In the UK, we began the New Year with the announcement of a major leadership change: Andrew Bailey, Chief Executive of the PRA, is to take the helm at the FCA later this year. The FCA has been led by Acting Chief Executive Tracey McDermott since Martin Wheatley stepped down in September. We’ll be watching with keen interest to see the direction Bailey will bring to the FCA – and who his successor will be at the PRA.
During January, regulators at home and abroad kept up the brisk pace of regulatory developments. Remuneration remains a strong focus. Where an individual changes jobs and the new firm ‘buys-out’ his or her expected bonus, currently the new firm isn’t able to recover that amount from the employee if misconduct at the individual’s prior firm later comes to light. The PRA is consulting on a proposal to allow firms to recover those ‘bought out’ bonuses. This measure is designed to support the PRA’s aim to discourage excessive risk taking and short term behaviour in banks.
Consumers are never far from the regulators’ minds. In January HMT was focused on treating customers fairly, announcing measures to end “excessive” exit charges for consumers who are accessing their pension pots. The FCA plans to consult in due course on a cap for exit fees.
In the asset management sector, the FCA announced changes to final rules and guidance for implementing UCITS V. The FCA must implement UCITS V by 18 March 2016, so firms need to act quickly to review the rules and put in place any necessary changes.
On the continent, the EC announced it will carry out a ‘fitness check’ of EU consumer law this year and next. The EC will consider major changes, such as whether consumer law should be consolidated into a single EU instrument, and whether consumer protection rules should be extended to SMEs in relation to business-to-business transactions.
Our feature article this month focuses on the EU General Data Protection Regulation, which has been agreed in principal and should be published soon in the Official Journal. We look at the various challenges this presents for financial institutions and the next steps towards implementation.