FCA published its Business Plan, which sets out the main areas of focus and priorities for 2019/20. The key priorities and planned activities for the year are set out under the eight priorities that cut across different financial sectors as well as the priorities for the seven sectors PRA regulates. The key cross-sector priority areas are Brexit-related issues, culture and governance, operational resilience, innovation and data ethics, and the future of regulation.
The plan will enable the industry and consumers to understand the entirety of the FCA work in a particular sector and what can be expected from FCA in the coming year. The plan also reflects the variety of changes affecting both financial services and the wider society and shows how FCA will use its resources to tackle these challenges. FCA states that much of what it does and the issues it addresses are complex and will continue to be priorities for future Business Plans. FCA will continue adapt its approach to the ever-changing landscape. The cross-sector priorities include the following:
- Supporting a smooth transition post-Brexit, strengthening international engagement with fellow regulatory bodies, and assessing the impact of EU Withdrawal on the industry and consumers
- Supporting culture transformation in financial services, performing appraisal of remuneration practices, and extending the Senior Managers and Certification Regime to all firms
- Focusing on operational resilience, with key priorities including policy proposals on operational resilience, setting clear expectations on outsourcing to third-party service providers, continued use of ethical hacking to test firms, supervisory multi-firm work on cyber-attacks, and communications with smaller firms to increase awareness of cyber-attacks
- Assessing Open Finance, building understanding of data ethics in financial services, publishing proposals on regulation of crypto-assets, encouraging innovation in global financial markets, and encouraging the development of regtech in data exchange
- Engaging with stakeholders that are considered the future of regulation, updating the rulebook in light of onshored requirements, reviewing costs and benefits of regulation for small firms, and publishing the first annual statement on perimeter issues
Along with the supervision assessment program, FCA will continue to use regulatory tools to test the cyber capabilities of the high-impact firms. CBEST (ethical hacking) gives insight into core areas of firms’ cyber resilience. While FCA has, so far, used CBEST in partnership with BoE on only a small number of firms, it plans to use regular CBEST testing for a larger number of priority firms beginning in 2019/20. The regtech activities in the year ahead will be focused on continuing the exploration and experimentation with industry on how to improve the method of data exchange between industry and regulators and specifically the opportunities for expressing requirements in a machine-readable and executable form. FCA has met with a number of start-ups, incumbent institutions, technology providers, and academics to see the impact regtech could have. This has helped in understanding where efforts should be focused. FCA has also begun to develop and test a number of activities and ideas based on its learnings. It will complete a cost-benefit analysis to better understand the business case for delivering Digital Regulatory Reporting in conjunction with industry participants and BoE.
Keywords: International, Banking, Insurance, Securities, Operational Risk, Regtech, Brexit, SM&CR, Cyber Risk, Digital Regulatory Reporting, FCA
Previous ArticleIASB Issues Work Plan and Meeting Updates for May 2019
PRA, via the consultation paper CP12/20, proposed changes to its rules, supervisory statements, and statements of policy to implement certain elements of the Capital Requirements Directive (CRD5).
EIOPA published the financial stability report that provides detailed quantitative and qualitative assessment of the key risks identified for the insurance and occupational pensions sectors in the European Economic Area.
EBA published its risk dashboard for the first quarter of 2020 together with the results of the risk assessment questionnaire.
EBA announced that the next stress testing exercise is expected to be launched at the end of January 2021 and its results are to be published at the end of July 2021.
PRA published the consultation paper CP11/20 that sets out its expectations and guidance related to auditors’ work on the matching adjustment under Solvency II.
MAS published a statement guidance on dividend distribution by banks.
APRA updated its capital management guidance for banks, particularly easing restrictions around paying dividends as institutions continue to manage the disruption caused by COVID-19 pandemic.
FSB published a report that reviews the progress on data collection for macro-prudential analysis and the availability and use of macro-prudential tools in Germany.
EBA issued a statement reminding financial institutions that the transition period between EU and UK will expire on December 31, 2020; this will end the possibility for the UK-based financial institutions to offer financial services to EU customers on a cross-border basis via passporting.
SRB published guidance on operational continuity in resolution and financial market infrastructure (FMI) contingency plans.