls Understanding of the regulatory framework and requirements Soft skills are you a leader?

40 A typical interview will cover 1. Experience, motivation and responsibilities 2. Looking inwards a) Risk management b) Governance c) Current firm developments 3. Deep dive your special subject such as a) TCF b) Risk c) Strategy d) Liquidity 4. Looking outwards a) Market developments b) Resilience for change

41 How SIFs will be judged APER 5 7 [and their successors] Proper control have you mapped the business & identified the risks? How did you manage them? How did you manage subordinates? Skilful Management do you fully grasp it? What MI do you get? What do you do with it? Business is compliant how is it monitored?

42 And if management fails the test? A second chance - re-interview NO to the Applicant to the manager/director continuing in post Calls into question the firm s judgement

43 When does a regulator act against an executive? 1. Aware of breaches and failed to ensure firm took remedial action 2. Failed to ensure firm had robust systems and controls 3. Failed to undertake comprehensive review of risks firm faced 4. Failed to ensure systems in place to ensure suitability 5. Failed to take reasonable steps to ensure customer communications clear 6. Failed to escalate MI and misled management Consequences include: 1. Substantial personal fines 2. Public censure (named and shamed) 3. Prohibited or suspended by the regulator UK /

44 Impact on senior management Increasing appetite to investigate the actions of senior management when investigating a firm s failings Gradual increase in disciplinary action against individuals where no dishonesty but where individual failed to take reasonable steps to ensure the business is controlled effectively and meets regulatory standards. Impact: Supervisory approach more challenging of senior management judgements Senior management more aware of expectations and requirements More challenges at RDC/Tribunal UK /

45 So in conclusion 1. Sound governance is the target 2. Governance = board + management + risk => strategy 3. Intensive supervision will highlight the fault lines the focus will be on board + management + risk 4. PRA and FCA will probe management judgements 5. PRA and FCA will challenge unsatisfactory management 6. And will have an appetite for disciplining firms and their executives UK /

46 ARROW assurance Avoiding unpleasant surprises Preparing for your ARROW visit Our 6 stage approach NED and executive interviews Document request Risk mitigation report and ICA probing competence risk adverse ARROW FSA s new approach Systems and controls intrusive supervision judgement on judgements Governance Risk management Preparing the ground - briefing on ARROW process Scoping and project plan Document review for FSA request Pre-interview preparation Mock interviews Feedback FSA s Risk Mitigation Programme Sectoral issues including SCV and client assets Capital and liquidity Strategy Business as usual review

47 Preparing for ARROW visits and SIF interviews We help firms prepare for ARROW visits (an FSA inspection visit). We also prepare senior executives and NEDs for SIF interviews. This document explains our approach to ARROW preparation which is proactive rather than reactive. SIF interview preparation is a more limited task but we adopt a similar approach. Our proposal Our proposal will be tailor-made to your business and our knowledge of FSA s current Arrow methodology. It will prepare you for a future Arrow visit, and additionally: - Provide independent assurance and benchmarking of your regulatory compliance; - Enable you to benefit from current best practice recommendations; and - Ensure you are in tune with FSA s current tougher approach not just in conducting Arrow visits but across a broad range of live issues, such as remuneration. Our approach We will replicate the current methodology used by FSA when performing an ARROW visit. ARROW is the name given to FSA s biennial inspection visit to major relationship managed firms that focuses on their: - Systems and controls; - Risk management; and - Governance. We consider that the structure of the inspection visit should follow the ARROW format, which entails (i) requesting a set of documentation and procedures; (ii) interviewing senior staff on the basis of this material; (iii) advising the firm of remedial action that it is required to take. Benefits for you The overall benefit of this review will be to give you and your senior officers assurance that: - Your business will sustain an ARROW visit with no unpleasant surprises; and - Your general compliance with FSA rules is satisfactory, and that any areas for improvement can be addressed in short order and with a minimum of difficulty. Our expertise We have undertaken six ARROW preparation projects in the past six months across the full range of financial services institutions including an international fund manager and a major retail bank. We are well-placed to assist you in identifying the documents FSA will require and to carry out a protective pre-visit review, to prepare directors and key personnel for their FSA interviews and to ensure that you are properly prepared for FSA s visit. ( )

