Financial Services and Markets Bill | UK Finance Regulatory Roadmap Series IV

As UK Finance brings back its popular Regulatory Roadmap webinar series, we joined live to bring you all the highlights on the key topics and issues impacting UK B2B financial institutions. 

Read on as we dig into the first in their series, covering the Financial Services and Markets Bill. 

What is the Financial Services and Markets Bill?

The Financial Services and Markets Bill was introduced into Parliament on 20 July 2022. Seizing the opportunities of Brexit, UK Finance described the Bill as a "once in a generation opportunity to improve regulation, enhance consumer protection and create a more competitive financial services sector".

The result of years of detailed and wide-ranging consultation, the aim of the Bill, which follows on from the Government’s ‘Future Regulatory Framework’ review, is to tailor financial services regulation to UK markets in order to bolster the competitiveness of the UK and as a global financial centre, delivering better outcomes for customers and business.

In addition to creating an open and global financial hub that will boost the competitiveness of UK markets, promote the effective use of capital, and support the leveling up agenda, a key focus of the bill will be harnessing the opportunities of innovative technologies in financial services.

Hence FullCircl was excited to join a debate hosted by UK Finance on 7^th November 2022, on this very topic.

Regulatory Roadmap

This session, hosted by Sarah Boon, MD Corporate Affairs and Strategic Policy at UK Finance, saw a panel of industry luminaries dissect what’s proposed in the Bill, its implications for how the regulators will set standards in future, as well as to reflect on the key regulatory priorities it signals for the banking and finance sector heading into 2023.

While much of the discussion focussed on what we can expect as the Bill moves through parliament for further scrutiny and approval, we picked out several key themes and have some early thoughts on how banks and FSIs can deliver on the rules of the Bill, and the role technology will play in defining successful implementation and beyond.

Embracing the opportunities

Here are our key takeaways:

1. Nimble Response

The panel were clear that to implement the Bill, banks and FSI’s will need to be nimble, open, and fluid in the response, but feared that there simply might not be enough capacity or people with the right level of expertise to implement the rules at pace.

Banks and FSIs will need to apply the rules in a way that focuses resources efficiently, reducing cost to service whilst remaining compliant.

The role of technology cannot be underplayed. Successful implementation will be best achieved by arming banks and FSIs with a customisable rule engine, powered by real-time business intelligence. This will ensure banks meet the new regulatory requirements by helping them stay one step ahead of changes as they occur whilst simultaneously streamlining regulatory checks by codifying policies and applying automation rules to data at the point of need.

Importantly this will serve to boost competitiveness, bringing me nicely to my next point.

2. Enhanced competitiveness

A key focus of discussion and one that underpins the Bill itself was harnessing the competitive opportunity. Whilst improved regulation will make a start towards increasing the attractiveness of UK financial markets, all agreed that there lies an intrinsic tension between regulation and competitiveness. So how to manage both successfully?

The answer is of course obvious - investment in technology. Tools that help banks and FSIs move fast in response to the new regulatory opportunity. Whether it’s automated data collection and critical checks, ensuring compliance, confidently targeting the right customers, growing advocacy through frictionless onboarding or consistently delivering high quality in-life experiences through the use of continuous compliance and valuable engagements at every stage of the customer lifecycle.

3. The importance of collaboration

The successful implementation of the Bill by banks and FSIs will be determined not only by speed, but also by collaboration. In particular we would draw your attention to the importance of collaboration with fintechs.
The Bill promotes the use of digital sandboxes, that will serve to enable a diverse range of financial institutions accelerating their business transformation in response.

This is a radical reform to support innovation. Digital sandboxes offer a fantastic environment to solve the biggest challenges through collaboration, providing the opportunity for banks and FSIs to securely evaluate the tools they need to deliver on regulatory requirements, whilst grasping the many opportunities it affords to improve the customer experience.

4. Tackling financial crime

As the panel pointed out, fraud is the fastest-growing crime in the UK. Whilst the Bill only addresses reimbursement, Banks and FSIs must work to counteract the explosion of possibilities for fraud and how to prevent it, rather than just deal with it once it has occurred.

Lost days are lost revenue, and banks and FSIs lose thousands of hours each year to manual processes and poor information on customers. Banks and FSIs need a proactive, rather than a reactive, approach.

Advances in data science mean financial institutions can not only ingest vast amounts of data, but analyse and match it in real-time to ensure that nothing is missed when onboarding a new customer, or continuously monitoring existing customers at scale – from shareholder information, group structure, UBOs, CCJs, gazette notices, to PEP and sanction checks - banks and FSIs that stay one step ahead of risks and have the ability to spot red flags immediately will be best placed to tackle financial crime.

5. Responding to the green finance agenda

In helping to secure the UK as a world-leading net zero financial centre, the Financial Services and Markets Bill introduces a new regulatory principle for regulators to “have regard” to the need to contribute towards achieving compliance with the Climate Change Act when discharging their duties.
Sustainability - including climate, environment, social inclusion, and social equality issues – is fast becoming the most pressing issue facing the world, impacting all aspects of society and societal systems, including financial systems. There is a huge opportunity for banks and FSIs that lead from the front.

Regulators increasingly see ESG issues as systemic risks to the UK financial system, therefore there is a huge focus on the ability of financial institutions to better identify and quantify sustainability risks and develop frameworks to tackle them.

Data and AI must play a central role if banks and FSIs are to move in the sustainable direction future success demands. From collection and triage of ESG data for due diligence and compliance, surfacing insights to sales and relationship management for prospecting, engagement, and onboarding, KYC (Know Your Customer), KYS (Know Your Supplier), to ESG-informed C-suite decision making.

Get ahead of the Financial Services and Markets Bill with FullCircl

We’ve only touched on a few of the key points here, but we created FullCircl to solve the big challenges we see on the horizon for the regulated industry sectors we serve. In helping our customers do better business, faster we provide:

• Business Information Graph (B.I.G) & API – to deliver super-connected enriched data and insights on companies and the officer inside them – updated daily
• Rules-based decision engine – a configurable, low-code decision engine to screen and onboard in seconds based on specific risk profiles and compliance rules
• Monitoring and business development – continuous monitoring and timely intelligence for proactive first engagement and remediation

We can help you get ahead of the new regulatory landscape. Contact a member of our team today to chat about the challenges you face in implementing the Financial Services and Markets Bill.