This newsletter summarizes recent regulatory changes impacting Banking, Capital Markets & Insurance firms.

Current coverage period: Through July 31, 2018

CURRENT REGULATIONS:

Financial Conduct Authority (FCA):
PS18/17: The European Money Market Funds (MMF) Regulation
Publication Date: July 11th 2018

Risks Covered: Compliance Risk

Business Processes Impacted: Brokerage Services

The agency has published a Policy Statement responding to the feedback it received on Consultation Paper 18/4. The paper proposes new fees schedules and several Handbook amendments that take into account the new European Money Market Funds Regulation.1

European Commission (EC):

Commission Delegated Regulation (EU) 2018/959 of 14 March 2018 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards of the specification of the assessment methodology under which competent authorities permit institutions to use Advanced Measurement Approaches for operational risk
Publication Date: July 6th 2018

Risks Covered: Operational Risk

Business Processes Impacted: Recovery and Resolution planning
The agency has issued regulation with regards to regulatory technical standards pertaining to the specification of the assessment methodology under which competent authorities permit institutions to use Advanced Measurement Approaches for operational risk.2

Financial Industry Regulatory Authority (FINRA):
FINRA Launches Enhanced Public Records Review
Publication Date: July 5th 2018
Risks Covered: Strategic Risk

Business Processes Impacted: Brokerage Services
The agency has launched an enhanced disclosure review process for public financial records of individuals seeking registration with a brokerage firm.3

The Board of Governors of the Federal Reserve (The Fed):
Statement on the Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act Amendments to the Home Mortgage Disclosure Act
Publication Date: July 5th 2018
Risks Covered: Business Cycle Risk

Business Processes Impacted: Capital Adequacy and Capital Planning
The Board of Governors of the Federal Reserve System released a statement on the implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act Amendments to the Home Mortgage Disclosure Act, and which apply to all institutions supervised by the Federal Reserve, including those with total consolidated assets of $10 billion or less.4

Prudential Regulation Authority (PRA):
Strengthening Individual Accountability in Banking
Publication Date: July 4th 2018
Risks Covered: Residual Risk
Business Processes Impacted: Capital Adequacy and Capital Planning
The agency has published supervisory statement SS28/15 outlining the regulator’s approach to strengthening individual accountability in banking.5

Insurance Europe (IE):
Insurance Europe’s comments on the Monitoring of Codes of Conduct under the GDPR
Publication Date: July 12th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Business Continuity Management
The agency has published comments regarding the monitoring of codes of conduct under the General Data Protection Regulation (GDPR). In the comments, the regulator stressed the significance and benefits of codes of conduct for the insurance industry.6

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA publishes first set of Questions & Answers on the Application of the Insurance Distribution Directive
Publication Date: July 11th 2018
Risks Covered: Conduct Risk
Business Processes Impacted: Business Continuity Management
The agency has published its first set of questions and answers providing practical guidance on the application of the Insurance Distribution Directive (IDD) and its regulations.7

Insurance Europe (IE):
Overview of Consumers’ Rights under GDPR
Publication Date: July 3rd 2018
Risks Covered: Market Risk
Business Processes Impacted: Business Continuity Management
The agency has issued a press release announcing the publication of an overview of consumers’ rights under the General Data Protection Regulation, and applicable as of May 25, 2018. The overview provides a brief outline of the rights that customers have in respect to the processing of their personal data by companies, including insurers. This includes the rights to be informed, to data correction and to data portability.8

The International Accounting Standards Board (IASB):
IFRS 17 Agenda Paper Tracker
Publication Date: July 18th 2018
Risks Covered: Market Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The document lists the agenda papers discussed at the Transition Resource Group for IFRS 17 Insurance Contracts and organized by category.9

European Parliament (EP):
Report on FinTech from the ECON Committee (European Parliament’s Committee on Economic and Monetary Affairs)
Publication Date: July 12th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency provides results from a study on competitive issues in the area of Financial Technology (FinTech).10

European Commission (EC):
Brexit: European Commission publishes Communication on preparing for the UK’s withdrawal from the EU
Publication Date: July 19th 2018
Risks Covered: Systemic Risk
Business Processes Impacted: Business Continuity Management
The agency published a press release setting out the ongoing work for the preparation of all outcomes of the UK’s withdrawal from the European Union (EU). All EU law will cease to apply to the UK as of March 30, 2019.11

