REG Reviews
4th September 2023
Last month, the FCA launched an investigation into rules around banks and political exposed persons, the UK government accelerated the fight against carbon emission reduction through AI investment, the nightlife sector appealed to insurers for support amid capacity crisis and REG released our enhanced Declarations feature.
Read these articles and many more, as we bring you all the important news and views from the insurance and financial services world…
The FCA have launched a second probe into rules around banks and ‘politically exposed persons’ (PEPs). This follows the letters sent to banks on August 9th requesting information about customers who have been “de-banked,” as part of a government-directed assessment into the relationship between banking services and freedom of speech.
This action by the Financial Conduct Authority (FCA) follows a directive from Chancellor, Jeremy Hunt, who urged the regulator to promptly determine the number of customers who have faced blacklisting due to their political viewpoints; emphasising that “the possibility of being de-banked poses a risk to one’s ability to voice one’s opinions.”
This move comes in the wake of Coutts, a subsidiary of NatWest, opting to close the accounts of former UKIP leader, Nigel Farage.
Numerous other politicians have similarly expressed difficulties in obtaining banking services, attributing the challenges to excessively burdensome regulations. In July, Hunt disclosed that he had been denied the opportunity to open an account with the online bank Monzo last year.
The FCA will mandate banks to divulge details about the number of terminated or suspended accounts, instances of denied services, and the rationales behind these decisions.
Over 25 major banks and building societies have until August 25th to provide their responses, and the FCA intends to release its findings by mid-September.
Hunt has emphasised that if the practice of blacklisting customers based on their political opinions is found to be prevalent, the regulator should impose substantial fines on the banks.
Following this initial probe, the FCA opened an investigation into the regulations around banking high-risk customers.
The FCA stated; “We are reviewing how financial services firms have applied the PEP regime and whether any changes are needed for UK PEPs.”
The assessment of the framework concerning PEPs, individuals subjected to increased scrutiny due to their elevated corruption risk, is part of the Financial Services and Markets Act, which received royal assent in late June.
PEPs encompass not only politicians but also their relatives. Previously updated in 2017, the rules governing PEPs will be reviewed, with the terms of reference to be disclosed in September and a comprehensive report expected in June of next year.
The FCA has reached out to Members of Parliament, peers, and party chairs polling above 5%, and aims to engage with other PEPs, including senior civil servants and high-ranking military personnel.
The UK has officially scheduled its highly anticipated summit addressing the responsible utilisation of artificial intelligence (AI). Taking place on 1st and 2nd of November, the event will bring together world leaders, AI industry representatives, and experts for comprehensive discussions.
This global summit intends to foster a collective agreement on the direction of AI’s future. The iconic Bletchley Park, known as the workplace of Alan Turing, a key figure in the development of modern computing during World War Two, will serve as the venue for these critical discussions.
Prime Minister, Rishi Sunak, stated; “To fully embrace the extraordinary opportunities of artificial intelligence, we must grip and tackle the risks to ensure it develops safely in the years ahead.”
“With the combined strength of our international partners, thriving AI industry and expert academic community, we can secure the rapid international action we need for the safe and responsible development of AI around the world.”
The list of invited world leaders for the event remains undisclosed, and there is uncertainty about the participation of entities such as the Chinese government or the prominent tech company Baidu.
The summit’s overarching focus will be on discussing the secure advancement of technology through globally coordinated efforts. While specific topics to be addressed haven’t been confirmed, the event is intended to provide a platform for such discussions.
In recent developments, Palantir, a US tech company, declined requests to halt AI development, with its CEO, Alex Karp, stating that calls for a pause typically come from entities lacking “products.”
Additionally, the Internet Watch Foundation, a children’s charity, urged Rishi Sunak to address the increasing prevalence of AI-generated child sexual abuse imagery in July.
Bletchley Park, known for its crucial role in decoding messages during WWII, had a notable influence on the subsequent discourse around AI.
Noteworthy figures such as codebreakers Irving John “Jack” Good and Donald Michie, who were part of the Bletchley Park team, later contributed to discussions on AI through their writings and speeches.
Alan Turing, a central figure in Bletchley Park’s history, introduced the concept of the imitation game, which is famously known as the “Turing test.”
This test aims to determine whether a machine’s behaviour is virtually indistinguishable from that of a human, a concept that has since become pivotal in the development of AI.
