In our weekly round-up of UK financial services regulation, Gavin Stewart summarises the latest announcements and developments. Be sure to subscribe to receive our updates in your inbox every week.
I posted last week on the Prudential Regulation Authority’s (PRA) work to simplify the prudential framework, and it’s worth placing these efforts alongside its thematic findings on collections. The PRA will reduce and simplify where it can, but ultimately will want to keep standards high. The same principle is likely to apply to the Financial Conduct Authority’s (FCA) consultation on MiFID amendments, although with the new ExCo team they may have a greater appetite for change.
Elsewhere, the FCA’s consultation on tightening financial promotion rules has an element of shutting the stable door late on a problem that has been evident since the regulator’s earliest days. The cyber item indicates how embedded in the regulatory agenda this issue is becoming, especially when set against the landscape of operational resilience.
This week's update covers:
Simplifying the prudential framework for non-systemic banks and building societies
The PRA acknowledges that currently it applies broadly the same prudential regime to all banks and building societies it regulates, despite their diversity of size and activities. This can result in some smaller firms experiencing over-complex requirements and expectations relative to the size and nature of their business.
As such, the PRA has published a discussion paper that explores options for the development of a simpler prudential framework for smaller banks and building societies.
The paper invites firms and practitioners to provide their views on the potential options and to help the regulator understand preferences and wider implications.
FCA consults on conduct and organisational requirements under MiFID
The FCA has published a consultation paper on the changes it is considering to UK MiFID conduct and organisational requirements.
The consultation is the first output of the work the FCA is carrying out together with the treasury on capital markets reform. Two further consultation papers are expected. This initial paper covers changes to two areas in UK MiFID organisational and conduct rules: research and best execution reporting.
Responses and comments to the consultation paper should be submitted by 23 June 2021.
The FCA has published its discussion paper (DP21/1) on strengthening its financial promotion rules for high-risk investments and firms approving financial promotions. This follows the FCA’s recent interventions to address harm from such investments.
It seeks views on three areas where the FCA considers that change could be made to protect consumers from harm:
The classification of high-risk investments to determine whether more types of investments should be subject to marketing restrictions
The segmentation of the high-risk investment market and what improvements can be made to risk warnings
The responsibilities of firms which approve financial promotions, and whether there should be additional requirements for these firms to continuously monitor financial promotions