Key Regulatory Topics: Weekly Update 22 September – 28 September 2023
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Related news and insights
Blog Post: 27 November 2023
Blog Post: 27 November 2023
Publications: 23 November 2023
Blog Post: 23 November 2023
There have been numerous publications by the UK regulators this week, including an update from the PRA on the timing of Basel 3.1 implementation in the UK, findings from the FCA’s multi-firm review of financial promotions for high-risk investments and FCA and PRA consultation papers on diversity and inclusion in the financial sector. HMT and the PRA have also published near-term reforms to the ring-fencing regime. Elsewhere, the ESAs published a joint report on the landscape of ICT third-party providers in the EU and their second annual report on the extent of voluntary disclosure of principal adverse impacts under Article 18 of the SFDR. The FSB issued a stocktake of international data standards relevant to cross-border payments and frictions from data frameworks that pose significant challenges to improving the cost, speed, transparency and access of cross border payments.
Please see the ‘Other Developments’ section for the ESMA 2024 work programme. In 2024 ESMA plans to deliver technical standards for the ESAP and continue preparatory work on the necessary IT infrastructure which will support ESAP.
FCA portfolio letter on its platforms portfolio supervision strategy
On 28 September, the FCA published a portfolio letter on its platforms portfolio supervision strategy. The letter provides an update of the FCA’s view of the key harms in this sector, its expectations of firms and a summary of the work it intends to do. Key harms identified and action the FCA plans to take include: (i) fees and charges not representing fair value. This is a key objective under the consumer duty, so the FCA will be undertaking proactive work on fair value and transparency of costs and charges, with an immediate focus on retention of accrued interest payments on customers’ cash balances; (ii) platform firms not having sufficiently robust systems and controls to protect customers from loss of investment savings or personal data due to fraud and/or cyber-attacks. One example given in the letter relates to the adviser charging function which has been mis-used by rogue advisers to defraud consumers of significant amounts of money. In 2023/24 the FCA will be selecting a sample of firms in the platform portfolio that facilitate adviser charging alongside firms in other portfolios offering similar services. This sample of firms will be asked to complete a questionnaire and the FCA will use the responses to assess the effectiveness of the systems and controls that firms have in place to ensure that advisers are charging their customers appropriately; (iii) the average time it takes customers to transfer their investments and savings between platforms, while improving, still needs more work. The FCA will be using the next iteration of its data request to continue to monitor and ensure sustained and significant improvements in transfer times across the sector, taking further action against outliers; (iv) customers holding unsuitable high-risk investments due to platform firms’ historic failure to conduct proper due diligence of non-standard assets (NSAs). The FCA will proactively engage with firms that hold NSAs to evaluate their assessment of their potential liabilities and whether they are taking appropriate steps to address them. The letter states that the FCA will not hesitate to require further capital injection if it considers there is a funding gap to meet those liabilities; and (v) customers losing access to platform services due to system outages or other operational resilience failures. Firms are encouraged to read the FCA’s policy statement on building operational resilience as the FCA intends by the end of this year to request data to monitor and test platform firms’ ability to meet this policy statement. Moving forward, the FCA will be targeting its supervisory focus on firms where there are indicators and/or evidence of failings relating to the obligations and expectations outlined in the letter. Firms can expect to be asked to demonstrate how they have taken this letter into account.
FCA consults on product sales data reporting in consumer credit firms
On 27 September, the FCA published a consultation paper on product sales data reporting in consumer credit firms. The paper seeks views on the FCA’s proposal to introduce three new Product Sales Data (PSD) returns into SUP 16. One of the returns, the back book PSD, will be a one-off data submission whereas the other two, the sales and performance PSDs will require quarterly submissions. These returns will allow the FCA to collect further data about the consumer credit market from providers of consumer credit products. They will also help the FCA to: (i) develop and deliver supervisory strategies across the consumer credit market; (ii) shape the development of its policy-making agenda and the delivery of rules in support of its objectives; and (iii) provide a clearer view of the market to inform authorisations and the review of applications. The FCA wants to ensure it strikes the right balance between getting enough data to help it monitor the market effectively, whilst not placing an unreasonable burden on firms. The FCA intends that firms will only become subject to these reporting requirements when their business exceeds a certain level. It has established reporting thresholds for when firms are first required to submit the proposed data, which are detailed in Section 2 of the consultation, it also notes that once firms cross these thresholds, they will continue to be subject to the reporting requirements even if they fail to exceed these thresholds in later reporting periods. The proposed PSD returns will exclude credit agreements reported as relating to overdrafts and any credit agreements secured on land. The deadline for comments is 15 November. The FCA intends to publish final rules in Q1 2024.
