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Compliance calendar. The key financial regulation to prepare for now.

Created: April 2017

The City is no stranger to legislation. The financial sector is one of the most heavily regulated in the world. And it never stands still.

If you’re just setting up, it can be overwhelming. If you’re an experienced operator, you’ll know that the key is to plan ahead and get help where you need it. Maintaining financial compliance can be a significant drain on time and resources without the proper assistance.

However, compliance is more than an administrative obligation or the price of entry to the market. It’s proof of a solid strategy. If you’re in it for the long-term, you need a business model that stands up to scrutiny.

All UK financial businesses are subject to Financial Conduct Authority (FCA) regulation and there are further special requirements for those seeking registration. And that’s just existing legislation – there’s plenty more on the horizon.

Here are some of the key pieces of financial regulation your firm should be aware of over the next two years:

Regulation: the dates you need to know

MAR

The Market Abuse Regulation (MAR) took effect on 3 July. It gives powers to tackle insider trading and market manipulation in a variety of financial markets.

Compliance deadline: 3 July 2016.

The European Union Fourth Anti-Money Laundering Directive

The most far-reaching anti-money laundering legislation in Europe for some years – emphasising ultimate beneficial ownership and customer due diligence, and introducing an enhanced risk-based approach.

Compliance deadline: 26 June 2017

MiFID II and MiFIR

The Directive on Markets in Financial Instruments repealing Directive (MiFID) and the Regulation on Markets in Financial Instruments, (MiFIR) have been developed in response to the financial crisis to make financial markets more efficient, resilient and transparent.

Compliance deadline: Early 2018

PSD2

PSD2 is designed to create a safer, more secure and efficient European payments market that protects customers and levels the playing field for service providers.

Compliance deadline: 13th January 2018

General Data Protection Rules

The European Council’s General Data Protection Regulation (GDPR) is intended to ensure robust data protection for EU residents and to simplify the regulatory environment for international business.

Compliance deadline: 25 May 2018

This is only a summary and there may be other pieces of legislation of which you should be aware. However, as long as you devote the right resources to the task, attaining compliance need not hinder you from achieving your goals.

Key changes, including MiFID II and the General Data Protection Rules, could have a big impact so it’s wise to get a proper strategy in place now.

Accounting obligations as an FCA member

In addition to evolving legislation, don’t forget the day-to-day obligations. All regulated investment firms, with limited exceptions, must submit quarterly or six monthly accounts and statutory annual accounts (as submitted to Companies House). With exceptions the accounts may have to be audited.

Most firms will also be obliged to undertake:

  • Annual controllers reporting
  • Market data reporting
  • Product sales data reporting
  • Remuneration data reporting
  • Reporting complaints
  • Transaction reporting.

Capital requirements permissions

Maintaining the requisite level of capital to meet the capital adequacy requirements is very important.

Your firm will also need to comply with the Capital Requirements Regulation (CRR) which sets how much capital your firm must hold. It is one of the two principal parts in the Capital Requirements Directive (CRD) IV, which is transposed into the FCA’s Handbook.

Compliance checklist

Although the details can be complex, the overarching strategy to achieve compliance is simple. Review the legislation, determine how it will affect your operations and formulate a plan. The more heads the better.

The regulatory world is constantly shifting. Financial firms should not underestimate the upheavals ahead or the cost of compliance. But wherever there is change there is opportunity. Gain an edge on the competition by pre-empting and adjusting more quickly, giving existing customers confidence and finding new ones.

Consider:

  1. What do I already know and what do I need to know?
  2. How are my competitors operating and what can I improve upon?
  3. Who will I ask to challenge my thinking and provide the missing pieces?
  4. What will my strategy look like and how will I implement it?

 

Find out how to speed up your FCA approval and increase profits at the same time. Download our FREE guide here.