48 Our skills and experience in this area have encompassed many different sectors, clients and issues and means that we are in a position to hit the ground running, delivering value from day one. By drawing on our extensive expertise we will be able to provide you with specifically tailored guidance, advice and training to ensure you will have a sound understanding and will be fully prepared for all aspects of an FSA inspection. What clients have said about our recent ARROW preparation work: - I think an accountancy firm tend to do a lot more of the giving you great wedges of slides...but not perhaps quite as specific as to current trends in the FSA, current hot topics that I think Simon particularly has his finger on the pulse of that I think was quite helpful Head of Legal, Retail Bank - They were also very able to answer specific challenges from some of the Executives as well in a way that was just very helpful, cut through the wiffle-waffle and made people sit up and take notice Head of Legal, Retail Bank - Simon was able to ascertain where I was uncomfortable and therefore I would take the action required to sort things. And there were other areas where he was kind of helping me see where I might want to think about things differently and I found that useful Head of Risk, Retail Bank - As it turned out the interview that CMS put us through was significantly more rigorous than anything the FSA came up with Head of Risk, Retail Bank Our role - helping you achieve your objectives Our role is to help you ensure that you are fully prepared for its FSA ARROW visit on time and to cost. We will deploy our experience of advising on these issues to run the project efficiently and help you ensure that the business is ready and prepared in good time. STAGE 1 PREPARING THE GROUND It is essential that all personnel involved in the project, particularly members of the Board, understand the aims and objectives of the ARROW visit, the process and what FSA will be looking for. We will therefore propose an initial Board presentation (which can be attended by anyone else you feel would benefit) setting out the ARROW process, tips for the interview, issues for you, focus on individuals and the new regulatory environment. This will be tailored to your business but to give you an idea of the type of presentation. As part of Stage 1 we will also provide you with our overview of the ARROW process tailored to your business. STAGE 2 INITIAL SCOPING AND PROJECT PLAN We will work with you to ensure that your project plan covers all aspects you need to consider when preparing for your ARROW visit and that impetus is maintained up to the date the FSA visit starts. The project plan will, of course, need to be specifically tailored to your business. We have a template project plan that we regularly use when assisting clients. You may wish to use this as the basis for your own project plan or as a sense check against your existing project plan. STAGE 3 THE FSA DOCUMENT REQUEST We can help you to identify the documents that FSA are likely to request from you. This will enable you to carry out a protective review of the documents to ensure that you have them all ready for production, that version control is in place and that action is taken to address any issues identified before the FSA request is made. We can provide a list of the likely documents. STAGE 4 INDIVIDUAL PRE-INTERVIEW PREPARATION It is important that all those being interview by FSA are aware of current regulatory concerns attaching to your business. We will therefore prepare a tailored reading list together with a note detailing the key themes and explanatory notes to enable your senior management team to ensure that they are able to deal with any questions raised by FSA during the interview process on regulatory developments affecting your business. ( ) 2