CEO of the Bletchley Park Trust, Iain Standen, stated; “It is fitting that the very spot where leading minds harnessed emerging technologies to influence the successful outcome of World War Two will, once again, be the crucible for international co-ordinated action,”
“We are incredibly excited to be providing the stage for discussions on global safety standards, which will help everyone manage and monitor the risks of artificial intelligence.”
A digital rights group has raised concerns that individuals’ control over and access to their data is being eroded by a post-Brexit bill that favours large corporations and “shady” technology firms.
The data protection and digital information bill includes modifications to regulations concerning subject access requests (SARs), enabling individuals to request copies of personal data held by organisations, as well as changes related to automated decision-making.
SARs have gained prominence due to their utilisation by politicians like Nigel Farage and Caroline Lucas, revealing a surge in their use following the 2018 EU GDPR regulations, which allowed organisations to reject or charge for requests only under specific circumstances.
The bill modifies this requirement to “vexatious or excessive,” a change that, according to Abigail Burke, the policy manager for data protection at Open Rights Group (ORG), is likely to reduce the threshold for refusals, potentially leading to a significant increase in such rejections.
“There’s already a huge power imbalance between large corporations and the government, and individuals, so when everyday workers or other people are trying to get an understanding of how companies or their employer are using their data, subject access requests are critical,” she said.
“You can’t really exercise your data rights if you don’t even know what data is being held and how it’s being used, so the changes are very concerning to us. Subject access requests to the police and other national security bodies have been really important for allowing people to understand how their data is being shared.”
Additionally, she highlighted that the bill:
“It greatly weakens your control over and access to your own data, making it very difficult to understand when and how automated decision-making is being used to make important decisions about your own life,” said Burke.
“And it reduces some of the safeguards and the mechanisms that you have to make complaints, or try to challenge decisions that you think are unfair. It’s basically the government choosing big business and shady technology companies over the interests of everyday people.”
However, the government holds the view that there won’t be a substantial rise in refusals of SARs. A spokesperson responded to ORG’s assertions about the bill, deeming them “misleading and, in several instances, factually incorrect,” while emphasising that the bill aims to “enhance transparency regarding the management of individuals’ personal data by companies.”
In a bold move towards achieving its ambitious net-zero target by 2050, the government has unveiled a groundbreaking initiative aimed at harnessing the power of Artificial Intelligence (AI) to spearhead the reduction of carbon emissions across various industries.
This multimillion-pound investment represents a pivotal step in the nation’s commitment to combat climate change and marks a significant stride towards a more sustainable future.
The announcement comes as a response to the pressing need for innovative solutions that can rapidly and effectively tackle the issue of carbon emissions.
With the threat of climate change looming larger than ever, governments around the world are under increasing pressure to adopt transformative measures.
The UK government’s decision to allocate substantial funds to leverage AI for environmental benefit is a testament to its proactive stance on combating climate change.
Twelve distinct green AI initiatives have been handpicked to receive a substantial share of £1 million, each set to play a unique role in reshaping their respective industries.
Among the initiatives, a notable focus lies on enhancing renewable energy generation and efficiency. Solar energy, a cornerstone of the renewables sector, will receive a much-needed boost through the application of AI-driven forecasting. By fine-tuning the prediction of optimal energy generation periods, AI will ensure that solar power contributes optimally to the grid’s demands.
However, the scope of these AI initiatives extends well beyond solar energy. The government’s comprehensive approach to decarbonisation encompasses even seemingly unrelated sectors like agriculture.
One standout example is the integration of AI in dairy farming. AI-powered robots, equipped with advanced sensors, will monitor crop and soil health, enabling more efficient resource allocation while minimising the environmental impact of the industry.
This innovative amalgamation of AI and agriculture showcases the government’s commitment to exploring unconventional avenues for carbon reduction.
In an impressive display of dedication to innovation, the government has also allocated an additional £2.25 million to foster the growth of AI-based solutions specifically targeting emissions reduction in the energy sector.
This supplementary funding serves as a testament to the government’s long-term vision, actively encouraging ongoing AI research and development in alignment with climate goals.
