1 Legal framework
1.1 Which legislative and regulatory provisions govern the banking sector in your jurisdiction?
The principal statutes governing the banking industry in the United Kingdom are:
- the Financial Services and Markets Act (FSMA) 2000 (as amended);
- the Banking Act 2009;
- the Financial Services (Banking Reform) Act 2013; and
- the Bank of England and Financial Services Act 2016.
A number of regulations - generally expressed in statutory instrument form - as well as the Prudential Regulation Authority (PRA) Rulebook and the Financial Conduct Authority (FCA) Handbook contain detailed rules applicable to the banking industry in the United Kingdom.
The Payment Services Regulations 2017 (SI 2017/752) (PSR) govern the provision of payment services in the United Kingdom. Those providing such services are required to adhere to the business conduct provisions laid out in PSR.
The primary regulatory framework for consumer credit activities is set out in the FSMA 2000 and in the Consumer Credit Act 1974 (as amended).
The Banking Act 2009 established a Special Resolution Regime (SRR) to facilitate the orderly resolution of banks in financial distress. It includes pre-insolvency stabilisation options, a bank insolvency procedure and a bank administration procedure. An insolvency regime that applies to investment banks (including banks carrying on investment banking activities) is set out in the Investment Bank Special Administration Regulations 2011.
On 1 January 2018, the Benchmarks Regulation (Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (Regulation (EU) 2016/1011) (BMR) came into force. The FCA is the United Kingdom's national competent authority under the BMR. The principal objectives of the BMR are restoration of investor and consumer confidence in the accuracy, robustness and integrity of indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds, and the benchmark setting process itself. The BMR aims to achieve this by ensuring that benchmarks are not subject to conflicts of interest, are used appropriately and reflect the actual market or economic reality that they are intended to measure.
On 27 February 2018, the Financial Services and Markets Act 2000 (Benchmarks) Regulations 2018 (SI 2018/135) (Benchmarks Regulations) came into force in the United Kingdom. The Benchmarks Regulations:
- designate the FCA as the UK competent authority for the purposes of the BMR;
- permit the FCA to exercise powers over persons who are not authorised and are involved in the provision of, or contribution of input data to, a benchmark, but are not benchmark administrators as defined in the BMR as ‘miscellaneous BM persons';
- empower the FCA to impose requirements on persons needing them to administer or contribute to a benchmark; and
- provide for the FCA to regulate benchmark administrators, including the recognition of third-country administrators.
The Benchmarks Regulations amend secondary legislation - including the Financial Services and Markets Act 2000 (Exemption) Order 2001 (SI 2001/1201) and the Consumer Credit (Disclosure of Information) Regulations 2010 (SI 2010/1013) - to reflect the BMR. In addition, they make a minor amendment to Section 293 of the FSMA 2000 relating to the implementation of the EU Cybersecurity Directive (2016/1148/EU).
The Financial Services (Banking Reform) Act 2013 (Commencement No 12) Order 2018 (SI 2018/1306) was published on 5 December 2018; as were the Bank of England (Amendment) EU Exit) Regulations 2018 (SI 2018/1297).
1.2 Which bilateral and multilateral instruments on banking have effect in your jurisdiction? How is regulatory cooperation and consolidated supervision assured?
A number of bilateral and multilateral instruments are relevant - in particular:
- standards issued by the Basel Committee on Banking Supervision; and
- international tax standards, such as the Organisation for Economic Co-operation and Development's Common Reporting Standards.
1.3 Which bodies are responsible for enforcing the applicable laws and regulations? What powers (including sanctions) do they have?
The UK banking sector is regulated for prudential purposes by:
- the PRA, which is part of the Bank of England, the UK central bank; and
- the FCA for conduct purposes.
The Financial Policy Committee (FPC), which operates from within the Bank of England, acts as the macro-prudential regulator for the UK financial system.
The FSMA 2000, as amended, sets out the PRA's and the FCA's statutory objectives. The PRA's principal objective is to promote the safety and soundness of the firms it regulates. On 28 March 2018, the PRA published Supervisory Statement (SS)1/18, "International banks: the Prudential Regulation Authority's approach to branch authorisation and supervision", which replaces SS10/14, "Supervising international banks: the Prudential Regulation Authority's approach to branch supervision". SS 1/18 is relevant to all PRA-authorised banks and designated investment firms not incorporated in the United Kingdom that form part of a non-UK headquartered group (international banks) and which are operating in the United Kingdom through a branch, as well as any such firm looking to apply for PRA authorisation in the future. The new approach came into effect on 29 March 2018.
For European Economic Area firms currently branching into the United Kingdom under ‘passporting' arrangements and intending to apply for PRA authorisation in order to continue operating in the United Kingdom after its withdrawal from the European Union, this approach will be relevant to authorisations. The PRA will keep the policy under review to assess whether any changes will be required due to changes in the UK financial system or regulatory framework, including those arising once any new arrangements with the European Union take effect after the United Kingdom's withdrawal from the European Union, which will take place on 31 January 2020.
The FCA's strategic objective is to ensure that the relevant markets function well. The FCA's operational objectives are:
- the consumer protection objective;
- the integrity objective; and
- the competition objective.
The FPC's primary responsibility is to protect and enhance the resilience of the United Kingdom's financial system. This involves identifying, monitoring and taking action to reduce systemic risks. Its secondary objective is to support the economic policy of the government.
The PRA is responsible for the prudential regulation and supervision of the banking sector. Under the FSMA 2000 (as amended), it is a criminal offence for a person to carry on a ‘regulated activity' in the United Kingdom unless authorised to do so or exempt from the authorisation requirement. Regulated activities are defined in secondary legislation. Deposit taking is a regulated activity that requires authorisation. Other regulated activities that require authorisation include:
- dealing in investments as principal;
- dealing in investments as agent;
- arranging deals in investments;
- managing investments;
- safeguarding and administering investments (ie, custody); and
- providing investment advice and mortgage lending.
- debentures (including sukuk);
- public securities;
- contracts for difference (ie, swaps); and
- units in collective investment schemes.
On 20 December 2018, the PRA and the Bank of England published a joint consultation paper on further Brexit-related changes to the PRA Rulebook and binding technical standards (Consultation Paper 32/18).