49 STAGE 5 INTERVIEW PREPARATION We will carry out mock interviews with each person due to be interviewed by FSA. Drawing on our significant experience in dealing with such matters, we will spend between one and two hours with each person, asking the questions that FSA is likely to ask in relation to that person s role and responsibilities within your organisation. At the end of each interview we will carry out a de-brief and where necessary highlight those areas where further preparation is required by the individual. Sometimes it is necessary to carry out a second interview, but this is rare. An interview grid is prepared for each individual interview and is based on a review of the documents provided to FSA as a result of the document request. STAGE 6 FEEDBACK We provide you with immediate briefings of what is said and not said during mock interviews to help you to identify and manage any areas of weakness or inconsistency. These are our suggested stages and represent a framework that we have successfully used with a number of firms. You may want to adopt this approach or, alternatively, you may wish to tackle your project in a completely different way. However you want to proceed, we can use our significant experience of preparing firms to enable you to achieve the optimum result and we look forward to discussing your approach and requirements with you. After the visit After FSA has undertaken its visit we will work with you to assess the outcomes including, where relevant, any additional work to be undertaken under a Risk Mitigation Programme. Our team Demonstrating our capabilities A selection of our relevant ARROW experience undertaken over the past six months: Preparing the UK branch of an overseas wholesale bank for its ARROW visit in July/August last year where FSA had concerns relating to its fraud and anti money laundering controls. FSA was seeking to extend its ARROW review well beyond the remit of that appropriate for a BCD-passported firm. Our focus was on ensuring that the bank resisted regulatory creep while satisfying FSA that matters were being dealt with appropriately and that the firm should not be referred to enforcement in which we succeeded. Preparing a major retail bank for its ARROW visit in August/September last year where the particular focus was on Treating Customers Fairly and business strategy to start deposit-taking and offering mortgages. This work included briefing each member of the Board including all non-executive directors and a number of key personnel. In this case, FSA particularly focussed on the banks treasury operations and use of the ICAAP and the resulting RMP contained no issues with which the bank was not already dealing. Preparing an international fund manager for its ARROW visit in October last year. This included preparing those responsible for international offices in Europe and Asia with particular reference to outsourced arrangements where concerns had been raised. The client felt particularly vulnerable in relation to the matter of remuneration and incentives and our preparation ensured that all key personnel were properly able to deal with the questions raised by FSA on this core issue. Preparing a mono-line credit card issuer and bank for its ARROW visit in November last year. This firm has been subject to previous enforcement action by FSA in relation to sales of PPI and it was therefore critical that the firm and its management were able to demonstrate that business was being dealt with in strict compliance with FSA requirements. Preparing the Board of a mutual insurer for its ARROW visit in December last year, covering the key issues of strategy and board effectiveness. Assisting the insurance arm of a major UK charity in its preparations for an anticipated ARROW visit over the next few months, in particular dealing with issues arising from the unsanctioned holding of client monies throughout a significant branch network. ( ) 3

50 Our commitment on fees In this economic climate, we want to ensure we provide you with a service that is value for money and can provide you with cost certainty. We can discuss alternative fee arrangements with you. We can provide you with one or more cost estimates for the entire project based on alternative arrangements and discuss this with you further. Simon Morris CMS Cameron McKenna February 2010 ( ) 4

51 A Timeline for Reform 12 January 2012 Key Blue Violet Green Domestic UK measures European/EU measures International measures NYP (expected prior to end 2011) December December Q Q Q Q Q Rescue & Restructure EC to publish Guidelines for rescue and restructuring of financial institutions to ensure continuity when present rules expire. (Link to Commission Legislative Proposals list) Financial Penalties EC to publish proposal on Regulation for mutual recognition of financial penalties. (Link to EU 2011 Programme) Innovative Financial Instruments ECOFIN to publish communication on innovative financial instruments for the new Multi-Annual Financial Framework. (Link to EC Commission 2H 2011 programme) With-Profits & Unit-linked Funds FSA to publish consultation paper on proposed amendments to take Solvency II into account. (Link to FSA Business Plan 2011/2012) Compensation FSA to publish consultation paper on Compensation Review. (Link to FSA Business Plan 2011/2012) Credit Unions FSA to publish review of Credit Unions sourcebook, finalising near-final rules in PS10/11. (Link to Policy Development Update, No. 137, July 2011) Credit Unions FSA to publish Regulatory Guide for Credit Unions (CURG), a new guide. (Link to Policy Development Update, No. 137, July 2011) Q Pensions EC Commission to publish white paper on pensions. (Link to EC Commission 2H 2011 programme) Q Q Q Q Solvency II EC to introduce calculation of new Solvency II risk sensitive capital requirement as well as the level 2 technical measure. (Link to EU 2011 Programme) Financial Sector Sanctions EC to publish approximation of financial sector sanctioning regimes. (Link to Commission Legislative Proposals list). Retail products Packaged Retail Investment Products legislative proposals to be introduced. (Link to EU 2011 Programme) Assignment EC Commission to report on effectiveness of assignments and the priority of assigned claims. (Link to EC Commission 2H 2011 programme)

