UK Finance’s latest must–read blogs

1) Three key questions for Consumer Duty – ‘So what?’ ‘why?’ and ‘how?’?

Firms should now be thinking about their Board report at the end of the first full year of the FCA’s Consumer Duty rules.?

Much has been done since we first saw the rules – customer journeys reviewed end to end to improve customer outcomes, communications reviewed and improved to increase understanding, price and value assessments carried out, management information scrutinised, policies and procedures updated, the list goes on.?

But – so what?? What your Board (and the FCA) will be interested in is what has changed as a result of all this work.? What changes have you made to your products?? What have you learnt from your price and value work? Can you demonstrate that customers are getting better outcomes as a result of what you have done/changed? How do you know that?? Make sure you are capturing and documenting the positive changes you are making.?

Read the full blog post by Jackie Bennett, Senior Advisor, Mortgages, UK Finance.?

2) Russia: Global regulators highlight enforcement.?

On Thursday 24 February 2022 Russia launched a full-scale invasion of Ukraine, a move that was widely condemned by the international community, and a move that led to an unprecedented, coordinated response from the European Union, the United States, the United Kingdom and other members of the G7 and 5-eyes.

The UK already had sanctions in place against Russia, primarily in response to the annexation of Crimea, an incursion into Ukrainian territory which began on Thursday 27 February 2014.?

In February 2022, the UK sanctions against Russia were contained in a Statutory Instrument that contained 94 regulations, 4 schedules and ran in total to 65 pages.?

At the start of the third year of the conflict, the UK Statutory Instrument currently contains 176 regulations, 23 schedules and 489 pages. Many of the new prohibitions have been enacted under the Trade sanctions part and this now accounts for 80 per cent of the regulations. These measures are much more complex for financial services and the overlap with areas such as Export Controls increases the complexity of any trade business being undertaken.?

2022 saw a significant volume of designations and prohibitions, while 2023 saw a lower, but more complex number of prohibitions.

Governments and regulators are placing increased importance on preventing circumvention and evasion and for 2024 the message is to prepare for enforcement. Sanctions cases often take 18 months to two years to be fully investigated, a window which we are now within.?

The OFAC fines for recent years show a significant uptick for 2023, the highest fines by value for OFAC, eclipsing the previous highest value set in 2019 when there were 26 penalties issued for a value just under $1.3 billion.?

With sanctions fines coming from a number of international regulators including FinCEN and NYDFS the OFAC component of a fine is often part of a much larger settlement, as was seen with the?Binance settlement, $968.6 million of the $4.3 billion total fine was imposed by OFAC.?

Global regulators have been very clear in their messaging that 2024 is the year that they look to enforcement, and we may see the 2024 total for OFAC hit a new high water mark, though as we come to the end of Q1 for 2024, OFAC have issued one fine, compared to three at this stage in 2023.?

Read the full blog post by Neil Whiley, Director, Sanctions Policy,?UK Finance.?

3) Thoughts on the FCA’s PS24/02?

Strengthening provisions for borrowers in financial difficulty and the impact on mortgage firms?

On 10 April 2024, the Financial Conduct Authority (FCA) published?PS24/02 - Strengthening provisions for borrowers in financial difficulty. These new rules build on its Tailored Support Guidance (TSG) and widen the scope of Chapter 13 of the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB 13). ???

Reflecting UK Finance's Reach Out campaign, the new rules support the message that, the sooner a borrower engages with their lender, the better the outcome that can be achieved.?

What are the key changes for mortgage firms???

When the new rules come in to force on 4 November 2024, the expectation is that firms must consider solutions that are appropriate for the customers individual circumstances. Firms should review the forbearance they offer to borrowers in financial difficulty on a regular basis ensuring they deliver good outcomes based on the individual circumstances of the borrower. ??

It was pleasing to see that, in line with our consultation response, the definitions for ‘payment shortfall’ and ’arrears’ remain unchanged.?

Some of the key changes for mortgage firms include:??

Expanding the scope of MCOB 13 to support customers who become known to a firm as potentially facing financial difficulties ??

The requirement to detail a non-exhaustive list of forbearance options in a prominent place on a firm’s website??

Informing the customer how any proposed forbearance arrangement(s) will be reported to Credit Reference Agencies (CRAs)??

The new forbearance option to waive capital and/or interest??

The need to appropriately, and regularly review forbearance options?

Read the full blog post by Karina Hutchins, Principal, Mortgage Policy,?UK Finance.?

4) Orchestrating your way through financial crime prevention?

The spectre of fraud and financial crime looms ever larger in the financial services sector. Britain lost more than ￡500 million to fraud in the first six months of 2023 alone, according to UK Finance.?

Of this, ￡57.2 million was stolen via fake investment scams, ￡43.5 million by criminals impersonating police or bank staff and ￡18.5 million via romance scams.

As threats evolve, so must the approach to combatting them. Advanced algorithms and expansive data networks offer more robust, efficient and accurate ways to identify and mitigate financial risks. So, how do financial services firms best utilise these technologies??

Risk orchestration: the conductor of fincrime prevention and compliance?

Risk orchestration brings together various processes and tools involved in managing fincrime risk and regulatory compliance. The technology acts like a conductor in an orchestra, seamlessly coordinating KYC/B, AML checks and fraud detection into an efficient, unified workflow.?

Operational efficiencies of orchestration?

Implementing the right?orchestration technology?not only boosts the effectiveness of fincrime?prevention strategies but also enhances operational efficiency. That’s particularly around identification and verification during customer onboarding.?

Leading the fincrime fightback?

Orchestration technology makes it easier to access and connect to multiple providers simultaneously through one integrated interface. So, financial services firms can draw on best-in-class providers, while also simplifying back- and front-end processes.?

Effective risk management for borderless scale?

Having all their RegTech in one place helps businesses enter new markets more easily, scale quicker and accommodate more local customisation, while still ensuring compliance with relevant regulations.?

Read the full blog post by Riten Gohil, Digital Identity, Fraud & AML Orchestration, Signicat. ?