CA Bhavi Parekh’s Post

NBFIs now manage more assets than banks, but lighter regulation increases systemic risk. Non-banking financial institutions (NBFIs), such as investment funds, pension funds and private equity firms, control a staggering 41% of total EU financial assets. 📉 Why it matters - Recent events have shown how risks in NBFIs spill over and impact everyone: 🏦 The UK pension fund crisis (2022): Rising interest rates triggered a mass sell-off of government bonds (gilts), imposing huge losses on the leveraged pension funds and bringing the gilt market to the brink of collapse. 💸 The “dash for cash” during COVID-19: Investment funds rushed to sell assets, worsening market chaos and liquidity shortages. These incidents highlight how risks in the NBFI sector can create domino effects, impacting everyone, from small businesses to individual savers. ⚠️ The lesson - Differences between bank and non-bank regulation must be levelled up where risks are the same. That’s why Finance Watch recently responded to the European Commission’s consultation on NBFIs, calling for: 🔍 Enhanced transparency on the risks of NBFIs and their interconnectedness with banks. 📑Oversight for unregulated entities like family offices and sovereign wealth funds, where they pose risks to the stability of the financial system. 💪 System-wide stress tests to uncover hidden risks. 🌍 Better climate risk rules to stop vulnerabilities from migrating to unregulated areas. Finance Watch’s recommendations aim to reduce risks and ensure a safer, fairer financial system for all. 📖 Read our full response for more insights: https://lnkd.in/ewZinVKu #NoMoreCrises  #FinanceWatch #FinancialStability #Regulation #SustainableFinance #NBFI

The Bank of England is proposing changes to its minimum requirement for own funds and eligible liabilities (MREL) framework to: ·      Simplify and consolidate the framework ·      Keep up to date with wider developments ·      Remain aligned with international standards ·      Adapt to lessons learned from implementation Key changes: ·      Restating UK CRR TLAC provisions in the MREL SoP: The Bank proposes consolidating the Total Loss-Absorbing Capacity (TLAC) and MREL regimes, simplifying requirements for firms ·      Updating indicative thresholds for stabilisation power resolution strategies: The total assets threshold for a bail-in preferred resolution strategy will be raised from £15bn–£25bn to £20bn–£30bn, reflecting nominal economic growth. This will provide smaller firms with more room to grow before potentially facing tighter regulatory requirements ·      Targeted changes to MREL calibration for transfer preferred resolution strategies: The Bank proposes setting MREL equal to the minimum capital requirement (MCR) for firms with a transfer preferred resolution strategy. This change is subject to the passage of the Bank Resolution (Recapitalisation) Bill and related legislation ·      Clarifying the measurement basis for MREL eligible liabilities: The Bank proposes using the accounting value of eligible liability instruments to measure MREL, promoting consistency and ensuring sufficient loss-absorbing capacity at all times ·      Emphasising the importance of effective processes and independent legal advice: The Bank is strengthening its expectations around firms' processes for managing MREL and obtaining independent legal advice on the eligibility of instruments Impact and implementation: ·      The proposed changes are expected to increase certainty and reduce compliance costs for firms ·      The Bank anticipates that the changes won't fundamentally alter the overall impact of its MREL policy ·      The proposed effective date for most changes is 1 January 2026 ·      The Bank is seeking feedback on these proposals by 15 January 2025 #BOE #MREL #BankingIndustry #ResolutionPlanning #FinancialStability #FinancialRegulation #BankingReform #UKFinance https://lnkd.in/evrYmezr

Private credit: What's happening? UK, US, and other elite markets: If you're a small firm, likely your bank will not lend you money. But your bank will lend a non-bank entity, which in turn will lend you the money. And the non-bank lender may be owned by your bank. Why the meandering (derivations)? Banks are tightly regulated following the 2007/8 crisis. Yet, money is thirty for more money (yield seeking). That machination can work. Condition: The non-banks understand your business better and are working with you to overcome challenges. Alas, that's not the case. That's the fear. #sustainability #complexity

Bank of England Consults on MREL Framework Enhancements The Bank of England, as the UK resolution authority, has launched a consultation on the Minimum Requirement for Own Funds and Eligible Liabilities (MREL). This is a crucial component ensuring that banks in distress can continue providing essential services, while investors, not taxpayers, bear the cost of any failure. 🔹 Key Proposals: • Simplifying and consolidating the MREL framework to enhance clarity and ease of implementation. • Ensuring alignment with international standards and responsiveness to market developments. • Adapting based on lessons learned from the framework’s application. 🔹 Themes of the Consultation: • Modifications to UK Capital Requirements Regulation (CRR) total loss-absorbing capacity (TLAC) provisions. • Updates to thresholds for resolution strategies. • Revisions based on the second assessment of the Resolvability Assessment Framework (RAF). 🗓️ Consultation Open Until 15 January 2025 https://lnkd.in/ep9kaEWd #FinancialStability #Banking #Regulation #MREL #BankofEngland

