PRA Proposes Rules on Identity Verification of Depositor Protection
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
Previous Article
FSB Publishes Work Program for 2021Related Articles
EC Regulation Sets Out Standards for Reporting and Disclosure of MREL
EC published the Implementing Regulation 2021/763 that lays down implementing technical standards for supervisory reporting and public disclosure of the minimum requirement for own funds and eligible liabilities (MREL).
EBA Report Notes Loan Origination Should Remain in Supervisory Focus
EBA published a report that examines the convergence of prudential supervisory practices in 2020 and offers conclusions of the EBA college monitoring activity.
APRA Decides to Standardize Submission Date for Quarterly Reporting
APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.
ECB Working Group Publishes Recommendations on EURIBOR Fallbacks
The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).
Bundesbank Publishes Supporting Documentation for Reporting by Banks
Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.
EBA Publishes Phase 1 of Reporting Framework 3.1
EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).
IOSCO Sees Support for Mandatory Sustainability Reporting
The Sustainable Finance Taskforce of IOSCO held two roundtables, with global stakeholders, on the IOSCO priorities to enhance the reliability, comparability, and consistency of sustainability-related disclosures and to collect views on the practical implementation of a global system architecture for these disclosures.
APRA to Finalize Capital Adequacy Standard Revisions by January 2022
Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA
ESMA Issues Guidelines on Outsourcing to Cloud Service Providers
ESMA published the final guidelines on outsourcing to cloud service providers.
EBA Publishes Data on Deposit Guarantee Schemes
EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.