These investments are a component of the government’s £1 billion Net Zero Innovation Portfolio, Lord Callanan, Minister for Energy Efficiency and Green Finance stating; “We are unquestionably world-leading when it comes to advanced AI and our track record for decarbonisation. This unique position means we must now push the boundaries in how this technology can enhance our rapidly growing clean energy sector.”
This initiative’s impact is two-fold. On one hand, it underscores the transformational power of AI in driving systemic change. The infusion of AI into various industries not only propels them toward a greener future but also sets a precedent for other nations to follow suit.
On the other hand, it exemplifies the government’s willingness to facilitate collaboration between seemingly disparate sectors, effectively creating a network of innovation hubs that contribute to the larger goal of net-zero emissions.
As the world watches, the UK government’s strategic allocation of funds stands as an inspiring model for how AI can be harnessed to solve some of the most daunting challenges of our time.
This initiative serves as a beacon of hope, demonstrating that with concerted efforts and visionary investments, a sustainable future is indeed within reach.
The transformation has begun, driven by technology, innovation, and a resolute commitment to safeguarding the planet for generations to come.
The financial sector is urging the Bank of England (BoE) to postpone the UK’s implementation of new international banking capital regulations by six months to prevent a phase of regulatory disparity that could impact London’s competitiveness against Wall Street.
The Prudential Regulation Authority (PRA), previously outlined intentions to introduce this regulatory package, known as the “endgame” of the Basel capital rules following the financial crisis, in January 2025, which aligns with the EU’s plans for the same implementation period.
However, the landscape shifted last month when the US unexpectedly declared a June 2025 deadline for adopting the Basel IV regulations, which are anticipated to raise US bank capital requisites by roughly 16%.
Executives within the UK financial sector have cautioned that managing distinct regulatory systems in various countries could result in significant expenses. Moreover, concerns have been voiced regarding the potential impact on competitiveness, especially within global markets where London-based banks frequently contend with their counterparts in New York.
Jared Chebib, a Partner at advisory firm EY, stated “The proposal . . . to push back the US Basel IV implementation schedule until 1 July 2025 creates challenges with misalignment across jurisdictions, particularly for global banks headquartered in the UK,”
The European Union’s legislation for implementing the bank capital framework contains a provision aimed at addressing competitiveness concerns. This clause enables the European Commission to potentially postpone the enforcement of stringent new capital requirements for trading, aligning the bloc with other significant jurisdictions. However, Brussels has not officially commented on whether it intends to exercise this authority.
Sources reveal that the PRA communicated privately earlier this year that it would be receptive to synchronisation with the United States if it were to choose a later date for the implementation of Basel IV measures. UK-based bank executives are preparing to engage with the UK regulator on this matter in the forthcoming months.
Lobbying organisation, UK Finance, has initiated discussions among its members to explore the possibility of collectively advocating for a six-month extension of the PRA implementation timeline for the UK’s banking capital rules.
While a six-month delay might not independently offer significant advantages to UK banks, the aim is to ensure synchronisation of regulatory timelines across major jurisdictions.
Simon Hills, who leads UK Finance’s prudential and capital team, emphasised the importance of synchronisation across jurisdictions. The PRA is still consulting on the UK’s plans.
Different phase-in periods for new banking rules initially set for global implementation in January 2023 are being proposed by the UK, US, and EU.
In August, UK consumer confidence experienced a more significant increase than anticipated, attributed to factors like decreased energy prices and a faster pace of wage growth.
The consumer confidence index, which gauges individuals’ perceptions of their personal financial situations and the overall economic outlook, surged by five points to reach minus 25. This rebound reversed much of the decline seen in July and brought consumer confidence levels back to approximately those observed at the beginning of the previous year.
Research firm GfK released this data, which exceeded the slight rise to minus 29 predicted by economists surveyed by Reuters.
Joe Staton, Client Strategy Director at GfK, stated that consumer confidence “regained momentum this month with a welcome five-point improvement” and “while the financial pulse of the nation is still weak, these signs of optimism are welcome during this challenging time for consumers across the UK.”
The observed improvement in consumer confidence has been attributed by some economists to the alleviation of the cost of living crisis. July witnessed a decline in inflation to 6.8%, marking the lowest rate since February of the preceding year and a significant drop from the peak of 11.1% recorded in October.
This positive trend was accompanied by a notable surge in wages, which experienced their fastest growth rate on record during the three months leading up to June.
This wage growth outpaced the increase in prices for the first time in roughly a year and a half.
