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

Current coverage period: Through March 31, 2019

CURRENT REGULATIONS:

Financial Conduct Authority (FCA):
FCA to introduce UK Benchmarks Register
Publication Date: March 22nd 2019

Risks Covered: Liquidity Risk
Business Processes Impacted: Data Privacy
The new Register will replace the European Securities Markets Authority Register for UK-supervised users, and UK and third-country based benchmark administrators that want their benchmarks to be used in the UK.1

Federal Reserve (The Fed):
SR 19-7: Statement on the Implications of the New Lease Accounting Standard on Regulation H
Publication Date: March 21st 2019

Risks Covered: Business Cycle Risk
Business Processes Impacted: Corporate Finance, M&A and Advisory
Agency issued statement on the implications of the New Lease Accounting Standard on Regulation H.2

Office of the Comptroller of the Currency (OCC); Federal Reserve; Federal Deposit Insurance Corporation (FDIC); Department of the Treasury (US):
Margin and Capital Requirements for Covered Swap Entities

Publication Date: March 19th 2019
Risks Covered: Regulatory Risk
Business Processes Impacted: Custodial Services
Multiple agencies are adopting and have asked for comments on an interim final rule amending the Agencies’ regulations that require swap dealers and security-based swap dealers under the Agencies’ respective jurisdictions to exchange margin with their counterparties for swaps that are not centrally cleared.3

Prudential Regulation Authority (PRA):
Liquidity Risk Management for Insurers

Publication Date: March 5th 2019
Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
The agency has published a consultation paper regarding a draft supervisory statement concerning liquidity risk management for insurers. The paper explains the background information and defines ‘liquidity risk.’ All comments should be received by June 5, 2019.4

Financial Reporting Council (UK) (FRC):
Position Paper: Post Implementation Review of the 2016 Auditing and Ethical Standards – Next Steps

Publication Date: March 5th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Audit, Legal & Compliance
The regulator has issued a position paper setting out the FRC’s planned timetable to make revisions to Auditing and Ethical Standards. This paper is intended to provide clarity over how the FRC proposes to respond to feedback from its recent consultation, but also address issues arising from other reports, events and initiatives that have implications for audit and auditors in the UK.5

Australian Prudential Regulation Authority (APRA); Australian Securities and Investments Commission (ASIC):
APRA and ASIC publish World-leading Life Insurance Data
Publication Date: March 29st 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Fraud and Financial Crime
Multiple regulators have released a series of publications and an online tool allowing policyholders to compare life insurers’ performance in handling claims and disputes.6

Insurance Europe (IE):
EU insurers publish No-Deal Brexit Check List
Publication Date: March 27th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has issued a checklist with regard to the insurance implications of a no-deal Brexit. The checklist includes motor insurance, travel insurance, and health insurance.7

Australian Prudential Regulation Authority (APRA):
APRA proposes changes to the prudential framework to implement the cross-industry appointed actuary
Publication Date: March 19th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Consumer/Investor Protection
The agency has decided to revise thirteen of its prudential standards to reflect consequential changes arising from the introduction of the new Prudential Standard CPS 320 Actuarial and Related Matters (CPS 320) and Prudential Standard GPS 340 Insurance Liability Valuation (GPS 340).8

European Insurance and Occupational Pensions Authority (EIOPA):
EIOPA requests Insurance Undertakings to provide information in the context of its 4th Long-Term Guarantees Report and the 2020 Solvency II Review
Publication Date: March 18th 2019
Risks Covered: Credit Risk
Business Processes Impacted: Lending & Investment
The agency has announced that it has requested insurance undertakings of the European Economic Area (EEA), and subject to Solvency II, provide the information on the Long-Term Guarantees (LTG) measures, the information on the dynamic volatility adjustment and the information on long-term illiquid liabilities. The data is required for preparing EIOPA’s 4th Annual LTG Report, an Opinion on the LTG measures and the 2020 Solvency II review.9

