Newsletter - March 2019
March 2019

Confirmation of Payee (CoP)

In order to tackle the high levels of fraud around UK payments a new Confirmation of Payee (CoP) service is going to be introduced to give customers greater assurance that they are sending their payments to the intended recipient. The service is effectively an ‘account name’ checking service which will reduce payments being misdirected due to errors or fraud.


Tablet

To the public this may appear to be something fairly simple for the banks to set-up as a check whenever a new payee is created, but as anyone who has worked in a bank knows, there are many situations where the situation is far more complicated than it seems:

  • Spelling differences (Anne/Ann, Stuart/Stewart, Steven/Stephen)
  • Shortened names (Rob/Robert, Tom/Thomas, Henry/Harry, Bill/William)
  • Use of middle name or preferred name instead of first name
  • Nicknames
  • Truncated names (particularly companies & charities)
  • Maiden names
  • Previous names of companies
  • Trading as names
  • Acronyms

There are two capabilities that need to be developed by all banks that provide payment services to their customers:

  1. The capability that whenever a new payee is setup in order to make a payment, the payee name is checked with the account holding bank (an Account Servicing Payment Service Provider or ASPSP in the new terminology). This will result in a ‘Yes – It’s a Match, No – It’s not a Match or ‘No – It’s a close Match’ which will be shown to the customer.
  2. The capability to service the incoming requests from Payment Service Providers (PSP) wishing to check one of your customer’s details. There are rules around the matching, what information is provided, and the same result options shown above will need to be passed back.

Fairmort has been looking at these requirements and we see that two of our existing solutions can provide banks with the capability to meet these requirements:

  1. Fast-Fuse - Our Fast-Fuse integration solution can service both incoming and outgoing CoP requests, in the case of incoming CoP requests it will either talk directly to the core banking system, talk to the WILF Reporting (WILFr) data warehouse, or talk to both systems to process the necessary matching logic. In the case of out-going requests the Fast-Fuse solution can deal with requests from whatever channels or systems the bank has in place that require the CoP capability.
  2. WILFr Data Warehouse - Our WILFr data warehouse can provide a data repository for the data needed to service incoming CoP requests as well as the matching logic. Clearly some or all of this data will be populated from the core banking system, but alias data can be held in WILFr if it is not easily maintained in the core banking system. Using the WILFr data warehouse to service these requests will provide banks with a cost-effective solution to the CoP requirement without making changes or upgrades to the core banking system which may be complex, expensive or not even possible in the case of older systems.

AEOI Reportable Jurisdictions

HMRC has finalised the list of AEOI reportable jurisdictions for the tax year of 2018. This means that the lists configured in the latest releases of WILFr AEOI module are now out of date, and will need to be updated, since some jurisdictions have been added, and others removed. Without these changes, the wrong jurisdictions will be included in the 2018 AEOI submission, due in May 2019. Whilst it is possible for WILFr AEOI users to update the jurisdictions within the WILFr AEOI module configuration screens, there will be a lot of updates to make following HMRC’s notification, so Fairmort will be releasing a patch with these changes to all WILFr AEOI users before the May 2019 submission.


London

Changes since last year's submission:

The following jurisdictions are now reportable for the May 2019 submission:

  • Antigua and Barbuda
  • Brunei Darussalam
  • Costa Rica
  • Macao (China)
  • Nigeria
  • Vanuatu

The following jurisdiction is no longer reportable for the May 2019 Submission:

  • Russia

The following are reportable jurisdictions for the 2019 reporting year, in respect of 2018 reportable accounts:

Andorra, Antigua and Barbuda, Argentina, Aruba, Australia, Austria, Azerbaijan, Barbados, Belgium, Belize, Brazil, Brunei Darussalam, Bulgaria, Canada, Chile, China, Colombia, Cook Islands, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Ghana, Gibraltar, Greece, Greenland, Grenada, Guernsey, Hong Kong (China), Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Korea, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macao (China), Malaysia, Malta, Mauritius, Mexico, Monaco, Montserrat, Netherlands, New Zealand, Nigeria, Niue, Norway, Pakistan, Panama, Poland, Portugal, Romania, Samoa, San Marino, Saudi Arabia, Seychelles, Singapore, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, Uruguay, Vanuatu.

Source:


Regulatory Updates

To ensure our software is compliant with the latest regulations we proactively research regulatory changes monthly. These changes may have an impact on your business. Along with the AEOI update taken from the HMRC website, this edition includes an update on the Continuity of Access waiver and the regularly featured PRA tracker.


