UK financial regulators have launched a ‘grid’ to outline details of upcoming regulatory initiatives and highlight timetabling changes resulting from the coronavirus crisis.
The Regulatory Initiatives Grid has been launched by the Bank of England, Prudential Regulation Authority, Financial Conduct Authority (FCA), Payment Systems Regulator and Competition & Markets Authority. The five organisations comprise the UK’s recently created Financial Services Regulatory Initiatives Forum, of which HM Treasury is an ‘observer member’.
The grid highlights initiatives that have been cancelled or delayed to ease the burden on financial services firms during the crisis – including the 2020 annual stress test for UK banks, and a number of consultations.
The grid illustrates the extent to which reacting to coronavirus has become an all-consuming task. “There is a universal near-term priority: responding to the impact of COVID-19 and mitigating its negative effects as far as possible,” the document states. “In this near-term period the grid contains relatively few instances of policies entering into force.”
But the document also warns of a potential policy formulation pile-up during the fourth quarter of the year. “Forum members have taken action to free up operational capacity, allowing industry manoeuvrability to support businesses and individual consumers,” it says. “However, that action has had a clear impact on the medium-term period. The extension of a number of consultation periods to the start of October could lead to the finalisation of a substantial volume of policy around the turn of the year.”
Aiming to boost co-ordination
The grid is described as an initial 12-month pilot that will be published “at least twice” annually. It is a tangible manifestation of the attempts to improve co-ordination between government and regulators instigated by the Financial Services Future Regulatory Framework Review announced last year. The government subsequently announced the Financial Services Regulatory Initiatives Forum alongside chancellor Rishi Sunak’s first Budget two months ago. The grid was due to launch this summer, but has been brought forward “to help firms stretched by the impact of coronavirus”.
FCA interim chief executive and forum co-chair Christopher Woolard said: “At any time it’s important for regulators to do what they can to help firms plan, but it’s all the more vital in difficult times like these. That’s why we have brought forward the publication of the grid… Financial services firms need to know what regulatory work is coming down the track, and this grid will give them the opportunity and time to prepare. It also shows the need for further careful planning by the forum members for the autumn.”
Sandbox for coronavirus innovators
The FCA, meanwhile, has also announced the launch of a ‘digital sandbox’ to provide “enhanced regulatory support to innovative firms tackling challenges caused by the coronavirus pandemic”.
The FCA, which plans to open applications “later in the summer”, said it was exploring the concept of a digital sandbox since before the coronavirus outbreak and has accelerated its plans. The digital sandbox will offer “enhanced” versions of features currently available through existing FCA programmes to allow “innovative firms to test and develop proofs of concept in a digital testing environment”.
Separately, as coronavirus heightens the importance of technology-based products and services, a report entitled ‘Enhancing the UK’s Approach to Innovation in Financial Services’ has been published by financial services advocacy group TheCityUK and consultancy PA Consulting.
TheCityUK’s chief executive, Miles Celic, said: “The UK has enormous strengths in fintech, with more than 1,600 fintech firms operating in the country. With the COVID-19 pandemic likely to fast-forward technological trends and adoption in all parts of the economy and globally, it is clear that the sector needs further regulatory support to take its growth to the next level.
“The UK’s regulatory sandbox approach has been hugely successful and internationally acclaimed, but is starting to show limitations as the sector grows and matures. A broader framework needs to be developed with industry to reflect the expansion of the fintech sector and ongoing regulatory development of maturing firms.”
The 36-page report highlights four key elements to supporting “the next stage of UK fintech growth”: clarifying regulatory support and engagement; building on success by delivering new initiatives; integrating innovation across the supervisory framework; and strengthening support of fintech expansion overseas.