This Week in Regulation


The Speed Read:

  • FCA signs FinTech innovation collaboration agreement
  • Call for Inputs: Use of technology for smarter regulatory reporting
  • Dear CEO: Quality of Prudential Regulatory Returns
  • Perimeter guidance published around personal recommendations on retail investments

FCA signs FinTech innovation collaboration agreement

The FCA has signed a FinTech collaboration agreement with the US Commodity Futures Trading Commission (CFTC), which will see the regulators collaborating and supporting FinTech innovation.

The agreement focuses on information sharing on market developments and trends, as well as facilitating the referral of Fintech companies interested in entering the other’s market. A joint event will be held to demonstrate how interested firms can work with both regulators.


Call for inputs: Use of technology for smarter regulatory reporting

Each year the FCA receives more than 500,000 scheduled regulatory reports from firms, plus other ad-hoc reports. This has led to an ongoing focus on how technology can make the regulatory regime more efficient and reduce the burden on firms.

The regulator has published a call for inputs detailing a ‘proof of concept’ developed at a TechSprint event held in conjunction with the Bank of England which could make regulatory reports machine readable and executable. Firms could then map the requirements directly to the data they hold to automate the reporting process.

The call for inputs outlines the development steps the proof of concept has gone through along with what the FCA views as the potential benefits of the solution. The regulator has also posed a number of questions for the industry, designed to provide the FCA with a clearer idea of the issues surrounding regulatory reporting and the role technology could play.


Dear CEO: Quality of Prudential Regulatory Returns

The FCA has issued a Dear CEO letter to all IFPRU and BIPRU firms, outlining a number of common issues it has observed in firms’ prudential regulatory returns, including:

  • Failing to complete the templates within the COREP submissions due to an inadequate understanding of the prudential rules;
  • Failing to submit all required returns;
  • Incorrect calculation of the total sum of risk exposures, leading to inaccurate capital requirements;
  • Inconsistencies in submissions. EBA validation rules require certain data points across the provided templates to show identical values;
  • Use of incorrect units;
  • Failing to report cumulatively (year-on-year).

While these may seem like minor failing, cumulatively they impact the FCA’s ability to analyse and identify prudential risk. In response to this letter, the FCA expects CEOs to review their firm’s regulatory reporting procedures to ensure they meet expectations. The regulator will reviewing a sample of regulatory returns from 1st October 2018 and will consider any necessary actions to improve the quality of regulatory returns.


Perimeter guidance published around personal recommendations on retail investment

The FCA has published a policy statement outlining perimeter guidance on what constitutes a personal recommendation, following CP17/28: FAMR implementation plan and insistent clients.

The Financial Advice Markets Review (FAMR) identified that firms felt unable to provide information or guidance to customers for fear of inadvertently giving a personal recommendation. This guidance is designed to provide greater confidence over the types of information that can be provided without necessarily making a personal recommendation.

In response to industry feedback, the FCA has included a greater range of illustrative examples as well as providing clarification in a number of areas. The regulator has now implemented all the FAMR recommendations assigned to it.

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