It is with great pleasure that we publish the November 2019 edition of Aurexia’s Regulatory Watch magazine.
November has been a very exciting month for us here at Aurexia UK. Indeed, we held our inaugural Digital Games event on the Future of Compliance, which brought together compliance professionals and fintechs to brainstorm innovative solutions for current industry issues. This reminded us of how far firms have come on data collation, data aggregation, and, lastly, data usage.
While firms continue to focus on enhancing analytics, we explore data ethics and the potential for regulatory intervention. The FCA may have delayed its Call for Input on the access and use of data in wholesale markets in September, however we predict the use of data will face increasing regulatory scrutiny over the next year.
Moreover, many firms are working at full throttle over the next few weeks, busy implementing the extension of the Senior Managers’ and Certification Regime (“SMCR”) to solo-regulated firms. We consequently explore some of the practical challenges banks still face and the key lessons learned that all firms should be considering.
Lastly, we do not claim to provide you with a complete snapshot of the regulatory news from the past month, however we have included an extract from EROS, our regulatory horizon scanning tool, with October regulatory developments.
Data Ethics
What does the future of regulation around data ethics look like?
Data ethics is becoming an important area within financial services. This is hardly surprising.
As data analytics, including intelligent and autonomous systems, play an increasingly important role in our world – for instance, transforming many different areas of our lives in profound and positive ways – these new technologies and applications pose complex ethical and economic questions that need to be addressed.
The FCA delayed their Call for Input on the access and use of data in wholesale markets in September this year. However, there are growing regulatory questions around how regulated firms are using data. This extends beyond the implications of GDPR and the use of personal data.
SMCR
Key lessons learned from banking as the 9th December deadline looms for firms
As the Senior Managers and Certification Regime (“SMCR”) requirements are extended to nearly all firms regulated by the FCA on 09/12/2019, we thought it would be an opportune moment to consider some of the challenges banks have faced and the subsequent lessons learned.
Therefore, it is not only the additional firms to whom SMCR will be applicable from December who are concerned. The EU branches operating in the UK have previously been subject to a lighter version, with less SMF functions applicable to them. While they transition to third country branches or subsidiaries, there will be more SMFs applicable to them and greater scrutiny.
Horizon Scanning
Key regulatory highlights from the UK and global regulators
Scanning the regulatory horizon can be a time consuming exercise. Each month, we will set out an extract of regulatory updates from our European Regulatory Oversight & Screening (“EROS”) tool. There are a significant number of publications, as you would expect. Arranged by taxonomy, the extract covers the month of September.
This – non-exhaustive – extract covers: FCA, PRA, ECB, EBA, ESMA, IOSCO, and FSB publications.
Key October highlights:
Brexit
The FCA will be extending the date by which firms and funds should notify their entry into the temporary permissions regime to 30/01/2020. Fund managers will have until 15/01/2020 to inform the FCA if they want to make changes to their existing notification. Firms should continue to comply with existing regulatory requirements (e.g. MiFID II, EMIR).
PRIIPs
The European Supervisory Authorities are promoting a consistent application by National Competent Authorities of the PRIIPs regulation to bond markets.
ESG
October was a turning point for ESG in the UK. First, the Financial Reporting Council (“FRC”) released a strengthened and revised UK Stewardship Code for 2020, based on a collaborative work with the FCA around governance and stewardship. Secondly, the FCA published their objectives and potential future actions on climate change and green finance. These objectives were in line with their strategic goal of ensuring markets function well.
