The Financial Conduct Authority (FCA) is using emergency powers to prevent financial advice firms, who advised members of the British Steel Pension Scheme (BSPS), from disposing of assets to avoid paying compensation. The FCA has introduced these emergency rules, without consultation, in light of the risk that some firms will take steps to get rid of their assets if the rules were consulted on first. The measures will apply from the 27 April 2022. The FCA previously announced proposals for a redress scheme for former BSPS members which the FCA estimates will deliver £71.2 million of redress to consumers who were wrongly advised to transfer their pension.  Continue reading…

The Financial Stability Board (FSB) has recently published a letter from its Chair, Klaas Knot, to G20 Finance Ministers and Central Bank Governors ahead of their meeting. The letter discusses the current outlook for financial stability and sets out the FSB’s plans over the coming months to assess and address emerging vulnerabilities. The letter notes that the Russian invasion of Ukraine triggered large price fluctuations in global financial markets. Continue reading…

by Elena Pykhova

The three-year priorities published by the European Central Bank1 is a must-read document for risk practitioners. It outlines important areas of focus for the supervisors – and, equally, banks and their risk teams, who should be analysing and leading the organisational thinking by ensuring maximum awareness of the environment, comprehension of its impact and hence enhanced preparedness necessary to withstand the next crisis. In the post-pandemic environment, it is not surprising to see credit risk and market risk high on the regulatory agenda. As it relates to Operational risk, while it is explicitly mentioned only in relation to IT Outsourcing and Cyber resilience, it has in fact multiple touch points and direct correlation with other areas, whether linked to business model, governance or climate and environmental risk.  Continue reading…

The Financial Stability Board (FSB) has on April 26th published a report on the interaction between US dollar funding and external vulnerabilities in emerging market economies (EMEs). The report has been prepared in collaboration with the IMF and forms part of the FSB’s work programme on non-bank financial intermediation. The report proposes policy measures to address EME vulnerabilities arising from foreign currency borrowing. These include measures to tackle the build-up of foreign exchange mismatches; enhance crisis management tools; and address data gaps to facilitate risk monitoring and the timely adoption of policies. The report also stresses the importance of ongoing work to address vulnerabilities from liquidity mismatches in open-ended funds, which would also help bolster the resilience of EMEs’ financial systems. Continue reading…

The financial fragmentation in the euro area that occurred at the start of the coronavirus (COVID-19) pandemic was reversed relatively quickly, the European Central Bank (ECB)’s latest report on Financial Integration and Structure in the Euro Area shows. Once pre-pandemic levels of integration were regained, financial integration increased further and remained resilient to pressure from further waves of infections. The most influential policy interventions that initially kept fragmentation contained, and then brought integration back to pre-pandemic levels, were the series of ECB monetary policy measures and the European Union (EU) agreement on a sizeable coronavirus recovery fund. Continue reading…

Akshata Murthy, the wife of British finance minister Rishi Sunak, said on Friday that she would stop avoiding British tax on her foreign income — bowing to pressure which her husband had earlier dismissed as a political smear. The public anger over Murthy’s tax status has been heightened by her husband’s decision to increase payroll taxes at a time when surging inflation leaves Britons facing the biggest cost-of-living squeeze since records began in 1956. Murthy, an Indian citizen, is eligible for so-called “non-domiciled” status in Britain, something available to foreign nationals who do not regard Britain as their permanent home. That in turn allowed her to opt to pay UK tax only on income she earned in or transferred to Britain. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has on 28 March published its Final Report on the European Union Carbon Market (EU carbon market). The Report’s analysis did not find any current major deficiencies in the functioning of the EU carbon market based on the data available. However, ESMA’s analysis of the market has led it to put forward a number of policy recommendations to improve market transparency and monitoring. Continue reading…

Agustín Carstens, General Manager at the Bank for International Settlements, recently delivered a speech on the topic of inflation at the International Center for Monetary and Banking Studies Geneva on 5 April 2022. Being the BIS’s General Manager, it will not come as a surprise to you that I have decided to devote my presentation to the issue that is top of mind for policymakers around the world, namely the return of inflation. After more than a decade of struggling to bring inflation up to target, central banks now face the opposite problem. The shift in the inflationary environment has been remarkable. If you had asked me a year ago to lay out the key challenges for the global economy, I could have given you a long list, but high inflation would not have made the cut.  Continue reading…

by Lieve Lowet & Lorenz Van Roosbroeck

Early February, the Actuarial Association of Europe (AAE) hosted a webinar entitled Sustainability and Climate Change – what does it mean for risk management in Insurance and Pensions? The webinar centered around issues of sustainability and the climate crisis. Since the EU Commission officially endorsed ESG considerations in its 2017 sustainable finance package, reinforced by the priorities of the current Commission and the Green Deal in 2019, the discussions are proliferating — up until the point that it is nearly impossible to follow all developments. As such, clear and distinct frameworks which capture the essence of the challenges we face are needed. It is within this context that the aforementioned webinar sparked interest as one of the speakers introduced a concept and measurement tool from ‘down-under’. More specifically, Gregorio Gil de Rozas, Instituto de Actuarios Espanoles, introduced the specific case of The Australian Actuaries Intergenerational Equity Index or AAIEI. After some research, it appears that The Actuaries Institute — i.e. the professional body representing the actuarial profession in Australia — published a Green Paper under the same name as the presentation, entitled Mind the Gap — The Australian Actuaries Intergenerational Equity Index (AAIEI). Here, we bear emphasis on this topic of intergenerational equity for several reasons.
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The European Commission’s ‘Freeze and Seize’ Task Force, set up to ensure EU-level coordination to implement sanctions against listed Russian and Belarussian oligarchs, has now stepped up its action at international level. It will work alongside the newly established ‘Russian Elites, Proxies, and Oligarchs (REPO)’ Task Force, under which the EU operates together with the G7 countries Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, as well as Australia. Cooperation between the European ‘Freeze and Seize’ Task Force and the international ‘REPO’ Task Force is essential to guarantee the efficiency of the sanctions taken on both sides of the Atlantic. The Commission is committed to work closely and coordinate with its partners to ensure effective cooperation on a global level. Continue reading…