Financial Services Regulation and Compliance - Banking Aug 2020
Financial Services Regulation and Compliance - Banking Aug 2020
CBI updates COVID-19 Hub
The Central Bank of Ireland (CBI) updated its COVID-19 Hub on 11 August 2020. In the section relating to regulated firms, the CBI has stated that credit institutions should not pay dividends for the financial years 2019 and 2020 until at least 1 January 2021 and should refrain from share buybacks aimed at remunerating shareholders.
The CBI has also stated in relation to variable remuneration that banks should adopt a prudent, forward-looking stance when deciding on their remuneration policies. This follows the recommendation of the European Systemic Risk Board of 27 May 2020 on restriction of distributions during the COVID-19 pandemic.
CBI publishes updated customer profiles for assessment of Section 149 notifications
The CBI updated its notional customer activity profiles on 25 August 2020. These profiles assist the CBI in assessing the impact of charges proposed by credit institutions on their customers. Key changes to the profiles include:
an overall reduction in OTC withdrawal usage figures, particularly for manual profile customers, due to a greater shift towards cashless transactions
a significant increase in point of sale (POS) debit transactions, including online transactions, for all customer profiles
a significant decrease in POS debit contactless transactions for electronic and standard profile customers, but an increase for manual profile customers;
an overall decrease in credit transfer usage figures, reflecting different transaction methods being used
an increase in Direct Debit/standing order charge figures for all customer profiles except the electronic profile, which remains unchanged
EBA provides clarity on the implementation of the reporting and disclosure framework in the context of COVID-19 measures
Following the publication on 2 June 2020 of its guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis, the European Banking Authority (EBA) has published a set of FAQs relating to their implementation. The FAQs provide clarification on issues raised by supervisors and credit institutions relating to the implementation of the guidelines. The new implementation and technical clarification FAQs are in section 4 of the EBA Report on the implementation of selected COVID-19 policies.
EBA publishes guidance on impact of CRR "quick fix" on supervisory reporting and disclosure
The EBA has published revised draft implementing technical standards (ITS) on supervisory reporting v3.0 along with two sets of guidelines on disclosures and supervisory reporting requirements. The guidance clarifies the application of certain "quick fix" adjustments to disclosures and supervisory reporting by institutions that were introduced in the Capital Requirements Regulation in response to the COVID-19 pandemic.
European System of Central Banks responds to European Commission consultation on EU retail payments strategy
The European System of Central Banks (ESCB) has published the text of its response to the European Commission's consultation on a retail payments strategy for the EU, following the end of the consultation period on 26 June 2020. Key points in ESCB's submission include:
action needs to be coordinated within the EU to reinforce competitiveness and independence in the field of payments
EU legislation is required to ensure mandatory compliance with SEPA credit transfer scheme and to add instant credit transfers to the list of services in the Payment Accounts Directive
access to cash needs to be preserved as well as acceptance of cash at the point of sale
open banking for European retail payments offers further scope for expansion, and cooperation between banks and TPPs should be encouraged
settlement finality systems should be opened up to payment institutions and e-money institutions through a revised settlement finality directive
EBA consults on the use of regtech solutions and ways to support the uptake of regtech across the EU
The EBA opened a consultation and regtech industry survey on 13 August 2020 to share views and experiences on regtech solutions. The objective is to better understand the ongoing activity in the area and to facilitate uptake of regtech solutions and address any related risks. The consultation deadline is 30 September 2020.
EBA updates its work programme for 2020 in light of the COVID-19 pandemic
The EBA has published an updated work programme for 2020, taking into account the impact of COVID-19 on its planned work and activities. The updated work plan seeks to minimise the burden on banks and limit the EBA's interaction with the industry, allowing banks to focus on, and ensure continuity of, their core operations including providing support to their customers. Consultations have only been launched where deemed to be critical, and final technical standards have been postponed, depending on the degree of finalisation and implementation timeframes. Data collection has also been put on hold where used by the EBA for ad-hoc analyses.
EBA makes available online tools to submit answers to its study of cost of compliance with supervisory reporting
The EBA has made tools available online to allow stakeholders to submit responses to its study of the cost of compliance in supervisory reporting. Two separate online surveys for the quantitative and qualitative components of the questionnaire are available and may be completed by 1 October 2020 (qualitative) and 31 October 2020 (quantitative).
EBA consults on guidelines on criteria for the use of data inputs in the expected shortfall risk measure under the internal model approach
The EBA has launched a consultation on draft guidelines on criteria for the use of data inputs in the risk-measurement model referred to in Article 325bc under the internal model approach (IMA) for market risk. The guidelines come as part of the package of deliverables published under the roadmap for the new market and counterparty credit risk approaches.
The consultation runs until 12 November 2020.
ESCB/European banking supervision response to the European Commission’s public consultation on a new digital finance strategy for Europe/fintech action plan
The ESCB's response to the European Commission's consultation on digital finance/fintech was published on 27 August 2020. The ESCB broadly supports the proposals of the European Commission, but recognises the risks of innovative technologies as well as the EU's dependence on non-EU providers of critical services and technical infrastructures. The ESCB also emphasised the need for a technology-neutral approach to regulation of financial services.
EBA issues opinion on the European Commission’s intention to amend the EBA’s final draft Regulatory Technical Standards on economic downturns
The EBA has published an opinion in response to the European Commission's intention to amend the EBA's final draft Regulatory Technical Standard (RTS) on the specification of the nature, severity and duration of an economic downturn. The EBA has suggested several changes with the aim of maintaining the agreed consensus of the originally submitted text.