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Lieve Lowet

Lieve Lowet

EU Affairs consultant and lobbyist

The Solvency II review – Cooperation platforms and low risk undertakings and groups (Part 2)

20 July 2022
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Following changes in 2019 in the Solvency II directive, EIOPA has the power to set up and coordinate collaboration platforms to enhance collaboration between the relevant supervisory authorities where a (re)insurance undertaking carries out, or intends to carry out, cross-border activities based on the freedom to provide services or the freedom of establishment. For these platforms, the criterium is not significant cross-border activity from the point of view of the home supervisor, but relevance to the host Member State market. Around ten of these platforms have been set up since then. However, in several cases, according to the European Commission, supervisors have failed to reach a common view on how to address issues related to such cross-border business. Hence, the European Commission proposes to further enhance EIOPA’s role: the home supervisor must inform EIOPA and the relevant host supervisors if it identifies deteriorating financial conditions or other emerging risks which may have a cross-border effect. The host supervisor may notify EIOPA and the home supervisor if it has serious consumer protection concerns. The idea is to find a bilateral solution between home and host supervisors while EIOPA stands ready on the side Will that work? This is part two of Lieve Lowet’s latest blog on Solvency II (see related items for part 1). Continue reading…

Lieve Lowet

Lieve Lowet

EU Affairs consultant and lobbyist

The Solvency II review – How to safeguard the internal market in insurance? (Part 1)

18 July 2022
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Since the introduction of Solvency II, there have been very few failures in the insurance sector. Because some failures had cross-border consequences, there has been pressure to change the present regulatory regime in order to give more powers to host supervisors and to EIOPA. Although the functioning of the internal market in insurance can certainly be improved, care must be taken not to overload the barge and to respect the approach that was agreed in the nineties for all financial service operators, i.e. a single market with a single license (European passport) and home country control. Failures are in a way a proof that market mechanisms are working. But in the financial services area, failures are more undesirable than in the rest of the services sector, especially in a cross-border context exercised via the freedom of establishment or the freedom to provide services (FPS). Despite the fact that Solvency II was not conceived as a zero-failure regime and that few failures have occurred in practice, the European Commission, pushed by EIOPA, is proposing important amendments to the present regime for insurers that operate cross-border, justified by supervisory shortcomings and a varying degree of policyholder protection across the EU following these failures. This is part one of Lieve Lowet’s latest blog posts on Solvency II. Part 2 will be published this Wednesday. Continue reading…

FCA fines Ghana International Bank Plc £5.8m for failings in its anti-money laundering controls

14 July 2022

The FCA has fined Ghana International Bank Plc (GIB) £5,829,900 for poor anti-money laundering and counter-terrorist financing controls over its correspondent banking activities. GIB provided correspondent banking services to overseas banks. This allowed them to provide products and services they would not otherwise be able to, including making payments in different currencies and across borders. The FCA requires banks to do extra checks on their correspondent banking customers to reduce the higher risk of money laundering and terrorist financing associated with the service.  Continue reading…

Daniel Vaknine

Daniel Vaknine

CEO and Partner of Visslan

Why internal whistleblowing is superior

13 July 2022
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Whistleblowing comes in many shapes and forms and is often seen as devastating for the organisation to which the allegations are directed. One amongst many examples is the recent Facebook whistleblower Frances Haugen. Many times, this includes the whistleblower talking to the media. In this article, we will explore why internal whistleblowing is superior to external such and why it’s essential for every organisation to enable their employees to report internally. Although we cover the differences between internal and external whistleblowing in other articles here is a brief overview of the differences. Internal whistleblowing is when an employee reports errors, corruption or malpractice within the organisation, i.e. internally. The employee uses the organisation’s own whistleblowing solution to highlight the issue. External whistleblowing is when a person blows the whistle externally instead of internally. This can be, for example, to the media, authorities or in social media. Common reasons why people choose external whistleblowing include that they have little faith in their own organisation, or because they have tried to blow the whistle internally without seeing any fundamental changes. Continue reading…