Financial Conduct Authority (FCA):
Bank of England and Financial Conduct Authority agree Memoranda of Understanding (MoUs) with EIOPA and EU insurance supervisors
Publication Date: March 5th 2019
Risks Covered: Conduct Risk
Business Processes Impacted: Consumer/Investor Protection
Multiple agencies have announced an agreed Memoranda of Understanding (MoUs) regarding supervisory cooperation and information-sharing, with respect to the UK and European Union/European Economic Area (EU/EEA) insurance companies, in the event of the UK exiting the EU/EEA without a withdrawal agreement and implementation period.10

Prudential Regulation Authority (PRA):
Credit Risk Mitigation
Publication Date: March 13th 2019
Risks Covered: Credit Risk
Business Processes Impacted: Business Continuity Management
The authority has updated its supervisory statement on credit risk mitigation, following the publication of PS8/19 “Credit risk mitigation: Eligibility of guarantees as unfunded credit protection.” This supervisory statement takes effect on September 13, 2019.11

Federal Reserve (The Fed):
Amendments to the Capital Plan Rule
Publication Date: March 13th 2019
Risks Covered: Business Cycle Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The Federal Reserve is amending the capital plan rule to limit the scope of potential objections to a firm’s capital plan on the basis of qualitative deficiencies in the firm’s capital planning process (qualitative objection).  Except for certain firms that have received a qualitative objection in the immediately prior year, the Board will no longer issue a qualitative objection to any firm effective January 1, 2021.12

Consumer Financial Protection Bureau (CFPB):
Technical Specifications for Submissions to the Prepaid Account Agreements Database
Publication Date: March 6th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Pricing & Valuation
The agency has announced that, effective April 1, 2019, prepaid account issuers are required to submit their currently-offered prepaid account agreements to the CFPB, and these are to be posted to the CFPB’s website.  The requirement to submit prepaid account agreements on a rolling basis to the Bureau becomes effective on April 1, 2019. Issuers are to submit to the Bureau no later than May 1, 2019 all prepaid account agreements they offer as of April 1, 2019.13

European Commission (EC):
Commission Delegated Regulation (EU) 2019/348 of 25 October 2018 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution’s failure on financial markets, on other institutions and on funding conditions
Publication Date: March 4th 2019
Risks Covered: Liquidity Risk
Business Processes Impacted: Funding & Liquidity Management
The agency has adopted Commission Delegated Regulation regarding regulatory technical standards that outline the criteria for assessing the impact of an institution’s failure on financial markets, on other institutions and on funding conditions. The regulation entered into force on March 24, 2019.14

Financial Conduct Authority (FCA):
FCA introduces final rules on the Directory of financial services workers
Publication Date: March 8th 2019
Risks Covered: Business Cycle Risk
Business Processes Impacted: Recovery & Resolution planning
The agency has issued the final rules on the Directory aimed at facilitating the ability of consumers, firms and other stakeholders to check information on individuals working in financial services. The Directory is expected to come into operation in March 2020.15

European Securities and Markets Authority (ESMA):
EU Rules on LEI – Presentation
Publication Date: March 6th 2019
Risks Covered: Compliance Risk
Business Processes Impacted: Capital Adequacy & Capital Planning
The regulator has published slides from a presentation given by Senior Policy Advisor Giulia Ferraris on European Union Rules on Legal Entity Identification (LEI). Topics covered in the presentation included LEI Rules under Markets in Financial Instruments Directive (MiFID) II, European Securities and Markets Authority data strategy and LEI, and upcoming rules.16

European Commission (EC):
Foreign Investment Screening: new European framework to enter into force in April 2019
Publication Date: March 5th 2019
Risks Covered: Business Cycle Risk
Business Processes Impacted: Funding & Liquidity Management
The agency has published a press release announcing a new framework to screen foreign direct investments coming into the European Union. The framework aims to create a cooperation mechanism, allowing the Commission to issue opinions, encourage international cooperation and set certain requirements for Member States. The framework enters into force in April 2019.17