The FCA is the conduct regulator of businesses in the banking sector. The FCA acts a prudential regulator for persons that are not prudentially regulated by the PRA. The FCA took over the responsibility of regulating consumer credit firms in 2014, with these firms being subject to the FCA's consumer protection rules and principles of business. The Bank of England aims to ensure that if and when a bank fails, it does so in an orderly manner, with as little impact on the UK financial system as a whole as reasonably practicable and in line with the SRR. The Treasury is responsible for drawing up the Code of Practice as guidance on how and when the SRR is to be used. The payment services regulator is responsible for the payment services in the UK banking sector.
The FCA has a ‘free-standing duty' in respect to financial crime, to which it must have regard when discharging its general functions (Section 1B(5) of the FSMA 2000, as amended). By virtue of this duty, the FCA must have regard to the importance of taking action intended to minimise the extent to which it is possible for business carried on by FSMA-authorised firms to be used for a purpose connected with financial crime. The FCA is responsible for supervising compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and for taking enforcement action for violations. On 13 December 2018, the FCA published guidance on financial crime systems and controls: insider dealing and market manipulation (Finalised Guidance 18/5). On 20 December 2018, the FCA published an evaluation paper (Evaluation Paper 18/3) on reducing barriers to entry to the UK banking sector.
1.4 What are the current priorities of regulators and how does the regulator engage with the banking sector?
At present, regulators are focused on redefining and strengthening the role of the City of London post-Brexit - a task made significantly more challenging in a COVID-19 world. Given the significant pressure on the banking sector as well as the wider economy triggered by the COVID-19 pandemic, regulators may need to develop new approaches to address the evolving requirements of the current economic landscape in which the banking sector plays a vital role.
2 Form and structure
2.1 What types of banks are typically found in your jurisdiction?
Retail/commercial and investment banks which are subject to the same authorisation process and regulatory requirements.
2.2 How are these banks typically structured?
The Prudential Regulation Authority (PRA) requires a deposit-taker to be either a body corporate or a partnership. UK-headquartered banks are generally UK public limited companies or private limited companies.
The main requirements on management and organisation are found in the General Organisational Requirements Part of the PRA Rulebook. Organisational systems should be proportionate to the nature, scale and complexity of a bank's business.
A bank must have:
- decision-making procedures and an organisational structure that clearly specify and document reporting lines and allocate functions and responsibilities;
- adequate internal control mechanisms to secure compliance with decisions and procedures at all levels of the bank;
- effective internal reporting and communication of information at all levels; and
- appropriate and effective whistleblowing arrangements.
Banks should segregate the duties of individuals and departments so as to reduce opportunities for financial crime or contravention of regulatory requirements and standards (eg, front-office and back-office duties should be segregated to prevent a single individual initiating, processing and controlling transactions). Responsibility should be segregated in a manner that supports the bank's compliance obligations on conflicts of interest, remuneration structures and prevention of market abuse.
The General Organisational Requirements implement Capital Requirements Directive IV organisational requirements for the management body, such as:
- board composition;
- time commitments; and
- in the case of significant firms, limits on the number of additional directorships and a requirement to have separate risk, nomination and remuneration committees.
The PRA and the Financial Conduct Authority require prospective banks to meet their respective threshold conditions
2.3 Are there any restrictions on foreign ownership of banks?
Apart from sanctions imposed by the United Nations, the European Union and the United Kingdom on specified persons and countries, there are no restrictions on foreign ownership of UK banks.
2.4 Can banks with a foreign headquarters operate in your jurisdiction on the basis of their foreign licence?
Foreign banks may operate in the United Kingdom by way of a UK-authorised branch. A non-European Economic Area bank seeking to establish a UK branch must submit a detailed branch authorisation application to the PRA and obtain its consent before establishing a branch in the United Kingdom.
3.1 What licences are required to provide banking services in your jurisdiction? What activities do they cover?
The relevant licence for banking in the United Kingdom is a Part 4A permission under the Financial Services and Markets Act (FSMA) 2000 to carry on deposit-taking (and any other relevant regulated activities). Applications are made to the Prudential Regulation Authority (PRA) and include a number of detailed application forms, including a permission table
that sets out Part 4A permissions by function and (in certain cases) by client type. Although the PRA manages a single administrative process, the Financial Conduct Authority (FCA) also assesses the applicant firm from a conduct perspective and authorisation is granted only if both regulators are satisfied.
As well as the basic application forms, an applicant must provide:
- a business plan, including details of the rationale for the business;
- details on the ownership of the bank;
- a business strategy;
- details of financial resources;
- details of non-financial resources;
- the management structure;
- controls and governance arrangements; and
- significant additional detail about the bank's:
- financial projections;
- IT systems and processes;
- internal audit;
- outsourcing arrangements;
- senior managers; and
- owners and influencers.
Any prospective bank planning to apply for a deposit-taking permission should arrange a pre-application discussion with the PRA. The PRA and FCA are expected to be in communication with the applicant throughout the process. Firms other than deposit-taking institutions (which in practice include some investment banks) usually apply only to the FCA, as the PRA's jurisdiction is limited to deposit-taking banks and certain designated investment firms classified by the PRA as being of systemic importance.
3.2 What requirements must be satisfied to obtain a licence?
The PRA and the FCA require that prospective banks meet their respective threshold conditions. These include the following:
- Deposit takers must be a body corporate or a partnership;
- A UK-incorporated corporate body must maintain its head office and, if one exists, its registered office in the United Kingdom;
- The applicant must conduct its business in a prudent manner, which includes having appropriate financial and non-financial resources. The applicant's non-financial resources must be appropriate in relation to the regulated activities it seeks to carry on, having regard to the FCA's operational objectives;
- The applicant must satisfy the PRA and the FCA that it is a fit and proper person in all circumstances to conduct a regulated activity. The applicant's management must have adequate skills and experience and act with integrity. The applicant must have appropriate policies and procedures in place and appropriately manage conflicts of interest;
- The applicant's business model must be suitable for a person carrying on the regulated activities it undertakes or seeks to carry on and does not pose a risk to the FCA's objectives; and
- The applicant must be capable of being effectively supervised by the PRA and the FCA. Any close links of the applicant must be disclosed and unlikely to prevent effective supervision of it.
3.3 What is the procedure for obtaining a licence? How long does this typically take?
The PRA and the FCA must make their decision within six months of receipt of the completed application, but can deem an application incomplete and require further information, which defers the start of the six-month period. In practice, the licensing process may take up to one year to complete. If the regulators grant permission, each can impose such requirements or limitations on that permission as it considers appropriate.