52 End 2011 End 2011 End 2011 End 2011 End 2011 End 2011 Deposits revision of Deposit Guarantee Schemes Directive expected to be completed. (Link to the European Commission s financial reform programme) Securities Law EC Commission to publish Securities Law Directive. (Link to European Parliament DG Internal Affairs Economic & Scientific Workshop on Securities Law Directive) Derivatives Legislation on market infrastructure expected. (Link to the European Commission s financial reform programme) Solvency II Implementing measures for Solvency II Directive on capital requirements for insurance undertakings to be agreed on. (Link to the European Commission s financial reform programme) Financial reporting new revised framework (FINREP rev3) will be published. Accounting international accounting bodies, including FASB and IASB, to complete their convergence project for a single set of global accounting standards. (Link to G20 Progress Report) Timeline th January MiFID: Deadline for responses to consultation based on questionnaire to inform ECOFIN s work on MiFID II. (Link to Questionnaire) 13 th January PPI deadline for responses to FSA guidance on new PPI products. (Link to guidance) 16 th January RDR adviser charging legacy assets deadline for responses to CP 11/26. (Link to consultation) 18 th January Non-executive directors deadline for responses to FSA consultation on the role of nonexecutive directors. (Link to consultation) 20 th January Bank recapitalisation banks to submit their plans for compliance with EBA recommendations on capital positions to their national authorities. (Link to EBA recommendations) 20 th January Own risk and solvency assessment deadline for responses to EIOPA consultation on proposal for guidelines. (Link to consultation paper) 20 th January Narrative public disclosure- deadline for responses to EIOPA consultation on draft proposal. (Link to consultation paper) 20 th January Quantitative reporting templates - deadline for responses to EIOPA consultation on proposal. (Link to consultation paper) 23 January Traded life policy investments deadline for responses to FSA guidance consultation. (Link to consultation) 26 th January Debt collection deadline for responses to OFT guidance on the recovery of consumer credit debts. (Link to OFT guidance) 27 th January Regulated covered bond regime deadline for responses to FSA guidance consultation. (Link to guidance consultation) 27 th January Packaged bank accounts deadline for comments on FSA CP11/21. (Link to consultation paper) 30 th January Distributor-influence funds deadline for responses to FSA guidance consultation. (Link to consultation paper) 31 st January Alternative Dispute Resolution deadline for responses to BIS call for evidence on EU proposals. (Link to call for evidence) 2

53 31 st January Complaints handling for insurers deadline for responses ton consultation paper and draft report on best practices. (Link to the consultation and draft report) January January CRD IV EP to produce draft report on bank capital requirements. (Link to press release) FATF Standards plenary meeting planned to finalise text of new Financial Action Task Force standards. (Link to summary of October meeting) February Omnibus II Plenary session during which the European Parliament will consider the proposed Omnibus II directive 20 th February FSA budget deadline for responses to FSA Plans and Budget for 2012/2013 document. (Link to publication) 2 nd February Credit rating agencies deadline for written submissions to the Treasury Select Committee concerning their inquiry into credit rating agencies. (Link to press release) 3 rd February Consumers in retirement income deadline for responses to ABI consultation on proposed compulsory code of conduct for communications by retirement income product providers. (Link to consultation) 3 rd February OFT deadline for responses to annual plan consultation document. (Link to paper) 6 th February FSA deadline for responses to FSA CP 11/27. (Link to consultation paper) 6 th February Regulatory fees and levies deadline for comments on chapter 2 of CP11/21. (Link to consultation paper) 10 th February Acquisitions directive deadline for responses to EC consultation on the directive, specifically its provisions in relation to the acquisition and increase of holdings in the financial sector. (Link to EC consultation paper) 10 th February Instruments of macroprudential policy deadline for responses to Bank of England/FSA discussion paper analysing the macroprudential tools discussed by the Financial Policy Committee in September 2011 meeting. (Link to discussion paper) 14 th February Bank executive remuneration disclosure deadline for responses to government consultation on regulations requiring large UK banks to publish pay details of their highest paid senior executives. (Link to consultation) 14 th February Prudent valuation deadline for response to FSA consultation on amending requirements on quarterly reports showing differences between prudent and fair valuation. (Link to consultation paper) 15 th February Transposition of Solvency II deadline for comments in response to FSA CP 11/22 and 11/23. (Link to CP 11/22 and CP 11/23) 15 th February Solvency II deadline for responses to HMT consultation on implementation of Solvency II. (Link to consultation) 17 th February Capital disclosure deadline for responses to BIS proposed definition of capital disclosure requirements. (Link to BIS proposals) 17 th February Credit risk and derivatives deadline for responses to BIS consultation paper on the application of elements of BASEL III to fair valued derivatives. (Link to consultation paper) 20 th February Quantitative reporting templates deadline for responses to EIOPA consultation on proposal for quantitative reporting templates for financial stability purposes. (Link to consultation) 24 th February ESMA/MiFID Deadline for responses to ESMA consultation paper on MiFID suitability requirements. (Link to consultation paper) 24 th February ESMA/MiFID Deadline for responses to ESMA consultation paper on MiFID compliance function requirements. (Link to consultation paper) 3

