Category: Announcements Page 1 of 2

FCA Warns Banks on Customer Communications - Waymark Tech Blog

FCA Warns Banks on Customer Communications

The COVID-19 crisis has created numerous challenges for the financial sector, but one which often goes unseen is the logistical challenge of maintaining communication with customers. With lockdown in place it is difficult for banks to maintain the speed and efficiency of paper based communications. However, the FCA has reminded the sector of its obligation to do everything it can to comply with communication obligations.

Back in March, the regulator warned financial advice companies not to work in the office, and to avoid face to face contact with clients. Alternative arrangements were to be made online, but this left a gaping hole for those customers who, for one reason or another, were unable to access online services. Maintaining a business as usual service for these clients is proving to be a major problem.

In its recent guidance, the FCA is keen to ensure that despite these problems, offline clients are protected as much as possible.

Notifying the FCA of issues

While the regulator still expects firms to try and comply with paper-based requirements, it acknowledges this may not be possible in every case. There will be flexibility with timescales and they will be more understanding. However, they do expect firms to demonstrate what steps they have taken to minimise the impact as far as possible and to notify them of any problems they expect to encounter by emailing firm.queries@fca.org.uk

For example, a firm would need to collect and send out paper documents as often as possible ensuring that while the service might be slower than normal, offline customers do not miss out. Funds should be returned to clients as quickly as possible if a delay means they cannot proceed with the transaction.

Clear communication

At times of uncertainty, transparency becomes even more important than usual. Firms will be required to provide regular updates about how they intend to treat incoming and outgoing post. Customers should be updated on evolving market conditions and shown how they can check their statements if they arrive late.

Face to face alternatives

Face to face meetings for issues such as suitability assessments may not always be possible. However, the FCA has urged companies to investigate alternative options such as phone conversations or online due diligence checks. Firms should send out the results of any assessment either online or through other means.

The FCA has experienced plenty of problems of its own. Back in April, it admitted it could be many months before it is able to address its key regulatory priorities. It is making its own adjustments and has said it may have to redraw its business plan to take into account the evolving situation.

Maintaining business continuity is an issue for all businesses. While online technology, makes it possible to deliver more services remotely, it is the small minority who can’t access the internet who are at risk of being disadvantaged. Inevitably, these people are more likely to be older or more vulnerable and will be even more adversely affected by delays to their services. The FCA, then, is striking a balance between being understanding for customers but keeping up the pressure to protect those clients who may suffer.

Financial Conduct Authority Updates Action on Coronavirus - Waymark Tech Blog

Financial Conduct Authority Updates Action on Coronavirus

As the UK goes into lockdown the FCA continues to update its guidance and work out how it can support the financial sector and those who rely on it through what is now undeniably, an unprecedented crisis. With questions about trading practices, vulnerable customers and reporting, the FCA has issued a series of statements over the past few weeks outlining its expectations.

Short selling

The FCA has not followed the examples of other countries such as Italy and Spain in banning short selling. Both countries have banned the practice in order to counter market volatility as the virus spreads across the world. Experts in the US have also argued strongly against short selling. However, the FCA claimed there was no evidence that it was behind the recent turmoil in the market. Indeed, they said short selling remains a useful tool in investment strategy, allowing companies to manage risks by taking long and short positions.

Vulnerable clients

Its work on vulnerable clients has been shelved as it postpones all non-essential work in the face of the pandemic. Publication of its guidance on vulnerable customers will be placed on the back burner for the time being.

However, the FCA has stepped up pressure to prevent repossessions in the fallout of the crisis. The regulator’s guidance says lenders should offer a three-month payment holiday in the face of the spreading pandemic. It should be granted where homeowners are experiencing payment difficulties because of COVID-19. This can apply where a customer first asks for leniency or if a lender feels they qualify for a break. The Government has said there is no expectation under its guidance for a lender to fully investigate the circumstances surrounding a request for a payment holiday.

“We are making it clear that no responsible lender should be considering repossession as an appropriate measure at this time.”

Christopher woolard, interim chief executive of the fca

Delayed disclosure

The FCA has urged companies to delay publication of their preliminary results for at least two weeks.

“The unprecedented events of the last couple of weeks mean that the basis on which companies are reporting and planning is changing rapidly.”

Financial conduct authority

Companies, it said, should give due consideration to the impact of the virus and that the events of the last couple of weeks meant that time tables set before the virus would mean there would be little time to achieve this.