An applicant for a banking licence must pay a non-refundable application fee, which varies according to the type of banking business to be carried on. Once authorised, UK banks must pay an annual licensing fee to the PRA or FCA, based on a number of factors, including annual income and types of banking business. Banks with a retail client base need to pay additional fees to cover the levies imposed by the Financial Ombudsman Service and the Financial Services Compensation Scheme. Banks may be required to pay other one-off fees in connection with changes to regulatory permissions or waivers. Banking licences are granted for an indefinite period, although the PRA retains powers to suspend or revoke licences and/or to impose financial penalties.
4 Regulatory capital and liquidity
4.1 How are banks typically funded in your jurisdiction?
The Capital Requirements Directive (CRD) IV implements Basel III at an EU level, updating the previous Basel Accord. CRD IV has two components: the Capital Requirements Regulation (575/2013) (CRR) and the CRD. The CRR is a regulation and is directly applicable in the United Kingdom; while the CRD is implemented in the United Kingdom mainly through the Prudential Regulation Authority (PRA) and Financial Conduct Authority rules.
4.2 What minimum capital requirements apply to banks in your jurisdiction?
UK-incorporated banks are subject to high-level, qualitative and quantitative liquidity requirements. Branches of foreign banks are subject to high-level requirements only. Detailed common reporting requirements also apply. All banks are subject to PRA Fundamental Rule 4, which requires a firm to maintain adequate financial resources.
The qualitative requirements for UK banks focus on:
- governance and senior management oversight of liquidity risk;
- measurement and management of liquidity risk;
- stress testing; and
- contingency funding plans.
The quantitative regime for UK banks implementing the Basel III liquidity coverage ratio (LCR) in the European Union entered into force in January 2015 under Delegated Regulation EU 2015/61. This ensures that banks hold a buffer of unencumbered high-quality liquid assets to meet liquidity needs under a 30-day stress scenario.
The reporting regime requires UK banks to provide liquidity data to the PRA, including daily liquidity reports, weekly mismatch reports, weekly pricing data, monthly marketable assets reports, monthly funding concentration reports, quarterly retail funding reports, and quarterly systems and controls questionnaires. All UK banks are subject to the ‘overall liquidity adequacy rule' (ie, every UK-authorised bank must be self-sufficient in terms of liquidity adequacy). This supplements the LCR and CRD IV reporting process, and is also supported by PRA rules implementing the Pillar 2 liquidity framework in accordance with CRD IV.
4.3 What legal reserve requirements apply to banks in your jurisdiction?
A bank must maintain at all times financial resources equal to or greater than its risk-weighted assets as a cushion of cash, reserves, equity and subordinated liabilities available to the bank to absorb losses during periods of financial stress. CRD IV raised the threshold in terms of the quantity and quality of capital that a bank is required to hold, with only two categories of permitted financial resources:
- Tier 1 (broadly, equity consisting of Common Equity Tier 1 and Additional Tier 1); and
- Tier 2 (broadly, subordinated debt).
There are limits placed on the amounts of Additional Tier 1 and Tier 2 capital that are recognised as financial resources and the uses to which such capital can be put.
Capital requirements apply to the trading and non-trading books. To calculate capital requirements in the non-trading book, banks can follow the standardised approach or (subject to regulatory approvals) adopt the ‘internal ratings based' approach. Under the standardised approach, used by most small banks, assets are given a pre-determined risk weighting set according to the type of asset in question. The trading book attracts a set of rules covering:
- market risk;
- position risk requirements for interest rate risk;
- equity risk;
- commodities risk;
- currency risk; and
- risks associated with options and collective investment schemes.
The market risk rules allow for a variety of approaches to risk weighting, depending on the sophistication of the bank, including models-based approaches. The PRA has discretion to impose additional capital requirements (and has historically exercised it liberally with respect to banks) under Pillar 2.
The PRA places the burden on banks to assess their own capital requirements and the systems and controls necessary to satisfy them, under the Internal Capital Adequacy Assessment Process (ICAAP).
In line with Basel III, CRD IV requires the implementation by member states of a regime for the imposition of capital conservation and countercyclical capital buffers. The Financial Policy Committee has delegated authority from the Bank of England for setting the policy framework and rates for the countercyclical buffer.
Under Pillar 3 requirements, banks must make disclosures about:
- capital structure;
- capital adequacy.;
- credit risk and equities in the non-trading book;
- credit risk mitigation;
- market risk;
- operational risk and interest rate risk in the non-trading book;
- leverage risk;
- capital buffers;
- use of external credit assessment institutions;
- governance arrangements;
- risk management; and
- remuneration policy.
Additionally, institutions holding more than £25 billion in deposits should maintain an additional systemic risk capital buffer (SRB) above the minimum quantitative requirements applicable to UK banks under the Capital Requirements Directive (CRD) IV. SRB rates generally fall within 1% to 3% of risk-weighted assets. The SRB is intended to co-exist alongside the global systemically important institution and other systemically important institution buffers, but only the highest of these buffer requirements will apply. The quantitative capital requirements under the CRD/Capital Requirements Regulation are supplemented by the obligation, introduced by the EU Bank Recovery and Resolution Directive (BRRD), for banks to satisfy at all times a minimum requirement for own funds and eligible liabilities (MREL).
MREL requirements are specified by the Bank of England on a case-by-case basis. Certain liabilities are excluded from the application of bail-in powers, including:
- protected deposits;
- secured liabilities; client assets; and
- most employee and pensions liabilities, trade and short-term liabilities.
5 Supervision of banking groups
5.1 What requirements apply with regard to the supervision of banking groups in your jurisdiction?
As consolidated supervision in the United Kingdom is ultimately derived from the principles and standards of the Basel Committee on Banking Supervision, it performs the same role in the United Kingdom as it does elsewhere: to ensure that prudential supervision of a bank looks to the strength of the bank's group, and not just the bank itself.
The Capital Requirements Regulation (CRR) rules define the scope of a group and the prudential requirements that apply to it. The CRR sets out the calculations of both group capital requirements and group capital resources. Capital requirements are set and reporting is made at the level of the relevant group, as well as the particular entity within the group.