54 29 th February Insurance benefits/premiums deadline for responses to HMT consultation paper on ECJ ruling on gender neutrality of benefits/premiums. (Link to consultation paper) February February February February February Early 2012 Early 2012 FATF Standards implementation date for new Financial Action Task Force standards. (Link to summary of October meeting) Insurance mediation EC to adopt revised Insurance Mediation Directive. (Link to BIPAR articles, with link to interview with Karel Van Hulle, July 2011) PRIPS EC to adopt PRIPS proposals. (Link to press article reporting dates) Payments council Report due on governance and performance assessment. (Link to review) BERR/BIS: The Kay review of UK equity markets Interim report to be published Money-Laundering EU Financial Action Task Force (FATF) due to report. (Link to ABI update with link to AML update) Financial market infrastructure BIS/IOSCO final report to be published. (Link to BIS/IOSCO Consultation Paper) (Link to responses) 2 nd March Internal audit function in banks deadline for responses to Basel Committee on Banking Supervision consultation document. (Link to consultation) 6 th March Advanced Measurement Approach deadline for competent authorities to apply EBA guidelines on the AMA extensions and changes. (Link to guidelines) 9 th March Deposit protection deadline for responses to FSA consultation paper on requirements for deposit takers to display their deposit protection arrangements prominently to customers. (Link to consultation paper) 13 th March Prospectus and transparency directive deadline for responses to FSA consultation paper on the UK implementation of this amending directive. (Link to consultation paper) 16 th March Financial conglomerates deadline for responses to BIS proposed principles for supervision of financial conglomerates. (Link to BIS proposals) 20 th March Banking supervision deadline for responses to BIS consultation on core principles for effective banking supervision. (Link to consultation) 20 th March Supervisory reporting requirements deadline for responses to EBA consultation on draft implementing technical standards on supervisory reporting requirements for institutions. (Link to consultation) 23 rd March Pensions deadline for responses to Department of Work and Pensions consultation on improving transfers and dealing with small pension pots. (Link to DWP guidance) 30 th March Solvency II (Internal Models) date on which FSA plans to open applications for internal models approvals process (IMAP). (Link to FSA (Julian Adams) speech, 18 April 2011) 31 st March Internal governance European Banking Authority expects competent authorities to implement guidelines on internal governance and incorporate them within their supervisory procedures. (Link to EBA Guidelines on internal governance) 31 st March Northern Irish Credit Unions date from which these will need to be authorised by FSA. 31 st March Market Conduct and Transaction reporting date from which FSA guidance takes effect. (Link to market newsletter) March Q OTC Derivatives Regulators Forum Next formal meeting of ODRF scheduled to be held in Hong Kong Money Laundering Regulations HMT to publish response to consultation on proposed changes to regulations. (Link to consultation) 4

