106 posts categorised "Risk strategy"
16 January 2020 Should EU banks be able to use capital and liquidity waivers? With European bank profitability low and coming under constant pressure, cross-border banking groups have been arguing for the ability to move capital and liquidity across borders more easily, in order to improve their efficiency in funding economic growth.
04 December 2019 FRC Client Assets Standard 2019 Kim Stainfield discusses the revised FRC Client Assets (“CASS”) Assurance Standard and it's contribution to improvements.
23 October 2019 Taking stock - what next for the UK’s financial services regulatory framework review Financial services is going through a period of technological disruption and change. The sector is responding to macro-trends such as climate change, changing demographics and the risks from economic protectionism. Technology is changing the way financial services firms operate and interact with customers. Incumbents are facing increased competition from challenger firms and, perhaps increasingly BigTech firms. Policymakers are starting to respond to these developments and the scope for a change in focus is perhaps most pronounced in the UK - and not just due to Brexit.
21 October 2019 What does being responsible for climate risk really mean? It’s clear that climate risk is an issue the PRA wants firms to take seriously and address urgently. The prudential regulator wants firms to recognise that climate change, and society’s response to it, present financial risks. These could arise through physical risks such as increased instances of extreme weather events, but the regulator is also particularly concerned about the shorter-term transition risks that could impact the financial system as we move towards a lower-carbon economy.
21 October 2019 FRC CASS consultation 2019 PwC have submitted feedback to the recent consultation on changes to the FRC Client Assets (“CASS”) Assurance Standard . From our experience, we consider that the Standard has contributed to a significant improvement in the quality and consistency of CASS audits. We also believe that the application of the Standard has contributed to a significant improvement in the understanding and documentation of control processes within regulated firms. However, in order to provide a more effective framework to improve audit quality, to support CASS auditors and to underpin the disciplinary process, we believe the FRC can further improve the clarity of some of the proposed requirements.
24 September 2019 Can you tolerate being punched in the face? Publication of the regulatory consultation paper on operational resilience is imminent. The concept of setting impact tolerances for firms’ most important business services, introduced in the discussion paper, will be integral to this. Firms should not shy away from what can seem like a difficult question. There is a logical sequence of activities that can be undertaken to set tolerances, stress test them and monitor against them. PwC has been tackling this topic with firms across the financial sector and we will publish our approach to this challenge soon. In the meantime, we strongly encourage firms to start the groundwork by being clear what important business services you operate.
12 August 2019 Sustainable investment in the spotlight: what asset managers should look out for By Lucas Penfold and Leo Donnachie Sustainable investing is attracting unprecedented levels of attention from regulators, both domestically and internationally. With an increasing public appetite...
15 July 2019 Parliament keeps the spotlight on operational resilience When you enter the Houses of Parliament it is impossible not to be impressed by the historical significance of the setting. But despite the Victorian grandeur of the location we were there this week to discuss a very modern phenomenon - IT and other operational failures in the financial services sector. Following a number of high profile operational incidents in the financial services sector in recent years, the Treasury Select Committee (TSC) has launched an inquiry into this topic. We were very privileged to be called to give evidence to the first public session of the inquiry to discuss a recent report we produced with TheCityUK on operational resilience.
15 July 2019 Making the first move on technology for regulatory reporting quality assessments A speech by Mark Carney, the Governor of the Bank of England, in June 2019 stated that the Bank of England is launching a review to explore the transformation of the hosting and use of regulatory data over the next decade. This includes proofs of concepts to test how the Bank can automatically extract regulatory firm data. The speech clearly highlighted the Bank’s increased focus on exploring how Artificial Intelligence (AI) and Machine Learning (ML) technologies can be used to collect and interpret supervisory data from firms to minimise manual processes. The Bank aims to pull the data on demand from firms, making the regulatory reporting process more efficient and less expensive.
04 July 2019 All change please: the evolving regulatory focus The annual speeches by the Chancellor and Governor of the Bank of England (BoE) at the Mansion House are always important dates in the diary for the financial services sector. This year’s speech was the last that Mark Carney will give as Governor and many expect that Philip Hammond will no longer be Chancellor once a new Prime Minister is appointed. In ‘normal’ times the replacement within a six month period of the two most influential financial services policy makers in the UK would represent an unusual amount of change. But as the sector currently faces a number of profound disruptions, challenges and opportunities, the 2019 speeches are more likely to be remembered as an important signal of the policy makers’ response to these.
27 June 2019 Ensuring resilience - from Cloud to climate change Just as policemen seem to be getting younger, so the pace of change outlined by the Governor of the Bank of England in his annual Mansion House speech appears to accelerate every year, and this year has been no exception. Some of the statistics thrown out by Mark Carney at this year’s Mansion House event are extraordinary: last year, one fifth of sales were online, whereas this year it will be one quarter.
17 June 2019 Why technology currency is a vital component of an operational resilience programme 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...
04 June 2019 Becoming operationally resilient - the imperatives: Part 2 - the commercial imperative 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.
31 May 2019 Becoming operationally resilient - the imperatives: Part 1 - The regulatory imperative 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.
24 April 2019 Navigating the “Trade vs Settlement” debate 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)?
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?
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.
04 March 2019 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?
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.
20 February 2019 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
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 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?
- Andrew Gray
- Ann-Marie Stone
- Asset Management market study
- Be fearless
- Brian Polk
- Conduct and culture
- Conor MacManus
- Daniel de Búrca
- Financial crime
- Financial Participation
- Grant Lee
- IFRS 17
- MiFID II
- Operational Resilience
- Risk strategy
- Sarah Isted
- Senior Managers & Certification Regime (SM&CR)
- Senior managers regime
- Simon Chard
- Solvency II