Regulatory Initiatives Grid an ‘essential reference point’ for UK firms

Elizabeth Budd, financial regulation expert at Pinsent Masons, said the grid (50 pages / 1.19MB PDF), had become “an essential reference point for all regulated firms” since it was first piloted two years ago. The grid is published by the Financial Services Regulatory Initiatives Forum (FSRIF), which includes HM Treasury, the Bank of England, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), among others.

The grid provides details on upcoming regulatory initiatives across the UK’s financial services landscape, presented on a sectoral and multi-sector basis and described by the FSRIF as a “consolidated presentation” of the anticipated timeframes. The grid shows which institutions are leading each of the initiatives on the grid, shows key milestones until post-October 2023, and whether the impact on in-scope firms is likely to be higher, lower or unknown.

The grid also identifies ”related initiatives”, although not on an exhaustive basis, identifies new initiatives since the last edition, and shows those that have been completed or stopped since their inclusion in the previous edition in an annex. While some of the proposed changes will be in the upcoming Financial Services and Markets Bill, other milestones shown include anticipated consultation dates and dates for regulators to publish rules.

The FSRIF also flagged that responding to ”known unknowns” in the market, such as the invasion of Ukraine and the cost-of-living crisis, could drive further initiatives not currently shown on the grid. Budd said: “The potential for these unprecedented events, these ‘known unknowns’, to have a bearing on firms and consumers may mean regulatory change needs to be put in place by both industry and regulators, at speed – as we saw during the Covid-19 pandemic.”

“For the funds industry, for example, there has already been the consultation around using new separate classes of shares in authorised funds, known as ‘side pockets’, to house investments impacted by the Russian invasion of Ukraine. This is a mechanism for fund managers to ring fence such assets so investors invest in or sell funds’ units based on valuations that exclude them,” she added.

The grid also sets out regulators’ proposals to increase distribution of long term asset funds to a wider market of retail investors. According to the grid, a consultation on the plans is proposed for the summer. There is also a discussion paper on money market funds and further engagement with industry planned into the autumn on the Overseas Funds Regime.

Budd said: “The regulators compiling the grid identify that they and industry have ‘a pivotal role’ in consumer support, saying this could lead to new regulatory initiatives, or changes to those that are already on the grid. As during the pandemic, firms should anticipate that consumers, especially vulnerable consumers, will be a central focus for regulators, particularly in view of the cost-of-living crisis.”

She added: “So, the grid is an essential reference point for all regulated firms looking to assess the impact of regulatory developments – whether through their firm’s engagement at the consultation phase or at implementation. But firms should also be aware the regulators could make changes, such as to timing or by introducing new initiatives. These will not feature on the grid, as it is not updated before the next edition comes out in the autumn. So it remains important for firms to track output by the individual regulators in response to emerging market developments.”