Financial Crime and Sanctions
Please see the ‘Payment Services and Payment Systems’ section for the City of London Corporation and FCA’s announcement on the launch of its APP synthetic dataset to develop products and services that can minimise fraud.
Please see the ‘Other Developments’ section for the FCA findings from multi-firm review of financial promotions for high-risk investments which is relevant to firms intending to promote relevant cryptoassets to UK retail consumers when the financial promotion rules for cryptoassets come into force on 8 October.
Please see the ‘Other Developments’ section for the ESMA 2024 work programme which includes technical standards and guidelines to be delivered in relation to the MiCA regulation and DORA.
EP announces date it plans to consider the proposed AIFMD II
On 27 September, the EP updated its procedure file on the proposed Directive amending AIFMD and the UCITS Directive, also known as AIFMD II. The update shows that the EP plans to consider AIFMD II during its plenary session, which will be held on 5 February 2024.
Markets and Markets Infrastructure
Please see the ‘Other Developments’ section for the ESMA 2024 work programme.
EC adopts ITS for the application of Article 16(1) of the Non-Performing Loans Directive
On 26 September, the EC adopted an Implementing Regulation laying down ITS for the application of Article 16(1) of the Non-performing Loans Directive with regard to the templates to be used by credit institutions for the provision to buyers of information on their credit exposures in the banking book. The ITS aim to provide credit institutions with a standardised template for NPL transactions in the EU. The EC believes that applying such data templates to credit agreements would reduce information asymmetries between prospective buyers and sellers of credit agreements and, thus, contribute to the development of a functioning secondary market in the EU. The EC also published accompanying annexes, Annex I sets out data temples for NPLs, Annex II sets out a data glossary and Annex III contains instructions for the use of the data templates. The Regulation will enter into force on the twentieth day following its publication in the OJ.
Payment Services and Payment Systems
City of London Corporation and FCA project to tackle authorised push payment scams
On 27 September, the City of London Corporation announced that with the FCA it has launched an APP synthetic dataset to develop products and services designed to minimise fraud. It aims to provide a foundation to better understand how useful data could be shared to reduce barriers to tackling fraud. The dataset allows analysis of rare patterns of behaviour to progress the understanding of synthetic data’s role as a new regulatory and compliance tool. It will be available on the FCA's Digital Sandbox available for firms to access. The data set is composed of: (i) 30 million rows of synthetic data; (ii) 20,000 synthetic individuals with full details; (iii) 20,000 synthetic accounts with 30,000 fraud events; (iv) over 70 million rows of synthetic text and call metadata; and (v) two years of data.
FSB stocktake of international data standards relevant to cross-border payments
On 25 September, the FSB published its stocktake of international data standards relevant to cross-border payments. The stocktake looks at national and regional data frameworks relevant to the functioning, regulation and supervision of cross-border payment arrangements. The FSB identified a number of frictions from data frameworks that pose significant challenges to improving the cost, speed, transparency and access of cross border payments. Frictions include: (i) fragmentation among data framework requirements and their implementation, most notably across the data needed to accompany a cross-border payment transaction; (ii) uncertainty among payment providers on how to balance the various obligations under different data frameworks; and (iii) challenges arising from restrictions on the flow of data across borders. The stocktake and stakeholder outreach offered a range of ideas for improving data frameworks to facilitate cross-border payments and the report discusses five possible areas for further consideration. The FSB invites stakeholders to submit case studies on these issues by 20 October. The case studies will be considered by the FSB as it develops its recommendations for promoting alignment and interoperability across data frameworks applicable to cross-border payments, which will be issued for public consultation in early 2024.
