FCA’s latest Mission and Business Plan contain few surprises, but indicate a lot of work in diverse areas.
The Mission, which takes into account stakeholder views, seeks to explain to firms how and why FCA prioritises its focus to meet its statutory objectives. It stresses that it regulates to promote the public interest and with the aim of adding the most public value. It aims to:
- build trust between users and providers of services;
- improve how markets regulate;
- create economies of scale by applying a common approach to regulation;
- work to prevent harm from occurring; and
- help to put things right when they go wrong.
The Mission looks at how FCA uses its decision-making framework, including how it categorises different types of “harm” and, following on from that, how it uses its diagnostic and remedial tools, as well as evaluating how well they have worked. The Mission also explains how FCA uses its regulatory judgement, interprets and measures its objectives and sets out what various market participants and users can expect from it.
The Business Plan sets out a demanding range of key priorities:
- consulting on the extension of the accountability regime;
- reviewing the regulatory framework on remuneration;
- considering how technology can help AML processes;
- preparing to review the quality of professional bodies’ AML supervision;
- preparing a further investment fraud warning campaign;
- giving guidance to firms on developing robo-advice services;
- engaging with Fintech hubs throughout the UK;
- looking at the role of near and real-time compliance monitoring in reducing the regulatory burden;
- setting up cross-sector cyber co-ordination groups;
- carrying out technology and cyber-capability assessments on all high impact firms;
- analysing resilience risks in major initiatives, including ring-fencing and PSD2;
- looking at the effect of “wake up” packs on consumer decisions on retirement;
- focusing on how firms treat borrowers when interest-only mortgage approach maturity;
- publishing its “Consumer Approach” on how it addresses consumers’ needs; and
- generally continuing its work on consumer credit, including high cost credit and overdrafts.
In addition to these cross-sector priorities are a range of sector priorities, including:
- ensuring MiFID 2 is effectively implemented in the wholesale financial markets and improving competition in investment and corporate banking;
- consulting on remedies in the asset management market and considering policy on fund liquidity;
- looking to improve competition in the retirement income market, and reviewing the non-workplace pensions market;
- launching a strategic review of retail banking business models, raising awareness of the PPI complaints deadline and supporting ring-fencing implementation;
- setting out its analysis and preliminary conclusions on the mortgage market;
- monitoring the debt management sector;
- starting to explore the motor finance industry;
- reviewing pricing practices in general insurance;
- looking at the effectiveness of competition in the wholesale insurance market;
- considering how to improve competition for investment plaforms;
- analysing the developing market for automated advice models; and
- looking further at the risks in the CFD market.
FCA notes the key largest risks to markets and consumers are outside its control, but that it must be prepared to address the risks as they arise. Domestically, it will continue to focus on conduct risk, and work towards reducing the need for regulatory intervention and building trust. FCA has noted the growing need for cyber-resilience, including the risks of outsourcing.
Of course, the Business Plan needs to account for Brexit planning. FCA says it has dedicated resource to manage the necessary work and will provide the Government with the support required.