ICAEW.com works better with JavaScript enabled.

Regulatory update January 2024


Published: 23 Feb 2024 Update History

Exclusive content
Access to our exclusive resources is for specific groups of students, users and subscribers.

The following is a list of some regulatory publications or announcements from January 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’ website for a complete record of their publications and news releases.  

HM Government

On 10 January the Treasury published a code of practice to support the special resolution regime for central counterparties. The Bank’s powers under the special resolution regime were most recently expanded by FSMA 2023. This code “will provide guidance and clarity on how a number of powers within the [expanded] regime can be used, and also provide details which authorities must have regard to in conducting a resolution”.    

On 11 January the Treasury published a consultation with proposals to enhance the UK's resolution regime for banks. Following the events surrounding the failure of Silicon Valley Bank in March 2023, the government concluded that the existing UK resolution regime is ‘sound’, but that the regime could be enhanced to provide the Bank with more flexibility to deal with potential small bank failures. In summary, it is proposed that the FSCS can be used to fund upfront costs of a small bank resolution (eg to recapitalise the bank), and that the FSCS recoup the funds from all other deposit takers. The consultation closes 7 March 2024.      

On 25 January the Treasury and Bank responded to the comments received to their February 2023 consultation for a digital pound (a central bank digital currency). The response confirms that no decision has yet been taken to implement a digital pound, but that work will continue to explore how one may work. Over 50,000 responses were received to the consultation. While industry and organisations were largely supportive, the Treasury has committed that, if a digital pound were implemented, there would be safeguards (eg, primary legislation) to deal with the many concerns raised – eg, to guarantee users’ privacy and their control of money. The authorities also committed to protect access to cash.

Bank of England / Prudential Regulation Authority (PRA)  

On 11 January the PRA published three letters setting out its 2024 supervisory priorities for UK deposit takers, international banks and insurers. We have covered these letters in more detail here: bank priorities; and insurance priorities

On 23 January the PRA published a consultation paper (CP2/24) solvent exit planning for insurers. The PRA proposes that new rules and expectations for insurers to prepare for a solvent exit as part of their business as usual activities, including preparing and maintaining a Solvent Exit Analysis document. The aim is to improve the prospect that an insurer executes a solvent exit successfully. The PRA will publish its final policy statement in H2 2024, with an implementation date Q4 2025. The deadline for responses is 26 April 2024.

On 25 January the PRA published the results of its review of the ring-fencing rules. The review did not cover those aspects of the regime that sit in legislation; and is separate to the Skeoch Review which reported in March 2022, the recommendations from which have been the subject of a September 2023 consultation by the Treasury and PRA. The PRA’s overall conclusion is that most rules are performing satisfactorily, are well understood and that no significant gaps have been identified. The review did identify some potential improvements which the PRA will consult on in due course.

On 29 January the Bank’s Director of Financial Stability provided a good summary of the risks to financial stability in the non-bank sector (eg, liquidity mismatch, leverage, concentrations, correlations, inter-connectedness). The speech highlighted the Bank is focusing on “the refinancing of existing debt in the context of higher rates, valuations, risk management approaches, liquidity and leverage, and what the impact of these might ultimately be on systemic markets and institutions important for the provision of credit to households and businesses”.

Financial Conduct Authority

On 11 January the FCA highlighted it is reviewing historical motor finance commission arrangements and sales across several firms, using its skilled persons tool (s166 FSMA 2000). This is in response to a large number of complaints from customers, and that some complaints have been upheld by the Financial Ombudsman and the courts. If the FCA finds evidence of widespread misconduct and that consumers have lost out, it will determine how to best provide redress and resolve legal issues. In the meantime, the FCA has paused for around 9 months any deadlines that firms need to meet to respond to relevant customer complaints.

On 16 January the FCA announced the creation of a new industry-led working group for financial advisers. The group will look at how to build capability in sustainable finance across the financial advice sector.

On 23 January the FCA’s Chief Executive discussed some of the potential benefits and risks with consumer facing technology, and the regulatory approach. The FCA expressed a willingness to engage and discuss the issues to enable UK consumers to benefit from technological innovation; that the debate should be informed by the societal and political risk appetite and the benefits to be gained rather than just minimising the risks.

On 26 January the FCA noted that the Administrative Court refused permission for a judicial review to challenge the FCA’s rules that ban referral fees for debt packagers. The rules were introduced to remove any potential conflict of interest that debt packagers might have, and that might lead to poor customer outcomes.