The following is a list of some regulatory publications or announcements from November 2023 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 Treasury
On 22 November, in relation to the Autumn statement, the Chancellor sent various letters setting out the government’s objectives or explaining the measures being taken. They include letters to the Bank’s Financial Policy Committee providing recommendations for the forthcoming year, and to the FCA explaining the proposed pension reform.
On 23 November the Treasury extended the term of its mortgage guarantee scheme to 30 June 2025. The scheme encourages 95% LTV lending by providing a government guarantee.
Bank of England / Prudential Regulation Authority (PRA)
On 6 November the Bank and FCA published discussion papers with proposals for regulating stablecoins. The Bank’s paper outlines its proposed approach to regulate systemic payment systems using stablecoins, whereas the FCA paper explores how to regulate issuing and holding stablecoins that claim to maintain a stable value relative to a fiat currency. The deadline for responses is 6 February 2024. The PRA also published a Dear CEO letter setting out its expectations for the use of digital money; and a road-map paper that explains the interaction of the regulatory regimes for digital money.
On 8 November the Bank published the results of its second stress test of UK central counterparties (CCPs). The stress tests explored the credit and liquidity resilience of the three UK CCPs and their interconnectedness with the rest of the financial system. The exercise used a hypothetical scenario based on a global economic downturn combined with various negative supply shocks to commodities markets, and that was calibrated to a severity broadly the same as the worst historical stress experienced by each CCP. Overall, the UK CCPs were resilient to the stresses applied. The Bank will use the findings to support its ongoing supervision and regulation of UK CCPs.
On 10 November the Bank published the latest phase of the system-wide exploratory scenario exercise. The aim is to understand how the financial system reacts to stress. More than 50 bank and non-bank participants have been supplied with a severe, but plausible, stress scenario, that is faster, wider ranging, and more persistent than those seen in recent periods of market instability. The participants will report in January 2024 how the scenario may affect their businesses. In Q2 2024 there will be consideration of the actions that participants can take. The Bank expects to report its findings by the end of 2024.
On 16 November the PRA published a consultation paper (CP24/23) on funded reinsurance. The PRA proposes a new Supervisory Statement (SS) to set out its expectations for life insurers use of funded reinsurance. The SS would include PRA expectations for ongoing risk management, modelling solvency capital requirements, and how firms should structure the funded reinsurance arrangements. The deadline for responses is 16 February 2024.
On 28 November the PRA published the latest list of UK firms designated as other systemically important institutions. There are 15 firms on the list including the largest UK banking groups, UK banking subsidiaries of five US banking groups, and two other subsidiaries of overseas groups. The PRA also published the applicable buffer rates.
On 28 November the PRA published the latest list of UK headquartered global systemically important institutions. These are HSBC, Barclays and Standard Chartered.
On 30 November the Financial Services Regulatory Initiatives Forum published the latest iteration of the Regulatory Initiatives Grid. This document sets out the regulatory pipeline of planned publications by financial services regulators – including the Bank, the PRA, FCA, Payment Systems Regulator.
Financial Conduct Authority (FCA)
On 7 November the FCA published the findings from its review of firms controls to reduce Authorised Push Payment (APP) fraud. Over 116,000 people fell victim to APP fraud in the first six months of 2023. The FCA review found some good practices, but found that firms can do more, such as a need for more focus on consumer vulnerabilities and good consumer outcomes and more support for victims.
On 16 November the FCA published its findings from a review of Authorised Fund Managers (AFMs) and their sustainability approaches. The review found that most AFMs have made efforts to comply with the FCA’s expectations, but that there were areas for improvement, including better stewardship approaches as they generally did not meet FCA expectations, that fund holdings should align with the fund’s sustainability objectives, and the need for clearer and more complete disclosures. The FCA will continue to monitor the market
On 27 November the FCA published its final report on firms' progress implementing the internal capital adequacy and risk assessment process. The review found that most firms showed that they were able to make the transition to the new regulations, but that there were areas for improvement. These include improvements around group ICARA processes, internal intervention points, wind-down assessments, liquidity assessments, operational risk capital assessments and regulatory data submissions
On 28 November the FCA published Policy Statement (PS23/16) setting out final rules and guidance for a disclosure and labelling regime for sustainable investment products. The final proposals include, an anti-greenwashing rule to ensure sustainability related claims are not misleading, and the introduction of product labels that reflect the sustainability goals of the investments. Implementation is staggered (see table 17 of the PS on page 71), with the anti-greenwashing rule implemented from May 2024.
On 30 November the FCA consulted on proposals that would require personal investment firms to set aside capital to cover potential compensation or redress costs. Between the 2016 and 2022, the FSCS paid nearly £760 million in compensation to 20,000 consumers that received poor advice. The consultation ends 20 March 2024.