UK Financial Services Sector regulatory landscape for 2016

A cura di:

In a short article it is not possible to be totally comprehensive about everything that the regulators are focused on, and which might affect you, in the year ahead but here are some of the bigger issues of which to be mindful.

PRA regulated banks and insurers will need to comply with the new Senior Managers Regime and Certification regime during 2016 with most of the key dates occurring during the first half of the year and up to 7 September 2016 which is the last implementation date for insurers.

The regime has a significant impact on boards and senior executives and requires much more formal descriptions of their roles and responsibilities.  The certification regime captures a much wider range of staff than the approved persons regime.

As many will know this is a major overhaul and replacement of the approved persons regime.  The FCA have indicated that they will be applying the regime in place of the existing approved persons regime to all other authorised firms during 2018.

Both the PRA and the FCA are putting a new emphasis on encouraging whistleblowing following recommendations previously made by the Treasury Select Committee.  A range of firms, particularly banks and insurers, must now appoint a whistleblowers' champion - who is typically to be a non-executive director and will be subject to the Senior Managers Regime or the Senior Insurance Managers Regime.  There are also obligations to adopt appropriate whistleblowing arrangements.  These are additional to existing obligations in the general legislation relating to whistleblowing.

Andrew Bailey has been appointed as the new Chief Executive of the FCA and will take up the position later in 2016.  Andrew has many years of experience at the Bank of England and as CEO of the PRA so this is likely to assist in strengthening flows of information and cooperation between the FCA, the PRA and the Bank of England.  Sam Woods has been announced as his replacement as CEO of the PRA.  He has had a very quick rise to the top of the PRA having previously held senior roles in the civil service including playing a key role supporting the work of the Vickers Commission which led to the ring-fencing requirements for the largest UK banks.

This year will also be a big year for banks preparing for ring-fencing.  The work on this is already underway and the task is a huge one.  One thing that is getting less attention is the knock on impacts for customers and counterparties of the banks.  Firms who are in this position should start thinking about whether there are any implications for their own banking arrangements.

Finally, there is also an important new emphasis on supporting innovative financial approaches.  The FCA has published its thinking about developing a Regulatory Sandbox which would operate in tandem with Project Innovate and be a means for innovative new entities to work through the regulatory implications of their innovation with the FCA.  A number of changes to law and rules will need to be put in place to implement some aspects of the Sandbox concept and these are expected to be put in place during the first half of 2016.