News

UK Financial Services Regulatory Initiatives Forum publishes sixth edition of Grid

28 February 2023

The eagerly awaited sixth edition of the Financial Services Regulatory Initiatives Grid has been published by the Financial Services Regulatory Initiatives Forum. The delay to its publication (originally expected in November 2022) is explained by the need for the regulators to better consider how the opportunities provided by the December 2022 Edinburgh Reforms, including the Government’s policy statement ‘Building a Smarter Financial Services Framework for the UK’, will impact the regulatory pipeline and initiatives over the coming years.

Background

The Forum’s members are the Bank of England (including the PRA), the FCA, the Payment Systems Regulator, the Competition and Markets Authority, the Financial Reporting Council, The Pensions Regulator and the Information Commissioner’s Office. HM Treasury attends as an observer member. The Forum was launched to strengthen coordination between members, and the Grid (first published in April 2020) sets out the regulatory pipeline so that the financial services industry and other stakeholders can understand – and plan for – the timing of the initiatives that may have a significant operational impact on them.

The Forum usually publishes the Grid twice a year, providing detail on the timing of initiatives over a 24-month horizon. The Grid also highlights key examples of closely interconnected initiatives to help stakeholders easily identify these.

Latest edition of the Grid – February 2023

As pointed out by Nikhil Rathi (Chief Executive Officer, FCA) and Sam Woods (Deputy Governor, Prudential Regulation, Bank of England), this sixth edition of the Grid ‘comes at a time of new horizons for the future of financial services regulation’. They explain that delaying the November 2022 Grid to now has allowed the regulators to better consider how the opportunities provided by the December 2022 Edinburgh Reforms, including the Government’s policy statement ‘Building a Smarter Financial Services Framework for the UK’, will impact the regulatory pipeline and initiatives over the coming years.

Seizing new opportunities

While many of the concerns regulators were considering when the previous edition of the Grid was published last May are still relevant (notably, financial sanctions in relation to the war in Ukraine, and the cost of living crisis), regulators are now also using the prospect of a new framework outside of the EU as a chance to proactively move forward and deliver better outcomes for consumers and industry. This is being delivered both with new pieces of work (including the Edinburgh Reforms and the repeal and replacement of retained EU law to regulators’ rulebooks) and with new opportunities to reduce regulatory burdens (including transforming data collection and a ‘Strong and Simple’ prudential framework for non-systemic banks and building societies).

Key themes and measures from the Edinburgh Reforms and the Financial Services and Markets (FSM) Bill are reflected in the Grid’s commitments, including:

reforming the ring-fencing regime for banks;
consulting on removing burdensome customer information requirements set out in the Payment Accounts Regulations 2015;
overhauling the regulation of prospectuses;
review of the Senior Managers and Certification Regime (SMCR);
ongoing work following Lord Hill’s UK Listings Review Report; and
consultations on rules for the stablecoin regime, the future regulatory regime for cryptoassets, and oversight of critical third parties.

Future iterations of the Grid will reflect the timings and impacts of any further changes under the Government’s reforms as they are confirmed.

Managing change

Pace and proportionality are key

This edition of the Grid and upcoming editions will continue to reflect UK regulators’ commitment to new ways of working following Brexit. The regulators will also continue to implement core initiatives such as delivery of relevant international standards like Basel 3.1. Now more than ever, the Forum recognises the need to consider the pace and proportionality of initiatives.

Significant undertaking to repeal and replace retained EU law

The Government’s policy statement on the approach to repealing and replacing retained EU law on financial services contains an ambitious plan which the Forum members will be supporting. Progressing this as well as building a smarter regulatory framework will be a significant undertaking for both the regulators and the industry. The Forum members will try to minimise the burden as things move forward. The plan is that future editions of the Grid will provide more information about proposals for repeal of retained EU law, alongside wider initiatives.

Importance of collaboration to ensure success

There is recognition that some initiatives in the Grid may have a particularly high impact on some sectors, such as asset managers and payments providers. For example, measures to prevent authorised push payment (APP) scams through Confirmation of Payee and improved intelligence sharing, and the increased number of initiatives relating to cryptoassets, will require significant collaboration between Government, the regulators and the industry to be successful.

