FSCS's role in the financial services global community

Here at FSCS we are often highlighting our impact – helping get people back on track when financial firms fail and promoting the protections we offer, which contributes to the UK’s financial stability. But many people might not be aware that we also play our part in promoting global financial stability. We regularly meet with international standard-setting bodies and engage with our counterparts across the globe, sharing our knowledge, discussing emerging trends and identifying upcoming challenges. For example, we recently participated in a joint meeting of the Financial Stability Board (FSB), which is responsible for overseeing global financial stability, and the International Association of Deposit Insurers (IADI), of which we are a member.

It is really important to recognise that FSCS does not operate in isolation. The global nature of financial services today means we cannot ignore what is going on across borders. The resolution of Silicon Valley Bank (SVB) and the failure and subsequent takeover of Credit Suisse by UBS in 2023 were a powerful reminder that when a firm fails in one jurisdiction, it can very quickly impact other countries, including us here in the UK. Recent surveys have shown that trust and confidence in the global banking industry has risen in recent years but bank failures could easily cause this trust and confidence to ebb away as financial services are operating in an environment that the Financial Times has called a “social media-infused world that operates at warp speed.” So, it is crucial that we regularly speak with our counterparts across the globe, sharing insights that may strengthen everybody’s capabilities and ensure we are all as prepared as we can be in the event of a failure. In doing this, we work closely with the Bank of England and His Majesty’s Treasury. Many countries recognise the expertise that we can provide and have been keen to receive our input in key areas.

The failure and resolution of SVB was the key topic of the meeting I mentioned earlier, as the world of resolution and deposit insurance continues to analyse and understand its impact, identifying lessons to learn and adaptions to implement. A common theme which speakers emphasised was the importance of having a variety of resolution tools available, but also preparing for their use and, importantly, understanding the direct and indirect consequences of using them.

It was also valuable to hear about some of the key issues and challenges which are facing those in other countries. For example, at the FSB-IADI meeting, we heard reports of a number of our counterparts grappling with e-money (and account aggregator) related issues concerning failure and pay out. For example, the US Federal Deposit Insurance Corporation (FDIC) is conducting ongoing work into uninsured deposits to better understand that exposure.

Through our international liaison we have also gained some great insights on how other countries are approaching use of alternative pay outs – that is reimbursement for customers of a failed firm. It is always helpful to have that understanding of how other countries have overcome challenges and adapted to the modern environment.

In addition, over the past year we have liaised with counterparts to support their learning or creation of equivalent bodies and stress test our own work with representatives from countries including Spain, Turkey, Canada and Kazakhstan, Singapore and Australia.

We must also consider the increasing use of non-bank or market-based finance which inherently create exposures that are as much global as domestic. Discussions with our counterparts broaden our understanding of both traditional and new emerging financial products. There are great opportunities for these conversations to inform our understanding of the potential implications of new digital technologies and non-fiat currencies, as well as potential friction points in regulation and legislation – especially given the inherent cross-border nature of these financial products. For example, we have learnt about Central Bank Digital Currencies after a presentation from Nigerian colleagues.

Turning to the international bodies we work with, as a member of IADI’s Executive Committee, we have recognised the need for changes within the organisation and have played an important role in advocating for, and driving forward, various reforms. These include establishing a new council structure and measures to streamline operations and enhance strategic oversight, improving IADI’s responsiveness to global financial challenges and reviewing the organisation’s Core Principles – the global standards for deposit insurers. 

We also work with other international forums including, the European Forum of Deposit Insurers, which acts as an important forum for the UK to engage with EU member states, as well as, other European countries.

We are proud to play our part in the work of international standard setting bodies and make a contribution to global financial stability, as well as helping boost UK consumers’ trust and confidence in financial services.