Regulatory Initiatives Grid - Financial Services Authority

Regulatory Initiatives Grid

May 2021

PRUDENTIAL REGULATION AUTHORITY

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Foreword by Financial Services Regulatory Initiatives Forum co-chairs

Nikhil Rathi, Chief Executive Officer, Financial Conduct Authority (FCA) Sam Woods, Deputy Governor, Prudential Regulation, Bank of England (BoE)

We would like to welcome you to this, the third edition of the Regulatory Initiatives Grid, and start by saying that this will not be the last. We said in September last year that we expected the Financial Services Regulatory Initiatives Forum and Grid to be a mainstay of the regulatory landscape. We are now pleased to confirm that these will continue having completed a successful one-year pilot.

It is clear that the Forum and Grid serve an important function and will continue to do so. The impact of the Covid-19 pandemic and the UK exiting the EU has only heightened the importance of regulatory coordination. The Treasury's (HMT) letters of recommendations issued to the FCA and Prudential Regulation Committee in March 2021 recognise this, and the role that the Grid and Forum play in supporting greater regulatory coordination with benefits for proportionality, transparency and competitiveness.

The Forum's focus The executive summary that follows this foreword sets out an overview of the regulatory pipeline and developments since the last publication of the Grid. Here, we provide a few insights into the Forum's thinking with respect to some important features of the pipeline.

This Grid represents a continuation of our `controlled return to normality' approach. The pipeline charts as steady a course as we can, remaining mindful of the ongoing operational disruption of the pandemic. In this context, it is important to note that Forum members have extended, delayed or stopped a number of initiatives since the last Grid in light of the impact of Covid-19 and economic conditions. For example, in November 2020, the FCA, BoE and HMT jointly announced that the UK's Investment Firms Prudential Regime (IFPR) and elements of the Basel 3 reforms will not be introduced until January 2022 reflecting feedback from industry.

Nonetheless, it is not lost on Forum members that the total number of initiatives in this publication has increased for the second time in a row. We are satisfied that this remains reasonable in the context of an expanding membership and a pipeline that has been at least partially blocked by Covid-19. That being said, we will be closely monitoring this to ensure that increases in this `initiative count' are not a given.

In November, the Chancellor turned the page on what he described as a new chapter for financial services and set out a vision of an open, green and technologically advanced industry serving the communities and citizens of this country. Many Forum members have subsequently put pen to paper on their contributions to this chapter, introducing initiatives relating to climate, diversity and inclusion, and innovation. The existence of the Forum has prompted a clearer focus on coordination of those initiatives at an early stage in their development ? including identification of opportunities for joint work and de-duplication.

This experience is indicative of how the Forum is operating to effect improved coordination of regulatory initiatives. Awareness of the Forum and preparations for its meetings drives bottom-up focus on coordination within members' organisations. We make this point having realised that the publication of the Grid on the heels of our Forum meetings could create the false impression that our meetings involve widespread top-down intervention in the pipeline. The reality is that changes to the pipeline are largely being managed and communicated day to day. The Forum is an important opportunity to stand back and survey the overall landscape; but each Grid is more a reflection of what happens between rather than during Forum meetings. The main impact of the Forum is that its operation meaningfully improves that between Forum activity.

Further feedback Finally, we want to thank everyone who has taken the time to provide thoughtful and constructive feedback over the last year, which we have carefully considered. The executive summary sets out how we have refined this edition of the Grid in response to this. Most importantly, we are delighted to welcome the Financial Reporting Council (FRC) to the Forum. Multiple stakeholders highlighted the FRC as a critical contributor to the regulatory pipeline, and we look forward to further opportunities to ensure all our organisations continue to work closely together.

Now that the pilot phase is over, we will be looking to stabilise the publication so that you know what to expect but we of course still welcome your feedback on the timing and coordination of initiatives.

Regulatory Initiatives Grid 2

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Executive summary

This edition of the Grid contains 128 initiatives, an increase on the 111 in the second edition published in September 2020. That increase is partly due to the inclusion of initiatives from the FRC. It also reflects that a number of new initiatives have been added where regulators are pushing forward in areas which are a shared priority across public and private sectors (e.g. eight new environmental, social and governance (ESG) initiatives). In addition, given the number of initiatives paused or delayed in response to the Covid-19 pandemic, fewer initiatives have fallen out of the Grid (by virtue of completion) than might typically be expected.

Forum members will continue to monitor the cumulative impact of regulatory initiatives on industry and consider whether changes are needed.

The overall number of initiatives, though important, does not tell the whole story. The Grid includes a broad range of initiatives which will impact the different sectors of the financial services industry in different ways.

