FRF Review:
The FRF Review outlined several recommendations, which are implemented by the Financial Services and Markets Bill (FSM Bill). These proposals were first outlined in the Government’s consultation paper published in November 2021 and confirmed in the formal response. The recommendations include:
Will the regulators merge?
Whilst the response to the consultations was published in July, and prior to the appointment of our new Prime Minister, there doesn’t seem to be any mention of merging the regulators yet. In fact, a recent House of Commons debate (7th September 2022) concluded that it did not see the need to merge regulators.
The PRA recently issued a discussion paper (DP4/22) setting out how it plans to respond to greater responsibility for policy and rule setting. Notably, the PRA indicated that:
The regulator wishes to embrace its responsibility for rulemaking. The ability to set rules will enable the PRA to respond quickly when changes are required. It also means that the PRA will need to collate relevant data from key stakeholders to inform the rulemaking process. This is reflected in the PRA emphasising its work to streamline reporting requirements; citing plans for full reviews of data collection in the insurance and banking sectors. Firms have until 8 December 2022 to respond to the discussion paper.
In a similar vein, the FCA issued its 3-year strategy to 2025; outlining how it will meet the FRF recommendations. The FCA's three key priorities for 2022/2023 align to its wider strategy:
FCA’s strategy sets out thirteen outcomes to support these priorities.
The regulatory framework supports the financial markets by contributing to discussions on international frameworks and ensuring that the UK continues to be a leading financial centre.
Under the proposed DAR the regulators take on greater responsibility for those unauthorised entities who undertake designated activities. These firms would be obliged to comply with rules as determined by the regulators in relation to the designated activities. The designated activities are set out in Schedule 6B of the FSM Bill and include:
Next steps:
As indicated, under the FSM Bill, we will see the regulators take on more responsibility. Both regulators see these changes as an opportunity to engage with industry to shape policy that is fit for purpose.
We also see the regulators continuing to focus on the importance of data to identify risks in the markets and enabling proactive supervision.
How will these changes affect firms, whether regulated or unregulated? The PRA has clearly stated that firms remain responsible for implementing policy. Additionally, the PRA says that it intends to engage, and track a firm’s progress against policy by requesting updates. The FCA’s expectations are no different. Firms are expected to cope with the ever-increasing regulatory change requirements.
Ruleguard regulatory change management:
Regardless of a firm’s size, the compliance landscape is likely to be extremely broad and complex. Ruleguard helps senior management to demonstrate compliance with applicable rules. Firms can:
Please contact us for further information on Tel: 020 3965 2166 or hello@ruleguard.com.
Webinars:
To register your interest or learn more, please click here.
White Papers:
Request a complimentary copy of our White Paper on Best Practice in Third-Party Risk Management click here.
Further resources:
See our blog page for further articles or contact us via hello@ruleguard.com.
Visit our website to find out more about how Ruleguard can help: https://www.ruleguard.com/platform
Contact the author
Head of Client Regulation| Ruleguard