Gabriella Dickens, an economist at Pantheon Macroeconomics, pointed out that the boost in consumer confidence could be attributed to multiple factors. These include the reduction in mortgage rates over the past month, as well as the decrease in energy costs that occurred in July.
Ruth Gregory, an economist at the consultancy, Capital Economics, suggested that this data marks “the cost of living crisis is coming to an end.”
However, she also stated; “consumer confidence may deteriorate again in the coming months due to further rises in unemployment, falls in house prices and still rising interest rates”.
The Bank of England is anticipated to increase interest rates in September, marking the 15th consecutive rise since December 2021.
Consumer confidence serves as an important gauge of both the willingness and ability to spend, which holds significance for economic growth due to household spending’s substantial contribution to gross domestic output.
This confidence has faced challenges from escalating food and energy prices, driven by Russia’s incursion into Ukraine.
Based on interviews conducted during the first half of August, the GfK index exhibited across-the-board improvements.
Forecasts for personal finances in the next year climbed by four points to reach minus three, the closest approach to a positive figure since January 2022. Additionally, expectations for the overall economy also experienced an increase.
Staton suggested the indicator monitoring spending intentions saw an eight-point increase, a development that could bode well for retailers as the transition into autumn unfolds.
Industry experts are urging for increased competition in the UK nightlife insurance market, which is currently dominated by a single capacity provider. Concerns are growing that any reduction or withdrawal of this provider’s services could severely impact the sector, reports Insurance Age.
Brokers and leaders in the nightlife industry are appealing for more insurers to step in and assist nightclubs facing an insurance crisis if the key provider scales back or exits the market.
According to these stakeholders, Accelerant, who provides capacity to the major managing general agents (MGAs) that offer nightclub insurance, currently holds a significant share of the UK nightclub market’s capacity provision, making it the primary choice for brokers.
Michael Kill, CEO of the Night Time Industries Association, mentioned to Insurance Age that while there are occasional alternative insurance providers for nightclubs, their pricing is often prohibitive. It can cost up to £40,000 per annum to insure a high-street nightclub, making Accelerant the most practical choice.
“A positive is that Accelerant is accessing something that is working for people, but it’s the sole product out there at moment that’s workable within the traditional nightclub sector,” stated Kill.
Some of the MGAs offering nightclub insurance include NBS Underwriting, Trilogy, Eaton Gate, and Burns & Wilcox. However, Kill is urging for engagement from insurers interested in introducing competition to a market that has made significant advancements in risk management in recent years.
“The key thing that we’d love to do is get some insurers around the table for us to talk to them about exactly what the sector looks like now, and what it’s looked like for over the last 10 years, so that people are confident moving into the sector and are able to supply products at a reasonable sort of premium,” he commented.
Brokers have observed Accelerant’s rapid expansion in the nightclub sector and other niches, with the company extending its presence across the UK market as premium income grows.
In 2021, the insurer reported €219 million (£188.2 million) in gross written premiums (GWP), which increased to €662 million the following year, largely driven by partnerships with its MGAs.
Accelerant Insurance Europe operates with a 90% quota share arrangement with reinsurers, assuming only a small portion of the risk itself. It holds an A-rating from AM Best, making it a secure choice for MGAs.
Jon Newall, founder of Prosura, warned that if Accelerant were to exit the nightclub market partially or entirely, it would have a significant impact, similar to a major bank departing from the UK. Nightclubs would face challenges in obtaining affordable insurance, potentially leaving them in a vulnerable position.
Newall stated; “We are not concerned about Accelerant’s financial stability, or its credit worthiness or anything like that, it’s just a genuine concern of [lack of competition in] the distressed market. If something did happen to them, or they pulled out the UK market, we’re in trouble.”
Additionally, Insurance Age reported it understands that Accelerant has restrictions in place that prevent the MGAs it supports from quoting against other providers it backs when brokers are placing business, further limiting options for intermediaries.
Simon Mabb, the Managing Director of Romero, who operates a successful nightclub scheme, highlighted that capacity provision in the sector has declined due to players exiting following the impact of COVID-19.
One significant player he mentioned is QBE, which had a strong proposition but has now scaled back.
“The market has been struggling for a period with people wanting to write leisure businesses, particularly late leisure. Customers have taken a battering in terms of premium. All roads lead back to Accelerant which is the main capacity that is writing this business,” he said.
