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Our blog explores the latest issues in financial services risk and regulation.

11 April 2019

Beyond Brexit- a new financial services regulatory framework for the UK?

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?

09 April 2019

IFRS 17: New Measures, New Perspective

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?

03 April 2019

MiFID II supervisory review: FCA has low-priced research in its sights

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.

13 March 2019

Meeting investment expectations: How Brexit could provide the catalyst for a more dynamic asset mix

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?”

04 March 2019

Governance and Oversight of delegated CASS activities: practical considerations

In December, we blogged about the delegation of Governance and oversight of CASS activities where we took a look at the key requirements and challenges faced by firms who outsource CASS activities. Below we highlight some of the more detailed common observations from our interactions with firms in relation to outsourcing or offshoring to other parties.

Why innovation is key to overcoming regulatory challenges in asset management

During 2019, heightened regulatory scrutiny on investor transparency, combined with wider competitive pressures, may further squeeze profit margin for asset management firms. One obvious temptation may be to cut back and do less, but doing things differently is often a better way to overcome challenges. So what are the regulatory and wider strategic factors that will continue to drive this trend of compressed margin, and how can innovation help firms get ahead?

26 February 2019

Why it's time to lift the pause button on the SM&CR

Back in early 2018, following the FCA’s paper on the Senior Managers & Certification Regime (SM&CR) which delayed the start date of the extended regime to December 2019, we found that some firms hit the pause button on their implementation plans.

25 February 2019

IFRS 17: Jump start your IFRS 17 project

In mid-February, my PwC IFRS 17 colleagues in the UK and I were joined by over 30 clients who expressed an interest in hearing more about what we have collectively learnt from the 140 projects that we are currently involved in, and the current position of other global Insurers on their respective IFRS 17 journeys. At such a busy time of year for Insurers, it is great to see that there is still a high demand to compare journeys and progress with peers in the market. A decent proportion of clients are not letting this reporting period be 3 months lost in their IFRS 17 programs.

21 February 2019

Insurance - resilience against a potential downturn

A general economic slowdown has led to negative market sentiment in recent months, with equities falling and credit spreads rising.  Risks of a further economic deterioration remain.One can envisage a downside scenario – not necessarily a central case - in which equities fall further, credit spreads widen, interest rates fall in response to a flight to quality, FX rates fluctuate, and property prices continue to stagnate, or fall.  Inflation might also rise in the short term, in response to currency movements, and short term interest rates may exhibit particular volatility in response.  Complicating matters further, it is possible that a downside scenario may reveal itself only gradually, with asset prices appearing stable for periods of time, despite being vulnerable to sell-offs.

20 February 2019

Test of relevance: Succeeding with consumers and society’s financial needs

As society, the economy and welfare change, so do people’s’ financial lives and responsibilities. As a result, expectations of the financial services sector are changing. The sector has a vital role in financial inclusion, ensuring access to financial solutions and in meeting evolving customer needs and expectations. In UK Life & Pensions: A roadmap to succeed in a fast-changing sector, PwC looks at why creating solutions capable of meeting these shifting demands is much more than a commercial imperative, rather it is a matter of relevance and trust, both critical in sustaining the industry’s licence to operate.

Taking accountability for operational resilience

The operational resilience of the financial services sector, and particularly the banking sector, has rarely been out of the news in recent years. How are senior industry leader feeling as yet another operational failure hits the front pages? What is clear is that the impact of outages on consumers means industry, regulators and other policy makers are increasingly prioritising the topic. At the heart of the regulators’ philosophy on operational resilience is a view that boards are responsible for ensuring the resiliency of their institutions but that senior individuals, in the form of senior manager function 24 (SMF24) should also be held to account for operational failings

13 February 2019

Four steps to a successful financial crime investigation

By Christian Butter and Harry Holdstock We often work with our Financial Services clients on internal investigations into allegations of financial crime. And we’re finding that several factors—including advancing technology, the rise of the corporate trust agenda and a stronger emphasis on project governance—are driving a subtle shift in how...

08 February 2019

Why should EEA banks ramp up their post-Brexit regulatory planning?

With Brexit now less than 50 days away, all firms are well advised to speed up their preparations for the UK’s exit from the EU. Much of the focus on the impact of Brexit on the financial services sector has been on those firms providing services from the UK into the EU-27 and what a loss of passporting will mean for them. But for those European Economic Area (EEA) banks that passport into the UK there will also be significant changes to the regulatory requirements they face. These include changes related to the Senior Managers and Certification Regime (SM&CR) and the Financial Services Compensation Scheme (FSCS), as well as a number of other regulatory reporting requirements for third-country branches

07 February 2019

"Seven Awkward Questions" - food for thought for new bank applicants

By Stephanie Henderson-Begg Last week Bank of England Deputy Governor for Prudential Regulation and CEO of the Prudential Regulation Authority (PRA), Sam Woods, gave a speech titled “Seven Awkward Questions” on how the PRA has been supporting it’s secondary competition objective since its inception in 2013. For us, working with...

Regulating cyptoassets: FCA’s next step towards promoting innovation

By Suddankumar Subbaroyan On 23 January 2019, the FCA published its first consultation paper (CP) titled guidance on cryptoassets. The PwC licensing team supports and welcomes the FCA’s initiative and finds it encouraging that there will be further consultations and guidance in this space. It shows that the UK regulator...

Lloyd’s Market Oversight: learning the lessons of 2018

Many people have asked me whether it was possible to foresee the significant change in approach that Lloyd’s took towards business planning in 2018. My initial response was a clear “no” - it was both unexpected and with a different level of focus and intensity than in any recent year.With the benefit of hindsight (and a bit of searching), I now conclude that it was possible, but that no-one that I have spoken to (outside of the Corporation) actually did.  I’ll explain why.

05 February 2019

Illiquid assets and open-ended funds: What are the big issues for firms?

The Brexit referendum result in June 2016 exposed some potential structural vulnerabilities in the asset management sector. It highlighted that open-ended funds invested primarily in illiquid assets can struggle to satisfy high demand for redemptions under stressed market conditions, at least without being forced to sell those underlying assets very quickly at a significant discount. While the existing liquidity management measures avoided major problems, the Financial Conduct Authority (FCA) has now consulted on proposals to mitigate the risk in case of a repeat event. While the industry supports the regulator’s focus on this, the more engaged firms have identified a series of challenging implementation issues among the proposed requirements. So which aspects of the proposals have triggered most debate across the industry so far and are likely to have the most significant impact?

Get set for hypertech: Why it’s time for life and pensions businesses to think bigger on technology

The life and pensions industry is being transformed by data and technology innovations. As PwC explores in UK Life & Pensions: A roadmap to succeed in a fast-changing sector, a combination of data analytics, artificial intelligence and increasing computational capacity are paving the way for simpler products, reduced costs and sharper risk pricing. These developments can also boost innovation by making it possible to tailor customer solutions with greater precision and build and deploy new offerings with increased agility and speed.

04 February 2019

Stress testing model risk management: New challenges for firms

2019 marks a major step forward in the regulation of model risk management (MRM), with the PRA beginning to assess firms’ stress testing MRM practices as part of their Supervisory Review and Evaluation Processes (SREPs).

29 January 2019

Technology Risk: Balancing innovation and risk

Today’s technology risk landscape is an intimidating one – sector disruption and emerging technologies are transforming the Financial Services (FS) industry – and it’s up to the technology risk function to make sure that the risks associated with that transformation are being managed and mitigated appropriately.