Episode 61: Regulatory update – Diversity to de-banking: The FCA's Roadmap for 2024
Jun 21, 2024
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The podcast discusses the impact of the general election on financial services, FCA's decision on insurers selling GAP insurance, potential changes in asset management regulation, Treasury Select Committee's inquiries on diversity and de-banking, and a trader's costly mistake leading to fines.
General election delays impact financial services regulation updates.
FCA focuses on fair value in insurance market to enhance consumer protection.
FCA emphasizes tech innovation and simplification in UK asset management regulation.
Deep dives
Impact of General Election on Regulatory Updates
The ongoing general election has delayed regulatory initiatives, including the publication of the regulatory initiatives grid. The manifestos from various parties might influence financial services policies, with potential delays in updates. The pause in parliamentary activities due to the election has implications on financial services regulation, such as delayed secondary legislation.
Reintroduction of Gap Insurance Products
The FCA has allowed four insurers to resume selling gap insurance products after identifying insufficient value in existing policies. These insurers have reduced commission levels to enhance customer value. The FCA's focus on fair value aligns with consumer protection goals, aiming to improve industry standards and protect consumers from inadequate insurance offerings.
Asset Management and Regulatory Framework Consultation
The FCA emphasizes supporting the growth of the UK asset management sector through technological advancements and cost reductions. The discussion on a future regulatory framework for funds highlights potential simplification measures in the alternative investments space. Considerations around international competitiveness and innovation drive regulatory initiatives.
Enforcement Actions on Financial Institutions
HSBC faced regulatory fines for shortcomings in treating customers in financial difficulty fairly, resulting in inadequate support and disproportionate actions. The enforcement highlighted weaknesses in policies, staff training, and monitoring processes. The PRA's supervisory approach toward insurance branches reflects evolving regulatory frameworks to ensure appropriate management and oversight.
Control Failures Leading to Trading Error and Regulatory Implications
Enforcement actions against an undisclosed investment bank for a trading error reveal significant control failures, including ineffective monitoring systems and poor response mechanisms. The incident, resulting in market disruptions and flash crashes, underscores the criticality of robust risk controls and timely interventions in financial markets.
Upcoming Election Impact and Regulatory Outlook
The podcast anticipates discussing post-election regulatory landscape and enforcement trends. Legislative developments, market responses to regulatory changes, and industry-specific challenges will likely shape future episodes, offering insights into evolving financial services regulations and enforcement actions. Stay tuned for detailed analyses and emerging trends in the financial regulatory space.
David Morrey and Ben Farmer discuss the impact of the general election on the financial services sector, such as the delays to the Regulatory Initiatives Grid, the Finance Act, the alternative investment fund designation bill, and the FCA's proposals on naming and shaming. Other topics discussed include:
The FCA's decision to allow four insurers to resume selling GAP insurance after withdrawing it from the market due to concerns over fair value and commission levels
The speech by the chair of the FCA on the future regulatory framework for asset management, including the potential for simplifying the Alternative Investment Fund Managers Directive (AIFMD), diverging from EU standards, and supporting technology innovation
The Treasury Select Committee's questioning of the FCA's enforcement proposals, diversity and inclusion proposals, de-banking issues, access to cash, and the motor finance investigation
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