In its 2020/21 Annual Plan the Payments Systems Regulator (PSR) stated that it would work alongside the FCA and Bank of England to actively feed into a Future Regulatory Framework review by providing resources, feedback and expertise.
Along with the Prudential Regulation Authority (PRA), the FCA and the Bank of England, the PSR are supporting Treasury-led work looking at the future regulatory framework for financial services.
The PSR stated that they would set out their major upcoming regulatory initiatives affecting the financial services sector in the joint Regulatory Initiatives Grid. The ‘Grid’ is a new initiative from the government, showing timelines for each regulator’s activity. It is hoped that this ‘Grid’ will help the industry understand the potential impacts and plan ahead.
You may recall that in his Mansion House speech in June 2019, the then Chancellor of the Exchequer announced two reviews that are relevant to the PSR. One is looking at the payments landscape; this regulatory framework for financial services is the second review announced by the Chancellor.
The Financial Services Regulatory Initiatives Forum has now launched this new initiative to help financial firms prepare for upcoming regulatory work.
The introduction of the ‘Regulatory Initiatives Grid’ by the Financial Conduct Authority (‘Grid’) – announced by Chancellor of the Exchequer Rishi Sunak in March’s Budget – has been brought forward by the Forum to help firms stretched by the impact of coronavirus (Covid-19).
The Forum is comprised of the Bank of England, Prudential Regulation Authority, Financial Conduct Authority, Payment Systems Regulator and Competition and Markets Authority, with HM Treasury attending as an observer member.
The Grid lays out the planned timetable for major initiatives – including the transition from LIBOR and the introduction of financial services legislation to prepare for the end of the EU withdrawal transition period.
The Grid also highlights initiatives that have been cancelled or delayed to ease the burden on financial services firms during the crisis – including the Bank of England’s 2020 annual stress test and a number of consultations.
‘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 for the first time. ‘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.’
FCA Interim Chief Executive and Forum Co-Chair Christopher Woolard
‘A Grid pulling together the Forum members’ work programmes is a new resource for us and industry, and we would welcome feedback on this first version. I hope the Grid will prove to be of real value in the immediate future as we navigate Covid-19, and as it evolves over time.’ The Grid will run as an initial 12-month pilot and will be published at least twice a year.’
Deputy Governor for Prudential Regulation, CEO of the Prudential Regulation Authority and Forum Co-Chair
Regulatory Initiatives Grid
The full grid can be found at: Regulatory Initiatives Grid.
The overarching purpose of the Grid is to:
- strengthen regulatory coordination
- reduce operational burden in response to the impact of COVID19
- to aid the future development of coordinated regulation.
The plan focusses on three time horizons:
- Near term: Now
- Medium term: end summer 2020 to March 2021
- Long term: April 2021 onwards.
Near term activities have been determined a part pf responding to the impact of COVID19 and seeking, where possible, to negate the effects of the pandemic.
The report suggests that the impact of near term adjustments will present a congestion risk in the medium and longer term which will require further consideration.
Payments Regulatory Focus
Looking at the regulatory pipeline through a ‘payments’ lens indicates the following nine regulatory focus initiatives for the wider payments landscape are included in the Grid.
1: Open Finance – an assessment of the opportunities and risks arising from Open Finance and determining the FCA role in ensuring developments are best for consumers.
- FCA led
- Short Term: Call for input
- Long Term: Activity
2: Final stages of Open Banking Implementation
- CMA led
- Medium term: Engagement
- Long Term: System and process changes to implement.
3: Strong Customer Authentication.
- FCA led
- Medium term: Implementation of new rules
- Long Term: Implementation of new rules
4: Specific Direction 10 – Confirmation of Payee.
- PSR led.
- Short term: Implementation
5: Market Review into supply of card acquiring services
- PSR led.
- Medium Term: Interim report and stakeholder engagement.
6: New Payment Architecture – ensure the NPA is resilient and supports competition as it develops in the future.
- BoE / PRA / PSR led.
- Short Term: Call for input.
- Medium Term: Activity
7: Access to cash legislation.
- HMT led with input from BoE, FCA and PSR.
- Activity timeline not defined.
8: Joint authorities cash strategy initiative.
- Led by BoE, FCA, HMT and PSR
- Short Term: Engagement.
9: Payments Landscape Review
- Led by HMT with input from BoE / FCA / PSR
- Medium Term: Engagement.
Engaging with the Regulatory Pipeline
This new Grid from the Financial Services Regulatory Initiatives Forum sets out the regulatory pipeline. This is so the financial services industry and other stakeholders can understand – and plan for – the timing of the initiatives that may have a significant operational impact on them.
This Financial Services Regulatory Initiatives forum was launched to strengthen coordination between members. It is made up of representatives of the Bank of England, Financial Conduct Authority, Prudential Regulation Authority, Payment Systems Regulator and the Competition and Markets Authority, with HM Treasury as an observer member.
The Forum will publish this Grid at least twice a year to help manage the operational impact on firms of implementing initiatives from the Forum members.
This will help in any environment. But the Forum stats that this is especially necessary during the current coronavirus (Covid-19) crisis. The Forum members have worked closely with firms to coordinate their response and part of this has been to cancel or delay several initiatives to reduce operational burdens on firms. This is illustrated in the Grid.
The Grid provides detail on the timing of initiatives by quarter over a 12-month horizon – in future editions we intend to extend this to 24 months.
This is a one-year pilot exercise. The Forum wants to make the Grid as useful as possible and are encouraging market participants to engage via: FSRIFSecretariat@fca.org.uk.