Keeping ahead of regulatory developments: the new regulatory initiatives grid

On 7 May 2020, the Financial Services Regulatory Initiatives Forum (the Forum) published the Regulatory Initiatives Grid (the Grid). The Grid was published earlier than originally planned in response to the pressures the financial services industry is under as a result of the COVID-19 crisis. The Grid maps out the regulatory pipeline by quarter over the next 12 months and is intended to assist firms and other stakeholders with their understanding of regulatory changes that may have a significant operational impact on them, and their preparations for implementing such changes. It will run initially as a pilot and is expected to be published at least twice a year.

We set out below an overview of:

• the Forum and its relationship to the Grid
• the regulatory response to COVID-19 as set out in the Grid
• key initiatives and timeframes set out in the Grid
• how to read sector-specific parts of the Grid
• how to feedback on the pilot and expectations for future editions of the Grid.

Financial Services Regulatory Initiatives Forum and the Grid

The Forum is made up of representatives from the Bank of England, the FCA, the PRA, the Payment Systems Regulator, the Competition and Markets Authority, and HM Treasury (as an observer member), and aims to strengthen regulatory coordination.

The Forum was launched in response to the Financial Services Future Regulatory Framework Review, which confirmed the benefits of effective regulatory coordination, and was also intended to respond to the recommendation for an 'air traffic control' forum in the Future of Finance report.

The Grid provides a vehicle for circulating information on the expected timing of regulatory initiatives at the date of publication, but it is not a substitute for Forum members' publications on the substance of initiatives. As a mechanism for sharing information and supporting coordination between authorities, the Forum itself does not have decision-making powers, and the content of regulation is the responsibility of individual Forum members.

Forum members may continue to change the timing and substance of initiatives and announce new initiatives going forward.

Reducing operational burdens in response to COVID-19

The Grid's foreword explains that authorities have cancelled or delayed several initiatives that were in the pipeline to reduce operational burdens on regulated firms. Key examples include:

• The cancellation of the Bank of England's 2020 annual stress test and annual cyclical scenario, and its decision to pause completion of the 2019 biennial exploratory scenario on liquidity.
• The extension of the closing dates of many open consultations to 1 October.
• The delay of various reviews and new initiatives announced in the Budget.
• The delay of certain international implementation steps, for example in relation to Basel 3.1 and phases five and six of enhanced bilateral margin obligations.

The Forum confirms that it will "keep these plans under review as the situation develops, and consider whether some initiatives should be delayed further, once the longer term impact of Covid-19 on the sector, and the economy, is better understood".

Key initiatives and timeframes

Overview

The Grid's executive summary and key initiatives timeline encourages readers to consider its contents within three discrete periods: the near-term, the medium-term, and the longer-term.

Near-term (i.e. from now through the summer)

The Grid shows that during this period, the key initiative was the start of registration for the new data collection platform, replacing GABRIEL.

The Forum's main focus during this period is on responding to the impact of Covid-19 and mitigating its negative effects; relatively few policies will enter into force to free up operational capacity. This aims to allow "industry manoeuvrability" to support businesses and customers.

Medium-term (i.e. from the end of the summer to March 2021)

The Grid shows that during this period, key initiatives include:

• Open banking implementation.
• The entering into force of CRDV and BRRDII requirements.
• The end of the Onshoring transition period.
• The end of the EU withdrawal transition period.

The extension of a number of consultation periods to October may lead to the finalisation of a substantial volume of policy at around the turn of the year. This period also includes the end of the Brexit transition period which will require further regulatory initiatives. In this context, and in light of the uncertainty around the impact of COVID-19, the timing for a number of initiatives in this period has not yet been confirmed. This will require further reprioritisation by Forum members, who will continue to review the planning of policy finalisation and implementation dates to manage operational demand.

The longer term (i.e. April 2021 and beyond)

During this period, key initiatives include:

• EU CRRII implementation.
• Bilateral margin obligations phase 1-5.
• First report to regulators under the Resolution Framework.
• Transition from LIBOR.
• Investment firms prudential regime.
• All major UK banks to meet standards set to ensure resolution plans will be effective.
• Basel 3.1 international implementation deadline.

Considerable implementation lead-time has been provided for most high impact initiatives, many of which relate to globally agreed regulatory objectives and the implementation of international standards. The Grid notes that even for some of these longer-term initiatives, Forum members may need to reconsider implementation milestones.

Reading sector-specific sections of the Grid

Overview

The Grid is organised by sector, and also includes a 'multi-sector' chapter covering cross-sectoral initiatives.

The sectors are as follows:

• Banking
• Payment services and systems and market infrastructure
• Insurance and reinsurance
• Pensions and retirement income
• Retail investments
• Investment management
• Wholesale financial markets

Chapters generally include a brief introduction, highlighting the most significant initiatives in connection with the operational impact on firms.

Initiatives

For each initiative, the Grid sets out information about:

• which of the Forum members is taking the lead
• a high level description of the initiative
• the timing of related milestones, where known
• the estimated scale of operational impact
• a quarterly breakdown of plans
• timing amendments for COVID-19.

Criteria for inclusion

Initiatives may be included in the Grid if they meet two criteria: they must represent "public information" i.e. information which has been made available through each of the Forum members' regular communication channels, and also have an individually significant operational impact during their implementation by firms. This second requirement means that the initiative is one that the Forum believes is likely to consume a "meaningful amount" of firms' time and resources.

Initiatives led by international bodies, where Forum members are not playing a substantial role in their implementation in the UK, are not included. Similarly, the Grid does not include enforcement actions and most supervisory activities which are firm-specific.

Future editions of the Grid

Changes in future

Owing to the pilot's early launch in the context of the global pandemic, certain features are likely to change in future editions. For example, such editions are likely to cover a period of 24 rather than 12 months, and will have fewer indicative or indeterminate timing projections.

Feedback

The Forum encourages firms and other stakeholders to provide feedback on the pilot by contacting FSRIFSecretariat@fca.org.uk.

Help is at hand

If you have any questions regarding the regulatory pipeline or are interested in hearing more about initiatives affecting specific sectors, please get in touch.