Office of the Superintendent of Financial Institutions (OSFI):
Implementation of the Final Basel III Reforms in Canada
Publication Date: July 16th 2018
Risks Covered: Liquidity Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has published a discussion paper which sets out OSFI’s proposed policy direction and timelines for implementing the final Basel III reforms in Canada.12

Japan Financial Services Agency (JFSA):
Publication of the Proposal for Compliance and Risk Management Concept and Procedure (Compliance and Risk Management Basic Policy)
Publication Date: July 13th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Risk Management & Stress Testing
The agency has announced the publication of the Proposal for Compliance and Risk Management concept and procedure (Compliance and Risk Management Basic Policy). Opinions on the proposal were to be submitted by August 13, 2018.13

Financial Conduct Authority (FCA):
Benchmarks Regulation (Amendment) (Financial Ombudsman Service) Instrument 2018
Publication Date: July 27th 2018
Risks Covered: Compliance Risk
Business Processes Impacted: Business Continuity Management
The agency has released a Benchmark Regulation (Amendment) to the Financial Ombudsman Service Instrument 2018. This instrument comes into force on July 27, 2018.14

Bank of England (BoE):
Bank confirms SONIA’s Compliance with IOSCO Benchmark Principles
Publication Date: July 25th 2018
Risks Covered: Sovereign Risk
Business Processes Impacted: Custodial Services
The agency has published its statement of compliance with the IOSCO principles for financial benchmarks. The principles are to ensure best practice when using the Sterling Overnight Interbank Average Rate (SONIA) by providing users with transparency concerning the administration of SONIA.15

Financial Conduct Authority (FCA):
Insurance Distribution Directive (Amendment) Instrument 2018
Publication Date: July 26th 2018
Risks Covered: Business Cycle Risk
Business Processes Impacted: Business Continuity Management
The agency has made amendments to its Insurance Distribution Directive Instrument 2018. The amendments touch several modules of its Handbook. The instrument comes into force on October 1, 2018, except for the General Provisions, which come into force on July 27, 2018.16

International Association of Insurance Supervisors (IAIS):
Day Two of IAIS Global Seminar Focuses on Innovation and Emerging Risks
Publication Date: July 27th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Business Continuity Management
The agency has provided updates on the activities/results of the second day of the Global Seminar in Moscow. Day 2 focused on innovation such as regulatory sandboxes and emerging risks such as cyber security and climate risk.17

Prudential Regulation Authority (PRA):
Solvency II: Monitoring model drift and standard formula SCR reporting for firms with an Approved Internal Model (Update)
Publication Date: July 26th 2018
Risks Covered: Operational Risk
Business Processes Impacted: Finance & Performance Management
The agency has published a Supervisory Statement that outlines its expectations of firms with an approved internal model, and provides more information on the PRA’s approach to monitoring model drift and the reporting of standard formula Solvency Capital Requirement (SCR) information.18

European Banking Authority (EBA); European Securities and Markets Authority (ESMA); European Insurance and Occupational Pensions Authority (EIOPA):
European Supervisory Authorities publish further guidance on the Key Information Document for PRIIPs
Publication Date: July 20th 2018
Risks Covered: Market Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
The multiple regulators have issued a statement in respect to publishing further guidance on the Key Information Document (KID) requirements for Packaged Retail and Insurance-based Investment Products (PRIIPs). The guidance aims to promote common supervisory approaches and practices based on continuing work to monitor the implementation of the KID.19

International Financial Reporting Standards (IFRS):
Webinar: IFRS Taxonomy 2018—Recording now available
Publication Date: July 17th 2018
Risks Covered: Cyber Security Risk
Business Processes Impacted: Information Technology
The agency provided a recording of the live webinar introducing the IFRS Taxonomy 2018.20

 

FORTHCOMING REGULATIONS:

Financial Conduct Authority (FCA)
Christopher Woolard’s statement welcoming the IDWG Recommendations
Christopher Woolard, Director of Strategy and Competition at the FCA has released a statement regarding the recent report provided by the Institutional Disclosure Working Group, and which contained a series of recommendations regarding potential templates for data collection and disclosure. The statement also outlines the arrangements that should be implemented to ensure that the said templates are maintained, the ways in which the agency can encourage providers to offer information using the templates, and methods the regulator can put into practice to prompt users to request information in this format.21

Bank of England (BoE)
Risk Sensitivity and Risk Shifting in Banking Regulation
The agency has published a Financial Stability Paper concerning risk sensitivity and risk shifting in banking regulation, addressing the implementation and evaluation of post-crisis reforms as part of Basel III.22