55 Q Q Q Q Q Capital Requirements FSA to publish consultation paper on CRD 4. (Link to FSA Business Plan 2011/2012) Mortgage Market Review FSA to publish policy statement. (Link to FSA Business Plan 2011/2012) With-Profits FSA to publish PS to CP 11/5 on protecting with-profits policyholders. (Link to FSA Policy Development Update November 2011) Common Reporting FSA to publish policy statement on Guidelines on Common Reporting (COREP). (Link to FSA Policy Development Update November 2011) Recovery & Resolution FSA expects to issue Policy Statement on Recovery & Resolution. (Link to FSA Policy Development Update November 2011) Q Common Reporting FSA to publish consultation paper on COREP common reporting rules.. (Link to Policy Development Update, No. 136, June 2011) Q Markets Risk Outlook FSA to publish markets risk outlook paper. (Link to FSA Milestones Update, August 2011) Q Compensation Review FSA to publish paper. (Link to FSA Milestones Update, August 2011) Q Q Q Q Q Easter Client assets FSA to publish PS to CP 11/15 on Client Assets sourcebook (Link to FSA Policy Development Update) Code of practice for insurers ABI to introduce a compulsory code of practice for insurers, developed in conjunction with its members. (Link to ABI news release) UCITS V EC to publish amendments to UCITS directive as regards rules on UCITS depositaries and remuneration policies (delayed from Oct 2011). (Link to EU legislation programme 2011) Short selling regulation on short selling/credit default swaps expected, along with Technical Standards, Technical Advice, Guidelines and Recommendations thereon from ESMA. (Link to ESMA 2012 work programme) IMD EC to publish IMD directive text. (Link to ABI update with link to IMD & PRIPS report) HMT Treasury to publicly present an analysis of their response to the financial crisis to executive management board. (Link to press release) 6 th April Pensions new rules on Pension Scheme Disclosures to come into force. (Link to FSA Consultation Paper 11/03) 16 th April FSA case fees deadline for responses to Charging for our work: modernising our case fee arrangements from (Link to publication) 24 th April Transaction reporting system date on which the contacts TRS users have with the FSA for TRS reporting will terminate. (Link to FSA letter) 30 th April Non-EU Credit ratings ESMA s revised end of transitional period for use of credit ratings issued outside the EU. (Link to press release) April April April Spring PPI remaining elements of remedies package (other than those on provision of information in marketing materials and to third parties) to come into force. (Link to CC timetable) CRD IV Vote in ECON on bank capital requirements expected. (Link to press release) Prospectus Directive Amending directive designed to reduce burden on insurers to come into effect. (Link to FSA Business Plan 2011/2012) Financial crime The Law Commission to present its final recommendations (following responses received on consultation paper no. 195) to Parliament on the use of criminal law in regulatory contexts. 5

56 1 st May Trading platforms Projected effective date of guidelines on systems and control in automated trading environments for trading platforms, investment firms and competent authorities. 30 th May Solvency II (Internal Models) date on which FSA plans to close applications for internal models approvals process (IMAP). (Link to FSA (Julian Adams) speech, 18 April 2011) 18 th June Recognised Auction Platform Regulations date regulations (other than 6, 10 and Schedule 1) come into force. (Link to legislation) 30 th June UCITS funds deadline for firms to introduce the key investor information documents for their UCITS funds. (Link to FSA policy statement on transposition of the revised UCITS directive) End June H July July July Bank recapitalisation date by which banks are to have exceptional and temporary buffer of Core Tier 1 capital ratio of 9%, in line with EBA recommendations. (Link to EBA recommendations) FSCS funding review to consult formally, lead by Sheila Nicoll and looking at issues such as composition of the nine funding classes, levy thresholds applicable to each and their tariff bases. (Link to FSA press release) BERR/BIS: The Kay review of UK equity markets Final report to be published HMT Steering group on simple financial products to report back to the financial secretary to the Treasury. (Link to press release) Shadow banking Workstreams setup by FSB in key shadow banking areas to report progress and policy recommendations. (Link to FSB press release) 1 st July Short selling and CDS European Regulation on short selling and certain aspects of credit default swaps to come into effect. (Link to Draft Regulation) Summer 2012 Q Q Q Tax Transparent Funds regulations to come into force. (Link to HM Treasury Press Release) Capital Requirements FSA to publish Policy Statement on CRD4. (Link to FSA Business Plan 2011/2012) OTC derivatives ESMA to publish Technical Standards, Technical Advice, Guidelines and Recommendations. (Link to ESMA Business Plan 2011/2012) IORP Directive EU Commission to publish revised IORP Directive. (Link to ABI update with link to IORP Review) 1 st October Pensions amended conduct of business rules come into operation. (Link to FSA Policy Statement 11/08) 1 st October Corporate governance (subject to consultation) revisions to the UK Corporate Governance Code and the UK Stewardship Code to take effect. (Link to FRC paper) 1 st October Self invested personal pensions date from which firms may take advantage of rule for generic key features illustrations for groups/sub-groups of employees in group personal pension scheme. (Link to PS 11/14) 24 th October BIPRU R date until which this BIPRU rule concerning the implementation of contingency plans may be modified by consent (unless the rule itself is amended before this point). (Link to FSA guidance) Autumn 2012 Autumn 2012 Computer trading BIS to publish final report on the future of computer trading in financial markets. (Link to BIS working paper) Insurance Guarantee Schemes EC to publish Directive on insurance guarantee schemes. (Link to EU 2011 Programme) (Link to ABI page with link to IGS update with new timetable) 1 st November Solvency II new regime takes effect (possibility of date being put back to 1 January 2013). (Link to European Timeline chart produced by FSA) November Short selling and CDS trading new EC regulation to enter into force. (Link to press release) 6

