Regulators aren't necessarily known for providing firms with helpful hints and practical pointers. This week, however, our leading item involves just that, in the form of common mistakes for authorisations in the UK asset-management sector. Much of this guidance has a useful wider read-across to applications from all types of firms.
Elsewhere, we provide updates on a flurry of developments across the payments and open-banking ecosystem, with innovation and regulatory risks seen in equal measure.
Finally, we round off with the latest news regarding the Bank of England’s (BoE) planned stress tests.
If your firm is considering UK asset-management authorisation, the Financial Conduct Authority (FCA) has published guidance to reduce delays and increase the chances of being authorised by avoiding common recent errors. Overall, the FCA cites the completeness and clarity of the application as the main reason applications fail. Examples include:
Firms considering submitting an application should consider the above and ensure that the criteria are met before going ahead.
Read more on asset management: common errors when applying for authorisation
In a speech at the Innovate Finance Global Summit 2024, Sarah Breeden (Deputy Governor, Financial Stability, BoE) discusses its role in fostering innovation in money and payments. The speech highlights the rapid technological changes impacting money systems and outlines the BoE’s efforts to ensure safety and capture benefits from these advancements.
Key topics include:
The speech also emphasises the need for regulatory frameworks to address risks associated with new forms of money, such as stablecoins, while encouraging banks to innovate in payments. It concludes by emphasising collaboration with the private sector and plans to publish a discussion paper to gather input on these topics.
Read more on Modernising UK payments
The Payment Systems Regulator (PSR) has launched a consultation on compliance and monitoring arrangements for the reimbursement requirements relating to authorised push payment (APP) scams. The reimbursement requirements are designed to incentivise firms to combat APP fraud, by requiring them to repay customers victims of such scams. The reimbursement policy will begin on 7 October 2024.
Pay.UK, the operator of the Faster Payments Scheme, will be responsible for monitoring compliance with the reimbursement requirements. To do this, it will establish a new reimbursement claim management system (RCMS). The PSR consultation proposes rules requiring firms to register with Pay.UK by 24 August 2024, providing Pay.UK with information to allow them to be onboarded to the RCMS, and use the RCMS to manage reimbursement claims. The consultation also sets out regulatory reporting requirements.
Read more on CP24/3 APP scams reimbursement compliance and monitoring
Read more on PS23/3 Fighting authorised push payment fraud: a new reimbursement requirement
The Joint Regulatory Oversight Committee (JROC) has released a consultation document detailing the structure and operational framework for the Future Entity, set to oversee the UK's open banking. The Future Entity will replace the current Open Banking Limited, as mandated by the Competition and Markets Authority (CMA) Order, to streamline standards and governance in the financial sector. This transition involves establishing an Interim Entity to facilitate seamless changes during the regulatory overhaul.
JROC is seeking feedback on proposals that aim to enhance market efficiency, security, and competitiveness, highlighting the Future Entity's critical role in maintaining the UK's leadership in open banking innovation. The committee is committed to integrating diverse stakeholder insights to ensure the Future Entity's framework is robustly aligned with industry needs, thereby fortifying the open banking ecosystem.
The consultation period concludes on 20 May 2024, and JROC plans to incorporate the feedback into its final recommendations, anticipating implementation in a phased approach aligned with the evolving regulatory landscape.
Read more on JROC's proposals for the design of the Future Entity for UK open banking
The BoE has published an overview of its planned 2024 supervisory stress tests (SST) of UK Central Counterparties (CCP). The 2024 SST will focus on two analytical components: the Credit Stress Test (CST) and the Credit Reverse Stress Test (CRST). The 2024 CCP SST won't include a Liquidity Stress Test (LST) component.
The CST will assess the sufficiency of CCPs’ capacity to absorb losses under a combination of the BoE’s prescribed market-stress scenario and the simultaneous default of selected clearing member groups. The CRST will assess CCPs’ resilience to increasingly severe scenarios and assumptions, to identify potential combinations that might deplete CCPs’ prefunded and non-prefunded financial resources.
CCPs are required to submit the relevant data for the 2024 SST using data templates and instructions provided privately to them. The BoE intends to publish the results report in Q4.
Read more on Solvency II Review – Matching adjustment reform implementation considerations for 30 June 2024
Read more on Key elements of the 2024 CCP supervisory stress test
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