The launch of Bridgehaven, which plans to invest millions in the commercial specialty sector, has provided some hope for MGAs seeking capacity. However, it remains uncertain whether this provider would include nightclubs in its risk appetite, which primarily targets the higher end of the SME market.
Michael Kill believes that nightclubs are unfairly judged by insurers, even though they have made substantial progress in risk management. He pointed out that insurers often hold a stereotypical view of nightclubs as high-risk establishments.
“What we find is that the risk premium is elevated against other businesses, even though other businesses suffer the same challenges that our sector has faced, predominantly over the last three years. So it seems surreal that we’re in a similar situation to many other sectors, but seem to be penalised because we’re seen as higher risk. Something definitely needs to be done,” he added.
Indeed, great strides have been made to enhance the sector’s risk management, with improvements to CCTV and security, better strategies for reducing claims and risk exposure and strengthened reputation following a boost in advocacy fuelled by the proliferation of social media and online reviews.
From an MGA perspective, Michael Keating, CEO of the Managing General Agents’ Association (MGAA), believes the market is functioning effectively.
“MGAs are experts in terms of underwriting these sectors, and if Accelerant are providing paper and capital to MGAs, those MGAs must believe that they have the expertise and sector knowledge to provide an underwriting return for Accelerant. From a broker perspective, I’ve got no doubt that they would prefer competition. But that is down to brokers, MGAs and ultimately capacity providers to work together to identify where there is the ability for all stakeholders to make a satisfactory return,” Keating shared.
Despite efforts by Insurance Age to reach out, Accelerant did not respond to requests for comment.
In 2022, the average value of insurance fraud cases increased by 20% to £15,000, as reported by the Association of British Insurers (ABI).
ABI’s data also indicates a 19% decrease in the number of identified insurance scams compared to the previous year. This trend aligns with patterns observed in recent years.
ABI has committed to maintaining its rigorous efforts to combat insurance fraud.
The data from 2022 reveals a total of 72,600 reported fraud cases, with opportunistic frauds experiencing an 18% decline, resulting in 63,000 reported cases.
The decline in overall insurance fraud cases can be attributed, in part, to a 20% decrease in fraudulent personal injury claims, primarily due to the impact of the Official Injury Claim portal, which has led to a reduction in small claims within this category.
Despite this, the domain of car insurance continues to be the focal point for the highest number of fraud cases. In 2022, 42,000 fraud cases were reported in this sector, constituting 59% of the total count of fraudulent claims.
Despite the decrease in the number of fraudulent cases, the overall value of such cases remained constant at £1.1 billion, mirroring the figure from 2020. Although the total value of claims fraud exhibited a slight 4% decrease, there was a contrasting 2% increase in the value of opportunistic fraud.
ABI highlighted that the total cost of fraud accounts for an 8% uptick in property fraud values, which reached £134 million.
ABI’s Head of Fraud and Financial Crime, Mark Allen, stated; “While it is good to see that the industry’s collaborative efforts delivered results in 2022, there can be no room for complacency.”
“With many households and businesses continuing to face rising costs, now more than ever honest customers expect insurers to weed out the cheats and focus on paying genuine claims as quickly as possible.”
Allen also emphasised that fraud has escalated to become the most frequently reported crime in England and Wales. He expressed concern that the ongoing cost-of-living crisis might compel otherwise honest policyholders to potentially exaggerate their claims.
He commented; “These latest figures highlight that some fraudsters are aiming big, with some large frauds uncovered.”
“This shows why there can be absolutely no let-up in pursuing insurance fraudsters. Honest customers rightly expect nothing less.”
“It is also important that consumers remain vigilant to potential scams. The golden rule is never act in haste – if a deal appears too good to be true, then it probably is.”
Detective Chief Inspector, Tom Hill, from the City of London Police’s Insurance Fraud Enforcement Department stated; “While it is positive to see that detected insurance fraud rates fell in 2022, the increase in the average value of fraud shows that both IFED and the insurance industry cannot afford to take our foot off the pedal when it comes to uncovering and disrupting fraudsters.”
Hill pointed out that a portion of the victims of insurance fraud consists of members of the public. This includes individuals who unknowingly purchase fake insurance from fraudulent ghost brokers as well as those who fall victim to identity theft.
