Regulation Watch aims to provide members with updates on the activity of the sector's regulators, highlighting areas of specific interest. 

Recommended - highlights speeches, videos and audio relating to hot topics 

Recent News - a digest of some of the most relevant publications and updates released by the main regulatory bodies


Compliance, Culture and Evolving Regulatory ExpectationsThis recent speech from Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA, focuses on conduct. Following the cues in Nikhil Rathi's speech in March, in discussing the 5 Conduct Questions, it seems even more likely that a 6th question will be asked of firms - one that speaks to the issues of diversity and inclusion - you have been warned! It also comes with a fascinating, cautionary tale of individual responsibility which underlies the importance of 'tone within' in addition to tone from the top. 

Key facts about UK-based financial and related professional services: This is the annual update by CityUK of key data about the Financial Services sector in the UK. It comes with the caveat however, that many of the figures reported are pre-pandemic. That said, in themselves they are interesting, as they potentially indicate pre-pandemic trends, for example, in the use of digital services, which meant the sector was ready to support consumers during the last year. Click the headline for a visual summary, or here for the full report

Why diversity and inclusion are regulatory issues: In this speech, FCA CEO, Nikhil Rathi comments that the ongoing lack of diversity at the top in some firms raises questions about their ability to understand the different communities they serve, and their different needs. Tying his points to the recently published guidance on vulnerable consumers, which highlighted the needed for firms to understand and respond to the needs of their customers, Mr Rathi notes that this is unlikely if they do not have the diversity of background and experience required to overcome biases and blind spots. As a regulator there are tools at their disposal, for example whether the diversity of management teams – and the inclusivity of the management culture they create – could be part of our consideration of senior manager applications. He concludes by stressing that diversity matters to the FCA because it reduces conduct risk - so firms that fail to reflect society run the risk of poorly serving diverse communities. "And, at that point, diversity and inclusion become regulatory issues."

Fair Treatment of Vulnerable Customers: The Financial Conduct Authority (FCA) has published final guidance clarifying its expectations of firms on the fair treatment of vulnerable customers. This is incredibly important as recent FCA data indicates that: "27.7 million adults in the UK now have characteristics of vulnerability such as poor health, experiencing negative life events, low financial resilience or low capability. Not all people with these characteristics will suffer harm, but they may limit people’s ability to make reasonable decisions or put them at greater risk of mis-selling."   

FCA warning to banks re branch closures: Notified that some banks and building societies plan to continue their plans for, branch closures or have announced further closures, the regulator is reminding firms of their requirement to treat their customers fairly, and communicate with them in a fair, clear and not misleading way. In doing so, it highlights the expectation that firms will exercise particular care with vulnerable customers.  The Final Guidance (FG20/03) on Branch and ATM closures or conversions (published September 2020) outlines the FCA's expectation in this regard. 

Why does the FCA care about diversity and inclusion? An interesting speech by Georgina Philippou, Senior Adviser to the FCA,  
in which she talks about issues of diversity, as well as inclusion:  “People with different life experiences can bring new thinking and their experiences can inspire new approaches to problem solving and decision making”. There are also some thoughts on culture - acknowledging that culture will be different in different firms but that “it is the responsibility of us all, of everyone in the financial services industry, to create and maintain cultures which embody diversity and inclusion”.

Covid and the composition of spending: An interesting, if at times technical speech by Ben Broadbent of the Bank of England, in which he looks at how Covid has changed the spending habits of households and what this may have meant for costs and inflation.  

Anneliese Dodds’ speech to Bloomberg: Some positive messages about the role of responsible bankers during the current pandemic in this speech by Anneliese Dodds., to whom our CEO wrote earlier this year.  "In 2020, we have often seen the sector at its best. Setting up huge new systems overnight to get government-backed loans out to businesses who were desperately short of cash. Helping those who ran into difficulty to keep a roof over their head. Partnering with charities to support those most in need.