Snapshot of some initiatives added to the February 2023 Grid

The following table outlines the next steps for some key initiatives that are new to this latest edition of the Grid:

Multi-sector
Initiative	Next steps
SMCR review	In Q1 2023, the Government will launch a Call for Evidence and the FCA and PRA will issue a joint Discussion Paper. Next steps on legislative or regulatory change dependent on findings.
Updated Green Finance Strategy	Update to the 2019 Green Finance Strategy to be published in early 2023.
Banking, credit and lending
Initiative	Next steps
FCA Finalised guidance for firms supporting their existing mortgage borrowers impacted by the rising cost of living	Finalised FCA guidance and feedback statement due H1 2023.
FCA Tailored Support Guidance (TSG) consultation	As signalled in Dear CEO letter to retail lending firms in June 2022, FCA to consult on future of TSG in H1 2023
HMT consultation on removing burdensome customer information requirements in Payment Accounts Regulations 2015	Consultation closed 17 February 2023. The Grid indicates next steps may be due in Q2 2023
Payments and cryptoassets
Initiative	Next steps
FCA consultation on strengthening requirements for safeguarding funds for payments and e-money institutions, using enhanced rule-making powers to be conferred on FCA as part of Future Regulatory Framework Review	Consultation due H1 2023. Final rules and feedback statement to be published around end 2023 / early 2024.
Bank of England/FCA consultations on rules for stablecoin regime relating to stablecoin provisions in FSM Bill	Publication of consultation expected Q1-Q2 2023.
HMT consultation on managing the failure of systemic digital settlement asset firms	Consultation response is due in H1 2023
HMT consultation on future financial services regulatory regime for cryptoassets	Consultation closes on 30 April 2023
Bank of England supervisory approach to wholesale cash	Consultation on Codes of Practice for the new market oversight regime due in 2023 (Grid indicates next steps in Q2).
Access to cash FCA rules	FCA consultation in Summer 2023, once FSM Bill has received Royal Assent.
Insurance and reinsurance
Initiative	Next steps
Evaluation of GI Pricing intervention	The FCA is discussing with firms about a data request, with actual data collection planned for 2024
Insurance guidance for the support of customers in financial difficulty	The FCA’s consultation closed on 11 March 2023 and they are aiming to publish a final Policy Statement in Q2 2023 with any guidance coming into force in July 2023.
Multi-occupancy buildings insurance	The FCA is consulting on rule changes to help leaseholders in multi-occupancy buildings to understand and engage with the insurance arranged by their landlords or freeholders. The consultation is due Q1 2023 with final rules in Q3 2023.
Annuity reinsurance concentration	The PRA is looking at increased concentrations in annuity reinsurance and whether further guidance or regulatory change is needed. Further details will be announced in due course.
Solvency II reforms	Secondary legislation to implement the Government’s proposals will follow the FSM Bill. PRA expects to consult on rule changes in June and September 2023.
Insurer Resolution Regime	The Government’s consultation on the new regime closes on 20 April 2023. The Government will respond to the consultation later in 2023.
Changes to insolvency arrangements for insurers	The changes, which have been introduced in the FSM Bill will enable the UK authorities to better manage an insurer in financial distress. The PRA’s consultation on rules to implement the legislative changes closes on 31 March 2023. Final rules and policy are due in June/July 2023.
Investment management
Initiative	Next steps
The Vote Reporting Group will collate stakeholder views on standard information given for shareholder vote reporting, to develop more comprehensive and standardised vote reporting by asset managers.	The Vote Reporting Group will publish proposals for consultation in Q2 2023.
Wholesale financial markets
Initiative	Next steps
HMT review of the short-selling regulation – including a call for evidence	Consultation closes on 5 March 2023.
The International Sustainability Standards Board (ISSB) is set to finalise international sustainability disclosure standards later in 2023. The FCA will explore implementing the ISSB standards in its rules for listed companies to replace existing Task Force on Climate-Related Financial Disclosures (TCFD) requirements.	Consultation paper in Q4 2023 with a Policy Statement in 2024.

Next steps

The FSM Bill is expected to receive Royal Assent this year. While many of the regulatory initiatives in the Bill are already reflected in the Grid, future iterations will provide further clarity on the subsequent timelines and milestones after Royal Assent.

The Forum remains committed to publishing two Grids per year where possible. This edition will be the first Grid of 2023 and the next will be published towards the end of the year. However, in order to bridge the gap between those publications, and in recognition of the impact of the FSM Bill, the Forum will provide a short statement after Royal Assent informing the sector of any important and imminent changes.

The Forum continues to welcome feedback on the Grid, particularly ways in which the Grid has been useful for stakeholders in their planning for regulatory initiatives and where it can improve on this. It is also open to suggestions on how the Grid can be better presented or provided in order to support the Forum’s key objectives. Feedback on the Grid can be sent to the Forum Secretariat at [email protected]. The Forum Secretariat may share any responses with Forum members.

Authored by Virginia Montgomery, Melanie Johnson, Sara Bradstock and Kirsten Barber.