The British Insurance Brokers’ Association (BIBA) has officially renewed the signposting agreement with the government and the Association of British Insurers (ABI) aimed at assisting elderly individuals in finding suitable car or travel insurance.
This agreement, initially established in 2012 and subsequently reviewed in 2015 and October 2019, continues to provide guidance to older individuals seeking insurance coverage.
Since the introduction of the signposting arrangement, BIBA’s ‘Find Insurance Service’ has received approximately one million inquiries regarding car and travel insurance from older individuals.
Under this renewed agreement, if an insurer or broker is unable to provide insurance coverage to an older individual due to age-related reasons, they are obligated to direct the customer to an insurance provider that can cater to their requirements.
However, customers may be referred to a specialised signposting service, such as BIBA’s offering.
BIBA’s service is accessible through both online and phone channels, effectively guiding individuals to a relevant member broker that is best suited to assist them in securing suitable insurance coverage.
CEO at BIBA, Graeme Trudgill, stated; “This agreement is a great example of the industry working together for the good of customers. BIBA is delighted to continue with it in conjunction with government and ABI following eleven successful years.”
“It is increasingly important as our population ages and the number of older people travelling overseas has increased rapidly post-Covid, that people get all the support they need to find the right insurance protection.”
Hannah Gurga, Director Feneral of ABI commented; “Our industry wants all customers to be able to access competitively priced insurance that provides vital peace of mind, and this initiative is helping to deliver that.”
“It’s good to see the agreement renewed between the government, BIBA and ourselves and the positive impact it’s had in helping many older customers to continue to be covered for driving and travelling.”
The Economic Secretary to the Treasury, Andrew Griffith MP, added; “We all need insurance to continue doing the things we love – whether that’s travelling to see the world or driving to see friends and family. That’s why it’s so important that tools like the age agreement are in place to help find older customers appropriate cover.”
The British government is facing off against members of the House of Lords in a tussle over amendments to the transparency legislation enacted last year as part of the UK’s crackdown on illicit financial flows.
A letter jointly sent by the Treasury and the government’s business department in July to Lord Theodore Agnew, a House of Lords member, outlined the government’s stance against making beneficiary information from trusts accessible to the public without prior consultation.
The government’s contention is that immediate public disclosure might spark legal battles concerning individuals’ right to privacy, potentially undermining ongoing efforts to enhance transparency.
This assertion gains weight from a ruling by the European Court of Justice last year, which opined that divulging ultimate ownership details of companies could infringe upon personal privacy.
Consequently, numerous nations curtailed access to information about beneficial ownership. Critics view this judgment as a step backward in the journey to bolster corporate transparency.
Lord Dominic Johnson, the Minister for Investment, and Baroness Joanna Penn, Lords Treasury Minister, underscored the government’s viewpoint in the letter, emphasising the necessity of maintaining a balanced relationship between transparency and privacy, citing the European Court of Justice’s ruling.
“The government view remains that publishing all trust data could be problematic. We know from the recent European Court of Justice ruling on the EU’s beneficial ownership framework…that it is vital to maintain a proportionate balance between transparency and privacy.”
The correspondence to Lord Agnew marks the latest volley in an intense debate over the effectiveness of the UK government’s endeavours to curb money laundering and financial impropriety, particularly when the nation is used as a conduit for such activities.
Notably, the ongoing situation between Russia and Ukraine has brought this issue into sharper focus, prompting the imposition of sanctions on wealthy Russians holding assets in the UK.
While the government introduced transparency legislation last year that mandates offshore companies owning properties in England and Wales to declare their ultimate owners in a register of overseas entities, recent upscale property transactions in London have brought its limitations to light. Affluent individuals have leveraged trusts and nominee agreements to obfuscate ownership, revealing the legislation’s gaps.
The Labour party, transparency advocates, and House of Lords members have united in calling for legislative reform.
In June, the Lords voted in favour of an amendment demanding that Companies House publicly disclose beneficiary information of trusts. This amendment is part of a series slated for debate in the House of Commons on September 4.
Although the government has rejected default publication of trust beneficiary data, it has proposed access to specific individuals, including investigative journalists, under certain conditions.
The letter to Lord Agnew confirmed that Companies House would collaborate with Transparency International to ensure transparent access mechanisms for trust ownership details, promising meaningful feedback if access is denied.
