- ESG and Sustainable Finance requirements are having the greatest regulatory impact across the sector, followed closely by Financial Resilience
- Pressure on firms remains intense with an aggregate score of 7.2, up from 7.0 in February ‘23
- This edition recognises Payments as a key regulatory theme
- EU and UK rules set for further divergence
KPMG UK today (27 September) launches the third edition of its Financial Services Regulatory Barometer, providing a biannual measure of the regulatory pressure* faced by financial services firms in the UK and EU. The latest aggregate regulatory Impact Score stands at 7.2 (out of 10), a slight increase from 7.0 in February 2023, showing no let-up in the regulatory intensity facing the industry in the UK and across the EU.
ESG
KPMG found that – for the third time running – ESG and Sustainable Finance regulations are putting the most pressure on firms (8.5 out of 10). The industry is facing regulatory scrutiny around greenwashing, new and more demanding disclosure requirements, and increasing expectations from supervisors.
Financial resilience
The Barometer also reveals growing pressures around Financial Resilience (with a score of 8.4) as banks and insurers await final rules for Basel 4 and Solvency II, facing significant implementation challenges in the short to medium term.
Rob Smith, Head of KPMG Risk and Regulatory Advisory, comments: “Continuing economic uncertainty, including inflation and recent exits from the market has shaken the financial services industry and led to much-needed debate about what regulators could do differently.
“The unwavering focus on ESG and Sustainable Finance continues, with regulatory pressure on firms persisting as supervisors and customers increase their expectations. Closing in rapidly on the top spot, we see new and expanded requirements for financial resilience, with continuing focus on appropriate levels of capital and liquidity, and even greater emphasis on robust risk management and governance, as markets and economic conditions evolve.”