The FCA has published a speech entitled Regulatory priorities for retail banking, delivered by Karina McTeague, Director of Retail Banking Supervision at the FCA.

Key points in the speech include:

  • in relation to retail banking, the FCA set out a strategic review of banking business models that will: (i) assess the impact of the aggregated changes on retail banking models; (ii) consider the implications for consumers and competition; and (iii) ensure its regulatory approach remains fit for purpose. Phase 1 of the review was launched in April 2017 and the FCA expects to share its findings mid-2018. Phase 2 of the review will focus on scenario analysis and will evaluate the impact of different scenarios on retail banking models and profitability, including a “lower for longer” interest rate environment and the changes arising from digital conversion, Open Banking, the revised Payment Services Directive (PSD2) and ring-fencing;
  • the FCA recognises that although PSD2 comes into effect in January 2018, it seems unlikely that regulatory technical standards (RTS) that prescribe safety and security requirements will be in place before mid-2019. Pending the formal implementation of the RTS, the FCA expects all firms to have in place policies and procedures to monitor, identify and prevent fraud by keeping their customers’ data safe and secure. The FCA will also review fraud reports submitted by firms to determine the effectiveness of their fraud detection and prevention capabilities and to gain an overview of the sector; and
  • the FCA is also extending its programme of proactive engagement with existing services institutions, as well as preparing to supervise the newly regulated account information service providers and payment initiation service providers. As part of its proactive supervision of payment institutions, the FCA will be looking to see: (i) firms’ culture that prioritises treating customers fairly and doesn’t take inappropriate advantages or ill-informed, naive or vulnerable customers; (ii) firms’ sound systems and controls for effectively managing financial risks, such as safeguarding and operational resilience; (iii) and firms’ sound system and controls to combat the risk that are used for financial crime and money laundering purposes.

View Regulatory priorities for retail banking, 23 November 2017