It says it is in talks with the audit regulator, the Financial Reporting Council (FRC) and the Bank of England’s Prudential Regulation Authority (PRA) about a package of measures to ensure companies take time to prepare appropriate disclosures. The FRC, for its part, has also asked companies to delay disclosing financial reports rather than produce substandard audits.

This is uncharted territory for the entire sector. The FCA’s role in this is to reduce turmoil as much as possible and put pressure on companies to maintain sustainable and responsible policies which do not cause additional stress and anxiety to their customers.

Coronavirus: Regulators Scramble to Prop Up Financial Sector - Waymark Tech Blog

Coronavirus: Regulators Scramble to Prop Up Financial Sector

Financial regulators are formulating plans to cushion the blow of coronavirus including assessing contingency plans, fiscal stimulus and easing the pressure on borrowers.

The arrival of coronavirus has sent tremors through the stock market. Wall Street experienced its worst day since 2008 and the ECB has warned of a collapse on a scale of the financial crisis. It is both a global health and economic crisis and regulators around the world are scrambling to mitigate its impact.

China

In China, which has had more than 80,000 cases and over 3,000 deaths, the virus is already having a major impact on the financial system and regulatory strategy. Until now, the China Banking and Insurance Regulatory Commission, would scale back its war on bad loans.

Under the leadership of Guo Shuqing, the regulator has worked hard to tackle problems caused by bad loans and excessive leverage. He has been extremely successful but that war will have to wait. The regulator has said that new bad loans created during this crisis should not be considered non-performing loans.

Italy

In the second worst hit country, Italy, the focus is also on reducing the pressure on loans. Regulators are planning to introduce a widespread moratorium on debt repayments for consumers and businesses.

The announcement which was made by Italy’s Deputy Economy Minister, Laura Castelli, comes after the entire country was placed under lock down. The Government has also promised to inject €10bn into the economy.

UK

“Keep calm and drink tea” has been the message from the Government who seem happy to “take the virus on the chin”. However, the FCA is taking more proactive action. Earlier in the month, staff worked from home as the city watchdog ran a drill to test its readiness.

The regulator is also focusing on firms’ contingency plans. In an update on its website, the FCA said it was working with the financial services sector, HM Treasury and the Bank of England to review their responses to the virus.

This will include a review of the operational readiness of firms to assess any operational risks to day-to-day operations.

Meanwhile, at his confirmatory hearing for the Bank of England position, outgoing Chief Executive of the FCA, Andrew Bailey, said Coronavirus was the “first most pressing issue we face” and that it was evolving in “unprecedented and unexpected fashions.”

The severity of the situation, he said, suggested that at some point the bank may have to “focus on providing supply chain finance to ensure the shock effects of the virus are not damaging to too many forms of activity and we will have to move quickly to do that.”

That stimulus wasn’t long in coming. Announcing his budget, the Chancellor, Rishi Sunak, announced a stimulus package totalling £30bn including £7bn for businesses and families and £5bn for the NHS. There will also be changes to sick pay regulations with statutory pay available from day one of self-isolation.

USA

Regulators in the States have called on banks to ensure customers and members who are affected by the virus get the funding they need. In a joint statement, multiple agencies including the FDIC, Consumer Financial Protection Bureau, the Conference of State Bank Supervisors, the Federal Reserve, National Credit Union Administration and Office of the Comptroller of the Currency, said they would provide regulatory assistance to financial institutions, under their supervision, in meeting their financial needs.

EU

The ECB’s Christine Lagarde has called for more coordinated action between European states on the crisis. Speaking by video to European leaders, she warned that without urgent action the virus could cause an economic collapse on the scale of 2008.

The EU is also considering using flexibilities in its state aid rules which are allowed in exceptional circumstances. Officials are drafting a list of targeted options which members could support those states hardest hit by the coronavirus.

Among the schemes which may require state aid clearance from the commission are discounted government loans, tax credits, or deferral of tax payments.

Press Release - Governor Software Waymark Tech

Press Release

Governor Software and Waymark Tech Announce Global Financial Regulatory Content Agreement. 

  • Governor Software’s regulatory compliance solution Governor Reg to utilise Waymark Tech Global Regulatory Content, enabling it to support Financial Institutions to meet Regulatory Compliance demands globally.

LONDON, February 11, 2020

Governor Software Ltd, an innovative governance and oversight solution provider, today announced it has become a global reseller of Waymark Tech’s, global financial regulatory content, including current regulations, regulatory news and regulatory change. This agreement launches Governor Software’s Governor Reg, regulatory compliance solution onto the world stage, as Governor Reg can now support compliance teams across all financial regulations worldwide.

