Posted: 05 Sep. 2022 2 min. read

Back-to-school |A round-up of key regulatory developments over summer 2022

With the baking temperatures of summer on the wane we now face the reality of back-to-school and back-to-work. To ease the transition, we’ve produced a round-up of some key regulatory developments from mid-July to end-August.

Once again we’ve asked the experts in our EMEA Centre for Regulatory Strategy to tell us which regulatory developments stood out most for them. The results are attached below and are organised by sector (banking, capital markets, insurance and investment management) and by theme (sustainable finance, innovation and payments, conduct, and operational resilience and outsourcing). Here are some of the issues that particularly caught our eye.

In the UK, the dominant theme over the summer was the impact of the political agenda on regulation. The most direct expression of this was the Financial Services and Markets Bill, which we summarise here. The Bill lays the foundation of the Government’s vision of the UK’s future regulatory framework. It gives the UK regulators more rule-writing authority and, as a quid pro quo, makes them subject to a range of new accountability measures and a secondary objective to facilitate growth and competitiveness.

At the same time, the future role and scope of financial regulators is being debated. HMT and the PRA have set out their own, quite different positions on the UK’s review of Solvency 2. The ball is now in HMT’s court. The Chancellor will decide in the autumn whether to take further powers for the Government to intervene in financial regulation, in the public interest. And there has been media speculation that Liz Truss, should she become Prime Minister, will initiate a review of the regulators.

These debates will take place at a time when the risks to customers and to financial services firms will be high, and rising, because of the cost-of-living crisis. The FCA's new Consumer Duty Principle permeates almost everything else that the FCA does – there are references to it in the FCA’s communications over the summer on collecting loans owed by SME customers, on financial promotions of buy-now-pay-later loans and on the new requirements for Appointed Representatives.

European regulators have also been busy: the near final text of the Digital Operational Resilience Act (DORA) has been published and is expected to be ratified in the autumn. The DORA will require firms to make significant improvements to their operational resilience and cyber risk management framework. EIOPA consulted on differential pricing approaches, noting that while some differential pricing is justified, price walking can lead to unfair customer outcomes, and firms that use differential pricing will need to ensure they can justify it.

Encouraging innovation and competition continues to be a government priority in both the UK and EU, but increasingly - at least in the UK - the timeline for passing supporting legislation defaults to “when Parliamentary time allows”. Responses to macro-economic pressures will continue to compete for Parliamentary and regulatory time. We see some of these pressures already causing delays in key policy areas such as digital assets and sustainability.

The attached presentation provides more detail of what regulators have been up to over the summer period. We trust you will find it interesting and useful.

Authors

David Strachan

David Strachan

Head of EMEA Centre for Regulatory Strategy

David is Head of Deloitte’s EMEA Centre for Regulatory Strategy. He focuses on the impact of regulatory changes - both individual and in aggregate - on the strategies and business/operating models of financial services firms. David joined Deloitte after 12 years at the UK’s Financial Services Authority. His last role was as Director of Financial Stability, working with UK and international counterparts to deal with the immediate impact of the Great Financial Crisis and the regulatory reform programme that followed it.

Suchitra Nair

Suchitra Nair

Partner

Suchitra is a Partner in the EMEA Centre for Regulatory Strategy and helps our clients to navigate the regulatory landscape around technological innovation. She sits on the UK Fintech Executive and leads our thought leadership on topics such as digitsation, cryptoassets, AI, regulatory sandboxes, Suptech, payment innovation and the future of regulation. She recently completed a secondment at the Bank of England, supervising digital challenger banks. Suchitra is a member of various industry working groups on innovation in financial services and has regularly featured in the Top 150 Women in Fintech Powerlist (Innovate Finance). She is a qualified Chartered Accountant and has previously worked in Deloitte’s Audit, Corporate Finance and Risk Advisory teams, where she led large-scale regulatory change projects.

Rod Hardcastle

Rod Hardcastle

Director

Rod is a Director in the EMEA Centre for Regulatory Strategy and has over 25 years of experience in Financial Services, both as a practitioner - including roles at major full service banks in the UK - and in advisory roles. Rod is a subject matter expert in bank regulation, particularly prudential regulatory capital, credit risk management and the Internal Ratings Based approaches.

Authors

Simon Brennan

Simon Brennan

Head

Simon Brennan leads Deloitte’s EMEA Sustainability Regulation Hub. Organisations are setting ambitious targets as they journey to become sustainable. The Hub is a source of critical insight and advice to support businesses to better understand and respond to new regulatory requirements, and to assess how best to transform business strategies and operating models.

Kareline Daguer

Kareline Daguer

Director

Kareline is a director in Deloitte’s EMEA Centre for Regulatory Strategy, specialising in insurance regulation. Kareline has more than 15 years of experience in both prudential and conduct insurance regulation, providing high quality advice to firms in the UK market. At Deloitte, Kareline leads a team of experts to carry out horizon scanning and assess the strategic impact of regulation on the market. Kareline provides advice to insurance clients on the impact of regulation on their business, finance, and operating models. Kareline has led engagements supporting clients with a number of regulatory challenges including Brexit and restructuring projects, advice on impact of Solvency II/ Solvency UK over capital decisions and investments, supporting a top 3 retail general insurer on interpretation and compliance with Pricing Practices rules, and design and implementation of insurance products and customer journeys for a large life insurer. Kareline is a member of the ICAEW Risk and Regulation Committee and the Solvency II working party. Kareline has authored several publications and columns on insurance regulation and Solvency II over the past ten years.