A spokesperson for the department for business and trade affirmed the forthcoming impact of the economic crime and corporate transparency bill, asserting its capacity to curb illicit activities and reinforcing the UK’s reputation as a fertile ground for legitimate business growth.
“Transparency regarding accessing Ultimate Beneficial Ownership information is crucial. Ultimately, it helps combat corruption and money laundering by providing a clear understanding of the individuals who ultimately own or control a company. This information enables authorities to identify and investigate suspicious activities, ensuring a fair and accountable business environment. Secondly, transparency fosters trust between businesses, investors, and the public.
By making UBO information easily accessible, transparency and integrity is promoted, enhancing business credibility, and attracting responsible investment. Businesses can run enhanced due diligence checks on these individuals that they might not have previously had foresight of. This aids in preventing illicit financial activities, such as tax evasion, by creating a deterrent effect and enabling effective enforcement of regulations.”
The Electoral Commission has revealed that hackers successfully accessed the information of tens of millions of British voters in a “complex cyber attack” that remained undetected for over a year.
The agency stated that “hostile actors” breached its network in August 2021, managing to infiltrate its file-sharing and email systems and acquire copies of the electoral register. However, the suspicious activity wasn’t identified until October 2022.
The commission stated; “We do not know who is responsible for the attack” and no individuals or groups had claimed responsibility.
The Electoral Commission admitted that determining an exact number of affected individuals was challenging but estimated that the details of approximately 40 million people were present in each year’s electoral register.
This breach is likely to rank among the largest data breaches in the UK in terms of the number of individuals whose data was compromised.
As of now, it remains uncertain whether the National Cyber Security Centre (NCSC), the defensive arm of the UK’s intelligence agency, GCHQ, has identified the responsible party behind the cyber attack.
The NCSC stated that it provided the commission with “expert advice and support to aid their recovery after a cyber incident was first identified,” emphasising that “defending the UK’s democratic processes is a priority.”
The breached electoral registers contained personal information including names, home addresses, and the dates at which individuals reached voting age for those who registered for ballots between 2014 and 2022, as well as details of overseas voters. Data from individuals who registered to vote anonymously remained unaffected by the breach.
This cyber attack is part of a series of cybersecurity incidents that have impacted the public sector in the current year. The ransomware attack on outsourcing group Capita in March and the hacking activities by the Russian-speaking Clop gang in June, which exploited vulnerabilities in the MOVEit file transfer service, have affected various local and national organisations.
The Electoral Commission issued an apology to those impacted and expressed regret over the insufficient safeguards. It also reassured that the hackers’ ability to influence voting outcomes or impersonate individual voters was minimal.
However, they stated it could potentially be correlated with other publicly available information and used to “infer patterns of behaviour or to identify and profile” people.
The Electoral Commission clarified that while local authorities oversee UK elections, it held “reference copies” of the electoral register to facilitate research and ensure compliance with political donation regulations.
The cyber attackers also managed to access the commission’s email system and control systems, potentially compromising email addresses and contact details of individuals who communicated with the commission.
Regarding the 10 month delay in publicly disclosing the data breach, the commission explained that it needed time to eliminate the malicious actors, evaluate the extent of damage, and implement enhanced security measures before making the incident public.
On 21st August, REG released our enhanced Declarations feature, allowing users of the REG Network to obtain verified declarations on Directors, Officers and Ultimate Beneficial Owners (UBOs).
REG customers can now receive verified declarations in real-time to:
We believe carrying out detailed and continuous checks is the ONLY way to deliver a robust process to meet AML, Regulatory and Commercial needs, regardless of your business activity.
Discover how RegTech is transforming the approach to compliance in our latest blog.
If you would like to learn more about our Declarations solution, click here to access our feature flyer.
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The Financial Conduct Authority (FCA) has made progress in its authorisations performance related to brokers, with improvements in four out of five categories.
The latest data for April to June indicates that all key broker metrics were above 90%, although only one category was rated as “green.”
Throughout the first quarter of the financial year, the FCA successfully processed 94.5% of applications for ‘approved person’ status within the stipulated timeframe, as submitted by authorised firms under the Senior Manager and Certification Regime.
