2015 has the potential to be a turning point in terms of the post-crisis re-regulatory agenda, when the focus shifts from repairing balance sheets and reputations to the role of financial services in promoting jobs and growth.  And indeed from proposing new rules to implementing the multitude that has been agreed over that last few years. Deloitte's EMEA Centre for Regulatory Strategy have identified what we believe to be the ten key areas of regulatory focus for financial markets in 2015.

As we discuss in detail in Top 10 for 2015 – Our outlook for financial markets regulation there are - we believe - grounds for cautious optimism. 

The 10 key areas of focus for the regulatory agenda next year, in no particular order are:

  • Structural reform and resolution in the banking sector
  • New institutions in action
  • Data and regulatory reporting
  • Culture and treatment of customers
  • Competition and innovation
  • Stress testing and risk management
  • Capital Markets Union
  • Business model mix in a world of multiple constraints
  • Solvency II and insurance capital
  • The interaction of market structures in different countries

Banking

On the banking front, the vast majority of the new primary requirements are now in place, although there is still a significant amount of implementing detail to come. The new European Commission and Parliament will push ahead with work to decide what falls under the umbrella of the Capital Markets Union. Recognition of the need for capital markets and non-bank finance to contribute to the jobs and growth agenda could moderate the approach that would otherwise have been taken to deal with concerns about shadow banking. And, after a very lengthy gestation, preparations for Solvency II will enter their final year.

A fresh start

2015 will see new institutions making a fresh start, and they will be determined to make their presence felt. The European Central Bank, via the Single Supervisory Mechanism, has taken over as the prudential supervisor of euro-area banks. The new Single Resolution Board will look at the resolvability of the cross-border euro-area banks. And in the UK, the new Banking Standards Review Council will aim to draw a line under past misconduct and reset standards in banking. However, there are undeniably some quite ominous clouds on the horizon. 

Rising standards

Standards and expectations have risen enormously across the board for all financial services firms and financial and other penalties for transgressions seem to be rising inexorably. Even if the balance is shifting from policy formulation to action and implementation, regulation will continue to occupy significant resources and senior management time, including building relationships with the new institutions. 

The devil in the detail

In particular, although primary legislation is in place for most of the new EU Regulations and Directives initiated by the last European Commission and Parliament, there is a formidable amount of detailed implementing standards still to come. There will be plenty of devils lurking in these details.

Decision time

Regardless of whether 2015 is a year of relative brightness or darkness, firms will have to take some key strategic and business model decisions about which activities and products remain viable in a world of new, and in the case of banks, multiple regulatory constraints on balance sheets.

In 2015 banks will be most affected, but Solvency II will raise similar questions for some insurers.

The new regulatory environment will create opportunities and challenges both for incumbents and newcomers. In a world where firms may more readily be allowed to fail, and with "challengers" knocking at many doors, agility and forward-thinking will be key.

For information and to read the full report, visit www.deloitte.co.uk/regulatorytop10

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