National Bank of Belgium to play a key role in funding NextGenerationEU

12 July 2022
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The National Bank of Belgium (NBB) is to support the European Commission in funding the important NextGenerationEU recovery plan. The Commission has decided to call on the NBB’s market infrastructure and expertise for issuance of the massive package of bonds worth over € 800 billion. During the coronavirus crisis the European Commission decided to support the Member States with an extensive recovery package to make the Union greener, healthier, more digital and more resilient. The package is called NextGenerationEU and will be funded by resources made available by the issuance of debt securities with a maturity of three months to thirty years. Altogether the investment programme amounts to over € 800 billion. The European Commission decided to call on the European Central Bank and the National Bank of Belgium for the issuance of these bonds. While the ECB will act as the payment bank the NBB will arrange the issuance of the bonds through its securities settlement system. Continue reading…

High inflation calls for timely and decisive central bank action

08 July 2022
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In its flagship economic report, the Bank for International Settlements (BIS) said the global economy risks entering a new era of high inflation. Stagflation dangers loom large, as a combination of lingering disruptions from the pandemic, the war in Ukraine, soaring commodity prices and financial vulnerabilities cloud the outlook. According to the BIS’s Annual Economic Report 2022, the priority for central banks is to restore low and stable inflation. In doing so, they should seek to minimise the hit to economic activity, thereby safeguarding financial stability. Engineering such a “soft landing” has historically been difficult, and the starting conditions today make it challenging, the BIS said. Continue reading…

Boris Johnson’s government plunged into crisis as two ministers quit

06 July 2022
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Two of the United Kingdom’s most senior ministers have resigned from the cabinet in the latest blow to Prime Minister Boris Johnson’s leadership. Health Minister Sajid Javid and Finance Minister Rishi Sunak announced their resignations within minutes of each other on Tuesday, plunging Johnson’s government into crisis. The resignations came as Johnson was apologising for what he said was a mistake for not realising that a former minister in charge of pastoral care was unsuitable for a job in government after complaints of sexual misconduct were made against him, in the latest embarrassment to have engulfed his government. In their resignation letters to the prime minister, both ministers took aim at Johnson’s ability to run an administration that adhered to standards. Continue reading…

Financial firms are investing more in tech to manage increasingly complex regulatory landscape

05 July 2022
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Almost half of firms (44%) are planning to invest more in RegTech solutions in the next 12 months to cope with the growing pressure on the compliance function in this fast moving and increasingly complicated regulatory and operational landscape. A further 41% expect to invest the same amount as the previous 12 months. This investment is driving up the overall cost of compliance with almost all (90%) of financial services firms reporting increased compliance costs over the past five years. One in ten said costs have doubled. This was discovered by compliance technology and data analytics firm SteelEye, in its first-ever Annual Compliance Health Check Report. Continue reading…

Private sector debt and financial stability

01 July 2022

Debt financing can spur economic growth but may also pose risks to financial stability and macroeconomic performance. Private non-financial sector debt increased to an all-time high of around 170% of world GDP during the Covid-19 pandemic, spotlighting the role of debt in supporting economic activity as well as the associated risks. Central bank frameworks for monitoring debt vulnerabilities were strengthened in the years prior to the Covid-19 crisis. Central banks have made increasing use of sectoral and entity-level data to look beneath aggregate figures that might conceal vulnerabilities; the distribution’s tail often provides a better signal of debt vulnerabilities than the middle. Continue reading…

Listening up to level up: Regulating finance for the whole of the UK

30 June 2022
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On 20 May 2022, Charles Randell, Chair of the Financial Conduct Authority, delivered a speech at the Centre for Commercial Law Studies, Queen Mary University of London, England. Meeting people across the nations and regions of the United Kingdom is the greatest privilege of my job as Chair of the Financial Conduct Authority. In Solihull, I met a single mother. When her father was dying, she gave up her job to care for him. She couldn’t meet her everyday costs and started taking on debt. She did seek help – but at her lowest ebb, she was sold a plan that charged her fees but didn’t reduce the debt. It didn’t even leave her enough money for food. It was only when she went to the voluntary sector – in her case, Christians Against Poverty – that she started to turn the corner. She got a new plan which meant she could keep her home. Continue reading…