This week has seen the FCA publish regulatory sandbox eligibility criteria and testing standards for new and innovative products.
Tracey McDermott set to leave the FCA
Tracey McDermott, Acting Chief Executive of the Financial Conduct Authority, has announced that she is to leave on 1 July 2016 when Andrew Bailey takes up his appointment.
FCA, 13 April 2016
FCA sandbox eligibility and testing standards
The Financial Conduct Authority has published eligibility criteria and the default standards for its regulatory sandbox in respect of testing parameters. The sandbox, part of the FCA's Project Innovate, aims to provide a "safe space" where firms can test innovative products and business models outside of the usual regulatory constraints.
The FCA, April 2016
CMA addendum to retail banking market investigation provisional findings
The Competition and Markets Authority (CMA) has published an addendum to its provisional findings in the retail banking market investigation. The CMA have looked at the impact of capital requirements on competition in personal current accounts, business current accounts and SME lending, as well as more widely across retail banking. Their provisional conclusion is that smaller/challenger banks using the "standardised approach" (because of the higher risk weightings) have higher mortgage prices in lower loan–to-value mortgages compared larger banks using the "internal ratings-based approach" (IRB). The CMA state that there are significant hurdles to overcome before banks may use the IRB approach. This is in the context of mortgages being generally one of the most profitable products in retail banking. The CMA consider that smaller / challenger banks are at a competitive disadvantage, but recognise that the capital requirements regime is prescribed under EU law. It calls on the PRA, BoE and HM Treasury to consider this issue and to ensure that the European Commission and EBA give due weight to competition when developing capital requirements.
Competition and Markets Authority, 15 April 2016
FCA survey on customer understanding of products
The Financial Conduct Authority has commissioned a survey of 17 retail banks and building societies looking at how firms ensure their customers understand the products they have bought. The conduct regulator reports that in general most banks and societies exhibited good practices such as adopting a more personal approach to complaints handling. However, some banks and societies were not properly distinguishing between a customer's understanding of a product and apparent customer satisfaction. Firms are reminded of the need to "check" customer understanding regularly during the product life cycle.
FCA, 12 April 2016
LSB report on customers in vulnerable circumstances
The Lending Standards Board (LSB) has published a report in which they conclude that while most firms are at an early stage in developing an approach to vulnerability, there is an acceptance of its importance and that it is an issue which extends beyond debt collection. As well as considering the definition of vulnerability, the report sets out examples of good practice.
LSB, 18 April 2016
BoE letter regarding FPC's proposed framework of capital requirements for UK banks
The House of Commons Treasury Select Committee has published a letter sent from Mark Carney, Bank of England Governor, to Andrew Tyrie, Treasury Select Committee chair, regarding the proposed framework of capital requirements for UK banks. The Governor defends the robustness of UK capital requirements but observes that "bank capital is not costless to society" and that some of the cost will be borne by individuals and firms.
UK Parliament, 15 April 2016
CML responds to FCA discussion on older people and financial services
The Council for Mortgage Lenders (CML) has published an article in response to the FCA's discussion paper on the ageing population and financial services. The CML accept that steps can be taken to improve outcomes for older people and cite, as an example, the FCA's decision to remove the affordability test for hybrid life time mortgages.
Council of Mortgage Lenders, 15 April 2016
Year-on-year home-owner house purchase lending up 21% in February
The Council of Mortgage Lenders has published new data on the characteristics of UK mortgage lending, finding year-on-year increases in first-time buyer, home mover, remortgage and buy-to-let activity for February 2016.
The Council of Mortgage Lenders April 2016
EU Data protection law approved
The European Parliament has approved the General Data Protection Reform package. The reform comprises a Regulation setting out a general EU framework for data protection and a Directive on protecting personal data processed for the purposes of prevention, investigation, detection or prosecution of criminal offences and related judicial activities. The Regulation will be directly applicable in national law when it takes effect with the Directive in 2018.
EU Parliament, 14 April 2016