It came as no surprise to anyone that once again governance and culture featured prominently as a cross sector priority in the Financial Conduct Authority’s (FCA) 2019/20 business plan. A key hammer to crack this particular nut will be the extension of the Senior Managers and Certification Regime (SMCR), which currently covers banks and insurers but will capture all regulated firms from the fixed implementation deadline of 9 December 2019.  But firms should not consider this in isolation, or as a ‘one off’ exercise - the governance and culture agenda continues to be an ongoing, permanent fixture of FCA supervisory focus and will likely be fertile ground for enforcement cases if current trends continue.

Scroll through a newsfeed nowadays and it’s difficult to avoid the latest take on innovative technologies such as Artificial Intelligence (AI), machine learning and advanced data analytics. These technological developments are beginning to disrupt the way in which financial services firms operate. A recent report by PwC shows that, while firms are at varying degrees of maturity in adoption, many are now embracing these technologies to transform activities such as risk management, fraud detection and post-trade processes. While these innovations are likely to be adopted by many within financial services, debate is growing around the disruptive power of new technologies and who is ultimately accountable for ensuring they are used responsibly.

By Brian Polk In the energy industry, a concept has emerged called ‘Peak Oil’ - defined as the moment when global petroleum extraction reaches its maximum rate before it slips into decline. Today, more and more banking clients are asking if there is a comparable turning-point for their own industry....

By Stephanie Henderson-Begg On 12 June the PRA fed back to firms on their “fast growing firms” (FGF) thematic, which has involved 20 of the fastest growing UK challenger banks. The review raised concerns around how firms manage the interlinking facets of risk appetite, stress testing and business model. The...

By Simon Chard, Partner and Stuart Birnie, Director Recent prominent and sustained operational incidents have placed operational resilience high on the boardroom agenda for Financial Services firms, with regulators continuing to enhance their expectations on resilience capabilities. A number of high profile operational incidents have been caused by technology currency...

The growing popularity of cryptoassets poses a conundrum for regulators.  Some have acted quickly with bans or bespoke regimes, while others are taking a more evidence-based approach and plan to reach a more considered view on the appropriate regulatory stance. But with cryptoasset products and associated activities increasingly crossing the boundaries into mainstream financial services, regulators around the world are under pressure to provide clarity over the application of existing regulation to this market. In the UK, authorities have attempted to do this but, how helpful have their efforts been?

In part 1 of this blog we unpicked the business plans for 2019/20 for the FCA and PRA insofar as they relate to operational resilience. The main message we would take from the FCA plans, which reveal the most detail, is that the regulator has a wide programme of supervisory activities based on existing regulation, before it factors in the work on any new policy statement.

How can you say you’re good at change management when it’s the most common cause of IT failure? How are you able to manage the relationships with your growing network of third parties?Forget questionnaires, how will you perform when we put your cyber framework to the test?These are the frank questions the FCA is likely to ask financial services firms this year based on a reading of its 2019/20 business plan, published in April. This is the latest publication showing that regulators have their sights squarely set on ensuring that firms are operationally resilient, and comes after the PRA published its own business plan. In the first of a two-part blog looking at the drivers for firms’ action on operational resilience we consider the regulatory imperative; part two will cover the commercial imperative.

By Graham Ure Following on from my previous blog, I wanted to share some further findings from our 2019 Market Abuse Surveillance Survey. In the two years since our last report, the 21 banks surveyed have implemented a range of vendor solutions seeking to embed effective surveillance. Indeed an entire...

This is not the first time I’ve spoken about the importance of a full and accurate impact assessment, and it certainly won’t be the last, but today I want to focus specifically on how IFRS 17 is likely to impact internal audit. With the help of internal audit expert Klaas de Vries, in this blog I have summarised the key impacts, and the corresponding ways in which you can best utilise your internal audit function ahead of 1 January 2022.

The days of LIBOR and similar benchmark interest rates are numbered. This is causing an ‘accounting infection’, the most immediate impact of which is on hedge accounting. Earlier this month, the IASB issued a proposed ‘cure’ for IFRS accounting ills in the form of an Interest Rate Benchmark Reform Exposure Draft (‘ED’).

Preparations for IFRS 17 and the parallel IFRS 9 have moved up several gears over the course of this year. Clear signs of this increased urgency came from the finance leaders taking part in our recent “Is IFRS 9/17 a building block for digital finance transformation?” briefing and Q&A session. I wasn’t just struck by their readiness to take time out to discuss implementation at the height of the reporting season, but also the detail of their questions, which shows how much they’re now getting down to the nitty-gritty of IFRS 17.

In the past 2 weeks, I was lucky enough to spend a week in sunny Dubai with my PwC counterparts across the Middle East, in order to gain an understanding of how their IFRS 17 plans are shaping up in comparison to the other countries around the world. This was a fantastic opportunity not just for knowledge sharing and networking, but also to focus on areas that we can learn from the Middle East’s experience, and vice versa. So, other than the importance of factor 50 suncream, what lessons can we learn from the Middle East IFRS 17 journey so far?

The value assessment is a valuable exercise: asset managers that have embraced this challenge are seeking to enhance transparency, communications and outcomes for investors, and better manage their own fund range. But in order to realise these benefits, firms must allocate sufficient resources to designing a robust and repeatable approach that harnesses the data and analytics required to perform the assessment.

By Graham Ure We recently launched the results of our 2019 Market Abuse Surveillance Survey. This follows up on its 2016 predecessor, and focuses on how banks are continuing to evolve their surveillance capabilities to adhere to market abuse regulatory expectations. The 2019 Surveillance Survey results bring to life just...

The question of “Trade vs Settlement” accounting for client custody assets has caused a wide range of debate across the industry.  Should a firm record and monitor the assets actually held for clients at a point in time (the settled basis) or additionally reflect the economic impact of any in-flight trades: e.g.: excluding assets which the client has contracted to sell; and including assets which have been purchased but not yet paid for (the trade basis)?

Since the EU referendum financial services firms, regulators and the Government have focused heavily on attempting to mitigate the risks to the sector and the wider economy from the UK leaving the EU without a deal. But the announcement in the Spring statement that the Government would set out its approach to consulting on the UK’s regulatory framework after Brexit before the summer suggests that HM Treasury (HMT) is starting to look beyond Brexit at the big question of how the UK’s financial services sector is regulated and supervised post-Brexit. So what are the major issues to decide? And how could the outcome of these consultations impact financial services firms operating in the UK?

Over the past year and a half, the insurance industry’s focus for IFRS 17 has primarily been on risk assessments, vendor solutions and implementation plans. These topics have of course warranted their time in the spotlight, but the new agenda item in the market is key performance indicators (KPIs). How do KPIs change in a post IFRS17 world and how does this influence how a company tells its story to the market?

The research unbundling reforms under MiFID II have been a widely debated topic across investment banking and asset management sectors in recent years. These reforms have represented a major change for industry, creating a number of challenges and important strategic questions for firms. With the Financial Conduct Authority due to publish the output of its supervisory review on this topic in Q2 2019, firms should prepare themselves for some strong messages and ongoing scrutiny in relation to low-priced research models.

PwC explores the opportunities to develop innovative investment solutions and work with policymakers to drive sustainable change in UK Life & Pensions: A roadmap to succeed in a fast-changing sector. Fresh thinking is not only needed to break free from the constraints that hold back current investment strategies, but also embrace more complex, though potentially more rewarding, alternative investments.More and more of our life clients are asking “is our asset allocation still fit for purpose?”