The two primary U.K. regulators for the financial services industry, the Financial Conduct Authority ("FCA") and the Prudential Regulatory Authority ("PRA") have been actively addressing a broad spectrum of issues.
Last week, the FCA opened a consultation on changes to the Financial Services Compensation Scheme ("FSCS") that would allow unincorporated associations and some large partnerships to participate in the FSCS if an investment firm fails. Comments on the proposal should be submitted on or before October 30, 2013. View the consultation paper here.
Issues surrounding payday lenders and consumer credit have also been on the FCA's agenda. It announced its vision for regulating that industry when it assumes regulatory authority from the Office of Fair Trading on April 1, 2014. See FCA Press Release. It also opened a consultation on how it intends to conduct its regulation. Comments should be submitted on or before December 3, 2013. View the consultation paper here.
The FCA announced it is extending to December 31, 2015, the effective date for capital requirements for personal investment firms. The delay is in part due to the unknown effects of the European Banking Authority's Capital Requirements Directive, and the effect the capital requirements may generally have on competitiveness. The FCA, therefore, decided to defer implementation so that its approach may be reviewed. See FCA Press Release.
The PRA issued a discussion paper proposing annual, concurrent stress tests of the U.K. banking system. The proposal addresses, among other things, the institutions expected to be included and the scenario design and modeling approaches to be considered. Comments should be submitted on or before January 10, 2014. View the discussion paper here. FT Adviser noted that the PRA's proposal would include medium sized banks but not smaller banks in the stress testing. Also proposed for inclusion in the stress testing are the U.K. branches of systemically important foreign banks.
The PRA has also published an Occasional Consultation Paper which addresses miscellaneous and minor changes to its rules. Issues discussed include FSCS protection for large unincorporated associations' deposits, remuneration, and initial capital exemptions for small credit institutions. Comments should be submitted on or before November 1, 2013. View the consultation paper here.
Amendments to the Banking Reform Bill currently before Parliament may further broaden the PRA's authority. Reuters reported that one proposed provision would include the promotion of competition in the PRA's regulatory mandate. Another proposal would subject bank executives to a seven-year prison sentence if they are found to have engaged in reckless misconduct in the management of a bank. View the Reuters article here.