Some initiatives are actively aiming to reduce regulatory burden and/or simplify regulation. This includes, for example, the BoE and FCA's work to transform data collection building on Digital Regulatory Reporting, HMT's proposals to streamline the FCA's process for cancelling the authorisation of inactive firms and the Pensions Regulator's (TPR) work to introduce a single code of practice to make their expectations simpler and easier to understand.

There are also long-running, critically important initiatives that will require significant resources from firms to implement necessary changes. These include, for example, the phase out of LIBOR, UK implementation of Basel 3.1 and strengthening operational resilience across a number of sectors.

As the Grid shows, financial services industry stakeholders will also have the opportunity to engage with Forum members' longer-term thinking on significant developments within their sectors. There are a number of strategic reviews set out in the Grid below, including the

Future Regulatory Framework Review, the Review of the UK Funds Regime, the Payments Landscape Review, the Review of Solvency II and the consultation on restoring trust in audit and corporate governance.

We encourage users to read the below `Introduction: how to understand this document' section before reviewing the Grid. This section provides a helpful explanation of the information provided for each entry.

Responding to stakeholder feedback on the format of this publication Feedback on the Grid has been extremely positive, and several stakeholders have said it has been a useful tool in preparing for upcoming regulatory initiatives. Building on this, we have continued to incorporate feedback from stakeholders on how to improve the Grid over the pilot year. For this edition, we have made the below changes:

? Welcomed the FRC as a member of the Forum. Stakeholder feedback suggested that the FRC should also be included in the Forum as its work has a significant impact on the industry, and this will ensure that the Grid is as comprehensive as is practicable. We do not currently expect to expand membership further to ensure that the Forum and the Grid do not become unwieldy, but we will keep this under review.

? Indicated where we expect an initiative to be of interest to consumers and consumer organisations. We have introduced this in response to feedback from some stakeholders that they found it challenging to identify in previous Grids which initiatives were likely to be of most relevance to consumers and their representatives. Further information about how we have approached this for each initiative is available below in the `Introduction: how to understand this document' section.

? Introduced sub-categories for the two largest sectors in the Grid: Multi-Sector and Banking, Credit and Lending. These sub-categories group similar initiatives to make them more accessible and digestible for users. The sub-categories are:

Cross-cutting/Omnibus; Financial Resilience; Operational Resilience; Conduct; Environmental, Social and Governance (ESG); Competition, Innovation and Other. Within multisector only there is an additional sub-category for Other single-sector initiatives.

? Compiled in an annex at the end of this document is a list of initiatives that have been removed from the Grid since the September 2020 edition. Removal is typically because an initiative has been completed. This comes in response to comments from stakeholders around the challenges in identifying the status of initiatives that have been deleted between editions.

? Introduced an interactive online tool which will allow users to filter initiatives in several ways, including by sector, lead regulator, expected impact on firms and those of interest to consumers and consumer organisations. This will help stakeholders to find the most relevant initiatives for them. An Excel version of the Grid is also available here.

Providing feedback We continue to welcome feedback on presentational aspects of the Grid but will look to stabilise the publication now that we have completed the pilot phase so that users know what to expect.

Feedback on this document can be sent to the Forum Secretariat at FSRIFSecretariat@.uk. The Forum Secretariat may share any responses with Forum members.

Please indicate in any response whether you agree/do not agree to sharing any personal data contained in your response, including name/email address, with Forum members.

We will not regard a standard confidentiality statement in an email message as a request for non-disclosure. Despite this, we may be asked to disclose a confidential response under the Freedom of Information Act 2000. We may consult you if we receive such a request. Any decision we make not to disclose the response is reviewable by the Information Commissioner and the Tribunal.

Regulatory Initiatives Grid 3

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The key initiatives in the regulatory landscape

2021

Apr-Jun 2021

Jul-Sept 2021

Oct-Dec 2021

2022

Jan-Mar 2022

Apr-Sept 2022

Post Sept 2022

Breathing space initiative

introduced 4 May 2021

Final stages of Open Banking implementation

Q2 2021

CRDV ? Holding Companies application deadline 28 Jun 2021

Bilateral margin obligations phase 5 1 Sept 2021

First Resolvability Assessment Framework reports due 1 Oct 2021

Strong Customer Authentication implementation 14 Sept 2021

CRDV ? implementation of IRRBB requirements

31 Dec 2021

Transition from LIBOR end 2021

IRB approach to credit risk 1 Jan 2022

Deadline for largest firms to implement resolution capabilities 1 Jan 2022

Operational resilience: deadline for

implementation 31 Mar 2022

Regulation of pre-paid funeral plans to be brought within the FCA's perimeter

July 2022

Diversity in Financial Services policy statement

Q3 2022

Bilateral margin obligations phase 6 1 Sept 2022

Basel 3.1 international implementation

deadline 1 Jan 2023 Deadline for mid-tier firms to implement resolution capabilities 1 Jan 2023

Near-term

Medium-term

Long-term

Regulatory Initiatives Grid 4

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Introduction: how to understand this document

Users of this document should consult the Forum's terms of reference to ensure an appropriate understanding of the role of the Forum and nature of this publication.

