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Bank Builder Module – Regulatory Project

Are You Looking To “Build A Bank”?

The exterior facade of the Bank of England building in Central London
The exterior facade of the Bank of England building in Central London

Setting Up A New Bank May Have It Called A “Challenger Bank” ….

But It Is More Of A Challenge Than Many People Realise!

The process of setting up a bank has been made simpler in the past two years by the Financial Conduct Authority and the Prudential Regulatory Authority, after several government inquiries that criticised the lack of competition in retail banking.

Before the infamous “Metro Bank” launched in 2010, there had not been a single UK Based banking licence granted in 100 years.

While only a handful of new entrants have come through the new registration process, there are well over four dozen start-ups already in talks to gain banking licences. The fact is that many of these “talks” will fall into no action taken as;

  • The concepts are weak
  • there is insufficient regulatory experience
  • there is insufficient experience in major regulatory experiences
  • failure to understand the regulatory capital required
  • lack of funding in setting up a bank properly
  • in many cases, there is a poor understanding of the risks and risk mitigation required.

After 2008, the regulators appeared to be overly cautious and thoroughly scrutinised any plan put before them. The FCA reduced the barriers to becoming a bank and have seen enormous activity in this area, however one major shortfall has been the cost of consultancies to help set up the startup. Most of the Big 5 accountancy firms will cost upwards of £2 Million to provide even the most basic of services.

“Other consultancies may charge less, but are strictly limited to what they know”

Can you do it alone?
Well, the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) have launched the New Bank Start-up Unit. The Unit is a joint initiative from the UK’s financial regulators giving information and support to newly authorised banks and those thinking of becoming a new bank in the United Kingdom.

The joint New Bank Start-up Unit will assist new banks to enter the market and through the early days of authorisation. The new unit has a standalone website, telephone number and email address. It will provide new banks with the information and materials they need to navigate the process to become a new bank, as well as with focused supervisory resource during the early years of authorisation.

The New Bank Start-up Unit will provide named case officers for firms during the authorisation process at both the PRA and the FCA and a greater level of supervisory support during the new bank’s early years after they have been authorised.

New banks will benefit from:

  • access to the New Bank Start-up Unit helpline
  • access to supervisors at both the PRA and the FCA via the helpline
  • regular capital and liquidity reviews, if appropriate
  • monthly regulatory update emails
  • invitations to seminars targeted at new and prospective banks and separately banks’ senior management and NEDs
  • invitations to events, alongside other firms, on key regulatory topics.
The Regulators document can be accessed HERE

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Does This Make It Any Easier?
The simple answer is no. The regulators word their letters and instructions in such a way that even £200 per hour Law firms often disagree with the interpretations. Take a look at the FCA’s Handbook to see for yourself. The handbook is rife with definitions (click on the hyper-linked word for the glossary definition) and you will find that in many cases, the definition is one thing in one part of the handbook and something else in another part – without telling you which part actually applies.

If you take the simple example of “Outsourcing” the glossary definition is;
“(1) (except in SYSC 8, COBS 11.7, SYSC 3 and SYSC 13 to the extent applicable to a Solvency II firm, and the definition of relevant person) the use of a person to provide customised services to a firm other than:
(a) a member of the firm’s governing body acting in his capacity as such; or
(b) an individual employed by a firm under a contract of service.
(2) (in SYSC 8, COBS 11.7, SYSC 3 and SYSC 13 to the extent applicable to a Solvency II firm, and the definition of relevant person) an arrangement of any form between a firm and a service provider by which that service provider performs a process, a service or an activity which would otherwise be undertaken by the firm itself.
[Note: article 2(6) of the MiFID implementing Directive and article 13(28) of the Solvency II Directive]”

So we hope that is clear for you.

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So What Is Bank Builder?
Bank Builder is available to anyone who is serious about setting up a bank, but wants value in their regulatory compliance project work, not just pay for a big name.

Bank Builder is both a Regulatory Based Product and Service provided together to give the structure of a project plan, with all the involved disciplines, but with an advice and information element and project leadership to take you along the journey to full authorisation and launch.

Bank Builder is a key element to anyone’s planning if they are looking to start up a bank and need regulatory compliance detail.

“Having spent nearly 20 years in the Compliance arena, and after setting my first bank up in 2008, the ground rules have been relaxed, but the requirements have become more complex. Risk management has developed and increased in its relevance and prominence. Compliance, and even more so with ‘Conduct Risk’ focus, reaches across all departments and all sectors of the banking operation today”

Lee Werrell, Chartered FCSI FISMM, Owner Compliance Consultant

We have the professional, qualified help that you need to make your banking project work.

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You don’t need Regulatory Compliance Academics, nor do you need consultants that are too vaguely experienced. At Compliance Consultant we have qualified staff all with many years of experience in Banking, Stock-broking, Fund Management and other firms who can act on their own initiative, add value at every stage and make the right decisions for you at the right time.

We provide;

  • Regulatory Requirement Project Management
  • Strategy Map Creation
  • Regulatory Business Plan Drafting Advice and Assistance
  • Customer Experience Creation (including regulated complaints system)
  • Regulatory Requirement Governance (The policies, TOR’s, key Manuals etc)
  • We arrange and cover the costs of the ICAAP (the internal capital adequacy assessment process)
  • We arrange and cover the costs of the ILAA (the Individual Liquidity Adequacy Assessment)
  • We arrange and cover the costs of the RRP (Recovery and Resolution Plans)
  • Required Regulatory Specialists for Compliance, Risk Management and Governance
  • Rigour of Project Management
  • Risk Management Framework
  • Interface with IT, HR, Marketing/Branding, and any Outsourced Facilities
  • Assistance and Advice regarding the Business Continuity Planning
  • Treating Customers Fairly (TCF) and “Conduct Risk” Assessments
  • Committee and Board representation advice
  • Director Training in Regulatory Issues
  • And much more …

Our Project Plan (High Level) can be accessed HERE

For a fixed cost – starting from £500,000 for the above project work (including the ICAAP, ILAAP and RRP) of just over a year in total from Pre-Preparation through to the Mobilisation Phase and Risk Rating Assessments (ratings agencies independent assessment) from the big agencies. Obviously your specific timings will vary depending on the bank type and the type of banking, CRM, HR or any other software you buy, but we can work with most external elements quite easily. If you compare rough costings, we can save you hundreds of thousands of pounds.

So if you are considering setting up a new bank, and all the others suck their lips and say “You can’t put a price on it.” Tell them that Compliance Consultant do.

We can work on a fixed basis or time allocation, or a mixture of both depending on the phase and level of involvement needed.

Contact us on 0207 097 1434 or email bankbuilder@complianceconsultant.org

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