Operational resilience under focus of UK financial regulators
Banks and insurers in the UK will be obliged to quantify the maximum level of disruption they will be able to tolerate to core services under new plans outlined by financial regulators. The proposals, set out in a shared policy summary and coordinated consultation papers published by the Financial Conduct Authority, Prudential Regulation Authority and Bank of England, are aimed at improving the operational resilience of firms and financial markets infrastructure and come after the FCA and PRA issued a joint discussion paper in 2018 setting out an approach on operational resilience. The new joint policy summary and coordinated consultation papers have been issued in response to developments since then, which include a number of high-profile system outage incidents in the sector, and industry feedback received to the discussion paper.
Megan Butler, the FCA's executive director of supervision, announced the latest phase of the regulators' work at The Investing and Saving Alliance's operational resilience forum, which was hosted by Pinsent Masons, the law firm behind Out-Law, in London on Thursday. In her speech, Butler said she expects firms to "understand your vulnerabilities, invest in protecting those and protecting yourselves, consumers and the market". Read more here...
UK needs to maintain regulatory alignment with EU after Brexit
The EU's financial services commissioner has warned that the UK needs to keep its financial services legislation aligned with Europe's, and avoid deregulation after Brexit. In an interview with the Financial Times, Valdis Dombrovskis said the European Commission would be happy to use equivalence rules to give the UK access to the EU's financial markets once Brexit finally takes place. However, Dombrovskis, one of three executive vice-presidents of the Commission, said the UK should not start "to engage in some kind of deregulation", adding that the more systemically important a financial market was, the more closely the Commission would expect it to align with financial regulations.
Financial services expert Tobin Ashby of Pinsent Masons, the law firm behind Out-Law, said Dombrovskis's comments were notable given the imminent general election in the UK. "Whilst this statement is unsurprising and seems simply to be timed to lay down some ground rules ahead of the possible further negotiations next year, it does emphasise the political nature of the issue," Ashby said. Read more here...
Financial authority heads take stand on climate change
The new heads of the European Central Bank and the International Monetary Fund are seeking to put climate change at the centre of their policymaking in a move likely to be supported by environmentalists. Recently appointed ECB president Christine Lagarde told the European Parliament this week that she wanted climate change to form part of a strategic review of the bank's purpose, backing up comments she made during her confirmation hearing in September. At that time, Lagarde said climate change and environmental risk were "mission-critical". Speaking to the EU's Committee on Economic and Monetary Affairs on Monday, Lagarde said climate change would be taken into consideration when the ECB was looking at macro-economic modelling and economic forecasts, as well as its supervisory role within the eurozone. Sustainability expert Oliver Crowley of Pinsent Masons, the law firm behind Out-Law, said: "There is a clear rise in prominent individuals speaking out on, and effecting change in, climate policy on a global scale. As well as the statements by Christine Lagarde and Kristalina Georgieva's it was recently announced that Bank of England governor Mark Carney, a strong advocate on climate issues, will be taking up a role as the UN envoy for climate action and finance from February." Read more here...
IT security guidance should spur contracts review
Financial institutions should review their contracts with outsourcing providers and third parties in light of new IT security guidelines issued by the European Banking Authority, an expert in financial services and technology law has said. Luke Scanlon of Pinsent Masons, the law firm behind Out-Law, said some institutions might also need to revisit risk assessments they have already carried out as a result of the EBA's finalised guidelines on ICT and security risk management. The EBA's new guidelines are addressed to payment service providers, credit institutions and investment firms. They will apply from 30 June 2020 when they will replace current guidelines on the security measures for operational and security risks of payment services, which will be repealed on the same date. "It will be important for financial institutions to review the new guidance to check whether their existing contracts with third parties comply," Scanlon said. Read more here...
Collaboration is how insurtech will grow
Increased collaboration will accelerate the use of new technologies in the insurance market and deliver efficiencies and improvements for insurers and customers alike, writes insurance expert Iain Sawers of Pinsent Masons, the law firm behind Out-law. Collaboration offers insurers fast access to new solutions built on innovations in big data analytics, wearables and connected devices, for example, which can offer better ways to understand, price and manage risk, or to innovate in the way that insurance is bought and sold. For insurtech providers, partnerships with insurers can help them overcome major barriers to entry in the market, he said. Read more here...
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