PCF

The Continuity of Access (CoA)

The existing CoA waivers expire in December 2019. It is not yet clear whether further waivers will be issued and if so who these will be issued to. The WILFr FSCS solution provides a CoA solution and is being used to provide an automated solution for some banks, however, the solution needs to be customised based on the core banking system being used. If you have any concerns or questions about how Fairmort can assist, then please contact

PRA/FCA and BOE Activities

Date Topic Ref Other Ref Report Comment Link to Webpage
01 March 2019 EBA EBA opinion on DGS stemming from withdrawal of the UK from the EU The European Banking Authority (EBA) published today an Opinion relating to deposit protection issues stemming from the withdrawal of the UK from the EU. In this Opinion, the EBA calls on the Deposit Guarantee Schemes Designated Authorities (DGSDAs) to ensure that depositors in the branches of the UK credit institutions in the EU are adequately protected by the EU deposit guarantee schemes (DGSs), in case of a withdrawal of the UK from the EU with no ratified agreement in place.
February 2019 EBA Minimum capital requirements for Market Risk D457 Basel Committee finalised its revised minimum capital requirements for market risk, which will likely apply to banks and PRA designated investment firms in the UK. The Committee aims to address some of the issues raised by banks since the publication of the first standards in 2016. The new version is good news for banks as it will slightly lower the capital requirement coming out of market risk. The proposals also clarify the scope of exposures that are subject to market risk capital requirements, and set out changes to the internal models approach and the standardised approach. The Basel Committee expects national supervisors to implement the new standards in Pillar 1 capital requirements as of January 2022.
28 February 2019 BOE/PRA FSCS - near final policy SS 18/15 FSCS An updated version of SS18/15 was published to reflect a no-deal withdrawal from the EU as part of a joint Bank of England and PRA Policy Statement 5/19 ‘The Bank of England’s amendments to financial services legislation under the European Union (Withdrawal) Act 2018’, to deliver the general approach being taken to ensure there is a functioning legal framework when the UK leaves the EU. This SS is near-final and effective from the date of the UK’s withdrawal from the EU. See the Annex for more details.
28 February 2019 BOE/PRA PRA approach to interpreting reporting and disclosure requirements and regulatory transactions forms after EU withdrawal SS 2/19
PRA103
PS 5/19 This supervisory statement (SS) sets out the approach the Prudential Regulation Authority (PRA) expects firms to take when interpreting EU-based references found in reporting and disclosure requirements and regulatory transactions forms after the UK’s withdrawal from the EU. The PRA has not made line-by-line changes to reporting or disclosure requirements, or regulatory transactions forms, as a result of the UK’s withdrawal from the EU, as it would not have been proportionate to do so. Instead, the PRA expects firms to interpret EU references in those templates and instructions in accordance with this SS.
28 February 2019 BOE/PRA Statement of Policy - Interpretation of EU Guidelines and Recommendations: Bank of England and PRA approach after the UK’s withdrawal from the EU This joint Bank of England (Bank) and Prudential Regulation Authority (PRA) Statement of Policy (SoP) sets out the Bank’s and PRA’s approach to EU Guidelines and Recommendations in light of the UK’s withdrawal from the European Union (EU). This SoP is relevant to all PRA-regulated firms, investment firms in scope of the UK resolution regime and all Bank-regulated financial market infrastructure providers (FMIs) operating, or intending to operate, in the UK.
28 February 2019 BOE/PRA EU Withdrawal Act - near final policy SS1/19 This webpage sets out the legal and regulatory framework which would be expected to operate following the UK withdrawal from the EU without an implementation period in place.
01 February 2019 FCA Payment Services & Electronic Money PRIN & BCOBS FCA 2019/05 FCA Handbook changes. Comes into effect 01/08/2019
10 January 2019 PRA Consultation Paper - Eligibility of financial collateral CP 1/19 In this Consultation Paper (CP), the Prudential Regulation Authority (PRA) sets out its proposed changes to Supervisory Statement (SS) 17/13 ‘Credit risk mitigation’ to clarify expectations regarding the eligibility of financial collateral as funded credit protection under Part Three, Title II, Chapter 4 (Credit risk mitigation) of the Capital Requirements Regulation (575/2013) (CRR). This CP is relevant to UK banks, building societies and PRA-designated UK investment firms that are subject to the CRR.
08 January 2019 PRA Policy Statement PS 1/19 FSA047
FSA048
PRA110
Published PS1/19 ‘Liquidity reporting: FSA047, FSA048, and PRA110’ and an updated SS34/15 ‘Guidelines for completing regulatory reports’. See the Reporting of PRA110 section for more information.
01 January 2019 PRA A number of data items and instructions came into force today RFB
PRA109
FSA071
FSA076-79
FSA081-83
REP001 &
REP001a
FSA082
PRA111
