Featured Product

    FCA Issues Strategy for Mortgage Lender Portfolio, Update on Sberbank

    The Financial Conduct Authority (FCA) announced that Sberbank CIB (UK) entered special administration following the sanctions imposed by the UK and other countries on its parent, Sberbank. This has led to the firm becoming operationally unable to make payments, despite the firm having sufficient assets to cover its liabilities. FCA also published a letter that outlines the strategy for firms in its Retail Mortgage Lender (RML) portfolio (characterized by firms that take deposits and offer regulated mortgage contracts).

    The letter sets out views on the key risks of harm for retail mortgage lenders' mortgage customers over the next two years; expectations about what retail mortgage lenders should consider when mitigating the key risks for these customers; an update on the work related to mortgage prisoners, the environmental, social, and governance (ESG) strategy, and Brexit; and the regulatory strategy of FCA. The following are the key highlights:

    • Supporting mortgage customers in financial difficulty—FCA’s Tailored Support Guidance will enable firms to deliver short- and long-term support to customers affected by the pandemic, treat them fairly, and help them get back to a more stable financial position.
    • Managing maturing interest-only (IO) mortgages—FCA expects retail mortgage lenders to have robust governance arrangements in place and employ a communication strategy that gives customers enough time to act where there is doubt about their ability to repay their IO mortgage.
    • Responsible lending—FCA expects these lenders to conduct affordability assessments and take a prudent and proportionate approach to assessing customers’ income beyond retirement.
    • Libor transition—FCA expects firms with LIBOR-linked contracts should continue their transition efforts to provide customers a fair replacement rate.
    • Treating customers in vulnerable circumstances fairly—FCA expects these lenders to embed the fair treatment of customers in vulnerable circumstances in their business models, culture, policies, and processes.
    • Improving diversity and inclusion—FCA expects such lenders to understand the needs of their customers and be able to respond to them when designing products and services, providing flexible customer service and communicating with them.
    • Helping mortgage prisoners—FCA encourages such lenders to consider if they can amend their lending criteria to lend to mortgage prisoners who are close to their risk appetite.
    • Environmental, Social and Governance (ESG) strategy—FCA expect them to play their part in helping the economy adapt to a more sustainable long-term future—for example, providing green mortgages.
    • Temporary Transitional Powers (TPP)—FCA used TTP to give firms time to adapt to the new regime. With the end of the TTP fast approaching, FCA expect firms to be fully compliant with onshored regulatory obligations by March 31, 2022.
    • FCA regulatory strategy—FCA has set out the purpose and approach to supervising firms and individuals.

    Firms within the RML portfolio and their boards are asked by FCA to carefully consider the degree to which their business presents the key risks of harm and review their strategies for mitigating them. Firms and their boards should be prepared to demonstrate how they are taking reasonable steps to address the risks and the FCA expects them to promptly remediate newly identified issues.



    Related Links


    Keywords: Europe, UK, Banking, Mortgage Lending, RMLS, ESG, Interest-Only Mortgages, LIBOR Transition, Mortgage Prisoners, Temporary Transitional Power, Regulatory Capital, Credit Risk, Lending, Benchmark Reforms, Consumer Credit, FCA

    Featured Experts
    Related Articles

    BOE Sets Out Its Thinking on Regulatory Capital and Climate Risks

    The Bank of England (BOE) published a working paper that aims to understand the climate-related disclosures of UK financial institutions.

    March 13, 2023 WebPage Regulatory News

    OSFI Finalizes on Climate Risk Guideline, Issues Other Updates

    The Office of the Superintendent of Financial Institutions (OSFI) is seeking comments, until May 31, 2023, on the draft guideline on culture and behavior risk, with final guideline expected by the end of 2023.

    March 12, 2023 WebPage Regulatory News

    BIS Paper Examines Impact of Greenhouse Gas Emissions on Lending

    BIS issued a paper that investigates the effect of the greenhouse gas, or GHG, emissions of firms on bank loans using bank–firm matched data of Japanese listed firms from 2006 to 2018.

    March 03, 2023 WebPage Regulatory News

    HMT Mulls Alignment of Ring-Fencing and Resolution Regimes for Banks

    The HM Treasury (HMT) is seeking evidence, until May 07, 2023, on practicalities of aligning the ring-fencing and the banking resolution regimes for banks.

    March 02, 2023 WebPage Regulatory News

    BCBS Report Examines Impact of Basel III Framework for Banks

    The Basel Committee on Banking Supervision (BCBS) published results of the Basel III monitoring exercise based on the June 30, 2022 data.

    February 28, 2023 WebPage Regulatory News

    PRA Consults on Prudential Rules for "Simpler-Regime" Firms

    Among the recent regulatory updates from UK authorities, a key development is the first-phase consultation, from the Prudential Regulation Authority (PRA), on simplifications to the prudential framework that would apply to the simpler-regime firms.

    February 28, 2023 WebPage Regulatory News

    DNB Publishes Multiple Reporting Updates for Banks

    DNB, the central bank of Netherlands, updated the list of additional reporting requests and published additional data quality checks and XBRL-Formula linkbase documents for the first quarter of 2023.

    February 28, 2023 WebPage Regulatory News

    NBB Sets Out Climate Risk Expectations, Issues Reporting Updates

    The National Bank of Belgium (NBB) published a communication on climate-related and environmental risks, issued an update on XBRL reporting

    February 24, 2023 WebPage Regulatory News

    EBA Updates Address Securitization Standards and DGS Guidelines

    The European Banking Authority (EBA) published the final draft of the regulatory technical standards that set out conditions for assessment of homogeneity of the underlying exposures in simple, transparent, and standardized (STS) securitizations.

    February 21, 2023 WebPage Regulatory News

    FSB Publishes Letter to G20, Sets Out Work Priorities for 2023

    The Financial Stability Board (FSB) published a letter intended for the G20 Finance Ministers and Central Bank Governors, highlighting the work that FSB will take forward under the Indian G20 Presidency in 2023

    February 20, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8793