Richard Pike, CEO and Founder of Governor Software stated: “This global agreement with Waymark Tech is a big step forward for Governor Software and Governor Reg.  Since April 2019, Governor Reg: FCA, a live version of the FCA Handbook, has been available to support UK compliance teams map, track and report regulatory compliance.  This agreement with Waymark Tech provides the regulatory content required to allow regulated financial institutions from all over the world map, track and report regulatory compliance as well as receive Regulatory Change updates and Regulator News on the day they take place. Governor Reg was initially developed in conjunction with the Financial Conduct Authority (FCA) in the UK, utilising Governor Software’s unique visualisation technology to provide FCA-authorised firms with a unique version of the FCA Handbook, allowing them benefits from improved search functions, increased visualisation of regulations and the ability to download specific modules, to being able to view changes by date using the history feature.”. 

Richard Pike further stated, “The decision to work with Waymark Tech follows a full review of a number Regulatory Content providers.  The technology that Waymark Tech, winner of Best NLP Regtech Firm 2019 in Wealth & Finance International’s 2019 Artificial Intelligence Awards and a RegTech 100 firm uses, is by far the best fit for Governor Software. Waymark Tech’s use of artificial intelligence to automate the extraction of regulatory requirements integrated seamlessly with Governor Reg and passed Governor Software technology stress tests.

Mark Holmes, CEO, Waymark Tech, said, “We are very pleased that Governor Software has selected Waymark Tech to provide the Global Regulatory Content for Governor Reg, as it is extended to the global market.  There is a great deal of synergy in the pairing of our technology and a lot of power in what we can jointly offer regulated financial firms worldwide to enable them to take full control of their compliance.”

About Governor Software

With offices in Dublin, London and New York, Governor Software Ltd supports senior risk and compliance executives at financial institutions maintain governance and oversight through clear visualisation of their regulatory obligations and risk appetite.

Founded in 2015 by CEO Richard Pike, the Governor Software team have first-hand experience of the production and oversight of governance information within financial institutions. Empowered with this unique knowledge, Governor Software have taken a fresh approach to addressing these challenges; using visualisation technology to efficiently tackle the issues associated with governance and oversight in their entirety.

Governor Software believe the opportunity for compliance and risk professionals to make governance and oversight a more robust and effective process is significant.
For more information visit: www.governorsoftware.com

About Waymark Tech

Founded in 2016, Waymark Tech is a UK based regtech and suptech firm that

believes in empowering their public and private sector subscribers to discover and synthesise the regulatory information that matters through the combination of passionate experts and innovative technology. For more information visit: www.waymark.tech  

FCA Clamps Down on Mini Bonds- Waymark Tech Blog

FCA Clamps Down on Mini Bonds

The FCA is clamping down on mini bonds, but according to Andrew Bailey this is just the start.

Speaking to S&P Market Intelligence, Bailey said that the move should be seen as a sign of its growing assertiveness.

“Some of the most complex issues we deal with are things on the regulatory perimeters. Mini bonds are not within our regulatory perimeter, but the promotion of them can be,” he told S&P Global Market Intelligence.

On 26th November, the FCA said it was intervening to ban the mass marketing of mini bonds to anyone other than high net worth and sophisticated investors. The ban will remain in place for a year until they can think of an alternative permanent arrangement.

Mini bonds were integral to the £236 million collapse of London Capital & Finance which leaves almost 12,000 investors in danger of losing their savings. Because mini bonds are not usually covered by the financial compensation scheme, if things do go wrong, investors can be left exposed.

An independent investigation into the FCA’s handling at the behest of the Treasury is underway which has highlighted a number of shortcomings from the regulator.

The FCA has come in for extensive criticism from all quarters for a host of issues and is under pressure to up its game. This is a sign that it is willing to do this and to stray into areas which have not normally been under its sphere of its influence.

The problem was that FCA regulated London Capital & Finance but not the complex high risk investments themselves, which gave some investors a false sense of security. Because they saw London Capital & Finance was regulated, they naturally assumed that so were the investments, and that they would be covered by the financial compensation scheme.

London Capital & Finance, for the most part, were willing to allow that misconception to continue unchallenged. This grey area of regulation has now come under scrutiny, although the Government rejected a recommendation from the Treasury Select Committee to give the FCA more powers beyond its remit to expand the perimeter of what comes into regulation.

While some people believe the perimeter should remain where it is, Bailey argues this position is no longer tenable for most people. The idea that the FCA should not be responsible for enforcing regulation against some companies ‘is no longer sufficient.’