The International Accounting Standards Board (IASB)
Feature: Reducing the gap between insurance and other industries
Existing accounting practices in the insurance industry are widely perceived as opaque and inconsistent. For companies applying IFRS Standards, the accounting for insurance contracts currently differs significantly from the accounting for other contracts. This diversity poses unnecessary difficulties for potential investors.23

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA seeks evidence on the use of BIG Data
The agency has launched a European Union-wide thematic review on the cross-sectorial use of big data by the European Supervisory Authorities (including EIOPA).24

Securities and Exchange Commission (SEC)
Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities
The agency has proposed amendments to the financial disclosure requirements for guarantors and issuers of guaranteed securities registered or being registered, and issuers’ affiliates whose securities collateralize securities registered or being registered in Regulation S-X, to improve those requirements for both investors and registrants.25

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC); Securities and Exchange Commission (SEC); Commodity Futures Trading Commission (CFTC)
Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds
The multiple agencies have filed a proposal to amend the regulations implementing section 13 of the Bank Holding Company Act.26

British Insurance Brokers’ Association (BIBA)
BIBA Comment on the Autonomous and Electric Vehicle Bill gaining Royal Assent
The agency has issued a press release welcoming the passage of the Autonomous and Electric Vehicle Bill.27

European Insurance and Occupational Pensions Authority (EIOPA)
EIOPA launches EU-wide Thematic Review on Consumer Protection issues in Travel Insurance
The agency has launched a review on consumer protection issues surrounding the travel insurance sector in order to better identify and tackle sources of consumer distress and detriment.28

Visit www.accenture.com/RegulatoryCompliance for latest insights on regulatory remediation and compliance transformation.

References:

