Regulatory Initiatives Grid launched ahead of schedule: CUBE’s response

The UK’s Financial Conduct Authority (FCA) has announced that the Regulatory Initiatives Grid (the Grid) has been launched ahead of schedule to help firms that are “stretched” by the coronavirus pandemic. The Grid was originally announced in Chancellor Rishi Sunak’s 2020 Spring Budget with a view to being launched in “summer 2020”. However, owing to the current pandemic, the strains it is placing on many firms, and the regulatory changes that have come about because of it – the project has been brought forward.

What is ‘the Grid’?

The goal of the Grid is simple: to enable regulated financial institutions to manage their regulatory obligations and better-prepare for upcoming changes. The Grid is managed by the Financial Services Regulatory Initiatives Forum (the Forum), which is comprised of key financial bodies including FCA, Bank of England, the Competition and Markets Authority and HM Treasury, among others. It aims to provide a two-year horizon scan of major upcoming regulatory initiatives, including the transition from LIBOR and legislation surrounding Brexit.

The Grid is organised by sector and includes a multi-sector chapter. It separates regulatory events into three, distinct periods: the near-term (until the end of Summer 2020); the medium-term (end of summer to March 2021; and the longer-term (April 2021 onwards). Regulatory initiatives have only been included where they have already been made accessible to the public and where the forum considers they will have an “individually significant operational impact during implementation.”

The Grid will run as an initial 12-month pilot and will be published at least twice a year. As a pilot, the FCA and the forum is welcoming feedback to the initiative and how it could be developed.

Mitigating regulatory burden: more can be done

Commenting on the Grid, FCA Interim Chief Executive and Forum Co-Chair, Christopher Woolard, said: “At any time it’s important for regulators to do what they can to help firms plan, but it’s all the more vital in difficult times like these… Financial services firms need to know what regulatory work is coming down the track, and this Grid will give them the opportunity and time to prepare.”

The Grid shows that UK regulators across the board are aware of the regulatory challenges that financial institutions are subject to and is a firm sign that they are serious about ensuring firms are keeping on top of regulatory changes. The Grid goes some way to enabling and aiding the change management process. However, it is a small step in an industry that is inundated by constant changes.

The Grid is not comprehensive and only covers substantial changes from UK regulators. It does not cover changes across jurisdictions, or those smaller, less operational changes which are harder to spot. Firms will need to trace and track these regulations through their existing processes – a task that can be time consuming and clunky if using manual methods.

While the Grid is a helpful tool, the industry should not lose sight of the fact that this is another regulatory source that change management teams will need to add to their repertoire and manage systematically. The process of keeping abreast of these changes will remain complex and potentially labour intensive.

CUBE’s response

CUBE believes that the most effective means of managing regulatory change is through automated regulatory change management. Automated compliance platforms, such as CUBE, use regulatory intelligence to scan the length and breadth of the regulatory horizon – across jurisdictions – to enable firms to anticipate, plan for and implement regulatory changes. Easing the burden of regulatory change has always been a priority for CUBE, and we welcome the Forum’s steps towards mitigating the effects of regulatory change – especially during this challenging time.

Commenting on the change developments, CUBE’s Head of Americas, Rob Fulcher, said “It’s an understandable and very much welcomed move by the Forum during uncertain and for many, unprecedented times. While the market is catching its breath, staying compliant and planning for change has not and cannot stop. The Regulatory Initiatives Grid should provide firms with a new focus and framework to guide their compliance and regulatory employees.

Not too dissimilar, CUBE was born out of the uncertain time and high regulatory-pressure of a post financial-crash era. During a time of ultra-high velocity and volume of new and changing regulations, CUBE’s solutions were designed to automatically capture, classify, filter, map and deliver relevant regulations in order for clients to assess impact and prioritize actions in a more efficient manner. CUBE currently monitors over 2000 Issuing Bodies globally; the announcement and guidance stemming from the Regulatory Initiates Grid will become yet another source that CUBE will capture, process and deliver as Regulatory Intelligence to our clients.