FCA regulatory sandbox: open for applications

The Financial Conduct Authority (FCA) has announced that cohort 6 of its regulatory sandbox is open for applications until 31 December 2019. The FCA is particularly interested in receiving applications from firms with propositions that:

  • make finance work for everyone, by addressing issues around access, exclusion and vulnerability;
  • support the UK in the move to a greener economy; and
  • use technology to overcome regulatory challenges, for example, by helping regulated firms comply with their obligations.

In addition, the FCA has identified two specific technology areas for which it would like to see more innovation and testing. Accordingly, the FCA welcomes applications from firms using:

  • federated learning and travelling algorithms; and
  • complex scenario modelling and simulation.

Regulation in a changing world: FCA speech

The FCA has published a speech, given by Christopher Woolard, FCA Executive Director of Strategy and Competition, on regulation in a changing world.

Mr Woolard discusses the future of financial regulation in the UK. He says that the FCA is keen to open a discussion on what type of regulation we need going forward. The time is right for change in light of: Brexit; the fact that post-crisis regulation has been implemented; the shift in consumer needs and attitudes; and the pace of innovation.

Mr Woolard mentioned that, over the coming months, the FCA will publish:

  • an open invitation for the thoughts and ideas of stakeholders on the future of regulation;
  • an analysis of future market dynamics;
  • a discussion paper on the FCA's principles for business; and
  • a consultation paper on the duty of care.

These are hot topics to look out for. For example, Mr Woolard indicates that the FCA is steering towards outcomes-focussed regulation, hinting that it may be considering a principle requiring firms to ensure consumer understanding rather than simply ensuring that communications are fair, clear and not misleading.

FCA complaints data for regulated firms

The FCA has published the complaints figures for regulated firms for the first half of 2019.

The FCA states that the data shows an increase in complaints from 3.91m in the second half of 2018 to 4.29m for the first half of 2019. The increase was mainly driven by a 34% increase in the volume of complaints about payment protection insurance (PPI). PPI complaints made up 49% of all complaints received during the relevant period, and it continues to be the most complained about product. When PPI is taken out, the latest complaints figures are the lowest volume of complaints firms have received since new reporting rules came into effect in 2016.

Excluding PPI complaints, the most complained about products remain current accounts (14% of reported complaints), credit cards (8%) and motor and transport insurance (6%).

Behavioural tools for the workplace: FCA Insight article

The FCA has published an Insight article, "Removing our biases: some behavioural tools for the workplace". The author considers how firms can avoid "groupthink" and ensure effective organisational decision-making based on challenge and planning around existing biases.

EONIA to €STR transition and €STR-based fallbacks for EURIBOR: risk management implications

The European Central Bank (ECB) Working Group on euro Risk-free Rates has published a report on the risk management implications of the transition from the euro overnight index average (EONIA) to the euro short-term rate (€STR) and the introduction of €STR-based fallbacks for the Euro Interbank Offered Rate (EURIBOR).

The report focuses mainly on the risk management implications for banks, but also touches on additional challenges facing the asset management and insurance sectors.

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