Structure The Grid is organised by sector. It includes a `Multi-Sector' chapter that covers initiatives that span more than one sector, in addition to sector-specific chapters. The sectorspecific chapters cover: Banking, Credit and Lending; Payment Services and Systems and Market Infrastructures; Insurance and Reinsurance; Pensions and Retirement Income; Retail Investments; Investment Management; Wholesale Financial Markets.

For this edition of the Grid, we have made two changes to the structure:

? Fully combined `Consumer Credit' with the `Banking' sector. This broader category will more accurately cover the range of initiatives in this space and reduce the total number of sections to improve accessibility.

? Added sub-categories for the two largest chapters: Multi-Sector and Banking, Credit and Lending. These subcategories group similar initiatives to make them more accessible and digestible for users. The sub-categories are: Cross-cutting/Omnibus; Financial Resilience; Operational Resilience; Conduct; Environmental, Social and Governance; Competition, Innovation and Other; and Other Single-Sector Initiatives.

Where relevant, chapters start with a brief introduction that provides information about the number of initiatives in the section, changes since the previous edition of the Grid and highlights some of the most significant initiatives in terms of the expected operational impact on firms.

Scope The Grid includes initiatives led by one or more Forum members ? the Bank of England (BoE), Competition and Markets Authority (CMA), Financial Conduct Authority (FCA), Financial Reporting Council (FRC), Her Majesty's Treasury (HMT), Information Commissioner's Office (ICO), Prudential Regulation Authority (PRA), Payments Services Regulator (PSR) and the Pensions Regulator (TPR). While we do not currently contemplate extending

the permanent members of the Forum, future versions of the Grid may include initiatives from a broader set of UK bodies based on their participation in the Forum on an ad hoc basis. Initiatives have been included where they meet both the following criteria:

? Public information ? Stakeholders will generally have been made aware of the initiative through our Forum members' regular channels of communication.

? Operational impact ? Initiatives that our organisations consider will have an individually significant operational impact during implementation by firms. This means that we believe the initiative is likely to take up a meaningful amount of firms' time and resources.

The Grid does not include initiatives led by international bodies if Forum members are not playing a substantial role in calibrating their implementation in the UK.

It does not include enforcement actions nor will it include the majority of supervisory activities as timing and operational impact are firm-specific. It also does not reflect the operational impact associated with ongoing requirements beyond implementation.

Therefore, the Grid is a consolidated presentation of the expected timeframes, as at the date of publication, of a sub-set of regulatory initiatives. These are subject to change including, potentially, a decision to vary or not to proceed with a particular initiative. This edition will not be updated after its initial publication to reflect the impacts of any such decisions.

Information provided in the Grid Moving through the columns from left to right, each row provides information on:

? Lead ? which institution(s) is taking the initiative forward. Where several Forum members are noted, this means it is a joint initiative. This generally indicates that Forum members are working together which could mean they are undertaking activities in parallel or in sequence.

? Initiative ? a high-level description of the initiative. This will generally include a link, hyperlinked within the initiative's title, to more detailed information that has been published about the initiative. Review of the Grid will not be a sufficient substitute for engaging with the more detailed material for any initiative.

? Expected key milestones ? the specific timing of particular milestones, e.g. closing dates for Consultation Papers, if these are known. The absence of a milestone may mean that a precise date has not been confirmed but activity is still expected as shown in the later quarter-by-quarter columns.

? Indicative impact on firms ? this is shown as `higher' (H), `lower' (L) or `unknown' (U) on a relative basis amongst initiatives. This is a high-level estimate given the number of initiatives covered and should be interpreted in this regard. It is not a substitute for or comment on any impact assessment or cost-benefit analysis Forum members are carrying out as part of individual initiatives. This estimate is based on the expected operational impact on a firm within scope of the initiative, which will ultimately vary between individual firms. It is not based on the volume of firms affected or non-operational impact of the initiative. A `higher' impact typically indicates we believe the initiative is likely to take up a very substantial amount of firms' time and resources. A `lower' impact initiative will still take up meaningful time and resource for firms. An initiative may also change from a `lower' to a `higher' impact, and vice versa, over time. For example, reviews are generally considered to be lower impact on the basis that consequential policy developments, if any, will be separately rated.

? Quarter-by-quarter ? a breakdown of the next four quarters, a column covering the following six months (April 2022 to September 2022) and a column for beyond that horizon. Within these columns a shaded cell denotes that a key milestone is currently planned for this period. An `E' denotes the expected point at which firms and

Regulatory Initiatives Grid 5

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