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Regulatory update April 2024


Published: 13 May 2024 Update History

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The following is a list of some regulatory publications or announcements from April 2024 affecting UK financial services.

The summary includes consultation/policy papers and speeches published by the regulators and other bodies, as well as articles that may be of interest. It is not intended to be an exhaustive list of all matters relevant to financial services.  

Please refer to the relevant organisations’ websites for a complete record of their publications and news releases.    


HM Treasury

On 19 April the Joint Regulatory Oversight Committee (JROC) published its recommendations for the open banking future entity. The “future entity” will be a key part of the open banking ecosystem, supporting continued development of open banking as the central standard setting and coordinating body. The recommendations set out the purpose and structure of the future entity, its governance and funding arrangements, its regulated status; as well as the possibility of an “interim entity” to facilitate the transition to the future entity. JROC is seeking comments on the recommendations by 20 May 2024.  

Treasury Committee

On 21 April the Treasury Committee published data from the FOS showing the number of complaints for debanking has increased by 69% since 2020/21 (with 3,858 complaints in 2023/24), and that there has been an increase in the proportion of complaints upheld by the FOS.  

On 22 April the Committee published oral transcripts from consumer groups, insurers and the FCA, as part of its work on insurance. The sessions covered the significant increases in insurance premiums and reasons (with a focus on motor and home insurance); potential penalties for paying monthly (or a tax on the poor according to some); increased claims costs (eg, labour costs, supply chain issues, increased theft affect motor claims; storm damage at the end of 2023); the potential for consumers to be priced out of essential products; concerns over lack of pricing transparency and biases; the actions being taken to implement the Consumer Duty although there was some scepticism that the Duty is having an effect given increasing complaints. The effects of the pandemic were also highlighted as playing a part on the longer-term trend for motor insurance, as that led to a decline in premiums. The FCA also indicated an expectation for market wide interventions in the forthcoming year, akin to its recent actions on gap insurance.  

Bank of England / Prudential Regulation Authority (PRA)  

On 3 April the Bank and FCA published a consultation on their approach to operating the Digital Securities Sandbox, along with guidance for firms that may wish to apply to use the Sandbox. The proposals would modify UK regulations to enable participants to use new technology (eg, Distributed Ledger Technology) when trading and settling digital securities. Successful applicants to the Sandbox will be able to provide services under the modified regulations. The consultation is open until 29 May 2024. 

On 11 April the PRA published its 2024/25 business plan, which sets out the PRA’s proposed areas of focus and actions over the next. The plan is arranged around the same four strategic priorities as last year, which in summary are i) to promote the safety, soundness and resilience of the banking and insurance sectors; ii) to be at the forefront of identifying new and emerging risks; iii) to support competitive and dynamic markets and facilitate international competitiveness and growth; and iv) run an efficient and modern regulator. 

Under each of its four priorities and across all topics (eg, capital / liquidity, operational resilience and cyber, climate), the PRA sets out a large volume of work that it is undertaking or will undertake. A lot of work is a continuation of existing activity (eg, finalising Basel 3.1, the strong and simple regime for smaller banks and the Solvency II reform for insurers; or embedding model risk management); other activities will start or move to the next level (eg, consulting on changes to the approach to bank branches, building on the lessons of SVB; a first dynamic risk stress test for general insurers in 2025; that the life insurance stress test 2025 will include an exploratory scenario to assess exposure to the recapture of funded reinsurance contracts; another survey of the use of machine learning); while some work is to monitor risks (eg, credit risk management and exposures to traditional higher risk sectors given the uncertain environment; potential model drift for insurers). The plan also highlights some commitments (eg, to implement the Basel Committee’s standard for the treatment of cryptoassets). 

On 22 April the Bank responded to DSIT / HMT setting out its strategic approach to AI. In its response, the Bank noted that AI / ML is already widely adopted within financial services. At a high level, AI / ML is an area of focus for the Bank where its aim is the safe and responsible adoption of AI / ML given the potential benefits; and the Bank considers its approach to regulating AI / ML to be broadly consistent with the government’s five principles. It should, however, also be noted that the Bank is technology agnostic. The response then highlighted the large programme of work that has been undertaken (often jointly with the FCA but also with others) in recent years and continues to be pursued in pursuit of the safe use of AI / ML. The FCA has also published its approach as set out below. 

Also on the 22 April the PRA published its final proposals implementing the Solvency II review. The proposals mainly set out the approach to transposing into PRA rules or statements those aspects of the EU Solvency II regime not already consulted on. While it is not intended there be any substantive change to policy, there are a small number of policy changes (see paragraph 1.14) and changes to rectify inconsistencies (eg, incorrect references). The PRA has previously set out its approach to EU guidelines, but also proposes incorporating some of the EIOPA Guidelines into its policy documents where it would be helpful. The deadline for responses is 22 July 2024

Financial Conduct Authority

On 10 April the FCA published the results from its latest cost of living survey in January 2024. Overall, the FCA found 7.4m people were struggling to pay bills. While this is an improvement since January 2023, when 10.9m people were struggling, it remains higher than before the cost-of-living squeeze began (5.8m were struggling in February 2020).  

On 12 April the FCA wrote to motor finance firms to remind them to maintain adequate financial resources, and their obligations to investigate complaints and notify the FCA of involvement in litigation. The letter was in response to firms taking different approaches to the potential effect on their financial resources from the historical use of deferred commission arrangements, customer complaints being upheld, and the FCA’s review whether there has been widespread misconduct. The FCA plans to set out its next steps by 24 September 2024. 

On 22 April the FCA published its approach to AI. As with the Bank, the FCA describes itself as ‘technology-agnostic’: it will focus on how firms can safely and responsibly adopt AI, which includes understanding the effect (ie, both risks and benefits) AI can have on consumers and markets. The FCA recognises that AI needs to be considered in the context of wider technology trends, and that its regulation of the subject may also need to evolve. The FCA also set out the actions it has taken and is taking, including having recruited 75 data scientists.

Also on the  22 April the FCA also published a feedback statement on Big Tech and whether data asymmetry between big tech firms and financial services firms could affect competition in financial services. Overall, while the FCA did not identify significant current effects, it noted three issues that could potentially have an adverse future effect: data asymmetry increases barriers to entry and contributes to Big Tech firms gaining market power; Big Tech firms’ platforms become the primary channel for retail financial services; Concentration of Big Tech firms limits bargaining power of financial services firms in any partnership arrangement. In response, the FCA is continuing to monitor Big Tech activity; testing whether Big Tech data would be valuable in financial services; and if so, how that data could be shared with the ecosystem; and will work with the PSR to understand the risks and opportunities with digital wallets. The FCA CEO also gave a speech on Big Tech and where the FCA is heading.  

On 23 April the FCA published final guidance on its anti-greenwashing rule, which comes into force on 31 May 2024. The FCA’s guidance set out four characteristics that references to the sustainability attributes of products and services should possess; and provides examples and best practice for each. The characteristics are that references are correct and are capable of being substantiated; are clear and presented in a way that can be understood; are complete (ie they should not omit or hide important information) and they should consider the full life cycle of the product or service; and comparisons to other products or services are fair and meaningful. The FCA also published a consultation paper proposing to extend the Sustainability Disclosure Requirements and investment labels regime to portfolio management services. The consultation closes 14 June 2024. 

Previous regulatory updates

  1. Regulatory update March 2024
  2. Regulatory update February 2024
  3. Regulatory update January 2024
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