The ban is a year long temporary measure but the FCA plans to replace it with something more concrete. It’s a sign that they are willing to be more aggressive in their powers and expand the perimeter of what they plan to regulate.

The grey area will be squeezed and the regulator says it is working closely with Google to report those sites which are not following their guidelines. The message for companies selling unregulated products is that the loophole is closing. The FCA is pushing against its own perimeter and will expand its powers to the limit.

London Capital & Finance also contains a wider lesson for the financial world. Aside from the action from regulators, the public are less inclined to accept the difference between regulated and unregulated products. They will expect the same standard of clarity and responsibility across the entire spectrum.

Going Green is Now A Regulatory Issue - Waymark Tech Blog

Going Green is Now a Regulatory Issue

This month, commuters in the city have spent much of their time dodging Extinction Rebellion protesters. The real pressure for change, though, is coming from the regulators.

The EU has led the way in developing a cross border framework to encourage a more sustainable financial system. The EU Action Plan for Sustainable Finance includes a taxonomy which would establish a unified classification for what can be considered sustainable activities.

The Commission sees this as the first step towards achieving a sustainable financial system and will follow it with:

  • Disclosures and Duties: Proposed regulation on disclosures for sustainable investment. This will introduce obligations for institutional investors and asset managers to disclose how they will integrate ESG factors into risk processes.
  • Benchmarks: A new category of benchmarks comprising low carbon and positive carbon impact benchmarks to help investors better understand the impact of their investments.
  • Amending regulations: The EU is also consulting on amendments to MiFiDII and the Insurance Distribution Directive to include ESG considerations into the advice that investment firms and insurance distributors provide to their clients.

These reforms aim to foster capital flows towards sustainable investment and to mainstream sustainability into risk management processes. They hope it will lead to better integration of sustainability into ratings, and research and clarify duties for institutional investors and asset managers.

Here in the UK we have the Taskforce for Climate Related Financial Disclosures which has made a series of recommendations encouraging organisations to improve the way in which they report on sustainability issues.

Just this month the FCA signalled that it was beefing up measures to ensure financial organisations are following the recommendations with measures designed to tackle greenwashing. In a statement it promised to consult on new rules to improve disclosures.

They recognise a problem. While the green finance market is growing, it is still relatively young and suffers from a lack of clear definition. This leaves the door open for greenwashing. Definitions of what is considered green varies from investor to investor.

Regulation, therefore, is coming from both international and regional levels. There is a growing recognition that climate reporting contributes to a more resilient financial system both among authorities and individual companies. For financial institutions, an improved stance on sustainability not only improves their corporate image but it can also reduce exposure to numerous climate-related risks.

Many are making changes voluntarily, but those lagging behind should take note. Climate-related regulation is coming, whether they like it or not. There will be more clarification on reporting requirements, green products, and obligations.

Those that have made the move early benefit on multiple levels. They can be seen as positive participants in the battle against climate change, they can access the growing sustainable investment markets and they can reduce compliance risks.

Sustainability is about to become an organisation-wide priority, from the boardroom to compliance teams and the trading floor. Firms can decide to make changes now or be forced to make them later. You can find out more detail about the coming climate-related regulations on our Global Regulatory Database. Link here: https://edb.enforcd.com/dashboard

What Went Wrong with Carphone Warehouse?

 

The FCA’s recent decision to fine Carphone Warhouse £29.1 million is meat and drink to those who feel mobile phone companies should keep away from financial products. But it also serves as a great case study in all the mistakes firms can make when trying to improve conduct.

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FCA Post Brexit – Here there be Dragons

 

It’s no secret that the financial regulators have had their hands full with Brexit over the past year or so. But while much of the attention has been focused on surviving the coming apocalypse, thought is now beginning to turn to what comes next. According to Andrew Bailey in a recent speech setting out the FCA’s future approach, the future could be much ‘less burdensome’ than the present.

 

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Enforcd is 1 of only 10 companies selected for the FinTech SuperCharger Hong Kong 2018

Enforcd, has beaten off stiff competition to become one of only 10 companies chosen to take part in the FinTech SuperCharger Hong Kong 2018.  

From amongst 277 companies based in 43 countries, Enforcd emerged as one of the 10 FinTech companies most likely to make a significant impact on Hong Kong’s financial ecosystem.  

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The Bank of England confirms Enforcd can help best practice and compliance

Today the Bank of England has published its third round of Proofs of Concept (POCs) completed by its FinTech Accelerator, which includes Enforcd.

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