We must harness that sense of active commitment as we plan for the recovery- a recovery which must be environmentally productive, not destructive; and one marked by providing additional opportunity, not wasting it."

Seizing the Opportunities from Digital Finance: This speech is not exactly the one delivered by Andy Haldane,  Chief Economist at the Bank of England and Member of the Monetary Policy Committee. Andy spoke of the regional economic imbalance across the UK. There were issues pre-COVID, such as gaps in financing SMEs, which are only increased by the pandemic. We will attempt to get hold of the speech as it was very informative and thought provoking. It concluded by returning to the published script and how the opportunities offered by digital might support the need to level up.

The potential long-term effects of Covid  The Bank of England's Deputy Governor for Markets and Banking, Dave Ramsden, looks at the impact of the Covid pandemic on the UK economy. He examines what the long-term effects are and how the economy is likely to respond. 

Strong and simpleIn this speech, the PRA's CEO, Sam Woods, explains where to next for the regulator when certain limitations are removed upon our withdrawal from the EU. Without getting overly technical, this is an informative look at where we can expect changes in UK regulation of small deposit-takers and how he believes this will contribute to his vision of the future UK regulatory framework that has high regulatory standards, offers responsible openness to those seeking to invest, and a dynamism that keeps pace with developments in the sector. That is once they can decide what 'small' means!

Acting flexibly and treating customers fairly in the face of a pandemic: A worthwhile read for those working in consumer credit. In this speech, the FCA’s Jonathan Davidson outlines the priorities as the regulator sees them, during the current phase of this pandemic. This includes a focus on vulnerability, the expectations around forbearance and the operational challenges to be overcome.

Is home working good for you?  A really interesting speech by the Bank of England's Andy Haldane, in which he looks at the impact home working has had on productivity and output, through well-being and happiness to the impact on creativity and relationships. Sadly, I couldn’t access the Engaging Business report which he refers to – if I do I’ll post the link here.

Evolution of a new model for financial regulation in the UK: As he prepares to stand down as Interim Chief Executive of the FCA on 30 September 2020, Chris Woolard looks at what lessons the regulator can should be taking from Covid-19 so far in terms of society, technology and the manner in which the FCA regulates; what changes might the FCA need to make to meet some of these challenges; and, as we transition out of the EU, what kind of regulation does the UK need? 

Older speech listings and some research referenced by regulators can be found in this archive.

Recent News

Guidance on the fair treatment of vulnerable customers: The FCA has revised its draft guidance and provided feedback on its consultation last summer (GC19/30) on this important topic. The aim of the proposed guidance is to make clear what firms should be doing to ensure fair treatment and to develop some consistency in outcomes. Ultimately it seeks to address what more needs to be done to embed in firms’ a culture of doing the right thing for vulnerable, and indeed all, consumers. This phase of the consultation will close on 30 September.

Consumer Investments: The FCA is committed to publishing an update report on a half yearly basis with regard to its work to reduce the impact of consumer harm in the investment market and the insights we are gaining from it. Here is the latest report.

Consumer Credit: In November 2020 the FCA updated its guidance for firms relating to the exceptional circumstances arising out of the coronavirus (Covid-19) pandemic and its impact on the financial situation of consumer credit customers. Follow the guidance here. 

Mortgages and Covid -19: The Financial Conduct Authority (FCA) has published updated guidance on mortgages repossessions which comes into effect from 29 January 2021. Firms should now not enforce repossessions before 1 April 2021, except in exceptional circumstances, and only as a last resort. Importantly, firms are also expected to consider the impact on customers who may be vulnerable, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate.  

Regulatory Initiatives Grid: The Financial Services Regulatory Initiatives Forum has published its second grid which sets out the regulatory pipeline across the Treasury [HMT], Bank of England [BoE], Financial Conduct Authority [FCA], Prudential Regulation Authority [PRA], Payment Systems Regulator [PSR] and the Competition and Markets Authority [CMA]. It also includes some important work from the Information Commissioners Office (ICO). The GRID is published at least twice a year to help manage the operational impact on firms of implementing initiatives from the Forum members. It outlines timings for initiatives that are multi-sector as well as sector specific work.  The Forum continues to encourage feedback to ensure the Grid is as useful as possible. 