5.2 How are systemically important banks supervised in your jurisdiction?
Under CRD IV, from 2016, global systemically important institutions (G-SIIs) and other systemically important institutions (O-SIIs) have been required to maintain, on a consolidated basis, a buffer of Tier 1 common equity (the SII Buffer). The European Banking Authority has developed guidelines for national supervisors to determine G-SII and O-SII status and maintains lists notified to it by national supervisors. The Prudential Regulation Authority is responsible for the designation of institutions within its jurisdiction and for setting and publishing the applicable buffer rates on an annual basis.
G-SIIs must maintain a leverage ratio buffer, which is set at a firm-specific level for G-SIIs and applies in addition to the minimum quantitative leverage ratio requirements applicable to all CRR firms. From 2019, UK banks that qualify as G-SIIs will become subject to the UK implementation of the Financial Stability Board's standards on total loss-absorbing capacity. The Financial Conduct Authority categorises firms from C1 to C4 according to the risk posed to their statutory objectives. Systemically important financial institutions and other high-impact firms are likely to fall into C1 and C2, which are subject to closer monitoring and supervision.
5.3 What is the role of the central bank?
The Bank of England, the UK central bank, has two core purposes:
- ensuring monetary and financial stability; and
- undertaking the following key roles in banking regulation:
- overseeing the interbank payment systems regime, by seeking to reduce risks that could be posed to the UK financial systems and prioritising its activities according to the risks posed by each system;
- overseeing the Special Resolution Regime, which gives the relevant authorities a framework for dealing with distressed banks; and
- being the provider of liquidity and lender of last resort to the banking sector. This is not prescribed in rules - it is a discretionary power.
6.1 What specific regulations apply to the following banking activities in your jurisdiction: (a) Mortgage lending? (b) Consumer credit? (c) Investment services? and (d) Payment services and e-money?
The Prudential Regulation Authority is responsible for the prudential regulation and supervision of the banking sector. Under the Financial Services and Markets Act 2000 (as amended), it is a criminal offence for a person to carry on a ‘regulated activity' in the United Kingdom unless authorised to do so or exempt from the authorisation requirement. Regulated activities are defined in secondary legislation. Deposit taking is a regulated activity that requires authorisation. Other regulated activities that require authorisation include:
- dealing in investments as principal;
- dealing in investments as agent;
- arranging deals in investments;
- managing investments;
- safeguarding and administering investments (i.e., custody); and
- providing investment advice and mortgage lending.
- debentures (including sukuk);
- public securities;
- contracts for differences (i.e., swaps); and
- units in collective investment schemes.
7 Reporting, organisational requirements, governance and risk management
7.1 What key reporting and disclosure requirements apply to banks in your jurisdiction?
Banks must comply with the prudential reporting requirements in the EU Capital Requirements Regulation (CRR) and Implementing Technical Standard 680/2014 on supervisory reporting (as amended). The data collected under these reports relates to:
- own funds;
- financial information;
- losses from property collateralised lending;
- large exposures;
- leverage ratio;
- liquidity ratios;
- asset encumbrance;
- additional liquidity monitoring metrics;
- supervisory benchmarking; and
- funding plans.
7.2 What key organisational and governance requirements apply to banks in your jurisdiction?
Directors of a bank incorporated as a company are subject to general duties, which are now largely codified in the Companies Act 2006. Directors of a UK-authorised bank listed in the United Kingdom or abroad are also subject to the principles of good governance contained in the UK Corporate Governance Code. Banks must comply with:
- the Prudential Regulation Authority's (PRA) Fundamental Rules and Principles, which address the interests of customers and the broader market as stakeholders in a bank; and
- the General Organisational Requirements Part of the PRA Rulebook.
Most of the requirements on governance are framed in high-level and non-prescriptive terms.
Banks must have robust governance arrangements, including:
- clear organisational structure with well-defined, transparent and consistent lines of responsibility; and
- effective processes to identify, manage, monitor and report risks, and internal control mechanisms.
Senior personnel must be of sufficiently good repute and experience to ensure the sound and prudent management of the bank. A bank must ensure that at least two such people undertake its management, and that at least two independent minds should formulate and implement its policies.
In 2016, new management and governance requirements for banks were implemented through the Senior Managers and Certification Regime (SMCR), which introduced enhanced standards for UK banks in respect of key responsibilities and associated individual accountability.
The majority of the requirements on management and organisation are found in the General Organisational Requirements part of the PRA's Rulebook. Organisational systems should be proportionate to the nature, scale and complexity of a bank's business.
In addition to the points mentioned in question 2.1, banks should segregate the duties of individuals and departments so as to reduce opportunities for financial crime or contravention of regulatory requirements and standards (eg, front-office and back-office duties should be segregated to prevent a single individual initiating, processing and controlling transactions). Responsibility should be segregated in a manner that supports the bank's compliance obligations on conflicts of interest, remuneration structures and prevention of market abuse. The General Organisational Requirements implement Capital Requirements Directive IV organisational requirements for the management body, such as:
- board composition;
- time commitments; and
- in the case of significant firms, limits on the number of additional directorships and mandate the establishment of separate risk, nomination and remuneration committees.
7.3 What key risk management requirements apply to banks in your jurisdiction?
The United Kingdom has an approval regime split between the PRA and the Financial Conduct Authority (FCA) for senior managers carrying out specified senior management functions (SMFs) in a bank. The SMCR, which replaced the approved persons regime, entered into force on 7 March 2016. Senior managers of UK banks who have overall responsibility for one or more senior management functions must obtain prior approval from the PRA and/or FCA before carrying out SMFs (including executive director functions, head of risk, internal audit, compliance and operations/technology, and certain business unit heads). Non-executive directors require approval where they carry out specific SMF roles, such as head of the remuneration or nominations committee. Banks are expected to perform initial due diligence on prospective senior managers (including employment references and criminal record checks) before applying for regulatory approval.
The appropriate regulator may grant approval only if it is satisfied that the person in question is fit and proper to perform the function(s) in terms of honesty, integrity, reputation, competence, capability and financial soundness.
A second-tier, in-house certification regime applies to certain other individuals in banks who are not senior managers, but whose roles or activities may pose a risk of ‘significant harm' to the bank or its customers. These individuals must be certified by the bank as fit and proper to perform the role(s) in question, taking into account similar fitness and propriety indicators as for senior managers. As part of their assessment, banks must request a regulatory reference from all of the person's previous employers covering the past six years of employment.
