Financial Markets Interim Regulatory Outlook 2021
Back to thinking about the future
Our mid-year assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores the trends and regulatory themes that we expect to shape the financial services industry for the remainder of 2021.
At the turn of the year, we identified nine regulatory themes affecting the financial services industry already dealing with the severe consequences of COVID-19. Against a more optimistic economic outlook than anticipated, we revisit these themes, identifying the developments and actions firms should focus on for the remainder of the year.
The report also explores specific regulatory priorities in each of the Banking, Capital Markets, Insurance and Investment Management sectors.
Click on the boxes below to access our predictions for each theme, or download the full report.
As some government support schemes and moratoria begin to be phased out, supervisors will push firms to identify any credit risk deterioration early. Firms must also address longstanding structural challenges to their profitability.
Supervisors will expect firms to keep a very close eye on customer outcomes, particularly in collections and forbearance. Boards will be pressured to improve gender balance and demonstrate greater diversity of skills and experience,
As regulatory developments on sustainability continue apace, the near-term focus for firms should be on climate risk management, including developing accurate and complete ESG data, and robust frameworks to prevent “greenwashing”.
Firms must respond to supervisors' concerns regarding digitisation, including reliance on unregulated third-parties, operational resilience, prudential and conduct risks in digital payments, and the use of AI.
2021 has seen growing convergence in the approaches taken by key regulators to operational resilience. In finalising their approaches, regulators have made clear they expect firms to consider even more challenging operational disruption scenarios than they experienced at the height of the pandemic.
Banks will seek to improve efficiency and profitability across their European operations. CCPs, clearing members and their clients need to be ready to respond to whatever plans the European Commission advances to reduce EU exposures to UK CCPs.
Regulatory divergence between the UK and EU will continue to grow, with potential changes to the UK's banking and insurance capital regimes, as well as changes to MIFID II/MiFIR.
Regulators will continue to pressure firms to move away from IBORs and provide increasingly granular MI to evidence their progress. Firms will also need to ramp up efforts to deal with legacy contracts.
Firms will need to monitor regulatory developments aimed at improving data sharing amongst national supervisors, and demonstrate more effective management of crypto-related AML risks.
Sector-specific supervisory priorities
In this section we outline a range of supervisory priorities across the Banking, Capital Markets, Insurance and Investment Management sectors complementary to the content in the cross-sector themes.
Access our interactive timeline tool for a high-level view of recent and upcoming regulatory milestones for the financial services industry.
Head of EMEA Centre for Regulatory Strategy
Partner, EMEA Centre for Regulatory Strategy