Regulatory Reporting and Assurance: Navigating Change in UK Banking & Capital Markets
I’ve had a few really interesting conversations recently with my Regulatory Finance network across banks, building societies and capital markets firms. While everyone is aware of the January 2027 Basel 3.1 timeline, what’s striking is just how differently firms are approaching it. These recent conversations reveal both challenges and innovative adaptations as firms position for compliance, resilience, and growth.
Basel 3.1 Implementation: The Clock is Ticking
The PRA’s decision to push back Basel 3.1 brings breathing space, but there is now a critical 12-month window for firms to attract, hire, and embed regulatory reporting specialists with the experience and agility needed for the new regime. Larger institutions are re-engineering their operating models to ensure regulatory returns ‘tell a story’, making MI and business partnering central to the function. Smaller deposit takers are benefiting from simplified liquidity reporting, but for GSIBs and DSIBs, comprehensive capital and risk frameworks remain front and centre.
Assurance Evolution: The Rise of the “1.5 Line of Defence” Model
Several banks have implemented a “1.5 LOD framework within regulatory reporting. This market-led adaptation places additional assurance resources and specialist functions between the front-line business and standard second line compliance/risk. The result? Enhanced control, faster gap analysis, and more meaningful, business-aligned returns. While the PRA/FCA do not stipulate a 1.5 line, they’re actively encouraging robust, data-driven assurance and business integration in response to s166 reviews and skilled person scrutiny.
What the Market is Saying
- Control, Assurance & Storytelling: Regulatory reporting isn’t just ‘machine-like’ returns; it’s about partnering with business lines and bringing clarity and interpretation to the rulebook (LCR, LE, capital).
- Skill Demand: Practitioners with hands-on experience in MI, assurance, gap analysis, and Basel frameworks are in high demand, with 2025 hiring setting up for implementation in 2027.
- Pragmatism on Basel 3.1: While some doubt further delays or even effective implementation (especially as the UK often tracks US developments) the market continues hiring and gap planning to remain ahead.
- Solvent Exit Analysis: New requirements effective October 2025 are driving banks to refine stress testing and recovery plans, often led by CROs or CFOs.
- Regulatory Simplification: The PRA is acting to simplify reporting, reduce costs and take a more proportionate approach targeting redundant templates and streamlining frameworks for sector resilience and growth.
Actions and Opportunities
- Transformative Hiring: Now is the time to engage and onboard regulatory reporting talent to ensure TOM redesign, control, and assurance ahead of Basel 3.1.
- Model Enhancement: Consider the benefits of a “1.5 LOD” to bolster returns quality, efficiency, and business partnership, even before it becomes regulatory expectation.
- Resilience Planning: Stress testing, exit analysis, and scenario planning are essential, with regulators watching for clear lines of accountability and ownership.
We are working extensively with an active pool of candidates across Regulatory Finance and Risk. If you would like to discuss these insights and any challenges you are facing, feel free to get in touch for a confidential conversation.