Home Policy & Governance UK regulatory forum adds members and unveils bigger pipeline ‘grid’

UK regulatory forum adds members and unveils bigger pipeline ‘grid’

HM Treasury: 'observer member' of forum that aims to ‘identify and address’ peaks in regulatory demands made on private sector | Credit: falco; Pixabay

The UK’s Financial Services Regulatory Initiatives Forum has welcomed two non-departmental public bodies as members and unveiled the first update of a ‘grid’ mapping out significant forthcoming regulatory initiatives.

The establishment of the forum – which has the Bank of England (BoE), Prudential Regulation Authority, Financial Conduct Authority (FCA), Payment Systems Regulator (PSR) and Competition & Markets Authority (CMA) as founding members, and HM Treasury as an ‘observer member’ – was announced six months ago. It aims to improve the way that HM Treasury and regulators work together to ‘identify and address’ peaks in regulatory demands made on the private sector, and to help organisations to plan.

The Information Commissioner’s Office (ICO) and the Pensions Regulator have now joined the grouping, which has also updated and extended its ‘Regulatory Initiatives Grid’.

‘Significant uncertainty persists’

The first grid was published in May, which was ahead of schedule ‘to help firms stretched by the impact of coronavirus’.

The updated grid contains 111 initiatives, an increase on the 85 included in the first edition. The increase reflects to the inclusion of initiatives from the ICO and Pensions Regulator and also the grid’s extension to cover a two-year time horizon. In addition, the grid’s compilers note that ‘given the number of initiatives paused or delayed over the past few months, fewer initiatives have fallen out of the grid (by virtue of completion) than might typically be expected’.

The forum is co-chaired by the FCA’s interim chief executive, Christopher Woolard, and the BoE’s deputy governor for prudential regulation, Sam Woods. In their foreword to the new grid, they say that the first grid ‘was notable for its focus on what would not be happening: initiatives that had been delayed or cancelled in response to the Covid-19 crisis’.

The updated edition ‘begins to establish a more typical forward look for users’, the duo say. But they warn: ‘We say “begins”, because we acknowledge that significant uncertainty persists in the environment in which the financial services industry is operating. We remain alert to the operational disruption facing the industry because of Covid-19 and the ways that might develop as we enter the winter. We stand ready to make further adjustments to the regulatory pipeline as necessary.’

‘Degree of disruption possible’ as Brexit transition period ends

The revised grid is published against not only the backdrop of the pandemic but also the forthcoming end of the transition period for the UK’s exit from the European Union (EU) at the end of December. Woolard and Woods say: ‘Forum members and industry have taken extensive action to mitigate the risks associated with an end to the transition period should it not be accompanied by new arrangements for financial services. Nonetheless, a degree of disruption remains possible, including disruption that cannot be fully anticipated. Again, we stand ready to act in whatever way the pursuit of our regulatory objectives demands.’

A number of initiatives highlighted in the 25-page grid relate to EU rules. These include the UK’s approach to transposing the EU’s Capital Requirements Directive (CRD) V and Bank Recovery and Resolution Directive (BRRD) II; and the UK government’s planned review of the EU’s Solvency II regime for insurers and reinsurers.

Non-EU-related initiatives covered by the grid include: the phase out of LIBOR (London Interbank Offered Rate) by the end of 2021; and planned consultations on implementation of the reformed Basel 3 banking standards (known as ‘Basel 3.1’) during 2021 – it was announced in March that the international implementation deadline for Basel 3.1 would be delayed by one year because of Covid.

The creation of the Financial Services Regulatory Initiatives Forum and grid are tangible manifestations of attempts to improve co-ordination between government and regulators instigated by the Financial Services Future Regulatory Framework Review announced last year.