ESRB advice on the prudential treatment of environmental and social risks
On 27 September, the ESRB issued advice (dated 25 August) on the prudential treatment of environmental and social risks. The advice explains that the EBA has a mandate to assess, after consulting the ESRB, whether a dedicated prudential treatment of exposures related to assets, including securitisations, or activities associated substantially with environmental and/or social objectives would be justified. The ESRB’s advice contributes to the assessment required from the EBA by looking at the issue from a systemic risk perspective as opposed to a microprudential risk management perspective. It highlights: (i) the specificity of risks related to climate change, which can be expected to become an important driver of broader environmental and social risks; and (ii) the challenges of tackling such risks in the existing prudential framework. In concluding, the advice finds that the response to the question of whether a dedicated prudential treatment for environmental and social risks is needed, and how best to deal with these risks in the existing framework, may evolve over time. The immediate priority must be to consider how existing micro- and macroprudential tools can be used, and how this can be done consistently and transparently, both in the EEA and globally through the Basel Committee on Banking Supervision. The challenge will therefore be to develop a precautionary approach on the basis of risk materialisation scenarios and the growing evidence on exposures to climate risks.
PRA updates the timing of Basel 3.1 implementation in the UK
On 27 September, the PRA announced that it had made updates to its intended timetable to complete its work and implement the Basel 3.1 standards in the UK. Following on from the feedback the PRA received to its consultation paper 16/22 on the implementation of Basel 3.1 standards, the PRA intends to move the implementation date of the final Basel 3.1 policies by six months to 1 July 2025. It also intends to reduce the transitional period to 4.5 years (from 5 years) to ensure full implementation remains by 1 January 2030. To allow for appropriate time to fully consider the responses to the credit risk and output floor proposals in CP16/22, without delaying publication of rules on the other parts of the package, the PRA intends to split publication of its near-final Basel 3.1 policy statements into two, with the near-final policies on market risk, credit valuation adjustment risk, counterparty credit risk and operational risk, expected to be published in Q4 2023 and the near-final policies on the remaining elements from CP16/22: credit risk, the output floor, and reporting and disclosure requirements, in Q2 2024.
ITS on list of diversified indices under the CRR published in the OJ
On 27 September, Commission Implementing Regulation (EU) 2023/2056 amending the ITS laid down in Commission Implementing Regulation (EU) No 945/2014 as regards an update of the list of relevant appropriately diversified indices in accordance with the CRR, was published in the OJ. The Regulation replaces the Annex to Implementing Regulation (EU) No 945/2014, to ensure that the stock indices listed in the Annex continue to meet the conditions for their specific risk to be ignored. The EBA has reassessed the relevant indices in light of the latest available data, which is the data relative to the year 2022, which showed the need to update the list. The Implementing Regulation will enter into force on 17 October, twenty days following its publication in the OJ.
PRA consults on capitalisation of foreign exchange positions for market risk
On 27 September, the PRA published a consultation paper setting out the PRA’s proposed clarifications and amendments when capitalising foreign exchange exposures under the market risk capital framework. It also sets out the process for seeking permission to exclude Structural Foreign Exchange (SFX) positions from this capital calculation. The proposals in the consultation relate to the post-Basel 3.1 PRA proposed implementation described in CP16/22, and would result in changes to: (i) the proposed Article 325 (Approaches for Calculating the Own Funds Requirements for Market Risk) in the proposed Market Risk: General Provisions (CRR) Part of the PRA Rulebook (Appendix 1); (ii) the proposed supervisory statement 13/13 – Market Risk from CP16/22 (Appendix 2); and (iii) the CRR Permission 352(2) supplementary application form (Appendix 3). This consultation paper also: (a) clarifies that items held on the balance sheet at historical exchange rates are not to be included as a risk position for the purposes of calculating Pillar 1 capital requirements; (b) sets out the types of positions eligible for the SFX permission; and (iii) sets out expectations on the calculation of the maximum net FX risk position and the overall net FX position for the own funds calculation in SS13/13. The deadline for comments is 31 January 2024. The PRA proposes an implementation date for the changes of 1 January 2025, which it says would coincide with the implementation of the Basel 3.1 standards. This is likely to change given the PRA’s update on Basel 3.1 implementation timings (see update above)
EBA launches annual EU-wide transparency exercise
On 22 September, the EBA announced that it had launched its annual EU-wide transparency exercise, as part of its efforts to monitor risks and vulnerabilities and to reinforce market discipline. As with previous exercises, it is exclusively based on supervisory reporting data, which will keep the burden for the banks to a minimum. The EBA has started the interaction with the 124 banks participating in the transparency exercise; this interaction envisages the verification of pre-populated templates and any data quality correction that will be done through the supervisory reporting channel. The EBA expects to release around 1 million data points, up to 10,000 data points per bank. The EBA expects to publish the results at the beginning of December, together with the annual Risk Assessment Report.