Each senior manager must have a statement of individual responsibilities for each SMF which must be approved by the FCA as part of the application and regularly updated for any significant changes. Banks must maintain a detailed ‘management responsibilities map' setting out management and governance arrangements, including individual accountability and reporting lines for all business lines and functions.
7.4 What are the requirements for internal and external audit in your jurisdiction?
A bank must appoint an independent auditor to perform an annual external audit of the bank's accounts and report to the FCA on the bank's client assets. The General Organisational Requirements may require a bank to form an audit committee and independent internal audit function to:
- oversee the bank's internal systems and controls, policies and procedures;
- issue recommendations; and
- verify compliance with those recommendations.
The FCA is not prescriptive about other experts, but notes that a bank's management - in particular, any board-level risk committee - should ensure that it obtains expert advice and the support necessary to meet their risk responsibilities.
8 Senior management
8.1 What requirements apply with regard to the management structure of banks in your jurisdiction?
The management structure and staff should have adequate experience, skills and knowledge to carry out their jobs effectively. The majority of the directors must be independent directors. The board must include a chief financial officer, a chief risk officer and a chief outsourcing officer.
8.2 How are directors and senior executives appointed and removed? What selection criteria apply in this regard?
The appointment and removal of directors and senior executives are governed by contract and employment law, as well as by the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) rules.
8.3 What are the legal duties of bank directors and senior executives?
The duties of directors are set out in Sections 171 to 177 of the Companies Act 2006. They include the duty to:
- act within their powers;
- promote the success of the company;
- exercise independent judgement, reasonable care, skill and diligence;
- avoid conflicts of interest;
- not accept benefits from third parties; and
- declare any interest in a proposed transaction or arrangement with the company.
8.4 How is executive compensation in the banking sector regulated in your jurisdiction?
Banks are subject to both the PRA and FCA Remuneration Codes, which together implement the remuneration requirements of the Capital Requirements Directive (CRD) IV. The PRA and FCA codes must be globally applied at group, parent undertaking and subsidiary undertaking levels. The codes apply to all employees, although there are particular provisions applicable to code staff, which include senior managers and other material risk takers. These are classified according to qualitative and/or quantitative eligibility criteria, and will typically include heads of business units and other individuals whose activities could materially affect the bank's risk profile or expose the bank to material harm. Code staff may include individuals whose total remuneration puts them in the same bracket as senior managers and/or exceeds £500,000 per annum, although potential exemptions are available for staff who meet only the quantitative criteria.
Under the codes, various principles are applicable to an employee's ‘remuneration' (which includes all forms of salary and benefit payments, including in-kind benefits). They the following principles:
- There must be an appropriate ratio of fixed to variable components of remuneration.
- At least 50% of variable remuneration should be equity, equity-linked or equivalent instruments.
- At least 40% of variable remuneration must be deferred and vest over a period of three to seven years in line with the business and associated risk, and the individual's activities (with senior managers being subject to the highest standards).
- At least 60% of variable remuneration must be deferred when variable remuneration is particularly high (eg, total remuneration of more than £500,000).
- Banks should adjust non-vested deferred amounts to reflect actual outcomes.
- Guaranteed bonuses should be exceptional and limited to new staff.
- Contract termination payments should not reward failure.
- Banks should have policies and procedures in place to ensure that code staff do not engage in personal investment strategies that undermine the code principles, such as insurance or hedging against the risk of performance adjustment.
As a result of CRD IV, the codes include bonus cap rules which cap variable pay at 100% of fixed remuneration (or 200% with shareholder approval).
The FCA and PRA have supplemented the codes with policy statements and guidance for different types of banks and other firms, which enables certain quantitative requirements to be disapplied for non-code staff and/or staff whose remuneration falls below de minimis levels.
For smaller institutions (banks with total assets below £15 billion), the PRA and FCA can also disapply certain rules on proportionality grounds at group-wide level.
9 Change of control and transfers of banking business
9.1 How are the assets and liabilities of banks typically transferred in your jurisdiction?
Part VII of the Financial Services and Markets Act (FSMA) 2000 (as amended) sets out a court-approved transfer mechanism. For example, as part of its Brexit planning, in January 2019 Barclays Bank received approval from the High Court to transfer certain business sections to Barclays Bank Ireland under Part VII of the FSMA 2000 (as amended).
9.2 What requirements must be met in the event of a change of control?
Part 12 of the FSMA 2000 (as amended) implements the requirements of the EU Acquisitions Directive (2007/44/EC) into English law. A person intending to acquire or increase ‘control' over the shares or voting power of a UK-authorised bank or its parent undertaking above 10%, 20%, 30% or 50% must notify and obtain consent from the Prudential Regulation Authority (PRA) prior to acquiring or increasing control. Failure to do so is a criminal offence. The PRA must consult the Financial Conduct Authority before deciding whether to approve a proposed change of control.
Change of control forms are detailed and require disclosure of information about the ultimate beneficial owner of the proposed acquisition.
A person wishing to decrease control of the shares or voting power in a UK-authorised bank or its parent undertaking below 50%, 30%, 20% or 10% must notify the regulator of the intention to do so. Failure to notify is an offence. There is no requirement for regulatory consent to the reduction of control.
The PRA has 60 business days from receipt of the application to approve the acquisition or increase of control (with or without conditions), or to object. This period may be interrupted once by up to 20 business days in cases where the PRA requires further information.
The Acquisitions Directive was supplemented with Level 3 Guidelines published by the Committee of European Banking Supervisors, the Committee of European Insurance and Occupational Pensions Supervisors and the Committee of European Securities Regulators (together, the Level 3 Committees). The Level 3 Guidelines updated on 1 October 2017 contain guidance on general concepts such as the meaning of the term ‘acting in concert' and the process for determining acquisitions of indirect holdings.
In considering the approval of an acquisition, the regulator will have regard to:
- the ownership of the proposed acquirer;
- the rationale for the proposed acquisition;
- how the acquisition will be financed; and
- the impact of the proposed acquisition on the day-to-day operation of the target.
10 Consumer protection
10.1 What requirements must banks comply with to protect consumers in your jurisdiction?
The Consumer Rights Act 2015 (CRA 2015) deals with:
- unfair terms in contracts;
- the level of information to be provided to consumers;
- the rights and remedies available to consumers in the event that their rights are breached; and
- sanctions on those who breach consumer rights.
