UK regulators outline responsibilities for market transparency, resilience and efficiency

UK regulators highlight responsibilities and concerns around the transparency, integrity, resilience and efficiencies of key market events and sectors

The UK’s prudential regulator (PRA) has issued its proposed views and expectations of general insurance firms when handling any ‘market-turning event’ (see CP 32/16) with a consultation period ending in late-December. This draft supervisory statement gives guidance to firms on planning, handling and learning from such significant events, which might affect their resilience, solvency and future business strategy. Such events might result in increased claim levels, put pressure on increasing premiums or adversely impact the firms’ profits, and the proposals covers both medium and longer-term considerations. In addition, the FCA has also issued material concerning new rules and guidance for general insurance firm enhancing disclosure and renewal practices (see FCA PS16/21).This is designed to achieve more transparency, and the better treatment and engagement with customers during renewal, enabling customers to make more informed decisions. Accordingly, both providers and intermediaries within the retail general insurance market need to potentially modify renewal processes, systems and communications to deliver compliance with these new policy arrangements from April 2017.

The Competition and Markets Authority (CMA) has also now issued its final findings of its investigations into the retail banking market. As part of a package of actions to address concerns over market barriers and a lack of robust completion, it has called upon the UK’s conduct regulator (FCA) to undertake further review work to ensure that industry practices and processes support consumer protection and choice, and the proper awareness and understanding of consumers. In an attempt to further shape and influence future market standards and behaviours, the review has considered the prevailing practice and efficiency issues, but also future challenges being faced across the retail banking market. This important review has concluded that the established UK banking businesses still have a strong and dominant grip in terms of levels of customer retention and loyalty, with potential adverse impacts on market entry and competition. A package of changes and initiatives are now being pursued to further encourage and enable customers to make informed choices on the value and cost effectiveness of services provided, such as the ability for customers to openly but securely share their banking data, using an ‘open banking standard’ to better identify, access and secure services and take better control of their own financial needs and circumstances. A number of other measures will be rolled-out through to mid-2018, designed to address or improve the quality of information provided, with more transparency on areas such as costs, interest rates and service and event alerts or prompts e.g. concerning overdrafts etc.

The outcome and eventual repercussions of both of these recent consultative and policy outputs are likely to filter down and across future regulatory standards and regimes impacting the UK’s respective industry sectors. Indeed the ramifications are likely to foster and extend across future structural and technological changes, innovations and challenges facing both sectors and markets.