Being better informed: November 2018

October was certainly a busy month for our regulators, with climate change risks, pricing strategies and Brexit featuring high on the agenda.

First of all, UK regulators are raising their expectations when it comes to sustainable finance. The PRA consulted on enhancing banks' and insurers' approaches to managing the risks from climate change. It wants firms to take a strategic approach to managing these risks and ensure board-level engagement. Meanwhile the FCA issued a discussion paper setting out a range of proposals covering environmental, social and governance policies, climate risk disclosures and initiatives to boost innovation in green finance. Firms should be aware of the direction of travel and prepare to meet regulators’ increasing expectations.

The FCA and PRA are also stepping up their plans for a no deal Brexit. The FCA published a consultation paper proposing amendments to its handbook and EU Binding Technical Standards (BTS) to reflect the UK’s new legal and regulatory framework after Brexit, as well as consulting on its approach to the Temporary Permissions Regime. Soon after, the BoE set out proposed changes to its rules and BTS to fix ‘deficiencies’ arising from Brexit. The BoE also provided further guidance on the process for authorisation and recognition for incoming EEA firms and non-UK FMIs under the Temporary Permissions Regime, and issued a Dear CEO letter to firms updating them on its approach.

In the insurance sector, the FCA raised concerns that firms’ pricing practices are leading to consumers being treated unfairly. It published the findings of a thematic review into home insurance pricing practices and a Dear CEO letter outlining the immediate actions it expects firms to take. The FCA also issued the terms of reference for a new general insurance market study which will focus on pricing practices in home and motor insurance. The terms of reference suggest a number of possible remedies, such as limiting auto-renewal, which would move the FCA towards a more interventionist approach.

Meanwhile, asset managers have been grappling with the package of measures resulting from the FCA’s market study of the sector, in particular the requirement for authorised fund managers to produce annual assessments of value. The value assessment will mark a significant change for the industry, and in our feature article this month we take a detailed look at some of the challenges and opportunities it’s likely to bring for firms, as well as the steps they should take to prepare.

Download this month’s edition to read about these developments and many more.