  1. “The European Money Market Funds (MMF) Regulation,” Financial Conduct Authority, Policy Statement PS18/17, July 11, 2018. Access at: PS18/17: The European Money Market Funds (MMF) Regulation 
  2. “Commission Delegated Regulation (EU) 2018/959 of 14 March 2018, supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards of the specification of the assessment methodology under which competent authorities permit institutions to use Advanced Measurement Approaches for operational risk,” Official Journal of the European Union, Regulation, July 6, 2018. Access at: Commission Delegated Regulation (EU) 2018/959 of 14 March 2018 supplementing Regulation (EU) No 575/2013 of the European Parliament and of the Council with regard to regulatory technical standards of the specification of the assessment methodology under which competent authorities permit institutions to use Advanced Measurement Approaches for operational risk.
  3. “FINRA Launches Enhanced Public Records Review,” Financial Industry Regulatory Authority, Press Release, July 5, 2018. Access at: FINRA Launches Enhanced Public Records Review.
  4. “CA 18-6: Statement on the Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act Amendments to the Home Mortgage Disclosure Act,” The Board of Governors of the Federal Reserve System, Consumer Affairs Letter, July 5, 2018. Access at: Statement on the Implementation of the Economic Growth, Regulatory Relief, and Consumer Protection Act Amendments to the Home Mortgage Disclosure Act.
  5. “Strengthening individual accountability in banking,” Prudential Regulation Authority, Supervisory Statement SS28/15, July 4, 2018. Access at: Strengthening Individual Accountability in Banking.
  6. “Comments on the monitoring of codes of conduct under GDPR,” Insurance Europe, Position Paper, July 12, 2018. Access at: Insurance Europe’s comments on the Monitoring of Codes of Conduct under the GDPR.
  7. Q&A on Insurance Distribution Directive, European Insurance and Occupational Pensions Authority, July 11, 2018. Access at: EIOPA publishes first set of Questions & Answers on the Application of the Insurance Distribution Directive.
  8. “Overview of consumer’s rights under GDPR,” Insurance Europe, July 3, 2018. Access at: Overview of Consumers’ Rights under GDPR.
  9. “TRG for IFRS 17 Insurance Contracts, Agenda Paper Tracker,” The International Accounting Standards Board, July 18, 2018. Access at: IFRS 17 Agenda Paper Tracker.
  10. “Competition issues in the Area of Financial Technology (FinTech),” European Parliament, Study, July 12, 2018. Access at: Report on FinTech from the ECON Committee (European Parliament’s Committee on Economic and Monetary Affairs).
  11. “Brexit: European Commission publishes Communication on preparing for the UK’s withdrawal from the EU,” European Commission, Press Release, July 19, 2018. Access at: Brexit: European Commission publishes Communication on preparing for the UK’s withdrawal from the EU.
  12. “Implementation of the final Basel III reforms in Canada,” Office of the Superintendent of Financial Institutions, Discussion Paper, July 16, 2018. Access at: Implementation of the Final Basel III Reforms in Canada.
  13. “Publication of “Proposal and Procedure for Inspection and Supervision on Compliance and Risk Management (Basic Policy on Compliance and Risk Management)” and Dissolution of Opinions,” Japan Financial Services Agency, Press Release, July 13, 2018. Access at: Publication of the Proposal for Compliance and Risk Management Concept and Procedure (Compliance and Risk Management Basic Policy).
  14. “Benchmarks Regulation (Amendment) (Financial Ombudsman Service) Instrument 2018” Financial Conduct Authority, July 27, 2018. Access at: Benchmarks Regulation (Amendment) (Financial Ombudsman Service) Instrument 2018.
  15. “Bank confirms SONIA’s compliance with IOSCO benchmark principles,” Bank of England, News Release, July 25, 2018. Access at: Bank confirms SONIA’s Compliance with IOSCO Benchmark Principles.
  16. “Insurance Distribution Directive (Amendment) Instrument 2018,” Financial Conduct Authority, July 26, 2018. Access at: Insurance Distribution Directive (Amendment) Instrument 2018.
  17. “Updates on the IAIS Global Seminar,” International Association of Insurance Supervisors, July 27, 2018. Access at: Day Two of IAIS Global Seminar Focuses on Innovation and Emerging Risks.
  18. “Solvency II: Monitoring model drift and standard formula SCR reporting for firms with an approved internal model,” Prudential Regulation Authority, Supervisory Statement 15/16, July 26, 2018. Access at: Solvency II: Monitoring model drift and standard formula SCR reporting for firms with an Approved Internal Model (Update).
  19. “European Supervisory Authorities publish further guidance on the Key Information Document for PRIIPs,” European Banking Authority; European Securities and Markets Authority; European Insurance and Occupational Pensions Authority, July 20, 2018. Access at: European Supervisory Authorities publish further guidance on the Key Information Document for PRIIPs.
  20. Webinar: IFRS Taxonomy 2018, International Financial Reporting Standards, July 17, 2018. Access at: Webinar: IFRS Taxonomy 2018—Recording now available
  21. “Christopher Woolard’s statement welcoming the IDWG recommendations,” Financial Conduct Authority, July 5, 2018. Access at: Christopher Woolard’s statement welcoming the IDWG Recommendations.
  22. “Risk sensitivity and risk shifting in banking regulation,” Bank of England, Financial Stability Paper No. 44, July 29, 2018. Access at: Risk Sensitivity and Risk Shifting in Banking Regulation. 
  23. “Feature: Reducing the gap between insurance and other industries,” The International Accounting Standards Board, July 5, 2018. Access at: Feature: Reducing the gap between insurance and other industries.
  24. “EIOPA Seeks Evidence on the Use of Big Data,” European Insurance and Occupational Pensions Authority, Press Release, July 6, 2018. Access at: EIOPA seeks evidence on the use of BIG Data.
  25. “Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities,” Securities and Exchange Commission, Proposed Rule, July 24, 2018. Access at: Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities.
  26. “Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds,” Office of the Comptroller of the Currency; Federal Reserve System; Federal Deposit Insurance Corporation; Securities and Exchange Commission; Commodity Futures Trading Commission, July 17, 2018. Access at: Proposed Revisions to Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds.
  27. “BIBA Comment on the Autonomous and Electric Vehicle Bill Gaining Royal Assent,” British Insurance Brokers Association, July 19, 2018. Access at: BIBA Comment on the Autonomous and Electric Vehicle Bill gaining Royal Assent.
  28. “EIOPA launches EU-wide thematic review on consumer protection issues in travel insurance,” European Insurance and Occupational Pensions Authority, July 17, 2018. Access at: EIOPA launches EU-wide Thematic Review on Consumer Protection issues in Travel Insurance.

 

About the Monthly Regulatory Tracker

The “Regulatory Reform” newsletter is the monthly initiative aimed at updating the Finance & Risk community with the most recent regulatory changes impacting Banking, Capital Markets & Insurance firms. We track more than 70 regulatory and industry bodies covering North America, Europe and Asia-Pacific. Every month, we will highlight approximately 20 regulations shortlisted on the basis of geography of coverage and anticipated business impacts. Our summaries will highlight the risks covered and business processes affected by the regulatory reforms.

 

Disclaimer

This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Accenture disclaims, to the fullest extent permitted by applicable law, all liability for the accuracy and completeness of the information in this blog and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professional.

 

About Accenture

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