European Commission
COVID-19 – the European Commission publishes statement on the European Parliament’s approval of Recovery and Resilience Facility – 10 February 2021
The European Commission has published a statement welcoming the European Parliament’s approval of the political agreement reached on the Recovery and Resilience Facility (RRF) Regulation in December 2020. This marks a key step towards making €672.5 billion available for loans and grants to EU Member States to support reforms and investments.
The RRF is one element of the EU’s plan for emerging stronger from COVID-19, entitled ‘NextGenerationEU’. It is structured around six pillars: (i) green transition; (ii) digital transformation; (iii) economic cohesion, productivity and competitiveness; (iv) social and territorial cohesion; (v) health, economic, social and institutional resilience; and (vi) policies for the next generation.
The Council of the EU now needs to formally approve the agreement before the Presidents of the ECOFIN Council and the European Parliament can sign it. The RRF should then come into force in the second half of February, after which EU Member States will be able to submit their national recovery and resilience plans to be supported by the RRF, which will be assessed by the Commission and adopted by the Council.
European Commission press release on the RRF
Q&As
Factsheet
Regulation as tabled for the EP plenary
Prudential Regulation Authority
COVID-19 – PRA publishes regulatory reporting statement – 5 February 2020
The PRA has published a statement on regulatory reporting amendments as a result of COVID-19, following its June 2020 statement on the same matter. The statement indicates that, in light of government guidance on COVID-19 restrictions, the PRA will accept a two calendar month delay for submissions by UK banks and designated investment firms of their annual reports and accounts, where deadlines fall before 31 July 2021. The PRA also indicates that it will accept a similar delay for building societies, although such firms should consider other statutory requirements that apply to them.
Firms are reminded that they should notify their PRA supervisory contact of any significant developments in their financial circumstances and are encouraged to submit before the end of the time extension if they are able to do so.
The PRA also indicates that it is aware that COVID-19 may be creating challenges for some firms in meeting other regulatory reporting deadlines and that it will be flexible on firms’ submissions where the deadlines fall on or before 31 March 2021 and the reporting is not time-critical for supervisors. Firms expecting to experience difficulties should contact their PRA supervisor in advance.
PRA press release
Financial Conduct Authority
COVID-19 – FCA publishes regulatory reporting update – 5 February 2021
The FCA has published an update on allowing flexibility in the submission deadline for annual reports and accounts in light of COVID-19. Firms may apply for a two-month extension to the deadline for submissions due up to and including 31 July 2021. Firms who are able to submit their reports on time should do so. In any event, firms should submit their reports no later than 30 September 2021.
FCA webpage
Technology change – FCA publishes report on multi-firm review - 5 February 2021
The FCA has published a report following its review of how firms implement technology change. The review considered a sample of 23 firms from across the financial services sector, all of whom implemented technology change during 2019. The FCA’s findings include the following:
- technology change failure is one of the primary causes of operational disruption, accounting for a quarter of high-severity incidents which cause harm to consumers and markets;
- firms with well-established risk management strategies and strict testing procedures are more successful in implementing technology change and those which implement such changes more frequently do so more effectively; and
- over 90% of the firms surveyed use legacy technology to deliver services and this often requires emergency changes due to failure and resulting disruption to services.
The FCA makes clear that it recognises COVID-19 has posed challenges to updating technology. It envisages that the report’s findings will increase industry dialogue on how to reduce the frequency and severity of disruption due to technology change implementation.
FCA Report on multi-firm review of technology change implementation
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COVID-19 – FCA publishes findings from impact survey – 11 February 2021
The FCA has published a report on the findings from its Financial Lives survey (FLS) which looked at consumers’ financial situations, the financial products they choose and their experiences of engaging with financial services firms. The FCA concluded its FLS research in February 2020 and ran an additional survey in October 2020 to better understand the impact of COVID-19. More than 16,000 consumers were surveyed between August 2019 and February 2020, followed by a further 22,000 respondents to the October survey.
The October survey found that there are now 27.7 million adults in the UK with characteristics of vulnerability including poor health, low financial resilience or recent negative life events. This figure is up 15% (from 24 million) since the FCA completed its FLS research in February 2020.
The FCA also found that the number of consumers with low financial resilience (over-indebtedness, low levels of savings, low or erratic earnings) has grown over the course of 2020 from 10.7 million to 14.2 million. By October 2020, one in three adults were expecting their household income to fall during the next six months, while one in four expected to struggle to make ends meet. In contrast, 48% of adults reported not having been financially affected by COVID-19 and 16% who have actually seen a financial improvement.
FCA report – Financial Lives 2020 and the impact of COVID-19
Executive summary
Press release
Updated webpage
European Securities and Markets Authority
Digital operational resilience – ESMA publishes letter on proposed Regulation – 9 February 2021
The European Securities and Markets Authority (ESMA) has published a letter sent jointly by ESMA, the European Insurance and Occupational Pensions Authority (EIOPA) and the European Banking Authority (EBA) (together, the European Supervisory Authorities, or ESAs) on a proposed Regulation on digital operational resilience for the financial sector (2020/0266 (COD)).
The letter sets out proposed modifications to the Regulation’s oversight framework covering the ICT services provided by critical third-party providers (CTPPs) to the financial sector and relating to:
- governance: the ESAs are concerned about the proposed governance and decision-making process between the Oversight Forum, the Joint Committee and the Boards of Supervisors of the ESAs. They propose the creation of a joint-ESA executive body that would integrate the role of the Oversight Forum and be responsible for the overall oversight work of cross-sector CTPPs. They further suggest that the Regulation could clarify the potential designation of CTPPs providing services to financial entities across the remit of a single CTPP-focused ESA;
- oversight work: the ESAs highlight the mismatch between the powers given to the ESAs to conduct their oversight work and the lack of powers relating to the follow-up process for their own recommendations. They propose greater ESA involvement in that process and the introduction of effective EU enforcement measures that can be applied directly to CTPPs;
- resourcing: the ESAs are concerned at the volume of mandates for technical standards, guidelines and reports required by the Regulation, largely to be provided within 12 months, given that no additional resource has been allocated. The ESAs strongly recommend that additional resources be allocated for this purpose and for discussion on timelines and deliverables; and
- proportionality: the ESAs also suggest that the Regulation is amended to include the principle of proportionality more widely.
Letter from ESAs on proposed digital operational resilience regulation