Access to Cash: The FCA published a limited period consultation on draft guidance for firms with regard to maintaining customer access to cash. The draft guidance set out the regulator's expectations for banks, building societies and credit unions when considering the closing of branches or ATMs, or converting a free to use ATM to pay to use.  The consultation closed at the end of July and the draft guidance can be accessed via the FCA's website.

Consumer Credit: The FCA has published updated guidance with regard to repossessions during the pandemic. Lenders should not repossess goods or vehicles need by customers before 31 January 2021. However, this should only be as a last resort, and in accordance with all relevant government public health guidelines, including on social distancing and shielding. Particular care is expected when dealing with vulnerable customers and careful consideration given to the potential impacts when deciding whether repossession of goods or vehicles is appropriate. 

The review of the unsecured credit market, led by Chris Woolard continues. It is expected to concentrate on how regulation can better support a healthy unsecured lending market. It will take into account the impact of the coronavirus on employment security and credit scores, changes in business models and new developments in unsecured lending including the growth of unregulated products in retail and the workplace. For more details view you can follow the review's progress on the FCA's website. 

To read about the existing expectations of the regulator with regards to the support firms should be providing for customers with credit cards and other revolving credit (store card and catalogue credit) and personal loans coming to an end of a payment freeze, please visit the FCA website.

Senior Managers and Certification Regime (SM&CR) and coronavirus (Covid-19): The FCA continues to update its guidance with regard to its expectations of Senior Managers and firms. It refers back to its advice on identifying key workers and the work/travel responsibilities of Senior Managers.  Keep track of the full set of FCA guidance and news with regard to the current epidemic here.  Further guidance has also been published on the FCA expectations under the Approved Person Regime during the current pandemic.

The regulator has also reminded firms of their obligation to regularly review regulatory permissions to ensure they are up to date and removed where they are not needed, and to notify the FCA of material changes. Details can be found on the FCA website.

Basel 3.1 implementation delayed: The Group of Central Bank Governors and Heads of Supervision (GHOS) have announced that the implementation of the Basel 3.1 standards will be delayed by one year. This is to provide operational capacity for banks and supervisors to respond to the immediate financial stability priorities from the impact of Covid-19. In a joint statement the PRA and HMT welcomed this announcement and committed to the timetable to ensure implementation in the UK consistent with the delay.

FCA Register:  The FCA has replaced its Financial Services Register with an enhanced Financial Services Register. The enhanced Register has a new look and includes improvements made in response to user feedback. The intention is that these changes will make it easier to find and understand information on the Register - why not take a look and send in your feedback! 

Duty of Care: The FCA had originally indicated that a consultation paper would be published in Autumn 2019.  The feedback to the original discussion paper, indicated that the FCA was looking at how it applies the existing regulatory framework, and considering revision of/addition to its Principles for Business. We were satisfied with this approach as it follows the recommendations made in our response to the discussion and look forward to engaging with the next steps which we now hope to see published in early 2021.

Financial Inclusion and Capability: The Treasury has released its report for the period 2019-20 outlining the progress made against its objectives.  It does not reveal much that is new to followers of this topic, but neatly summarises the number of government led/supported initiatives ongoing. 

FCA Business Plan 20/21: This much shorter than usual plan outlines the regulator's priorities whilst acknowledging that under the current circumstances [Covid 19] it may be some time before it can fully action these plans. Priorities include protecting the vulnerable, ensuring customers and small firms are treated fairly and tackling scams.  you can view the plan and a short introductory video on the FCA website.  

Live and Local to check if the FCA are running any events, in your area on a topic of interest follow this link to their website