Parliamentary group says regulators must adapt to post-pandemic working practices

It has found that the pandemic has directly driven the digital transition in both banking services and working practices.

The APPG conducted its second periodic industry survey early in 2022. This anonymous research survey looked at how the coronavirus pandemic had impacted challenger banks and building societies as well as the actions of government, regulators, and customers had impacted smaller challenger institutions.

Broadly speaking two thirds of institutions felt that the advice they had received from the regulator was helpful and clear. While just under a third through the opposite.

71% felt that the regulatory community had provided helpful and clear advice, with only minority reporting that it was incomplete or vague. This compared favourably when compared to our 2020 findings.

In terms of specific regulators, the PRA and the Bank of England came in for particular praise as did the UK Finance Trade Association. Of those who were critical, it was the FCA which bore their ire. However, even this was balanced by some very positive commentary around the FCA’s work demonstrating that they had improved their response over the pandemic. It is interesting to compare this to the 2020 survey where respondents reported that the FCA had come in for especially with regard to its understanding of small firms.

The survey received a strong response from a wide range of institutions across the sector and the results are detailed in the accompanying report.

Based on its research the APPG for Challenger Banks and Building Societies has made the following recommendations:

1 The regulatory community needs to adjust to the new realities of remote and flexible working. These have clearly become large features during the pandemic and in many ways may be here to stay. They will have a profound effect on both the experience of staff working for firms and customers accessing services;

2 The pandemic has resulted in a huge shift to digital transactions as more normal life returns Government and regulators need to make sure that vulnerable customers and those who depend on traditional cash-based transactions are not unduly disadvantaged; and,

3 Government needs to adjust regulation where necessary to take account of pandemic changes to work patterns and business models.

Commenting on the findings of this report, the Chair of the APPG on Challenger Banks and Building Societies, Rt. Hon Karen Bradley MP, commented:

“We were fascinated to see the change in perception towards the regulators compared to our 2020 work. There were criticisms from some, but overall firms seem far more satisfied with the Government and the regulators now than they were at the start of the pandemic.

“The pandemic has had a huge effect on businesses operationally and on working patterns across the economy. Although restrictions have now ended, it looks as if many of these effects from remote working to increased digital transactions will be permanent changes.

“It is the view of the APPG that Government and regulators need to be fleet of foot in monitoring the effect these have on our economy and on firms’ business practices and ensure their actions moving forward reflect these changes.”