RFB data items and instructions (ring-fencing); and PRA109 Operational continuity data item and instruction. The following data items and instructions were updated to reflect policy effective from today: FSA071, FSA076-79, and FSA081-83 data items; FSA071-83 instructions; REP001 and REP001a; and Guidance on terms used in data items FSA071 to FSA082, and PRA111. The Branch Return form came into force today and is available in the ‘Branch return Form’ section.
20 December 2018 PRA Consultation paper UK Withdrawal from EU CP 32/18 UK withdrawal from the EU: Further changes to 'PRA Rulebook and Binding Technical Standards' and This Consultation Paper (CP) contains two consultations to fix deficiencies arising from the UK’s withdrawal from the EU and make consequential changes: Part 1 sets out the Prudential Regulation Authority’s (PRA) proposals in relation to the PRA Rulebook and Binding Technical Standards (BTS) within the PRA’s remit that will be retained, or ‘onshored’, in UK law. Part 2 sets out proposals by the Bank of England (Bank) acting as resolution authority in relation to two BTS under the Bank Resolution and Recovery Directive (BRRD). 'Resolution Binding Technical Standards'
20 December 2018 PRA Branch Return Changes BR CP 24/18 PRA published Policy Statement 33/18 ‘Responses to Chapter 2 of CP24/18 ‘Occasional Consultation Paper’, which includes the final rules and Branch Return form to Chapter 2 of Consultation Paper 24/18 ‘Occasional Consultation Paper’. The revised rules and Branch Return form will take effect from Tuesday 1 January 2019.
20 December 2018 PRA
FCA
‘Securitisation: The new EU framework and Significant Risk Transfer’, Joint statement PRA & FCA PS 29/18 Further to Policy Statement 29/18 ‘Securitisation: The new EU framework and Significant Risk Transfer’, PRA published a joint statement with the Financial Conduct Authority (FCA), ‘Securitisation Regulation: PRA and FCA joint statement on reporting of private securitisations’. This direction is intended to apply to all UK established originators, sponsors and securitisation special purpose entities (SSPEs) from Tuesday 15 January 2019.
19 December 2018 FCA Policy Statement PS 18/24 PSD2 PS18/24: Approach to final Regulatory Technical Standards and EBA guidelines under the revised Payment Services Directive (PSD2)
14 December 2018 PRA Version 3 of PRA110 Q&As Published version 3 of the PRA110 Q&As which has been updated to include additional Q&A in existing sections, as well as a new section on contingencies. For more information see the Interim reporting of PRA110 section.
13 December 2018 PRA Statement of Policy/Policy Statement 32/18 PS 32/18 This statement of policy (SoP) sets out the Prudential Regulation Authority’s (PRA) approach to the implementation of the systemic risk buffer (SRB). In line with the Independent Commission on Banking (ICB) recommendations, the UK legislation implementing the SRB requires the Financial Policy Committee (FPC) to establish a framework for an SRB that applies to large building societies and ring-fenced bodies (RFBs). The SRB Regulations require the PRA to apply the framework set out by the FPC on the SRB from 1 January 2019. The FPC published ‘The Financial Policy Committee’s framework for the systemic risk buffer’ (‘FPC framework’) in May 2016. Alongside the FPC framework, this SoP will form the Bank of England’s broader framework for the SRB. The PRA will review this SoP at least every two years. This SoP is relevant to RFBs, within the meaning of section 142A of the Financial Services and Markets Act 2000 (FSMA), and large building societies that hold more than £25 billion in deposits (where one or more of the accountholders is a small business) and shares (excluding deferred shares) – jointly ‘SRB institutions’.
13 December 2018 PRA
FCA
Consultancy paper with FCA Changes to mortgage reporting requirements CP 30/18 Published a joint Consultation Paper (CP) with the Financial Conduct Authority (FCA), CP30/18 ‘FCA and PRA changes to mortgage reporting requirements’. This CP is relevant to: mortgage lenders; home finance administrators; and entities which own mortgage books but which are not authorised to lend
05 December 2018 PRA Supervisory Statement updated FSA 071 to FSA 082
PRA110
SS32/15 ‘Pillar 2 reporting, including instructions for completing data items FSA071 to FSA082, and PRA 111’

Releases and New Features

Commercial Credit Account Information Sharing (CAIS)

We have recently developed an Experian Commercial CAIS extract component in WILFr. The extract provided by WILFr conforms to the CAIS specification and also allows for an Excel version to be produced. Data used to produce the extract can be amended prior to extract creation through the WILFr Data Entry module, subject to the appropriate access controls and auditing.


Regulatory Updates

AEOI v1.1.6

Following discussions and clarification from HMRC this patch includes changes to the previously reported flag which references previous submissions to check if the person has previously been reported and if so they automatically become reportable for the current year, with the option to make the person non-reportable. Other improvements include setting all closed accounts to 0 and changes around the IBAN, alongside bug fixes and interface improvements.

BBSI v1.1

The latest BBSI release included changes to the submission file to replicate the HMRC template file and general functionality improvements.