While the statutory target for the FCA is to assess 100% of applications within three months, the recent performance, although falling short of the threshold, showed improvement over the previous quarter’s rate of 92.5%. On average, the FCA took 40 days to process these applications.
The most significant improvement from one quarter to the next was seen in the processing of approved persons under the appointed representatives regime.
Although not reaching the 100% target within three months, the rate rose significantly from 82.8% to 97.1%. The average processing time for this category was 25 days.
One category received a green rating, this was for variation of permission applications, which allows a timeframe of six months for complete applications and 12 months for incomplete ones.
While the statutory target is 100%, the FCA’s scoring system allows for a minimum of 98%.
The achieved result of 99.4% remained consistent with the previous quarter’s 99.7% accomplishment, and the average processing time was 47 days.
For new firm authorisations, which also have the same six- or twelve-month benchmarks, the success rate in processing stood at 97.0%. This marked an improvement from the previous 94.8%, placing it in the amber category and just narrowly missing a green rating.
In the category of change of control, with a statutory target of 60 working days, the average processing time by the watchdog was 53 days.
While the performance was notably close to the 100% mark at 99.7%, up from 99.2% in the previous quarter, it remained amber due to the requirement of a 100% achievement for a green grade in this section.
The regulator’s performance has faced ongoing scrutiny for its inability to meet expectations. In the corresponding period of 2022, the rate of approved persons under the SMCR stood at a mere 78.9%, while for AR approved persons, it was slightly higher at 86.0%.
The processing of changes in control met the stipulated timeline in only 82.1% of cases.
In a previous authorisations update in October, the FCA acknowledged the implementation of ‘burndown plans’ aimed at bolstering resources where necessary.
By February, Graeme Trudgill, the then Executive Director of the British Insurance Brokers’ Association (BIBA), was urging the regulator to intensify its focus on these authorisation ‘burndown’ plans.
The FCA stated; “The data shows that we continue to make good progress towards meeting all our service level targets.”
Last month, MGAs were revealed to be paving the way for tech adoption, the FCA launched a review into asset managers' liquidity management, brokers were urged to address climate change risks and Geneva hosted the world’s first ever human-robot conference...
Last month, the FCA cracked down on Principal Firms, brokers were seen to be leading the way with Consumer Duty preparation, and with the annual MGAA conference only a few days away, REG sat down with CEO, Michael Keating, to discuss all things MGAA and how the Association is transforming the market for its members. Read these articles and many more, as we bring you all the important news and views from the insurance and financial services world…
Last month, FCA's commission crackdown turned the spotlight on binders, BIBA released 'Brokers Guide to ESG', 'ghost broking' incidents are worryingly rising and CEO, Paul Tasker, sat down with Insurance Age to talk all things RegTech and how regulation technology is transforming the insurance sphere...
Last month, regulatory focus extended to crypto and AI sectors, the FCA partner with influencers to battle financial scams, REG automated German licensing data and cybercriminals scare the nation with new founded AI voice cloning scams...
Last month, heightened insurance premiums rocked society amidst cost-of-living crisis, a robot made history through performing surgery, the market prepares for SMCR reforms and an enhanced focus on D&I has materialised...
Last month, reinsurers' policy inflations began to destabilise the market, the treasury forecasts the introduction of the digital pound,and the FCA have urged financial services to commit to consumer duty, whilst calling out the whole insurance market to action allegiance to ESG commitments...
Last month, concerns around brokers' naivety of Consumer Duty were brought to light, a robot prepares to become a defence lawyer and OpenAI's ChatGPT has taken the internet by storm with its revolutionary imprint on the AI landscape...
Last month, the FCA revealed the next steps for FSCS , reports suggest there will be increases in cyber budgets and the the first UK space launch is granted its licenses...
Last month the FCA released the long awaited Personal Lines data, we saw updates on the Solvency II Reforms and the CII issued apologies after experiencing their latest cyber attack...
Last month, we saw a crackdown on money laundering and illegitimate business, experienced a move towards more advanced artificial intelligence, and prepared for growth within the cyber insurance market...
In September we saw the FCA seek to expand their scope of regulation, self-driving cars to be closer than we thought, and cyber attacks shaking the security landscape!...
Last month we finally confirmed the changes to the Appointed Representative regime, saw insurers reviewing policies in the wake of 'warlike' cyber attacks and understood why the Insurtech sector is suffering from an investor confidence dip...
