The UK Financial Services Authority (FSA) has sent out its pre-implementation report template for firms to fill in to confirm whether or not they will be ready for the incoming Single Customer View (SCV) reforms. Boards must confirm in writing by 31 July the status of their SCV projects, most of which have yet to get off the ground, if current industry sentiment is anything to go by.
The FSA has been warning firms about the changes required for the SCV reforms, which are all part of the Financial Services Compensation Scheme (FSCS) in the wake of the Lehman collapse, for some time. However, it seems that many firms feel the reforms do not apply to them, those in the securities services space especially, and they may be in for a shock.
The SCV is part of the reforms introduced with the Banking Act 2009, and follows two FSA policy statements confirming amendments to the FSA Compensation Handbook that the regulator indicates are designed to facilitate “faster payout” of compensation in the event that a deposit taker is unable to meet the claims of depositors. All deposit takers are required to be able to prepare the SCV, but those with less than 5,000 accounts held by eligible claimants need not have an electronic SCV, although they will still need to be able to provide the SCV on request, in another format.
Accordingly, firms need to be able to produce a pre-implementation report, which details their plans to adapt their systems in accordance with the requirements, by 31 July. These systems adaptations will not be simple, however, as it will require customer data to be pulled from across a bank’s siloed systems and reconciled on a regular basis, within 72 hours in fact. Given the lack of entity data standardisation and the spaghetti like nature of most large institutions’ back offices, this will require a degree of technology investment that many banks seem unprepared to take on.
It will be interesting therefore to see the FSA’s approach to those that fail to meet the deadline next month. Will it go in all guns blazing as it seems to have done frequently over the last couple of months, or will it seek to establish more of a dialogue on the subject to find out why the industry is so reticent to get involved?