CUBE RegNews: 12th April

Greg Kilminster

Greg Kilminster

Head of Product - Content

CP4/24: PRA consults on regulated fees and levies for 2024/25  

The Prudential Regulation Authority (PRA) has released a consultation paper (CP) 4/24 on the proposed rates for regulated fees and levies for the year 2024/25.  


Key takeaways  

The proposals include:  

  • The fee rates to meet the PRA’s 2024/25 Annual Funding Requirement (AFR).  
  • Changes to the internal model application fees, the model maintenance fee and the fee payable for insurance business transfers under Part VII FSMA.  
  • Setting out how the PRA intends to allocate the surplus from the 2023/24 AFR.  
  • The retained penalties for 2023/24.  


Next steps  

The deadline for feedback is 10 May 2024 and the PRA proposes to implement the changes on 3 July 2024.  


Click here to read the full RegInsight on CUBE’s RegPlatform  

ESAs publish DORA factsheet  

The three European Supervisory Authorities (ESAs) have published a factsheet outlining plans to perform a ‘dry run’ for the implementation of the Digital Operational Resilience Act (DORA) from 17 January 2025.  


From 17 January 2025, firms within the scope of DORA will be required to have a register of their arrangements with any ICT third-party service providers.  


The ‘dry run’ process is designed to help firms prepare for this requirement. Hence, firms taking part are requested to provide a register of their arrangements on a best-effort basis in a format as close as possible to the one required from 2025. The ESAs will help with the compilation of these sample registers, as well as provide testing, aid with data quality issues, and improve internal processes.  

The factsheet outlines the timetable for the dry run and invites firms interested in participating to contact their relevant competent authority by 31 May 2024. 


Click here to read the full RegInsight on CUBE’s RegPlatform  

CFPB/EC update on consumer financial protection discussions 

In July 2023, the US Consumer Financial Protection Bureau (CFPB) and the European Commission (EC) have announced the start of an informal dialogue on a range of critical consumer financial protection issues.  


Since July 2023, the CFPB and the European Commission have held three meetings focused on several key areas of mutual interest. This joint statement summarises the key developments from those meetings.  

Buy Now, Pay Later (BNPL) and over-indebtedness: EC staff presented findings from a study on European consumers’ over-indebtedness, highlighting an expected increase over the next decade. This session also delved into the growth of BNPL services, associated risks, and regulatory revisions. CFPB staff provided insights into the US BNPL landscape, including demographic data and regulatory frameworks, facilitating a comparative analysis between the EU and US markets.  


Digital payments access, fraud, and Big Tech companies: Discussions centred on EU regulations concerning open banking and initiatives to combat digital payment fraud. CFPB staff shared insights into US efforts to address digital payment fraud and the evolving role of non-bank entities in payments. The session also addressed the implications of Big Tech’s expanding presence in consumer finance.  


Artificial intelligence (AI): EC staff outlined EU legislation on AI and recent court judgments pertaining to automated decision-making. Meanwhile, CFPB staff provided an overview of relevant federal consumer financial regulations and efforts to address AI-related risks, particularly concerning discrimination. The session facilitated a comparison of legal and regulatory frameworks and shared information on AI use cases in consumer finance.  

Looking ahead, both the CPFB and the EC affirm their shared commitment to continue the dialogue. They have agreed to convene annual principal-level meetings and bi-annual staff-level meetings to address shared priorities and emerging challenges in consumer financial protection on both sides of the Atlantic.  


Click here to read the full RegInsight on CUBE’s RegPlatform  

EBA issues final guidelines on GCT   

The European Banking Authority (EBA) has released the final guidelines for implementing the Investment Firm Regulation (IFR) group capital test (GCT) for investment firm groups. These guidelines aim to address the inconsistencies in the application of the GCT across the European Union, thereby ensuring fair competition.  


Some context  

Article 7 of the IFR sets out rules for prudential consolidation, and Article 8 allows for an exemption through the use of an alternative approach, the GCT.  


The EBA has observed that the interpretation and application of the GCT provision vary among competent authorities, leading to a lack of clarity regarding the criteria outlined in the IFR.  


Key takeaways  

To promote a harmonised interpretation and implementation of the GCT, these guidelines:  

  • Establish specific criteria to assist competent authorities in assessing the simplicity of the group structure and the level of risk posed to clients and the market.  
  • Provide a simplified assessment methodology for groups that only include small and non-interconnected investment firms.  
  • Offer a methodology to guide competent authorities in evaluating the adequacy of own funds requirement for third-country undertakings of EU groups.  


Next steps  

These guidelines will come into effect on 1 January 2025.   

Competent authorities are required to ensure that all existing permissions related to the group capital test and lower amounts comply with these guidelines by the designated effective date.  


Click here to read the full RegInsight on CUBE’s RegPlatform  


PSR requests update on NPA implementation   

The Payment Systems Regulator (PSR) has published a letter sent to Pay.UK asking for an update on the progress of implementing the New Payments Architecture (NPA), which is set to replace the existing Faster Payments scheme.  


Pay.UK, responsible for delivering the NPA, has decided to temporarily pause the program following the government’s announcement to consider the NPA’s role in the National Payments Vision.  


In the letter, the PSR requests an update on the next steps. The response will be shared with the Bank of England and HM Treasury, both of which are involved in developing the National Payments Vision.  


Click here to read the full RegInsight on CUBE’s RegPlatform  

OSFI announces phase two of SCSE consultation  

The Office of the Superintendent of Financial Institutions (OSFI) in Canada has announced the second phase of the Standardised Climate Scenario Exercise (SCSE) consultation. The first phase was issued in October 2023.  


This consultation provides details on the SCSE methodology and considers the feedback received during the initial phase. It also includes a set of instructions and a workbook.  


The deadline for feedback is 7 June 2024. The final version, along with a questionnaire (SCSE Questionnaire), will be released in late 2024.  


Click here to read the full RegInsight on CUBE’s RegPlatform  


EBA releases report on 2023 credit risk benchmarking exercise  

The European Banking Authority (EBA) has released the final report for the 2023 credit risk benchmarking exercise. This report provides the results of the analysis of the variability of own funds requirements based on the internal ratings-based (IRB) approach.  


Institutions that use the IRB approach calculate their own funds requirements based on a set of parameters, which they estimate themselves either partially or completely. The annual benchmarking exercise is conducted to monitor the variability of risk-weighted assets (RWAs) for institutions that apply the IRB approach in EU Member States.  


This report is based on the data collected between April 2023 and September 2023 and as of 31 December 2022.  


Click here to read the full RegInsight on CUBE’s RegPlatform  

FinCEN publishes factsheet on s 314(a) process  

The Financial Crimes Enforcement Network (FinCEN) has published a fact sheet to help with Section 314(a) of the USA PATRIOT Act of 2001.  

FinCEN’s regulations under Section 314 (a) allow for the sharing between regulators of information about entities that may be involved in terrorism or money laundering. The factsheet outlines the process by which this is done, noting that, to 2 April 2024, 6,278 requests to share information had been made via FinCEN.  


Click here to read the full RegInsight on CUBE’s RegPlatform