57 21 st December Insurance derogation from EC Directive, allowing gender-based insurance premium differences, to end from this date. (Link to ECJ Press Release) 31 st December RDR Adviser Charging new rules on RDR Adviser and Consultancy Charging requirements to come into force. (Link to FSA Consultation Paper 11/03) 31 st December Retail reporting changes to Retail Mediation Activities Return and data collection based on RDR rules on adviser charging and professionalism to come into force. (Link to FSA consultation paper) 31 st December Self invested personal pensions new disclosure rules for SIPPs come into force. (Link to PS 11/14) 31 st December Reporting Deadline for FSA and financial firms to apply COREP common European reporting standards. (Link to ESMA Business Plan 2011/2012) Q Q Q MiFID II ESMA to produce Technical Advice, Guidelines and Recommendations. (Link to ESMA Business Plan 2011/2012) UCITS V/Venture Capital/Social Investment Funds - ESMA to produce Technical Advice. (Link to ESMA 2012 work programme) AIFMD, UCITS, PRIPS ESMA to produce Technical Standards in relation to all of these directives. (Link to ESMA 2012 work programme) 2012 Retail finance OFT to conduct a review of the market in 2012 to analyse the impact of the initiatives introduced by personal current account providers Accounting global accounting standards to be implemented. (Link to G20 Progress Report) 2012 Prudential regulation revision of the Financial Conglomerates Directive. (Link to the European Commission s financial reform programme) End 2012 End 2012 End 2012 End 2012 End 2012 End 2012 Financial Services Bill Financial Services Bill to receive Royal Assent. (Link to Hansard timetable announcement) Card surcharges Government to implement forthcoming EU legislation to ban excessive surcharges on all forms of payment. (Link to press release) OTC derivatives European Regulation on OTC derivatives, central counterparties and trade repositories to take effect. (Link to Europa press release) REMIT REMIT to come into force (Link to European Parliament press release) Recovery and resolution EC to publish proposals on harmonisation of national insolvency regimes. (Link to EC consultation paper) FSMA 2000 (Carrying on Regulated Activities by way of Business) (Amendment) Order 2011/2304 HMT required to review the operation and effect of the amendment and publish a report before end of /2013 MMR Arrears and Approved Persons - FSA to publish final rules for CP10/2 (PS10/9. (Link to Policy Development Update, No. 137, July 2011) January Demise of the FSA FSA to be fully wound up, supervision of banks to be carried out by the prudential regulatory authority, a legally separate but subsidiary part of the Bank of England that will replace the FSA by this time. (Link to HMT press release); (Link to FSA Business Plan 2011/2012) 1 st January Regulated covered bonds new FSA rules on regulated covered bonds come into force. (Link to FSA policy statement) 1 st January Financial reporting application date for FINREP v3 7