HMT summarise responses to call for evidence on aligning the ring-fencing and resolution regimes
On 28 September, HMT published a summary of responses to its call for evidence on aligning the ring-fencing and resolution regimes. The call for evidence sought views on the ongoing financial stability benefits of the ring-fencing regime and on the steps that could be taken to better align the ring-fencing regime and resolution regimes. It also invited respondents to consider a wider range of options for the longer-term future of ring-fencing. HMT report that the call for evidence received 14 responses, which overall provided limited evidence and a broad, mixed range of views on: a) the ongoing benefits that ring-fencing provides to financial stability not found elsewhere in the regulatory framework; and b) the options for aligning the ring-fencing and resolution regimes. There was consensus among respondents that the Panel’s proposal to disapply ring-fencing where banks are deemed resolvable is likely to be difficult to operationalise, however. The government plans to set out publicly its policy response to the call for evidence and any proposals for further reform regarding the longer-term future of ring-fencing in H1 2024. Any proposals for reforms will be subject to consultation in the normal way.
HMT consults on draft secondary legislation to implement near-term reforms to the ring-fencing regime
On 28 September, the HMT published a consultation seeking views on draft secondary legislation to implement near-term reforms to the ring-fencing regime. The package of reforms broadly takes forward the recommendations from the independent review of ring-fencing, chaired by Sir Keith Skeoch. HMT explains that the proposed changes represent a necessary evolution of the ring-fencing regime to make it more flexible and proportionate, whilst maintaining appropriate financial stability safeguards and minimising risks to public funds. The proposals include those announced as part of the Edinburgh Reforms in December 2022, as well as new proposals to facilitate investment by ring-fenced banks in SMEs. The deadline for comments is 26 November. The government intends to lay secondary legislation implementing the near-terms reforms in early 2024, subject to Parliamentary time. The government expects the legislative changes to come into effect as soon as they have been approved by Parliament. Respondents should note that the draft secondary legislation attached to this consultation may be subject to change before it is laid before Parliament.
PRA consults on how ring-fenced bodies should manage risks from third-country subsidiaries and branches
On 28 September, the PRA published a consultation paper setting out its proposed rule and policy updates in respect of the establishment and maintenance of third-country branches and subsidiaries within ring-fenced body sub-consolidation groups. This reflects HMT's proposal to remove the legislative prohibition on RFBs having non-EEA branches and subsidiaries as part of the near-term reforms (see update above). The proposals in this consultation would result in changes to the Ring-fenced Bodies Part of the PRA Rulebook (Appendix 1) and supervisory statement SS8/16 – Ring-fenced bodies (RFBs) (Appendix 2). The policy proposals included in this CP, when implemented, would: (i) introduce a rule whereby RFBs must ensure that any third-country branch or third-country subsidiary within the RFB sub-consolidation group does not present a material risk to the provision of core services in the UK by the RFB; and (ii) set out a non-exhaustive set of supervisory expectations that the PRA will consider when determining if a third-country branch or third-country subsidiary of an RFB or ring-fenced affiliate poses a material risk to the provision of core services in the UK by the RFB. The deadline for comments is 27 November. The PRA proposes that the implementation date for these changes would coincide, as closely as practicable, with the removal of the legislative prohibition on non-EEA branches and subsidiaries, expected to be in H1 2024.
Last week, the EC launched a far-reaching consultation and review of SFDR, long expected by the industry, we recently published a bulletin providing an overview, as well as giving thought as to what we might see in terms of SFDR 2.0.
Please see the ‘Other Developments’ section for the ESMA 2024 work programme which includes a mandate to expand the single rulebook for sustainable finance as part of the new European Green Bond Regulation and the delivery of ESMA’s final report on greenwashing.
Joint ESAs report on the extent of voluntary disclosure of principal adverse impacts under SFDR
On 28 September, the Joint Committee of the ESAs published their second annual report on the extent of voluntary disclosure of principal adverse impacts under Article 18 of the SFDR. Similar to the approach adopted for the 2022 Report, the ESAs launched a survey of NCAs to assess the current state of entity-level and product-level voluntary principal adverse impact disclosures under the SFDR, and have developed a preliminary, indicative and non-exhaustive overview of good practices and areas that need improvement. The results show an overall improvement compared to the previous year, although there is still significant variation in the extent of compliance with the requirements and in the quality of the disclosures both across financial market participants and jurisdictions. The ESAs also found that disclosures were easier to find on websites compared to the previous year. When financial market participants do not consider principal adverse impacts, the ESAs conclude that they should better explain the reasons for not doing so. Additionally, they note that even though they are encouraged to do so under the SFDR, financial market participants are generally not disclosing to what extent their investments align with the Paris Agreement. The report also includes a set of recommendations for the EC to consider ahead of the next comprehensive assessment of the SFDR.
