RBS 2012 Annual Report Download - page 291

RBS GROUP 2012
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Management of regulatory change
The early identification and effective management of changes in
legislative, regulatory and other requirements that may impact the Group
is critical to the successful mitigation of prudential and conduct risk.
Group Regulatory Affairs maintains a well-established policy and
supporting processes for the identification and management of such
changes across the Group. Group Board and Executive Committee
oversight is supported by a Prudential Regulatory Developments
Executive Steering Group, which was formed in early 2010 to provide a
specific focus on a range of key regulatory changes augmented by more
specialised groups which cover capital, liquidity, prudential and wholesale
market and retail conduct issues. In addition, there is a divisional Heads
of Regulatory Developments forum and an RBS Americas regional forum.
Reporting and internal communications activity expanded in 2012 in
response to the growing regulatory change agenda. This included:
x monthly reporting of key developments to the Group Risk Committee;
x substantial enhancements to the suite of tools used to monitor and
react to regulatory developments; and
x increased communications, such as staff seminars, publication of
additional information such as house views on key issues on internal
websites and the weekly Regulatory Affairs Flash Report, circulated
widely across the Group, which captures key regulatory
developments and relationship topics.
Regulatory relationship management
The Regulatory Relations Forum, chaired by Group Regulatory Affairs,
meets fortnightly and now has global coverage with representatives from
all divisions and regions. It facilitates the sharing of key regulatory
engagements.
Quarterly reporting to the Group Audit Committee captures all material
regulatory reviews and investigations and upstream regulatory
developments worldwide, as well as tracking the status and trends in key
regulatory relationships.
Key regulatory policies - ‘Group Relationships with Regulators’ and
‘Political, Legislative and Regulatory Environment’, are kept under annual
review. Each incorporates a new risk appetite statement, relevant
benchmarking activity against the Group's peer banks and, for the latter,
an end-to-end review and mapping of the upstream risk management
process.
Recovery and resolution planning
As advocates of effective recovery and resolution planning, the Group
continues to work towards the implementation of effective plans. In order
to be able to deal effectively with any future severe stress events, the
Group has developed a range of recovery options in the form of a
detailed recovery plan.
Individual country regulators are developing and implementing their rules
according to their own timescales. This emphasises the need for
consistency of approach, both by the regulatory bodies and internally
within the Group, to ensure effective management of financial stability
across jurisdictions, and to avoid duplication and inefficiency for cross-
border banks. The Group has worked with trade associations to provide
feedback on the FSB’s consultative document on operationalising
recovery and resolution planning, published in November 2012.
The Group intends to continue its activities aimed at producing robust
and effective plans and to proactively influence policy makers regarding
the most practical approach to implementing the regulations. It will also
be important to consider how individual regulations might be implemented
in a manner that takes advantage of any potential synergies and avoids
unnecessary re-work. The potential overlaps between recovery and
resolution planning and the proposals arising from the Independent
Commission on Banking, the US and the EU will provide an area of focus
in this regard.