For a person or entity that fails to pay off his due amounts such as loans, credit cards and utility bills, the term credit default is used. The following are the main characteristics of Australian credit default: Consumer credit defaults worth more than $150 can be reported to a credit reporting agency if they remain unpaid for more than 60 days. The credit provider must give two written notices prior to listing a default. On commercial credits, the smallest default amount must be $100 with a notice being sent by the credit provider before entering it on file. Defaults may be listed on someone’s credit file for five years after the debt has been paid off. Paid defaults appear as “paid” but are seen in one’s borrowing history. Under certain circumstances, there are limited situations where defaults can be expunged like when there was no legal liability for the debt, or notification requirements set out in s 21D were not adhered to or when their occurrence cannot be controlled by any individual. Having many defaults on an individual’s record will negatively affect his future ability to borrow money through banks as well as other financial institutions. At Easy Credit Repair, we believe in turning obstacles into stepping stones. Every Australian can enjoy a brighter financial future. Let's walk this path together. #CreditJourneyAU #FinancialFreedomStartsHere #EmpowerYourCredit #DebtToSuccess #CreditHealthMatters #AussieCreditRepair #BrighterFinancialFuture #RepairNotDespair #PathToGoodCredit #CreditWisdom #NoMoreDebtStress #FinancialWellbeingAU

The Financial Conduct Authority (FCA) recently released a review highlighting some concerning tactics in the cash savings market. With nearly £1,900 billion in household deposits, it’s crucial for savers to be aware of the rates being offered and ensure they're maximising returns on their cash. Key findings from the FCA report include: - Large gaps between official base rates and average easy access deposit rates. - Dubious practices like offering better rates to new customers or requiring action to secure bonus rates. - Regressive interest rate tiering, where higher balances earn lower rates. - As interest rates show signs of decline, now is the time to rethink your cash strategy. At Chamberlain Wealth Management, we’re here to help. Our partnership with the Insignis Cash platform allows clients to streamline and optimise their cash holdings in one place, offering competitive rates across a range of accounts. Get in touch to explore how we can help you better manage your cash investments. #ChamberlainWealth #CashSavings #WealthManagement #FinancialPlanning #Investing

Around 7.4 million people in the UK struggled to pay a bill or a credit repayment in January, according to the Financial Conduct Authority (FCA). The figure is lower than last year but is still significantly higher than before the cost-of-living crisis began. According to the FCA, in January 2023, after the Russian invasion of Ukraine and the subsequent start of the cost-of-living crisis, the number of people in financial difficulty almost doubled to 10.9 million. The FCA survey also suggested 5.5 million people had missed a bill or credit payment in the six months to January 2024. In addition, one in nine people also had no disposable income, the FCA said. Sheldon Mills, Executive Director of Consumers and Competition at the FCA, said: 'Our research shows many people are still struggling with their bills, though it is encouraging to see some benefiting from the help that's available. 'If you're worried about keeping up with payments, reach out to your lender straight away. They have a range of support options and will work with you to agree the best one for you. You can also find free debt advice through MoneyHelper.' #CostOfLivingCrisis #FCA #accountants #SupportingSmallBusinessGrowth #SmallBusinessAccountants #SMEAccountants #GrantJones

Earlier this year the Labour party published their plans for financial services and are currently drafting further proposals. Hidden within the noise is exploration of alternative models for increased financial resilience including longer-term fixed rate mortgages. On the surface this is sensible and would avoid affordability challenges customers have faced re-mortgaging at higher rates over the past 18 months. However, this systemic change will no doubt pose a headache for bank treasuries navigating the complex IRRBB and funding implications. Policy makers need to promote a thriving and competitive sector so it is essential to ensure that mid and small tier banks can accommodate what is likely to be alterations in market preference. ALMIS International will be looking at this over the next year and we plan to offer a series of webinars/roundtables to discuss this with the industry. Please reach out if you would be interested in partaking in the discussion. 🤚 Another key point to note is "pursing a more joined up approach to regulation and supervision.. and building a more collaborative relationship with the EU". #ALM #Treausry #IRRBB #Banking

An extension of the banking levy to cover successful new entrants to the sector like Revolut is one of proposals in the Financial Services Union’s (FSU) submission in advance of the coming Budget.The union wants to see the money raised ring-fenced for a number of specific purposes, including the provision of digital literacy supports to the members of the public with research previously published by the Government suggesting almost half struggle to manage their personal finances. #financialservices #banks FSU calls for widening of bank levy in Budget 2025 https://lnkd.in/ewJEfiqv

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