Greg Kilminster
Head of Product - Content
UK Financial Ombudsman newsletter
The UK’s Financial Ombudsman Service (FOS) has published its latest newsletter, Ombudsman News 191.
The newsletter contains the following content:
- A consultation on charging claims management companies and other professional representatives.
- Notes and guidance on the FOS general approach to complaints about insurance.
- Half yearly data showing the number of complaints the FOS received about financial businesses in the second half of 2023.
Click here to read the full RegInsight on CUBE’s RegPlatform
FCA operational resilience guidance published
The Financial Conduct Authority (FCA) has launched a new operational resilience resource which provides observations and insights on the preparations firms have made towards complying with PS21/3: Building operational resilience.
The resource reflects on the consultation process leading to the publication of the policy statement, and reminds regulated firms that the new rules come fully into force at the end of March 2025.
The guidance reminds firms that they must:
- Identify important business services and keep these regularly under review.
- Set impact tolerances for each important business services and keep these regularly under review.
- Identify and document the people, processes, technology, facilities, and information necessary to deliver each important business services. This includes any relationships with third parties which could impact firms’ ability to remain within your impact tolerance.
- Develop and keep up to date testing plans that detail how firms can remain within impact tolerances for each important business services. This means identifying severe but plausible scenarios across an appropriate range of adverse circumstances, varying in nature, severity, and duration, that are aligned to firms’ risks and vulnerabilities.
- Identify any vulnerabilities which may cause firms to not remain within impact tolerance for severe but plausible scenarios.
The FCA Handbook defines an important business service as one which: “means a service provided by a firm, or by another person on behalf of the firm, to one or more clients of the firm which, if disrupted, could:
- Cause intolerable levels of harm to any one or more of the firm’s clients; or
- Pose a risk to the soundness, stability or resilience of the UK financial system or the orderly operation of the financial markets.”
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ESMA updates Q&As
The European Securities and Markets Authority (ESMA) has updated its Q&As on the following topics:
- Alternative Investment Fund Managers Directive (AIFMD) and Undertakings for Collective Investment in Transferable Securities Directive (UCITS): The update focuses on performance fees.
- European crowdfunding service providers for business (ECSPR): The update focuses on default rate disclosure, risk management framework, and prudential requirements.
- European Market Infrastructure Regulation (EMIR): The update focuses on the reporting of accumulator contracts and the reporting of price field at position level.
- Markets in Crypto-Assets Regulation (MiCA): The update focuses on the publication of information by CASPs providing the service of exchange of crypto-assets for funds or other crypto-assets.
- Markets in Financial Instruments Regulation (MiFIR): The update focuses on the reporting of accumulator contracts.
Click here to read the full RegInsight on CUBE’s RegPlatform
ASIC launches new professional registers search tool
The Australian Securities and Investments Commission (ASIC) has announced the launch of a new streamlined Professional Registers Search (PRS) by late June 2024.
This new search tool will allow users to review and search all the professional registers databases with just one search. As part of this transition, the following ASIC Connect registers will be included in the PRS:
- Australian Financial Services (AFS) licensees
- AFS authorised representatives
- Credit licensees
- Credit representatives
- Official liquidators
- Registered auditors, liquidators and managed investment schemes
- Approved self-managed super funds (SMSF) auditors
These changes will not affect other search registers on ASIC Connect, such as company and business names.
A second update of the PRS is planned for late 2024, during which all professional register extracts and documents will be accessible to users.
Click here to read the full RegInsight on CUBE’s RegPlatform
OCC Acting Comptroller on effective recovery plans
Acting Comptroller of the Currency, Michael J Hsu, recently delivered a speech at the Entrepreneurship, Markets, and Technology: Regulation’s Challenges in a Changing World Conference in Zurich, Switzerland. In his speech, Hsu highlighted the significance of recovery planning in addressing the too-big-to-fail problem (TBTF). He specifically discussed the OCC’s “Guidelines Establishing Standards for Recovery Planning,” explaining how it can facilitate the development of robust and effective recovery plans, as well as the upcoming steps in this area.
Key elements of an effective recovery plan
Hsu mentioned that the guidance outlined eight key elements that contribute to an effective recovery plan. Hsu focused on three elements that he considered particularly important: triggers, options, and impact assessments.
- Triggers: Thoughtful, credible triggers can mitigate the risk by ensuring that recovery actions are considered in a timely manner. Triggers can be quantitative or qualitative.
- Options: Actionable options are the core of effective recovery plans. They can help restore confidence in a bank by improving its liquidity or capital position, reducing key uncertainty, or simplifying the banking organisation’s operations. The more numerous and wide-ranging the options a bank has, the better.
- Impact assessments: Impact assessments are important so that managers and boards of directors can understand the full range of consequences of taking certain actions. Analysing each option’s direct and indirect impacts can help with planning and limit the risk of surprise when banks in stress contemplate their recovery options.
Next steps
Currently, the OCC’s recovery planning guidelines apply to large banks with assets of at least $250 billion. Hsu mentioned that due to the banking turmoil experienced last year, the OCC is considering expanding the guidelines to encompass all large banks with assets of at least $100 billion.
Click here to read the full RegInsight on CUBE’s RegPlatform
ECB announces SREP update
The Supervisory Board of the European Central Bank (ECB) has announced the update of its annual health check of banks, the Supervisory Review and Evaluation Process (SREP). To provide clarity on the upcoming changes, the ECB has also published a Q&A.
Some context
In 2023, the ECB’s Supervisory Board asked a panel of independent experts to assess its supervision holistically. Their report was published in April 2023. Based on this report, the Supervisory Board decided to reform its SREP.
Key takeaways
The amendments aim to make the SREP simpler, more flexible and have a shorter timeline. The changes to the SREP include:
- Comprehensive planning: Supervisory activities will increasingly reflect and be related to the supervisory priorities set each year by the Supervisory Board.
- Multi-year assessment (MYA): The ECB will fully deploy this approach for the SREP going forward.
- Flexible risk assessment system (RAS): The Joint Supervisory Team (JST) will, at its discretion, complete certain risk assessments more flexibly throughout the year.
- Proportionality: This principle will be increasingly applied to the overall SREP, such as simplifying internal reporting for smaller banks.
- Supervisory methodologies: ECB Banking Supervision is developing a revised methodology for setting Pillar 2 capital requirements. The methodology will be published by the end of 2024 and fully applied in the 2026 SREP cycle.
- IT and analytical tools: The ECB will continue to leverage supervisory technologies to transform and optimise processes supported by the latest innovations.
- Clear and concise decisions: The ECB will reduce the length of SREP decisions by focusing on the key supervisory concerns, outlining expectations, and including actionable measures where needed.
Next steps
The changes will be rolled out gradually, beginning in the second half of 2024, and will be completed for the 2026 SREP cycle.
Click here to read the full RegInsight on CUBE’s RegPlatform