The priority of many governments and regulators since the financial crisis – particularly in the US and Europe – has been, first and foremost, to make the financial system safe. However, the impact on growth is now central to the debate.
The waves of regulatory reforms seem to have taken us beyond the 'tipping point' – the costs of ever more regulation have begun to exceed the benefits. Regulatory reforms have exercised a substantial drag on economic growth, while their impact on the safety of the financial system remains uncertain.
Financial institutions, users of financial services, politicians and regulators all need to address this agenda – all stakeholders have a role to play in achieving a better outcome. Our publication sets out our analysis – and more importantly, some policy recommendations that could be considered to help make sure that the delicate balance between stability and an effective financial services industry is kept in focus.
If you have any queries relating to the information contained in this update, please do not hesitate to contact me.
Head of Financial Services Markets
KPMG in Ireland
This month's insights…
There has been a strong and understandable reaction from politicians and regulators to the financial crisis. But are we on the right track, or do we need to adjust the direction of travel? This publication focuses on the cumulative impact of regulatory change on the wider economy – in particular, economic growth.
On Wednesday, 22 May MEPs voted through draft laws to create a single EU bank supervisory system. The European Central Bank will supervise the Eurozone's largest banks, in addition to giving their input into the supervision of other banks. Final approval for the laws will only come from the European Parliament once talks on accountability arrangements have taken place with the ECB. MEPs stressed the importance of these rules matching the EU supervisory powers.
Progress on the EU's Recovery and Resolution Directive (RRD) have reached a pivotal stage after a key vote by MEPs and technical consultations issued by the European Banking Authority (EBA).
The bank ring-fencing debate continues. Conversations are taking place among the EU Institutions and with various political groups across Europe, to try to avoid complications arising from key differences between EU-level and national proposals. The goal in reshaping the structure of European banks aims to bring national regimes into alignment but avoid a "one-size-fits-all" model, and MEPs are pushing the Parliament for a pan-EU framework that harmonises the various different measures.
On Tuesday 21 May, the European Banking Authority (EBA) published a consultation on possible criteria for identifying staff members whose activity would have an impact on a bank's risk profile – and as a result are subject to the CRD IV remuneration requirements.
The insurance industry is moving beyond a mindset of post-crisis retrenchment and Solvency II compliance – insurers are now refocusing on renewed growth. However, they do so under the constraints of 'the new normal', characterized by persistent low interest rates and market volatility, subsequently challenging traditional business models. Over the last eight months we have set about identifying what are the fundamental characteristics required by insurers to survive and thrive over the next decade or two. Click here to find out more about our new thought leadership, due to launch at the International Insurance Society conference in Seoul on Monday 17 June.
Mixed reactions greeted the latest guidelines for the early implementation of parts of Solvency II. The guidelines, issued in late March by the European Insurance and Occupational Pensions Authority (EIOPA), identify elements of the regime that EIOPA expects national supervisors to implement from 1 January on a "comply or explain" basis. With the latest Solvency II consultation ending on 19 June and the guidelines set to apply from 1 January 2014, insurers need to act now to set out their priorities before they consider submitting a formal response.
On the radar…
- 11 June – EBA draft regulatory technical standards for recovery plans under the Recovery and Resolution Directive consultation ends
- 14 June – EP consultation on coherence of EU financial services legislation consultation ends
- 19 June – EIOPA consultation on guidelines for Solvency II ends
- 25 June – European Commission consultation on the Green Paper on long-term financing ends
- 28 June – EIOPA consultation on complaints handling by insurance intermediaries ends
- By end June – ESMA final report and guidelines on remuneration policies and practices under MiFID expected
- By end June – European Commission shadow banking proposals expected
Coming soon: Evolving Investment Management Regulation 2013
The investment management industry continues down the previously untraveled road in 2013, with the volume and complexity of regulatory change showing no signs of abating.
Implementation of regulatory reforms nationally, internationally and globally is a significant challenge for the industry. The commitments made at the G20 level need to be implemented at country level; creating a number of cross-border challenges for today's investment manager.
There are a number of key regulatory concerns for the industry, including:
- effective cross-border business in a heavily-regulated environment;
- investor information and protection;
- financial stability;
- governance and responsibility;
- remuneration; and
- increased risk management and reporting requirements
This year's Evolving Investment Management report, now in its third year, cuts through the complexity of the global regulatory landscape for the investment management industry, providing an overview of:
- current and upcoming regulations – and how these are being implemented;
- the challenges and opportunities arising from regulatory change; and
- their implications on investment business.
The publication will be launched next month.
This report looks at the forces that are leading to a reshaping of distribution functions and how different elements of the model are changing. KPMG International provide insight into the strategies being deployed and pose questions in relation to whether distribution functions are structured in the best way to optimise client proximity, if client relationships are being managed in the most effective way across the business and how managers are upskilling and enhancing capabilities.
Download the report here
The Social Banker returns
Last year, the Social Banker series blew apart some of the hype and mysticism surrounding social media to deliver a rather unique look at how this technology is impacting the banking sector.
This year, the Social Banker v2.0 will go further by shining a spotlight on some of the new approaches that are emerging from the social sphere.
Over the next few months, subscribers and visitors can expect to see new insights and opinions from some of the very best minds in the banking and social media sector. I encourage you to add this page to your favourites, to join in the conversation on Twitter, LinkedIn, Google+ and Facebook.
Euro Crisis Update
The latest version of the Euro Crisis update is now available to download.