BANKING

New FCA webpage on model driven machine executable regulatory reporting

The FCA has published a new webpage on model driven machine executable regulatory reporting. One of the key technology areas on which the FCA is focusing is the development of solutions to the increasing challenges faced by financial institutions in implementing their regulatory reporting obligations. Along with the Bank of England, the FCA is exploring how technology can be used to link regulation, compliance procedures, firms' policies and standards, together with firms' transactional applications and databases. If successful, the FCA believes this opens up the possibility of a model driven and machine readable regulatory environment that could "transform and fundamentally change" how the financial services industry understands, interprets and then reports regulatory information.   FCA on 2 Nov 2017

 

Government intends to announce by end of 2017 its package of reforms to improve UK response to economic crime

The House of Commons Treasury Committee has published a letter from the Chancellor of the Exchequer, to Nicky Morgan, Chair of the committee, providing (among other things) an update on the project that is being carried out by the Cabinet Office to examine the UK's response to economic crime. The project has involved a consideration of the UK agencies involved in the investigation and prosecution of high value or complex economic crime.  In the letter, the Chancellor advises the committee that officials have provided advice to ministers on the effectiveness of the UK's response to economic crime, together with a series of recommendations to further enhance the UK's capabilities. The recommendations seek to improve the governance and operational response of the UK's economic crime agencies. At the cross-government meeting, it was agreed that Amber Rudd, Home Secretary, will take forward this work. The intention is to announce a package of reforms by the end of 2017. House of Commons Treasury Committee on 2 Nov 2017

 

 FSB report on artificial intelligence and machine learning in financial services

The Financial Stability Board (FSB) has published a report considering the financial stability implications of artificial intelligence (AI) and machine learning in financial services. Financial institutions are increasingly using AI and machine learning in a range of applications across the financial system, notes the FSB. This includes assessing credit quality, pricing and marketing insurance contracts, automating client interactions, analysing the market impact of trading large positions, optimising trading execution, and regulatory compliance. Financial Stability Board on 1 Nov 2017

 

EBA final guidelines on supervision of significant branches

The EBA has published a final report containing guidelines on the supervision of significant branches. The aim of the guidelines is to specify how consolidating supervisors and the home and host competent authorities should co-operate to carry out prudential supervision and co-ordinate monitoring, including the assessment of recovery planning, of certain branches of firms requiring intensified supervision (referred to in the guidelines as "significant-plus" branches). EBA on 1 Nov 2017

 

 EBA recommendation on coverage of entities in a group recovery plan

The EBA has published a final report on its recommendation on the coverage of entities in a banking group recovery plan. Under Article 7 of the Bank Recovery and Resolution Directive (BRRD), group recovery plans should consist of a recovery plan for the group headed by the EU parent undertaking as a whole, which should identify measures that may be required to be implemented at the level of both the EU parent undertaking and each individual subsidiary. The recommendation is intended to set out common framework for achieving the necessary level of information on all group entities in the group recovery plan.  EBA on 1 Nov 2017

 

 INSURANCE

PRA policy statement, supervisory statement and near-final rules and forms on authorisation and supervision of insurance special purpose vehicles

The PRA has published a policy statement which sets out its approach and expectations concerning the authorisation and supervision of insurance special purpose vehicles (ISPVs). ISPVs will issue insurance linked securities (ILS), which are financial instruments whose value is linked to an insurable loss event. In broad terms, the PRA has confirmed the approach on which it and the FCA consulted in November 2016. However, additional guidance, largely to add clarity, in certain areas has been included. Among other things, the PRA has replaced the proposed regulatory business plan (RBP) with a formal scope of permission (SOP), which outlines the arrangements, structures, and mechanisms to which the ISPV is limited, with reference to the relevant detail in the application documents. PRA on 1 Nov 2017

 

FCA policy statement and near final rules on Handbook changes reflecting new regulatory framework for insurance linked securities

The FCA has published a policy statement which sets out near-final rules on the changes required to the FCA Handbook to reflect the new regulatory framework for insurance linked securities (ILS). The statement also contains the FCA's response to the feedback received to the following two consultation papers, in which it set out the proposed authorisation and supervisory approach in relation to insurance linked special purpose vehicles (ISPVs) and proposed Handbook changes to reflect the new ILS regime: CP16/34, which was published jointly by the FCA and the PRA in November 2016; and CP17/3, which was published in January 2017  Practical Law UK - Financial Services on 1 Nov 2017