RBS 2011 Annual Report Download - page 446

444 RBS Group 2011
Regulatory developments and reviews
The Group works with domestic and international trade associations and
proactively engages with regulators and other authorities such as the
Basel Committee, the European Commission and governments, in order
to understand the implications of proposed regulatory change and to
contribute to the development of regulatory policy.
The Group and its subsidiaries have co-operated fully with various
regulatory reviews and developments in the UK and internationally,
including enquiries or investigations into alleged or possible breaches of
regulations.
United Kingdom
In the UK, the Group has actively engaged with a large number of
legislative and regulatory consultations. Reflecting global developments,
financial stability - notably bank prudential requirements and the new
regulatory framework - remains a key focus for the UK regulatory
authorities.
The Group has continued to participate fully in the analysis of the cause
of the financial crisis and the development of potential policy and reform.
Awide range of ideas and proposals, aimed at strengthening the
resilience of the banking system and addressing perceived shortcomings
in existing regulation, have been advanced and continue to be
developed. With respect to prudential requirements, the Group provided
detailed feedback on the FSA's latest consultation on Strengthening
Capital Standards and others, including on the supervisory formula
method and liquidity swaps. Other consultations included HM Treasury’s
further consultations on the structure of financial regulation, covered
bonds and on Recovery and Resolution Plans (“Living Wills”).
The Group has actively engaged with, and contributed to, a number of
inquiries regarding the future of banking. These included the Independent
Commission on Banking and various Treasury Select Committee
inquiries. It has contributed to debates led by the Financial Stability
Board, European Commission and UK authorities on resolution
frameworks, including possible mechanisms such as contingent capital
and bail-in arrangements. It participated in the FSA's pilot for the
development of Living Wills and will be developing suitable Living Wills in
line with forthcoming regulatory requirements.
The Group has continued to play an active role in the development of
requirements affecting products and processes. Examples include the
Government’s Review of Consumer Credit and Personal Insolvency, the
FSA’s review of mortgages (Mortgage Market Review) and of investment
advice (Retail Distribution Review), the FSA’s proposals on Product
Intervention and the European Directive on Mortgages. The Group
worked closely with the Government (the Department of Business,
Innovation and Skills) and the industry to develop and implement annual
credit card statements to improve transparency for customers. The Group
has also worked closely with the Government on its MyData initiative,
with a view to empowering consumers by giving them greater access to
their financial data, and on the Government’s proposals to introduce a
charitable giving option at ATMs.
In 2011, regulatory changes which have been introduced to improve
transparency for retail customers include the addition of interest rates on
savings account statements and annual statements for personal current
accounts.
UK regulated firms within the Group are members of the Financial
Services Compensation Scheme (FSCS), which provides compensation
to eligible customers of authorised financial services firms that are unable
to meet their obligations. The FSCS is a contributor to depositor
confidence and financial stability and the Group is supporting the FSCS
in increasing awareness amongst UK consumers.
The FSA, in its 2011/2012 Business Plan, made reference to the
proposed changes to the structure of regulation in the UK. The FSA will
be responsible for transitioning to the new regulatory structure and the
Group is committed to working with the authorities to establish a system
that delivers the new structure.
The Group also continues to co-operate with the Information
Commissioner’s Office, the UK’s independent public body set up to
uphold information rights in the public interest, promoting openness by
public bodies and data privacy for individuals. The Group monitors legal
and regulatory changes and industry best practice and implements timely
process improvements to ensure continued protection of individuals’
privacy rights and enhance information security management.
European Union/global developments
The Group follows closely the work and recommendations of the G20, as
well as international standard setters such as the Basel Committee on
Banking Supervision. Of note were the developments, particularly in
Europe, to implement the proposals from the Basel Committee on
Banking Supervision for an enhanced capital and liquidity framework. The
Basel Committee also developed proposals for additional capital for
globally systemically important banks. The Group remains closely
involved in all aspects of the proposals on capital and liquidity, as well as
on other related policy areas, such as countercyclical capital buffers and
contingent capital.
Also notable in 2011, was significant work by the European Commission
and the new European Supervisory Authorities in such areas as financial
sector taxation, corporate governance, crisis management, credit rating
agencies and remuneration. The Group provided input in all these areas.
United States
In the US, the Group continues to engage constructively with regulators
and other bodies on regulatory and legislative change and seeks to
ensure proper implementation and compliance. Current issues include
regulatory implementation of US financial regulatory reform legislation,
mortgage and credit card lending and consumer disclosures, debit card
interchange fees, and account overdraft protection.
Other jurisdictions
The Group is active in monitoring regulatory developments in each
country in which it operates so that internal policies are sufficient to
ensure the effective management of regulatory risk.
Additional information continued