Banking and Finance

FR1197 / 9 March 2023

European Parliament

SEPA Migration Regulation - ECON publishes draft report on proposed amending Regulation - 6 March 2023

The European Parliament’s Economic and Monetary Affairs Committee (ECON) has published a draft report (2022/0341(COD)), dated 2 March 2023, on the proposal for a Regulation amending the Single Euro Payment Area (SEPA) Migration Regulation (260/2012/EU) and the Cross-Border Payments Regulation ((EU) 2021/1230) in relation to euro-denominated instant credit transfers.

The explanatory statement, appended to the draft report, notes some positive aspects of the Commission’s proposals, including:

  • amendments to the SEPA Migration Regulation to bring the current legislation up-to-date;
  • the non-discriminatory approach to instant payments as compared to other types of credit transfers; and
  • the provision of the IBAN check as a security feature and the free of charge aspect of it.

The statement also sets out several areas that could be revised to strengthen the Commission’s proposal, including:

  • clarifying how the process of effecting bulk payments (the process of sending multiple payments at once) and paper payments might be made, emphasising that the entire process of these types of payment is not expected to be immediate, but rather the payment should be made as soon as possible from the moment all the necessary details have been processed;
  • clarifying the sanctions requirements and encouraging a move from transaction-based checks to client-based ones; and
  • a call to re-visit the Settlement Finality Directive (98/26/EC) in an effort to broaden the scope of the PSPs included in the current legislation.

Draft report on the proposal for a Regulation amending Regulations (EU) no. 260/2012 and (EU) 2021/1230 as regards instant credit transfers in euro

European Banking Authority

Benchmarking diversity practices and the gender pay gap - EBA publishes report - 7 March 2023

The European Banking Authority (EBA) has published a report on the benchmarking of diversity practices and the gender pay gap at the level of the management body at European Union level under the Capital Requirements Directive IV (2013/36/EU) (CRD IV) and the Investment Firms Directive ((EU) 2019/2034) (IFD). The data in the report shows the position as at 31 December 2021 and is based on a representative sample of 662 credit institutions and 129 investment firms selected by national competent authorities (NCAs) on the basis of common criteria.

Under Article 91(11) of the CRD IV, the EBA and NCAs are required to benchmark diversity practices in institutions’ management bodies. They are also mandated to collect information on the gender pay gap of members of the management body under Article 75(1) of the CRD IV and Article 34(1) of the IFD.

The objective of the requirements is to achieve diversity within the management body and achieve a more appropriate gender balance in management bodies. In addition, significant institutions are required under Article 88(2)(a) of the CRD IV to set a target for the representation of the underrepresented gender in the management body and to take measures to increase its number. The report notes that more diverse management bodies can help improve decision-making on strategy and risk-taking by incorporating a broader range of views, opinions, experiences, perceptions, values and backgrounds. A more diverse management body reduces the phenomena of ‘group think’ and ‘herd behaviour’. The report also references the fact that diversity is not limited to gender, but also concerns the age, social mobility and geographical provenance of the members of the management body.

Key points from the report include:

  • despite the legal requirements, a significant proportion of institutions have not adopted a diversity policy;
  • more than half of the institutions and nearly half of the larger credit institutions have no female executive director;
  • the representation of women and men in boards is “insufficiently balanced” with only 11.32% of 689 CEOs being female; and
  • the data on the gender pay gap shows that gender imbalances in the remuneration of directors exist. On average, female executive directors received 9.43% less remuneration than male colleagues.

The data presented in the report makes clear that further improvements to gender balance, and diversity generally, in institutions’ management bodies is needed. Further work by institutions and the NCAs is needed to overcome the identified shortcomings with the EBA calling on firms to adopt a diversity policy.

The EBA will continue to monitor diversity, and issue periodical benchmark studies on diversity and the gender pay gap, in relation to management bodies.

EBA Report on the benchmarking of diversity practices and the gender pay gap

Press release

Treasury Committee

Mandatory reimbursement for APP scams - Treasury Committee publishes correspondence with Bank of England, FCA, PSR and FOS - 4 March 2023

The House of Commons Treasury Committee (the Committee) has published a series of letters received from the Bank of England (the Bank), the FCA, the Payment Systems Regulator (PSR) and the Financial Ombudsman Service (FOS). These follow letters dated 25 January 2023, from Harriett Baldwin MP, Chair of the Treasury Sub-Committee on Financial Services Regulations, which set out a number of questions raised by the Committee about the proposed approach to the introduction of mandatory reimbursement for authorised push payment (APP) scams. These, in turn, follow the PSR’s Consultation Paper (CP22/4) on mandatory reimbursement and cost allocation for APP scams published in September 2022 and the Treasury Committee’s report ‘Scam reimbursement: pushing for a better solution’ in response to the PSR’s proposals, published in February 2023.

The Bank’s response, in a letter dated 10 February 2023 from Sir Dave Ramsden, Deputy Governor for Markets and Banking of the Bank, sets out the steps that the Bank has taken to ensure payment system providers are reducing APP scams using the CHAPS payment system. In addition, it notes that the Bank is in “active discussion” with HM Treasury and the PSR on how best to implement the outcomes proposed by the PSR.  