UNEP FI second progress report on implementation of UN Principles for Responsible Banking
On 22 September, the UN Environment Programme Finance Initiative (UNEP FI) published its second biennial progress report on the implementation of UN Principles for responsible banking. The report shows that member banks have made considerable progress understanding and disclosing how their portfolios and businesses relate to key environmental and social impacts, with the majority of member banks having set targets to address their most significant portfolio impact, driving alignment with and contributing to the UN Sustainable Development Goals and the goals of the Paris Agreement. The report also found that member banks have also integrated sustainability oversight into their governance structures, primarily at the board and CEO levels, evidencing effective governance for embedding sustainability across the entire organisation. However, the report highlights that there is still more to be done. Banks are encouraged to build upon governance and structural changes to drive concrete action, realising more real-world impact while respecting national regulations, cultural norms, and contextual variations. Moving forward, UNEP FI will continue to collaborate with banks on their Principles for Responsible Banking journey, with new guidance on nature and climate change adaptation expected to be released in Q4 2023. The next progress report is expected to be published in 2025.
FCA portfolio letter on its supervision strategy for Corporate Finance Firms
On 28 September, the FCA published a portfolio letter setting out its supervision strategy for Corporate Finance Firms (CFFs). The letter outlines the harms to consumers and markets that FCA think are most likely to arise from the business models of CFFs. The FCA also sets out the FCA’s strategy to address these harms, together with its supervisory priorities: (a) client categorisation, the FCA intends to undertake target reviews of firms’ client categorisation practices to ensure their processes are effective and follow procedures for the quantitative and qualitative tests required under COBS 3.5; (b) the consumer duty, the FCA reminds CFFs of the consumer duty’s far-reaching and wide perimeter and the firm’s responsibility to carefully consider its application to the firm’s activities. The FCA expects firms to consider the entire distribution chain and whether they can determine or materially influence outcomes for retail customers; (c) dealing with problem firms, the FCA expects CFFs to use their regulatory permissions to advance a legitimate business purpose, and to construct and maintain their permission profile in a way that accurately reflects this. The FCA is concerned with the number of firms that appear to hold permissions for no clear business purpose or to favourably influence public perceptions of their unregulated business; and (d) market abuse, firms must ensure market abuse controls are tailored to their individual business models. The FCA expects CFFs to have robust prevention cultures and systems and controls to discharge their obligations under UK MAR. The FCA expects CFFs to properly identify, record and manage conflicts of interest. Firms are expected to have discussed the contents of the letter with their directors and board and to have agreed appropriate actions and next steps by the end of November.
FCA update on improving the Appointed Representatives regime through greater use of data
On 28 September, the FCA published a webpage on how the FCA is improving the Appointed Representatives (AR) regime and what it expects from firms. The FCA: (i) shares analysis of the data it has collected on the AR regime; (ii) shows how this data has improved its understanding of the regime, its risks and benefits. This includes how it informs the FCA’s supervisory approach, targeting its resource on the highest risk principals and their ARs; (iii) explains how the data is informing greater scrutiny of authorisation applications and the FCA’s more assertive supervisory approach (including examples); and (iv) reminds principals of its enhanced expectations, details of which can be found in the FCA policy statement on improving the AR regime. The FCA also reminds firms of the consumer duty, noting that the rules supporting the AR regime and the consumer duty reinforce each other in increasing protection for consumers dealing with ARs. The FCA plans to continue to use improved data to strengthen its scrutiny of authorisations and approvals and supervise high-risk principals more assertively. The FCA also plans to undertake deeper analysis of existing data, using all the tools at its disposal where it sees harm emerging.