Consumer Financial Protection Bureau (CFPB):
Agency Information Collection Activities: Comment Request
Publication Date: March 20th 2019
Risks Covered: Credit Risk
Business Processes Impacted: Reporting
In accordance with the Paperwork Reduction Act of 1995 (PRA), the Bureau is requesting to renew the Office of Management and Budget (OMB) approval for an existing information collection titled, “Equal Credit Opportunity Act (Regulation B) 12 CFR 1002.”18

FORTHCOMING REGULATIONS:

Securities and Exchange Commission (SEC)
Fixed Income Market Structure Advisory Committee

Notice is being provided that the SEC Fixed Income Market Structure Advisory Committee will hold a public meeting on the transition away from LIBOR.19

European Commission (EC)
European Investment Bank Decision of 6 February 2019 laying down internal rules concerning the processing of personal data by the Fraud Investigations Division within the Inspectorate General and the Office of the Chief Compliance Officer of the European Investment Bank in relation to the provision of information to data subjects and the restriction of certain of their rights

The agency has adopted a decision allowing data controllers access to data in accordance with Regulation (EU) 2018/1725 under certain conditions. The decision, which is effective February 6, 2019, will allow the European Investment Bank Fraud Investigations Division within the Inspectorate General (IG/IN) to access personal data in order to better investigate allegations of fraud, corruption, collusion, coercion, obstruction, money laundering, and financing of terrorism, unless an exemption has otherwise been specified.20

Bank of Thailand (BOT)
Guidelines for participation in testing and developing innovative technologies that support new financial services (Regulatory Sandbox)

The regulator has issued guidelines on how to participate in the testing and development of innovative technologies to support new financial services (Regulatory Sandbox). The guidelines went into effect on March 15, 2019.21

Prudential Regulation Authority (PRA)
The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)

The agency has issued an update on the ICAAP and SREP, following the publication of PS8/19. The Supervisory Statement comes into effect on September 13, 2019.22

Australian Prudential Regulation Authority (APRA)
APRA releases letter to life insurers on offshore reinsurers and the review of prudential standard LPS117

The agency is seeking comments from the public on proposals to review the Prudential Standard LPS 117 Capital Adequacy: Asset Concentration Risk Charge (LPS 117). The deadline for submitting comments was set for May 10, 2019.23

The International Financial Reporting Standards (IFRS)
TRG for IFRS 17 Insurance Contracts—agenda papers for April 2019 meeting now available
The agenda, agenda papers and submissions log for the Transition Resource Group for IFRS 17 Insurance Contracts meeting held on April 4, 2019, have been published.24

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

References:

