BANKING

FCA Quarterly Consultation No 16

The FCA has published its 16th quarterly consultation paper in which they seek views to changes to its rules and guidance in the following:

  • Changes to DEPP and EG following the Bank Recovery and Resolution Order 2016
  • Changes to Market Conduct sourcebook relating to ESMA guidelines on commodity derivatives
  • Changes to SUP and EG to reflect extension of Immigration Act 2014
  • Listing Rules and Prospectus Rule changes relating to Prospectus Regulation coming into force
  • Changes to REC and MAR
  • COBS and MCOB changes to improve firms’ communication with consumers
  • Changes to reporting requirements in the Supervision manual

FCA, 3 March 2017

Non-EU central banks and other public bodies set for EMIR exemption

The European Commission has adopted a delegated regulation that will exempt central banks and public bodies managing public debt in Australia, Canada, Hong Kong, Mexico, Singapore, and Switzerland from the clearing and reporting requirements of EMIR. EU central banks and public bodies charged with or intervening in the management of public debt are already exempted from EMIR. The Commission is empowered to adopt delegated acts to amend the list of entities to which EMIR does not apply. EC, 3 March 2017

PRA update on supervisory statement on IRB

The Bank of England has published a speech by Martin Stewart, Director of banks, building societies and credit unions at the PRA, in which he confirmed that by the end of March 2017 the PRA will consult on revising its supervisory statement on the internal rating based approaches. BoE, 3 March 2017

FCA policy development update: March 2017

The FCA has updated its policy development webpage for March 2017, which sets our information on the FCA's recent and future publications schedule. The updates summaries the FCA's proposed publications and highlight the changes that have been made since the previous schedule. FCA, 3 March 2017

EBA 2016 reports on consistency of RWAs

The EBA has published the following reports, relating to assessments of the consistency of risk-weighted assets (RWAs):

  • Results from the 2016 high default portfolios (HDP) exercise. This report sets out the results of a supervisory benchmarking exercise for HDPs (that is, residential mortgage, SME retail, SME corporate and corporate-other portfolios). The exercise involved the entire population of banks that are authorised to use internal models for the calculation of regulatory capital in the context of HDPs. The aim of the exercise was to assess the overall level of variability in RWAs and to examine and highlight the different drivers of the dispersion observed.
  • Results from the 2016 market risk benchmarking exercise. This report sets out the results of a supervisory benchmarking exercise (HPE) intended to assess the level of variability observed in market-risk-weighted assets (MRWA) produced by banks’ internal models.

EBA, 3 March 2017

FCA sets out expectations on use of dealing commission

The FCA has published a press release about firms failing to meet expectations on their use of dealing commission. In particular, the FCA is concerned about poor practices for paying for research, research budgets, research polls, systems and controls and conflicts of interest. FCA, 3 March 2017

IBA feedback statement on additional consultation on evolution of ICE LIBOR

The ICE Benchmark Administration (IBA) published a feedback statement on its additional consultation on the evolution of the London Interbank Offered Rate (LIBOR). IBA, 3 March 2017

INSURANCE 

FCA publishes Insurance Distribution Directive consultation

The FCA has published the first of its two consultation papers on the implementation of the Insurance Distribution Directive (IDD). The paper covers the FCA's proposals for the application which include the following areas:

  • Professional and organisational requirements
  • Complaints handling and out-of-court redress
  • Professional indemnity insurance (PII)
  • Changes to conduct of business rules (for non-investment insurance contracts)
  • The regulatory regime for ancillary insurance intermediaries

The consultation closes on the 5 June 2017.

FCA, 6 March 2017

IAIS consults on draft group corporate governance application paper

The International Association of Insurance Supervisors (IAIS) has published for consultation a draft application paper on group corporate governance. The aim of the draft paper is to provide good supervisory practices and examples to address challenges specific to the governance of insurance groups. It is also intended to create a common understanding among supervisors on how to assess or evaluate the governance frameworks of insurance groups. The paper is stated as being relevant for all groups, but is particularly useful for the supervisors of internationally active insurance groups, as they usually have more complex structures and require heightened co-ordination between the group-wide and other involved supervisors. The deadline for comments on the application paper is 3 April 2017. The IAIS will hold a public background call on 20 March 2017 to discuss the draft paper and receive public feedback. IAIS, 3 March 2017

ABI and BIBA review industry code of good practice to support vulnerable motor and household customers at renewal

The Association of British Insurers (ABI) and the British Insurance Brokers' Association (BIBA) published a report reviewing their joint code of good practice to help insurers and insurance brokers provide support to potentially vulnerable customers when renewing motor and household insurance policies. The report outlines the steps ABI member firms have taken during the initial 12 month implementation period of the code of good practice. ABI & BIBA, 3 March 2017

IAIS consults on revised insurance core principles (ICPs) and integration of ComFrame material and ICPs

The International Association of Insurance Supervisors (IAIS) has published for consultation a draft package of measures on revised insurance core principles (ICPs) and draft ComFrame material integrated with selected ICPs. ComFrame is a common framework for the supervision of internationally active insurance groups (IAIGs), which aims to provide a set of international supervisory requirements focusing on effective group-wide supervision of IAIGs. These requirements build on those in the IAIS' ICPs. More details on the technical aspects of the integration of the ComFrame material with ICPs can be found in the IAIS February 2017 newsletter. IAIS, 3 March 2017

EIOPA requests information for its long-term guarantees report

EIOPA has published a request that insurance and reinsurance undertakings from the EEA and subject to the Solvency II Directive provide the following information:

  • Impact of the symmetric adjustment mechanism to the equity risk charge on the financial position of undertakings.
  • Impact of the extrapolation of risk-free interest rates on the financial position of undertakings.
  • Losses due to bond defaults and downgrades of bonds in matching adjustment portfolios.

The information is needed as part of EIOPA's long-term guarantees (LTG) report.

Results need to be submitted to national supervisory authorities by 15 June 2017, who will then report to EIOPA by 16 July 2017. EIOPA, 3 March 2017

Big data and the insurance sector

The Information Commissioner’s Office (ICO) has said the large volumes of data which are available online presents the insurance sector with both challenges and opportunities. The ICO is preparing guidance to help the insurance sector, and others, comply with the new General Data Protection Regulation (GDPR), coming into force from May 2018. ICO, 3 March 2017

INVESTMENTS AND FUNDS

European Parliament to consider MMF Regulation

The European Parliament has updated its procedure file on the proposed Regulation on Money Market Funds (MMF Regulation). The procedure file indicates that the Parliament will consider the proposed Regulation during its plenary session to be held from 13-16 March 2017. European Parliament, 3 March 2017

FCA highlights concerns about investment managers and best execution

The FCA has published a press release which expresses concern about how investment managers are failing to ensure effective oversight of best execution. In particular they are concerned about:

  • How poor practices have not been addressed since its 2014 thematic review on the topic.
  • Poor use of management information on execution costs and an inability to evidence any improvement to execution process based on cost data.
  • Compliance staff not being empowered to provide effective challenge on execution quality.

FCA, 3 March 2017