The Supply of Goods and Services Act 1982 deals with consumer protection in the context of the supply of goods and services. Banks are required to comply with these consumer protection rules, just as any other service provider. The Financial Conduct Authority (FCA) is responsible for enforcing the consumer protection framework - including distance selling and consumer credit provisions - in the banking sector. Its primary objective is to ensure that consumers of financial services are appropriately protected and to promote effective competition in the interests of consumers. Banks in the United Kingdom are subject to the FCA's Treating Customers Fairly regime, which is enforced vigorously.
Where banks fail to participate in the effective promotion of competition, the FCA and the Competition and Markets Authority (CMA) have the power to investigate and take enforcement action against such breaches. The FCA has the power to require the disclosure of information about suspected breaches and refer this to the CMA for a more detailed investigation. On 17 July 2018, the FCA published "Our Approach to Consumers", which sets out its approach to consumer protection.
10.2 How are deposits protected in your jurisdiction?
Deposits held in banks, building societies and credit unions (including in Northern Ireland) that are authorised by the Prudential Regulation Authority are protected up to £85,000 under the Financial Services Compensation Scheme, which is funded by contributions from the banking sector.
11 Data security and cybersecurity
11.1 What is the applicable data protection regime in your jurisdiction and what specific implications does this have for banks?
The General Data Protection Regulation (GDPR) sets out the framework for data protection in the United Kingdom. It is applicable to breaches, complaints, any failures to comply with data subject access requests and excessive data collection. The data subject must be told:
- what data the bank will be collecting;
- what it will be used for;
- how long it will be retained; and
- whether it will be shared with any third parties.
Personal data must be destroyed when no longer necessary for the original purpose. Banks in breach of their GDPR obligations are subject to substantial fines as well as reputation risk.
11.2 What is the applicable cybersecurity regime in your jurisdiction and what specific implications does this have for banks?
On 13 March 2019 the Basel Committee on Banking Supervision (BCBS) published its statement on crypto-assets, expressing the view that the continued growth of crypto-asset trading platforms and new financial products related to crypto-assets has the potential to raise financial stability concerns and increase risks faced by banks. While crypto-assets (not to be confused with the digital currencies of central banks) are at times referred to as ‘crypto-currencies', the BCBS is of the view that such assets do not reliably provide the standard functions of money and are unsafe to rely on as a medium of exchange or store of value. Crypto-assets are not legal tender, and are not backed by any government or public authority. The BCBS's statement was intended to set out its prudential expectations relevant to the exposures of banks to crypto-assets and related services, particularly for those jurisdictions that do not prohibit such exposures and services.
The BCBS concluded that crypto-assets have exhibited a high degree of volatility and are considered an immature asset class, given the lack of standardisation and constant evolution. They present a number of risks for banks, including:
- liquidity risk;
- credit risk;
- market risk;
- operational risk (including fraud and cyber risks);
- money laundering and terrorist financing risk; and
- legal and reputation risks.
Accordingly, the BCBS expects that if a bank is authorised and decides to acquire crypto-asset exposures or provide related services, the following minimum requirements should be met:
- Due diligence: Before acquiring exposures to crypto-assets or providing related services, a bank should conduct comprehensive analyses of the risks noted above. The bank should ensure that it has the relevant and requisite technical expertise to adequately assess the risks stemming from crypto-assets.
- Governance and risk management: The bank should have a clear and robust risk management framework that is appropriate for the risks of its crypto-asset exposures and related services. Given the anonymity and limited regulatory oversight of many crypto-assets, a bank's risk management framework for crypto-assets should be fully integrated into the overall risk management processes, including those related to anti-money laundering and combating the financing of terrorism and the evasion of sanctions, and heightened fraud monitoring. Given the risk associated with such exposures and services, banks are expected to implement risk management processes that are consistent with the high degree of risk of crypto assets. Its relevant senior management functions are expected to be involved in overseeing the risk assessment framework. Board and senior management should be provided with timely and relevant information related to the bank's crypto-asset risk profile. An assessment of the risks described above related to direct and indirect crypto-asset exposures and other services should be incorporated into the bank's internal capital and liquidity adequacy assessment processes
- Disclosure: A bank should publicly disclose any material crypto-asset exposures or related services as part of its regular financial disclosures and specify the accounting treatment for such exposures, consistent with domestic laws and regulations.
- Supervisory dialogue: The bank should inform its supervisory authority of actual and planned crypto-asset exposure or activity in a timely manner, and provide assurance that it has fully assessed the permissibility of the activity and the risks associated with the intended exposures and services, and how it has mitigated these risks.
The BCBS continues to monitor developments in crypto-assets, including direct and indirect exposures of banks to such assets. The BCBS is coordinating its work with other global standard-setting bodies and the Financial Stability Board (FSB).
In June 2019 Facebook confirmed its intended launch of a global cryptocurrency known as Libra in 2020. As a consequence of regulatory scrutiny, on 15 July 2019 Facebook announced that Libra will not launch until all regulatory concerns have been met and Libra has the appropriate approvals.
On 31 May 2019 the FSB published a report on crypto-assets which was delivered to the G20 finance ministers and central bank governors at their meeting in Fukuoka, Japan on 8-9 June 2019. The report recommended that the G20 keep the topic of regulatory approaches to crypto-assets and potential gaps - including the question of whether more coordination is needed - under review.
In January 2019 the Monetary and Economic Department of the Bank for International Settlements (BIS) published "Proceeding with caution – a survey on central bank digital currency" (CBDC) (BIS Paper 101). The paper is based on a survey of 63 central banks. Although a majority of central banks are researching CBDCs, this work is primarily conceptual and few central banks intend to issue a CBDC in the short to medium term. On 9 January 2019 the European Securities and Markets Authority (ESMA) published its Advice on Initial Coin Offerings and Crypto-Assets, which sets out ESMA's concerns about the risks to investor protection and market integrity - the most significant being fraud, cyber-attacks, money laundering, and market manipulation. Pursuant to a request by the European Commission to evaluate developments in crypto assets, on 9 January 2019 the European Banking Authority published the results of its assessment of the applicability and suitability of EU law to crypto-assets. Typically, crypto-asset activities do not constitute regulated services within the scope of EU banking, payments and electronic money law, and risks exist for consumers that are not addressed at the EU level. Crypto-asset activities may give rise to other risks, including money laundering.
