Featured Product

    PRA Proposes Rules on Identity Verification of Depositor Protection

    January 20, 2021

    PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS). It also proposes amendments to the expectations of PRA in respect of insolvency practitioners being best placed to carry out identity verification checks in the event that a firm has failed to do so by the compensation date. The proposals in CP3/21 would result in changes to the Depositor Protection Part of the PRA Rulebook (Appendix 1) and the supervisory statement SS18/15 on depositor and dormant account protection (Appendix 2). This consultation closes on February 15, 2021, with PRA proposing the implementation date to be March 24, 2021.

    CP3/21 is relevant to the FSCS, all PRA-authorized deposit-takers, and insolvency practitioners. It contains no material of direct relevance to retail financial services consumers or consumer groups, upon which they might need to act. Under the existing PRA Depositor Protection rules, which implemented an EU Directive, if a depositor or ultimate beneficiary has not had their identity verified in accordance with the Relevant Anti Money Laundering (AML) Requirements at the compensation date, their deposits are automatically ineligible for FSCS protection (through no fault of the depositor or ultimate beneficiary). The proposed rule changes are intended to prevent FSCS eligibility issues in the event that a firm has failed to conduct identity verification in accordance with the relevant anti-money laundering requirements referred to in Depositor Protection Rule 2.2(4)(f) while continuing to ensure identity verification is carried out before any compensation is paid.

    PRA proposes to amend existing Depositor Protection rules to allow deposits to become eligible for FSCS protection if identity verification is, in any case, carried out in the manner set out in Regulation 28 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the MLR). CP3/21 also outlines the proposal to set out, by way of amendment to SS18/15, that PRA considers that insolvency practitioners should undertake post-compensation date identity verification, given their obligations and responsibilities under the Banking Act 2009. PRA has engaged closely with FCA on these issues, due to the responsibility of FCA for consumer protection and role as competent authority for the anti-money laundering regime in UK, and has also engaged with the FSCS. The proposals have been designed in the context of UK having left EU and the transition period having come to an end. Unless otherwise stated, any references made to legislation, including that which is “retained EU law,” relate to the UK version. PRA will keep the policy under review to assess whether any changes would be required due to changes in the UK regulatory framework.

     

    Related Links

    Comment Due Date: February 15, 2021

    Effective Date: March 24, 2021 (Proposed)

    Keywords: Europe, UK, Banking, Depositor Protection, Consumer Protection, PRA Rulebook, AML, Identity Verification, FSCS, PRA

    Related Articles
    News

    EU Amends CRD4 and CRD5 as Part of Capital Markets Recovery Package

    EU published Directive 2021/338, which amends the Markets in Financial Instruments Directive (MiFID) II and the Capital Requirements Directives (CRD 4 and 5) to facilitate recovery from the COVID-19 crisis.

    February 26, 2021 WebPage Regulatory News
    News

    EU Committee Recommends Systemic Risk Buffer of 4.5% in Norway

    The Standing Committee of the European Free Trade Association (EFTA) recommended that a systemic risk buffer level of 4.5% for domestic exposures can be considered appropriate for addressing the identified systemic risks to the stability of the financial system in Norway.

    February 25, 2021 WebPage Regulatory News
    News

    PRA Clarifies Approach to Onshoring of Credit Risk Rules for UK Banks

    In a recent statement, PRA clarified its approach to the application of certain EU regulatory technical standards and EBA guidelines on standardized and internal ratings-based approaches to credit risk, following the end of the Brexit transition.

    February 25, 2021 WebPage Regulatory News
    News

    FSB Sets Out Work Priorities for 2021

    In a recently published letter addressed to the G20 finance ministers and central bank governors, the FSB Chair Randal K. Quarles has set out the key FSB priorities for 2021.

    February 25, 2021 WebPage Regulatory News
    News

    EU Publishes Corrigendum to Revised Capital Requirements Regulation

    EU published, in the Official Journal of the European Union, a corrigendum to the revised Capital Requirements Regulation (CRR2 or Regulation 2019/876).

    February 25, 2021 WebPage Regulatory News
    News

    ESAs Issue Statement on Application of Sustainability Disclosures Rule

    ESAs published a joint supervisory statement on the effective and consistent application and on national supervision of the regulation on sustainability-related disclosures in the financial services sector (SFDR).

    February 25, 2021 WebPage Regulatory News
    News

    EC Consults on Crisis Management and Deposit Insurance Frameworks

    EC published a public consultation on the review of crisis management and deposit insurance frameworks in EU.

    February 25, 2021 WebPage Regulatory News
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Addresses Banks in Scope of First Resolvability Assessment

    BoE issued a letter to the CEOs of eight major UK banks that are in scope of the first Resolvability Assessment Framework (RAF) reporting and disclosure cycle.

    February 24, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6629