The PSR’s letter, dated 14 February 2023 from Chris Hemsley, Managing Director of the PSR, to Ms Baldwin states that its proposals are subject to change, and it plans to publish its final policy statement in May 2023. The letter sets out the factors it considered ahead of its consultation on the £100 minimum threshold for reimbursement and notes that its proposals give firms the ability not to impose the threshold.

In the FCA’s letter, dated 13 February 2023 from Nikhil Rathi, Chief Executive of the FCA, the regulator agrees in principle that victims of APP fraud should be reimbursed where they have done nothing wrong. However, it states that, from a legislative perspective, there is nothing in the Payment Services Regulations 2017 which assigns liability to a payment service provider for APP fraud and, therefore, as part of next steps, legislative change may be needed.

The FOS’s response, dated 9 February 2023 from Abby Thomas, Chief Executive and Chief Ombudsman for the FOS, states that, if the consultation scheme is implemented, it plans to set up a dedicated team to fast-track cases about mandatory-scheme claims that are rejected due to allegations of gross negligence or complicity, or where the amount of redress is disputed.

Letter to Bank of England

Bank of England response

FCA response

PSR response

Letter to FOS

FOS response

Treasury Committee press release

Bank of England

Second Resolvability Assessment Framework - Bank of England publishes ‘Dear CFO’ letter - 7 March 2023

The Bank of England (the Bank) has published a ‘Dear CFO’ letter from Melanie Beaman, Executive Director of the Resolution Directorate of the Bank, in relation to preparation for the second Resolvability Assessment Framework (RAF), planned for October 2023.

The Bank is repeating its resolvability assessment of major UK firms in 2023-24 to assess their progress in addressing issues identified as part of the first assessment and to monitor progress in maintaining and enhancing their ability to achieve the three resolvability outcomes, namely: (i) having adequate financial resources in the context of a resolution; (ii) being able to continue to do business through a resolution and restructuring; and (iii) co-ordinating and communicating effectively internally, and with relevant authorities and markets, so that the resolution process and subsequent restructuring are orderly. The Bank anticipates the second RAF assessment will:

  • assess firms’ overall ability to achieve the three resolvability outcomes;
  • assess the progress that firms have made in addressing the issues identified in the first assessment; and
  • assess firms’ preparations in more detail.

Following the RAF and as with the first assessment, the Bank aims to publish a public statement in June 2024 which will include an updated assessment of each firms’ ability to achieve the three resolvability outcomes and highlight the progress that each firm has made. The statement will be supplemented with private feedback to support firms’ ongoing maintenance and enhancement of their resolvability preparations.

The Bank and the PRA will continue to engage with firms ahead of the start of the second assessment, including on issues identified by the Bank as part of the first assessment.

Dear CFO Letter


Business Banking Resolution Service

Post-Implementation Review - BBRS publishes second report of findings - 7 March 2023

The Business Banking Resolution Service (BBRS) has published a report on the second part of its Post-Implementation Review (the Report). This follows the first part of the review published in February 2022 (and reported in this Bulletin). The Report focusses on the operational effectiveness and impact of the BBRS, and whether it is delivering against its rules and operational plans.

The Report indicates that key findings from the Review PIR2 report include that: (i)the BBRS is doing what it was set up to do; (ii) cases are assessed competently; (iii) and BBRS’ decisions on case eligibility and financial awards are independent. However, original assumptions of case volumes were over-estimated and the agreed remit of the BBRS against the expectations of some small and medium-sized enterprises (SME) using the service has caused frustration. The cost of running the service is significant, given the number of cases, and case completion time taken is too long. The Report concludes that there is opportunity to significantly improve the service for SME users and sets out ten recommendations, including:

  • BBRS should prepare a paper on case volumes to confirm weaknesses in the original estimates and reset expectations on volumes of historical and contemporary cases and communicate this as a priority;
  • with the data available to it, the BBRS should consider which, if any, eligibility criteria should be amended to make the service more effective. Inflation alone since its inception would suggest that upper levels of turnover and asset value should be increased;
  • BBRS should review the case review process to remove unnecessary steps, reduce overall timescales and reduce costs and achieve early decisions. This should include a review of the appeal process to simplify it, reduce timescales and the resources required for it;
  • the BBRS should consider improving the transparency and effectiveness of its current approach to triaging cases and (where appropriate) advancing the use of conciliation and mediation instead of the investigative adjudication process;
  • for historical cases relating to personal guarantors of dissolved companies that are too small for BBRS but eligible in every other respect, and which otherwise do not have a forum to be heard, BBRS should consider putting them all forward as concessionary cases;
  • the BBRS should undertake more detailed analysis, and share the outcomes, of the time taken to progress cases and the involvement of relevant parties to ensure they are as efficient and effective as possible; and
  • the BBRS should request that each participating bank provides data at regular intervals on all decision letters issued and regular feedback on the outcome of directly resolved cases taken back from BBRS.

BBRS Post-Implementation Review Part 2 (PIR2) Report


Press release