New regulatory unit set up to support new challengers' access to the UK banking market

Out-Law News | 21 Jan 2016 | 3:09 pm | 1 min. read

A new regulatory unit has been set up by two UK financial services regulators to help smooth entry into the UK banking market of new challenger banks.

The Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) will jointly resource the New Bank Start-up Unit which will work to "assist new banks to enter the market and through the early days of authorisation", they said.

New banks will see "a greater level of supervisory support during the new bank’s early years after they have been authorised" as a result of the work of the new unit, the regulators said. Among the benefits the regulators say the new unit will provide include "regular capital and liquidity reviews, if appropriate", as well as access to staff at the new unit and both the PRA and FCA via a new helpline.

A spokesperson for the FCA confirmed to Out-Law.com that the new initiative is distinct from the existing Innovation Hub which is aimed instead at helping financial services companies bring innovative products and services to market and help firms understand how the regulatory regime might apply to them.

Andrew Bailey, deputy governor for prudential regulation at the Bank of England and chief executive of the PRA, said: "The New Bank Start-Up Unit builds on the work we have already done to reduce the barriers to entry for prospective banks, which has led to twelve new banks now authorised since April 2013. These new banks are a key part of bringing innovation to the sector, particularly where there is a gap in the market – whether it is the service they provide, the customers they target, the products they sell or the technology they use."

"With the launch of the New Bank Start-up Unit, applicants will now benefit from having a single place where they can get the advice and guidance they need to start a new bank and support once they are authorised," he said.

According to a report by the Financial Times, Bailey said that Bank of England is looking at ways to reduce regulatory burdens that smaller banks relating to capital requirements to help spur greater competition in the UK banking market.