The FCA proposes to extend the Senior Managers and Certification Regime, LV= and Allianz announce they are to ‘merge’ and one of the new digital banks discusses its first few months.
They say a week is a long time in politics and a month is certainly a long time in today’s Financial Services world. I have chosen three stories that are highlights for me.
Senior Managers and Certification Regime
The FCA has required all approved persons to be registered with it for many years, but last year the Senior Managers and Certification Regime (SMCR) replaced this for firms which were dual regulated by them and the Prudential Regulation Authority (PRA). They are now proposing to extend this to all firms it regulates.
The new Regime means that all Senior Managers (as defined by the FCA Handbook) must be disclosed along with a statement of responsibilities, the idea is that this improves accountability and transparency. Other employees – who are not defined as senior managers but could ’cause damage’ – will need to be certified. This is more of a decoration to confirm they are certified fit and proper to perform their roles (they previously needed to be approved by the FCA individually).
I certainly agree that this is the right move by the FCA. From one side, larger firms making individuals accountable for their actions should reduce risk to consumers or serious harm being done. Smaller firms and individual advisors will have less cumbersome registration requirements which allows them to spend more time doing their jobs and growing their businesses. As a result of this I see the overarching clarity and competitiveness goals of the FCA coming closer.
New kid on the block: Starling Bank
If you haven’t yet heard of them, you really should. One of the new kids on the block, according to FinTech News Starling Bank have had an app only current account for three months now and are offering something genuinely refreshing. A fee free (yes that includes overseas transactions) current account that pays interest on balances and provides instant notifications of transactions and insights into spending patterns.
I’m excited to see how this business develops. Starling aim to create the best current account in the world by focusing on just one product with a marketplace (coming soon) to link to the best of everything else. If everything they are planning comes to reality, we will look back wondering why we put up with the big banks for so long!
LV= and Allianz ‘Merger’
Reported in CityAM, this is actually a joint venture where Allianz has taken an initial 49% stake of the new firms business for £500m. This will increase in 2019 with Allianz injecting a further £213m for a further 20.9%. This company will manage Allianz home and motor book as well as LV=’s commercial insurance. It is expect to complete before the end of the year.
The new business will be the UK’s third largest general insurer. As with any large scale ‘merger’ the question of a competitive market has to be considered. However, I don’t think there is cause for concern. With the big players still being kept honest by myriad challengers and (love them or loathe them) comparison sites, there will be no time for complacency. The new business should benefit from scale and synergies to improve the service and products they can offer.
With the UK financial services landscape continuing to change from all directions – the three stories above showing change in regulation, increased competition and market consolidation – UK businesses need to ensure they keep themselves aware of these changes and how the regulation, competition or consolidation may impact on them and their customers.