Cybersecurity remains a hot topic, particularly following the cyberattacks on LBG, HSBC Plc, Tesco Bank and RBS Group Plc, and the identification of cyber vulnerabilities known as Meltdown and Spectre.
12 Financial crime and banking secrecy
12.1 What provisions govern money laundering and other forms of financial crime in your jurisdiction and what specific implications do these have for banks?
The Financial Conduct Authority (FCA) has a ‘free-standing duty' in respect to financial crime, to which it must have regard when discharging its general functions (Section 1B(5) of the Financial Services and Markets Act (FSMA) 2000, as amended). By virtue of this duty, the FCA must have regard to the importance of taking action intended to minimise the extent to which it is possible for business carried on by FSMA-authorised firms to be used for a purpose connected with financial crime. The FCA is responsible for supervising compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and for taking enforcement action for violations. On 13 December 2018, the FCA published guidance on financial crime systems and controls: insider dealing and market manipulation (Finalised Guidance 18/5). On 20 December 2018, the FCA published an evaluation paper (Evaluation Paper 18/3) on reducing barriers to entry into the UK banking sector.
12.2 Does banking secrecy apply in your jurisdiction?
No. Banking ‘secrecy' should not be confused with confidentiality, data protection and privacy considerations, which do apply.
13.1 What specific challenges or concerns does the banking sector present from a competition perspective? Are there any pro-competition measures that are targeted specifically at banks?
Where banks fail to participate in the effective promotion of competition, the Financial Conduct Authority (FCA) and the Competition and Markets Authority (CMA) have the power to investigate and take enforcement action against such breaches. The FCA has the power to require the disclosure of information about suspected breaches and refer this to the CMA for a more detailed investigation.
14 Recovery, resolution and liquidation
14.1 What options are available where banks are failing in your jurisdiction?
The Prudential Regulation Authority (PRA) requires UK banks and banking groups to develop recovery and resolution plans (known as ‘living wills').
A recovery plan comprises a series of measures that the bank or its group could take to turn the business around following adverse trading conditions, and sets out a range of options that the bank could take to return to adequate levels of liquidity and capital. Recovery options may include:
- raising new equity;
- elimination of dividends;
- liability management; or
- sale of the bank.
Recovery plans are developed by banks. However, their adequacy and potential practical efficacy are evaluated by the PRA. Banks must produce a resolution pack that sets out information required by the appropriate resolution authorities to enable them to draw up a resolution plan to resolve the bank in the event of its failure.
The Banking Act 2009 and subsequent legislation prescribe the UK bank resolution regime. The resolution objectives in the Banking Act 2009 give effect to the Financial Stability Board's (FSB) Key Attributes of Effective Resolution Regimes, which G20 leaders agreed in 2011. The Banking Act 2009 equips the Bank of England with a variety of statutory powers (known as resolution tools) to enable it to effect resolutions. The Treasury's Code of Practice provides guidance on how and when the Special Resolution Regime (SRR) is to be used.
When exercising the resolution powers, the Bank of England's statutory objectives are to:
- ensure that critical banking functions remain available;
- protect and enhance financial stability;
- protect and enhance public confidence in the financial system's stability;
- protect public funds;
- protect depositors and investors covered by the Financial Services Compensation Scheme (FSCS);
- protect (where relevant) client assets; and
- avoid interfering with property rights.
The PRA expects a bank's recovery plan, as well as the processes for producing resolution proposals, to be subject to oversight and approval by the board or a senior governance committee and subject to review by the audit committee. Banks must nominate an executive director who has overall responsibility for the bank's recovery and resolution plan, as well as overseeing governance arrangements. As a bank comes under increasing stress, the PRA will assess its ‘proximity to failure', which is captured by the bank's position within the PRA's Proactive Intervention Framework (PIF), which is designed, in part, to guide the Bank of England's contingency planning as resolution authority. The PIF assessment is derived from a firm's ability to manage the following risks:
- external context;
- business risk;
- management and governance;
- risk management and controls; and
- capital and liquidity.
There are five stages of PIF, describing different proximity to failure, as follows:
- low risk;
- moderate risk;
- risk to viability absent action by the firm;
- imminent risk to viability of the firm; and
- the firm is in resolution or being wound up.
Each bank will be allocated to a particular stage. If a bank moves to a higher risk category (eg, the PRA determines that the bank's viability has deteriorated), the intensity of supervision will increase proportionality.
The PRA's recovery and resolution framework is based on Directive 2014/59/EU establishing a framework for the recovery and resolution of credit institutions and investment firms (BRRD), which entered into force on 2 July 2014. The United Kingdom implemented the BRRD through changes to primary and secondary legislation, new PRA and Financial Conduct Authority rules and amendments to the Treasury's SRR Code of Practice. On 20 December 2018, the Treasury published the Bank Recovery and Resolution and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (SI 2018/1394).
14.2 What insolvency and liquidation regime applies to banks in your jurisdiction?
By virtue of the Banking Act 2009, the Bank of England has responsibility for the resolution of a failing bank, and their group companies. The SRR applies to banks, building societies, systemically important investment firms, recognised central counterparties and banking group companies. The SRR prescribes a number of stabilisation powers that are exercisable in relation to a bank. The aim of the SRR is to provide a mechanism for resolving failing banks that will only be used in situations where failure is imminent and other powers of the relevant UK authorities are inadequate. The measures available include the transfer of all or part of the bank in question to a ‘bridge bank' owned by the Bank of England or the temporary public ownership of the bank in question or its holding company.
On 29 April 2019 the FSB published its thematic Review on Bank Resolution Planning (www.fsb.org/wp-content/uploads/P290419.pdf). On 31 August 2018 the PRA published Supervisory Statement 19/13, "Resolution Planning", which sets out the resolution planning information that banks are expected to provide to the PRA.
In October 2017 the European Banking Authority consulted on changes to the Implementing Technical Standards (ITS) on information for resolution planning, with the aim of further harmonising data collections and facilitating data exchange within resolution colleges. The ITS was submitted to the European Commission for approval on 17 April 2018. Banks are expected to start reporting using the new templates by the end of May 2019.
Bank nationalisation in the United Kingdom is rare. Northern Rock was nationalised on 22 February 2008; Bradford & Bingley was nationalised on 28 September 2008, although the deposits and branch network were sold to the Santander Group. The interests of depositors were fully protected. In the event of a bank's insolvency, deposits protected by the FSCS are ‘super-preferred' in the creditor hierarchy. Employees may be protected under employment law where a business unit is transferred or where redundancies are made. Certain employee claims rank as preferred debts if a bank is wound up.