  1. “FCA to Introduce UK Benchmarks Register,” Financial Conduct Authority, March 22, 2019. Access at: FCA to introduce UK Benchmarks Register.
  2. “SR 19-7: Statement on the Implications of the New Lease Accounting Standard on Regulation H,” Federal Reserve, March 21, 2019. Access at: SR 19-7: Statement on the Implications of the New Lease Accounting Standard on Regulation H.
  3. “Margin and Capital Requirements for Covered Swap Entities,” Office of the Comptroller of the Currency; Federal Reserve; Federal Deposit Insurance Corporation; Farm Credit Administration; and the Federal Housing Finance Agency, March 19, 2019. Access at: Margin and Capital Requirements for Covered Swap Entities.
  4. “Liquidity risk management for insurers,” Prudential Regulation Authority, Consultation Paper CP4/19, March 5, 2019. Access at: Liquidity risk management for insurers.
  5. “Post Implementation Review of the 2016 Auditing and Ethical Standards: Next Steps,” Financial Reporting Council, Position Paper, March 5, 2019. Access at: Position Paper: Post Implementation Review of the 2016 Auditing and Ethical Standards – Next Steps.
  6. “APRA and ASIC publish world-leading life insurance data,” Australian Prudential Regulation Authority, March 29, 2019. Access at: APRA and ASIC publish world-leading life insurance data
  7. “EU insurers publish no-deal Brexit checklist,” Insurance Europe, March 27, 2019. Access at: EU insurers publish no-deal Brexit check list
  8. “Proposed Minor Changes to the Prudential Framework to Implement the Cross Industry Appointed Actuary Standard,” Australian Prudential Regulation Authority, March 19, 2019. Access at: APRA proposes changes to the prudential framework to implement the cross-industry appointed actuary.
  9. “EIOPA requests Insurance Undertakings to provide information in the context of its 4th Long-Term Guarantees Report and the 2020 Solvency II Review,” European Insurance and Occupational Pensions Authority, March 18, 2019. Access at: EIOPA requests Insurance Undertakings to provide information in the context of its 4th Long-Term Guarantees Report and the 2020 Solvency II Review.
  10. “Bank of England and Financial Conduct Authority agree Memoranda of Understanding (MoUs) with EIOPA and EU insurance supervisors,” Financial Conduct Authority, March 5, 2019. Access at: Bank of England and Financial Conduct Authority agree Memoranda of Understanding (MoUs) with EIOPA and EU insurance supervisors.
  11. “Credit risk mitigation,” Prudential Regulation Authority, March 13, 2019. Access at: Credit Risk Mitigation
  12. “Amendments to the Capital Plan Rule,” Federal Reserve, March 13, 2019. Access at: Amendments to the Capital Plan Rule
  13. “Technical Specifications for Submissions to the Prepaid Account Agreements Database,” Consumer Financial Protection Bureau, March 6, 2019. Access at: Technical Specifications for Submissions to the Prepaid Account Agreements Database
  14. Commission Delegated Regulation (EU) 2019/348 of 25 October 2018 supplementing Directive 2014/59/EU, EUR-Lex, March 4, 2019. Access at: Commission Delegated Regulation (EU) 2019/348 of 25 October 2018 supplementing Directive 2014/59/EU of the European Parliament and of the Council with regard to regulatory technical standards specifying the criteria for assessing the impact of an institution’s failure on financial markets, on other institutions and on funding conditions
  15. “FCA introduces final rules on the Directory of financial services workers,” Financial Conduct Authority, March 8, 2019. Access at: FCA introduces final rules on the Directory of financial services workers
  16. “EU rules on LEI,” European Securities and Markets Authority, March 6, 2019. Access at: EU Rules on LEI – Presentation
  17. “Foreign Investment Screening: new European framework to enter into force in April 2019,” European Commission, March 5, 2019. Access at: Foreign Investment Screening: new European framework to enter into force in April 2019. 
  18. “Agency Information Collection Activities: Comment Request,” Consumer Financial Protection Bureau, March 20, 2019. Access at: Agency Information Collection Activities: Comment Request
  19. “Fixed Income Market Structure Advisory Committee,” Securities and Exchange Commission, March 26, 2019. Access at: Fixed Income Market Structure Advisory Committee.
  20. “Rules of Procedure, European Investment Bank, European Investment Bank Decision of 6 February 2019,” Official Journal of the European Union, March 6, 2019. Access at: European Investment Bank Decision of 6 February 2019 laying down internal rules concerning the processing of personal data by the Fraud Investigations Division within the Inspectorate General and the Office of the Chief Compliance Officer of the European Investment Bank in relation to the provision of information to data subjects and the restriction of certain of their rights
  21. Guidelines for participation in testing and development of innovation – New technology to support financial services, Bank of Thailand, March 15, 2019. Access at: Guidelines for participation in testing and developing innovative technologies that support new financial services (Regulatory Sandbox)
  22. “The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP),” Prudential Regulation Authority, March 13, 2019. Access at: The Internal Capital Adequacy Assessment Process (ICAAP) and the Supervisory Review and Evaluation Process (SREP)
  23. “Offshore Reinsurers and the Review of Prudential Standard LPS 117 Capital Adequacy: Asset Concentration Risk Charge,” Australian Prudential Regulation Authority, March 4, 2019. Access at: APRA releases letter to life insurers on offshore reinsurers and the review of prudential standard LPS117
  24. “TRG for IFRS17 Insurance Contracts,” The International Financial Reporting Standards, March 22, 2019. Access at: TRG for IFRS 17 Insurance Contracts—agenda papers for April 2019 meeting now available.

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.

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