Financial Stability Board and International Monetary Fund
G20 Data Gaps Initiative - FSB and IMF publish progress report - 8 October 2021
The Financial Stability Board (FSB) and the International Monetary Fund (IMF) have published their sixth progress report on the implementation of the second phase of the G20 Data Gaps Initiative. This follows a request from the G20 Ministers and Governors to explore information gaps and make proposals for strengthening data collection.
The progress report refers to the challenges posed by the COVID-19 pandemic and sets out a number of new statistical and data priorities, including in relation to climate change; household distributional information; fintech and financial inclusion data; access to private sources of data and administrative data, and data sharing.
FSB/IMF report on G20 Data Gaps Initiative
Webpage
Press release
Task Force on Climate-Related Financial Disclosures
Climate-related financial disclosures - TCFD publishes 2021 status report and guidance - 14 October 2021
The Financial Stability Board’s (FSB) Task Force on Climate-related Disclosures (TCFD) has published its 2021 status report, the fourth of its kind, together with two guidance documents.
The report analyses the extent to which companies are aligning their climate-related disclosures with the recommendations of the TCFD and provides an update on developments and initiatives which support the work of the TCFD. It also covers the key findings from a study which considered the financial impact that climate-related disclosures can have on risks and opportunities in business strategies.
The report states that, overall, significant progress is still needed in relation to companies’ consideration of climate-related issues within financial decision-making. That said, progress is being made in relation to climate-related disclosures, including that:
- the TCFD now has support from over 2,600 organisations across 89 countries - an increase of over a third compared to the findings of the 2020 status report - and Europe remains the leading region for disclosures;
- climate-related disclosures in line with TCFD recommendations have accelerated over the last year more than in any other year previously assessed;
- 50% of the companies reviewed made climate-related disclosures in line with the TCFD recommendations;
- notably, disclosure of the resilience of corporate strategy against several climate-related scenarios increased from 5% in 2018 to 13% in 2020, albeit this remains the least reported metric; and
- while materials and building companies lead on disclosure, the Insurance sector experienced a high increase in the average level of climate-related disclosures and now leads all groups in the disclosure of risk management processes.
The TCFD has also published two guidance documents alongside the report. The first of these contains new guidance on metrics, targets, and transition plans for companies disclosing ‘decision-useful’ information and linking such disclosures to financial impact estimates. The second contains updated guidance on implementing the TCFD recommendations, including changes to the governance and strategy, and metrics and targets sections.
The FSB has issued a statement indicating it welcomes the report and asking the TCFD to continue its work to promote and monitor companies’ progress and publish a further status report in September 2022.
TCFD Report: Task Force on Climate-related Financial Disclosures 2021 Status Report
Guidance on Metrics, Targets and Transition Plans
Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures
Webpage
FSB Press Release
The Network for Greening the Financial System
Biodiversity and Financial Stability - NGFS and INSPIRE publish an interim report - 8 October 2021
The Network For Greening The Financial System (NGFS) and the International Network for Sustainable Financial Policy Insights, Research and Exchange (INSPIRE) have published an Interim Report entitled ‘Biodiversity and financial stability: building the case for action’ as part of their joint study group.
According to the Interim Report, there is growing evidence that "biodiversity loss could have significant economic and financial implications, because the decline of ecosystem services poses physical risks for the economic actors that depend on them. These actors also face transition risks from policies designed to halt biodiversity loss". The report recommends that central banks and financial supervisors take appropriate action in response, including by signalling to financial institutions the importance of understanding the risks arising from their dependencies and impacts on biodiversity.
The Final Report from the study group is expected to be published in early 2022.
NGFS Biodiversity and financial stability: building the case for action - study group interim report
Press release
HM Treasury
The Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2021 - 8 October 2021
The Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2021 (SI 2021/1127) has been published, together with an explanatory memorandum.
The Order amends the list of persons in Part 1 of the Schedule to the Financial Services and Markets Act 2000 (Exemption) Order 2001 (SI 2001/1201) to include UK Infrastructure Bank Ltd., the entity established by the UK Government in July 2021 to support the financing of private and local authority infrastructure projects, with core objectives to tackle climate change and support regional and local economic growth. UK Infrastructure Bank Ltd. is exempted from the general prohibition in respect of any regulated activities specified in the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (SI 2001/544) (RAO), other than insurance business.
The Order will come into force on 1 November 2021.
The Financial Services and Markets Act 2000 (Exemption) (Amendment) Order 2021
Explanatory Memorandum
Webpage
Financial Policy Committee
Financial stability - FPC publishes Summary and Record of meeting - 8 October 2021
The Bank of England’s Financial Policy Committee (FPC) has published a Summary and Record of its meeting of 23 September 2021. The Summary refers to the proposed exclusion of central bank reserves from the metric which determines buffer rates for Other Systemically Important Institutions (O-SII).
The Summary also includes a section on outsourcing and third party-dependencies, noting that additional policy measures are likely to be needed to mitigate the risks associated with firms’ reliance on critical third parties. The FPC supports the intention of the Bank of England, the PRA and the FCA to publish a joint Discussion Paper in 2022 on these issues.
Summary and record of the FPC meeting
Financial Conduct Authority
Remote or hybrid working expectations for firms - FCA publishes new webpage - 11 October 2021
The FCA has released a new webpage setting out its expectations on remote and hybrid working for existing firms, firms that are applying for authorisation and firms that are applying for waivers, variations of permission or changes of control. The webpage contains a list of wide-ranging considerations which, according to the FCA, are likely to evolve over time.
In short, “it's important any form of remote or hybrid working adopted should not risk or compromise the firm's ability to follow all rules, regulatory standards and obligations, or lead to a failure to meet them”. In particular, firms should be able to prove that the lack of a centralised location or remote working does not, nor is likely to, affect the firm’s location in the UK and its ability to meet and continue to meet the threshold conditions. Moreover, it must not prevent the FCA receiving information, cause detriment to consumers or increase the risk of financial crime. Firms are expected to carry out satisfactory planning, including in relation to the maintenance of appropriate governance and oversight by senior managers under the senior managers regime. Any material changes to how a firm intends to operate may require prior notification to the FCA.
The FCA notes that a firm’s application for authorisation or registration should cover certain specific details, where applicable. For example, depending on the firm’s business model, it might need to refer to the arrangements for remote working and business continuity plan requirements when using home networks.
FCA webpage
Financial Ombudsman Service
Compensation for distress, inconvenience or other non-financial loss - FOS publishes updated guidance - 13 October 2021
The Financial Ombudsman Service (FOS) has published updated guidance for both businesses and consumers in relation to the making of compensatory awards for distress or inconvenience.
Principal Ombudsman and Director of Investigation, Garry Wilkinson, confirms in a FOS blog post published the same day that the updated guidance does not represent a change in approach, but provides more detailed guidance on, and examples of, the awards for distress and inconvenience that the FOS may make. More specifically, the guidance includes:
- more case studies to support businesses and consumers’ understanding of what fair compensation might be in relation to particular complaints;
- more case studies on the level of award the FOS may make where a business’s mistake may have a serious impact on a customer;
- examples of where the FOS may make awards for other non-financial loss, including damage to reputation, and pain and suffering; and
- for consumers specifically, the circumstances in which FOS may make an award.
FOS blog post: Awards for distress and inconvenience - what businesses need to know
FOS guidance for businesses
FOS guidance for consumers