Under the Banking Act 2009, if the Treasury decides to take a bank or a bank holding company into public ownership, it must pay compensation if shareholders suffer a loss compared to the position they would have been in had the failed bank been subject to insolvency proceedings (referred to as the ‘no creditor worse off' safeguard). No account is taken of any financial assistance provided by the Bank of England or the Treasury in valuing the shares of the bank.
The SRR consists of the following pre-insolvency stabilisation options for banks:
- the transfer of all or part of a bank to a private sector purchaser (PSP);
- the transfer of all or part of a bank to a bridge bank owned by the Bank of England;
- the transfer of a bank or a bank's holding company into temporary public ownership (TPO);
- the asset separation tool, which allows assets and liabilities of the failed bank to be transferred to a separate asset management vehicle, with a view to maximising their value through an eventual sale or orderly wind-down; and
- a bail-in to absorb the losses of the failed firm, and recapitalise that firm (or its successor) using the firm's own resources.
A stabilisation power may be exercised only if the PRA is satisfied that:
- the bank is failing, or is likely to fail, to satisfy the threshold conditions for authorisation under the Financial Services and Markets Act 2000; and
- having regard to timing and other relevant circumstances, it is not reasonably likely that action will be taken to satisfy those conditions.
In exercising any of the stabilisation powers or the insolvency procedures, the relevant authorities must have regard to a number of specified objectives. These are:
- ensuring the continuity of banking services and critical functions in the United Kingdom;
- protecting and enhancing the stability of the UK financial system;
- ensuring the stability of the UK banking system;
- protecting depositors;
- protecting public funds and client assets; and
- avoiding unjustified interference with property rights.
The Bank of England may exercise the PSP or bridge bank powers if it is satisfied (after consultation with the Treasury and the PRA) that it is necessary having regard to:
- the public interest in the stability of the UK financial systems;
- the maintenance of public confidence in the stability of the UK banking system; or
- the protection of depositors.
The Treasury may exercise the TPO power only if it is satisfied (after consultation with the Bank of England and the PRA) that either:
- exercise of the power is necessary to resolve or reduce a serious threat to the stability of the UK financial system; or
- it is necessary to protect the public interest where the Treasury has previously provided financial assistance to a bank.
The stabilisation powers are supplemented by a broad range of powers to transfer shares or property (including foreign property) and overriding contractual rights that could interfere with the transfer.
A bank insolvency procedure provides for the orderly winding up of a failed bank. It facilitates the FSCS in satisfying depositor claims or the transfer of their accounts to another institution. The Bank of England, the PRA or the secretary of state may apply to the court to make a bank insolvency order. An order may be made if:
- the bank is unable, or is likely to be unable, to pay its debts;
- winding up the affairs of the bank would be in the public interest; or
- winding up the bank would be ‘fair' (‘just and equitable' in the Insolvency Act 1986).
In order to participate in the bank insolvency procedure, the bank must have depositors eligible to be compensated under the FSCS. Once a bank insolvency order is made, the liquidator has two objectives:
- to work with the FSCS to ensure, as soon as is reasonably practicable, that accounts are transferred to another bank, or that eligible depositors receive compensation under the FSCS; and
- to wind up the affairs of the bank.
The general law of insolvency applies, with some modifications, to bank insolvency. The liquidator has similar powers to access the bank's assets and, once the eligible deposits have been transferred or compensation paid, creditors will receive a distribution in accordance with their rights. A resolution for voluntary winding-up has no effect without prior approval of the court.
The SRR includes a bank administration regime, which puts the part of a failed bank that is not transferred to the bridge or private sector purchaser (known as the residual bank) into administration. The purpose of bank administration (which should not be confused with administration under the Insolvency Act 1986) is principally to ensure that the non-sold or transferred part of the bank continues to provide services to enable the purchaser or bridge bank to operate effectively. Once the Bank of England notifies the bank administrator that the residual bank is no longer required, the bank will proceed to a normal administration, where the objective is either to rescue the residual bank as a going concern or, if this is not possible, to achieve a better result for the bank's creditors as a whole than in a winding-up.
Insolvency procedures for banks carrying on an investment banking business are set out in Statutory Instrument (SI) 2011/245 (as amended by the Investment Bank (Amendment of Definition) and Special Administration (Amendment) Regulations 2017 (SI 2017/443)). On 4 December 2018 the Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018 (SI 2018/1285) were published by the Treasury.
15 Trends and predictions
15.1 How would you describe the current banking landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?
The economic and social chaos triggered by the global COVID-19 pandemic has not left the banking sector unscathed. At present, individuals and corporations are relying on bank loans for survival in a COVID-19 world. This has had, and continues to have, a material adverse impact on the banking sector and the wider economy. It is too early to predict what, if any, legislation or additional regulatory powers may be necessary to aid recovery from this crisis.
15.2 Does your jurisdiction regulate cryptocurrencies? Are there any legislative developments with respect to cryptocurrencies or fintech in general?
The UK approach to the regulation of cryptocurrencies has been conservative. Although, at present, there are no specific cryptocurrency laws in the United Kingdom, cryptocurrencies are not considered legal tender in the United Kingdom and cryptocurrency exchanges have registration requirements.
16 Tips and traps
16.1 What are your top tips for banking entities operating in your jurisdiction and what potential issues would you highlight?
Banks and other financial institutions are under increasing pressure to engage in a meaningful discussion with all relevant stakeholders about environmental and wider social responsibility considerations. A number of hot topics will affect the financial system in the coming year. These include:
- recovery from the United Kingdom's lockdown triggered by the COVID-19 pandemic in March 2020;
- the expected persistence of the low interest rate environment;
- rapid ongoing technological change (automation, machine learning and advances in the development of artificial intelligence) in the real economy, as well as in the financial services sector;
- sustainable/green finance in response to the accelerating climate emergency; and
- the societal role of financial institutions.
In terms of the operation and global reach of the City of London in a post-Brexit world, the role of the Bank of England, its cooperation with other central banks and relevant international institutions are likely to be redefined under Andrew Bailey's leadership of the Bank of England and that of the European Central Bank, which since 1 November 2019 is headed by its first female president, the former head of the International Monetary Fund, Christine Lagarde.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.