TAKING STOCK OF THE REGULATORY LANDSCAPE

The beginning of September is a time to take stock after the summer, assess where we are and what’s ahead.  Here’s my assessment of the regulatory landscape.

1          There are specific topics on the radar – I’d put AML on the list (although it’s never really been off the list) and whistleblowing features strongly.  Expect to hear more about that – possibly a lot more – because it’s so closely connected to culture.  There are sector-specific topics too that I’m expecting to attract regulatory attention – for instance, affordability in the context of all types of consumer lending.

2          Senior managers’ regime and the certification regime – there are three points here:

  • The SMCR will be rolled out to a wider audience in 2019 and the next wave of firms will need to start work soon – not just to prepare but to absorb the lessons learnt by firms already subject to the SMCR. There are quite a few of those.
  • The SMR places responsibility – and accountability – with senior managers. Expect to see rumblings, at least, of action against individuals under the SMR now that the regime has bedded in.
  • Certified staff are often forgotten about; the focus has tended to be on senior managers. That feels as though it’s missing a trick and I’ll be posting on CR staff in the next few weeks.

3          Culture’s still a priority – I’ve posted on it; lots of other people have posted on it; the FCA continues to make the point; the PRA has commented on the importance of culture too.  It’s often hard to define but it’s certainly a key point – and it encompasses so many other topics that sit high on the list:  social contract; behaviours; treatment of customers; conduct risk; whistleblowing.  Expect more – a lot more – of the same.

4          Governance is critical – this isn’t a new point but it’s starting to take on greater prominence, particularly in the context of operational activities, technology and systems and controls.  And governance is being cited as a key component when introducing changes to technology and operating systems.  Again, I’m planning to post on this in the coming weeks.

5          The wildcard of Brexit – it’s an understatement to say that it would be helpful to know what’s going to happen; making plans in a vacuum – and with so many potential outcomes – is exceptionally difficult.  Some firms will be affected more directly and more immediately than others, whatever the outcome, but it will be rare for a firm to be unaffected in any way – whether that’s in relation to staff availability, demand for products, impact on customers (over the longer term, as well as the short-term effect), exchange rates, property prices or other macro factors.  The regulators will respond but they aren’t the only ones who’d rather like to know what Brexit will look like.

 

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