ESMA 2024 work programme
On 28 September, ESMA published its work programme for 2024. The work programme describes objectives and outputs for each of ESMA’s strategic priorities and thematic drivers and for each of the sectors within ESMA’s remit. Outputs are divided into three categories: (i) ongoing work; (ii) annual outputs; and (iii) 2024 specific outputs, which are known at this stage. Key legislative files impacting ESMA in 2024 include: (a) in 2024, ESMA will be mandated to expand the single rulebook for sustainable finance as part of the new European Green Bond Regulation and will deliver its final report on greenwashing; (b) ESMA will deliver technical standards for the ESAP and continue preparatory work on the necessary IT infrastructure which will support ESAP; (c) several technical standards and guidelines will be delivered in relation to the MiCA regulation and DORA, as well as preparatory work for oversight responsibilities related to DORA; and (d) under MiFID and MiFIR, ESMA will begin the process of selecting and authorising Consolidated Tape Providers (CTPs) in the EU, in addition to developing technical standards and guidelines.
FCA findings from multi-firm review of financial promotions for high-risk investments
On 27 September, the FCA published the findings of its multi-firm review of how firms offering restricted mass-market investments (RMMIs) have complied with new rules on the customer journey. For the review the FCA chose a sample of 13 firms of different sizes from within the Peer-to-Peer and IBCF portfolios, asked them to provide information on their on-boarding journey and conducted virtual or in-person visits with each firm to discuss their approach. The review summarises the examples of good practice and bad practice in relation to the conditions set out in COBS 4.12A with respect to: (i) incentives to invest; (ii) cooling-off period; (iii) risk warnings; (iv) categorisation; and (v) appropriateness. The FCA has given individual feedback to all the firms involved about the areas they need to improve. It expects all firms promoting either RMMIs and/ or non mass market investments (NMMIs) to retail consumers to consider the findings of the review for their businesses. The FCA expects firms offering RMMIs to consider the examples and any changes they need to make to their practices to meet its expectations and improve consumer outcomes. The FCA also expects firms promoting relevant cryptoassets to UK based consumers to consider these findings due to the requirements set out in PS23/6, the new financial promotion rules for cryptoassets, which enters into force on 8 October.
ESAs report on the landscape of ICT third-party providers in the EU
On 27 September, the ESAs published a report (dated 19 September) on the landscape of information and communication technology (ICT) third-party providers (TPPs) in the EU. The analysis was undertaken to inform preparations for the application of DORA and aims to map the provision of ICT services by TPPs to financial entities in the EU. It is intended to support the ESAs’ policymaking process in light of the EC’s call for advice to further specify the criteria for critical ICT TPPs and to determine oversight fees. The data collection exercise on which the report is based was the first of its kind, covering ICT-related contractual arrangements for entities across the financial sector. Overall, the exercise has identified around 15,000 ICT TPPs directly serving financial sector entities across the EU. It found that the most frequently used ICT TPPs support critical or important functions for their clients in a wide range of services. In addition, most critical services were classified as non-substitutable by financial institutions. The data collection exercise also revealed some valuable lessons for the implementation of DORA. For instance, it has underlined the importance of ensuring that financial entities provide unique identifiers in the data submitted and the need to develop an appropriate ICT services taxonomy.
FCA and PRA consult on diversity and inclusion in the financial sector
On 25 September, the FCA along with the PRA published their respective consultations papers on diversity and inclusion (D&I) in the financial sector. The FCA, in its consultation, sets out its proposed framework that would establish minimum standards and give firms a better understanding of what is expected of them in this area from a regulatory standpoint. Its proposals relate to: (i) better integration of non-financial misconduct considerations into staff fitness and propriety assessments, conduct rules and the suitability criteria for firms to operate in the financial sector; and (ii) requiring firms to report: (a) their average number of employees on an annual basis; (b) collect, report and disclose certain D&I data; (c) establish, implement and maintain a D&I strategy; (d) determine and set appropriate diversity targets; and (e) recognise a lack of D&I as a non-financial risk. The PRA consultation proposes, among other things: (i) to require firms to have and publish a firm-wide diversity and inclusion strategy; (ii) that the largest firms would be required to set their own diversity targets where they identify underrepresentation, subject to a minimum of targets for women and ethnicity, if underrepresentation is identified; and (iii) to require firms to have and publish a strategy specifically promoting diversity and inclusion on the board. The PRA also propose to require the largest firms to report certain diversity and inclusion data alongside information on the targets they have set for themselves. The PRA and the FCA intend to use the data reported to produce an aggregated industry-wide benchmarking report. The proposals would apply differently to firms depending on their number of employees, their categorisation under the SM&CR, and whether they are dual-regulated. The deadline for comments on both consultation papers is 18 December, with the regulators planning to publish final rules in 2024 for them to come into force 12 months later.