CUBE RegNews: 25th October

A selected summary of key developments for regulated financial institutions

Greg Kilminster

Greg Kilminster

Head of Product - Content

PSR publishes APP fraud data report


The UK’s Payment Systems Regulator has published a report aimed at payment service providers (PSPs) that are required to publish authorised push payment (APP) fraud data. 


The requirement was codified in March 2023 by the PSR’s policy statement PS23/1, APP scams: Measure 1 Collection and publication of performance data. 

The new report specifies the content that must be included as part of this requirement, the format that must be used, where it should be published and the timescales that must be followed. 


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


PRA and FCA issue policy statement on bonus cap


The Prudential Regulation Authority and the Financial Conduct Authority have issued feedback and guidance on changes proposed in CP15/22 which looked at proposed changes to the current requirements concerning the ratio between fixed and variable components of total remuneration (the ‘bonus cap’). 

The policy statement confirms that the previously imposed bonus cap is to be removed with effect 31 October 2023 for firms’ ongoing financial years. 

The bonus cap had been introduced in the regulators’ rules in two tranches. Firstly in 2014, during the transposition of Capital Requirements Directive (CRD) IV, the regulators applied the cap to all large and systemically important CRD-regulated firms, choosing to disapply the cap for smaller firms on proportionality grounds and then in December 2020, in line with the implementation of CRD V, the regulators extended their respective remuneration regimes, including the bonus cap, to a wider set of firms. 

 

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


US agencies issue rule to facilitate bank account access


Three federal bank regulatory agencies (the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency) have issued a final rule to strengthen and modernise the Community Reinvestment Act (CRA). The CRA is a landmark law enacted nearly 50 years ago to encourage banks to help meet the credit needs of their entire communities, especially in low- and moderate-income (LMI) neighbourhoods. 


The final rule updates the CRA regulations to reflect changes in the banking industry, such as the growth of digital banking, and to ensure that the CRA remains an effective tool for promoting financial inclusion. The key features of the final rule include: 


  • A new metrics-based approach to evaluating bank performance. The final rule adopts a new quantitative framework for evaluating bank retail lending and community development investments. This framework will be more transparent and objective than the current approach, and it will better align with the CRA’s goals of promoting financial inclusion and reducing disparities in access to credit. 
  • A focus on LMI communities and other high-need areas. The final rule will place greater emphasis on bank activities in LMI communities, rural areas, and other high-need areas. This is consistent with the CRA’s purpose of ensuring that all communities have access to credit and banking services. 
  • Adaptations to the digital banking age. The final rule recognises that banks are increasingly delivering products and services through digital channels. It will therefore evaluate bank lending and investments outside of traditional assessment areas, such as online and mobile banking. 
  • Tailored requirements for small and intermediate banks. The final rule recognises that small and intermediate banks face different challenges than large banks. It therefore tailors certain requirements, such as data reporting, to bank size and type. 


Most of the rule’s requirements will be applicable beginning 1 January 2026. The agencies believe that the final rule will make the CRA more effective in promoting financial inclusion and ensuring that all communities have access to the credit and banking services they need to thrive. 


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


Fed writes to banks explaining climate-related principles 


In a letter to supervisors of banks with $100 billion and more in assets, the Federal Reserve has outlined the principles for climate-related financial risk management which have been agreed by the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency. The letter states that the principles are intended to support efforts by financial institutions to focus on key aspects of climate-related financial risk management. The principles cover six areas: governance; policies, procedures, and limits; strategic planning; risk management; data, risk measurement, and reporting; and scenario analysis. The letter also outlines how climate-related financial risks can be addressed in various risk categories including credit risk, liquidity risk, other financial risk, operational risk, legal and compliance risk and other non-financial risk. 


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


BlackRock agrees to $2.5 million fine


Investment adviser Black Rock LLC has agreed to a $2.5 million fine imposed by the Securities and Exchange Commission (SEC) for failing to disclose the true nature of an investment made available to BlackRock clients. 


Investors were told that Aviron Group, LLC was a diversified financial services company, but it was a company providing marketing services to the film industry. Additionally, six fund reports inaccurately reflected the coupon rate to be paid by Aviron to the fund managed by BlackRock, making it appear that the nominal yield derived from the Aviron Investment would be larger than it was in four reports, smaller in one report, and provided conflicting information in one report. 


Andrew Dean of the SEC reminded firms that: “Retail and institutional investors rely on accurate disclosures of the companies that make up a closed-end or mutual fund’s portfolio to evaluate a current or prospective investment in the fund.” 

 

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