The Model Office Blog

The FCA Business Plan '18/19

[fa icon="calendar"] Apr 10, 2018 1:57:30 PM / by Chris Davies

The Financial Conduct Authority (FCA) yesterday published its Business Plan for 2018/19 that sets out the key priorities for the coming year.

The priorities in this year’s Business Plan reflect the high level of resource the FCA needs to dedicate to European Union (EU) withdrawal, given its impact both on our regulation and the firms we regulate. Also (as we predicted) there is a prominent focus on identifying, managing and improving conduct and culture.

Alongside this work, the FCA will focus on seven cross sector priority areas, based on assessments of where there is the greatest harm or potential for harm, and where intervention can have the greatest impact. The priority areas are:

  1. Firms’ culture and governance, focusing on driving accountability and self-governance through the Senior Managers and Certification Regime (SM&CR) focusing on remuneration arrangements and establishing a public register which should all drive behaviours and produce outcomes likely to benefit consumers and markets.
  2. Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
  3. Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services. So operational resilience is key along with embedding The General Data Protection Regulation (GDPR) and outsourcing risk assessment.
  4. Innovation, big data, technology and competition, which are driving change in markets. The sandbox is key to continue to provide a safe harbour for firms to test their regulatory viability plus RegTech is now coming into it’s own with the FCA openly suggesting they will digitise and apply data analytics to its regulation activities.
  5. The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers. This should build on the good work behavioural economics has provided in helping consumers make better financial decisions and improving information delivery.
  6. Long-term savings, pensions and intergenerational differences, which reflects the changing UK population and their financial needs.
  7. High-cost credit, building on the significant impact already made in the market to consider alternatives and finalise the FCA review on these products.

Sector Priorities:

Where the FCA sets out its stall on sector priorities that affect our work in retail markets, Investment management, its transparency and value for money are a big focus with more work on their Asset Management Market Review Study and suggested remedies (e.g. increased competition) to come.  

Where retail investments are concerned, the Financial Advice Market Review (FAMR) still takes prominence across access to advice, lower costs and increasing the availability for automated advice. This is good news, as consumers need confidence that access is available through affordable means if the industry is to play a significant role in increasing consumer financial capabilities. We also await the latest FCA review on platforms, which (like Investment Management) should focus on value and transparency.

Pension and retirement income sees a strong focus on the role of the workplace with auto-enrolment also playing a key role.

Where banking is concerned ring-fencing is a key directive and banks need to have this in force by January 2019, which will increase consumer protection and stop exposure to ‘casino banking’ and any subsequent failures as seen in the ’08 crash. The Payment Services Directive (PSD2) will see a revolution in banking and enable more flexibility for the consumer banking experience.

Finally Insurance and protection markets will also see more scrutiny around value and consumer protection

So, it would seem the FCA now see adopting RegTech as a enabler platform  can help empower the continued regulatory trend towards firm's individual accountability for developing a constructive culture for good conduct across compliance, customer and employee engagement. 

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Topics: Financial regulation, Financial business development, fintech, regtech, Constructive compliance, Risk management, practice management, FCA, advice, HMT, suitability, FAWG, FAMR, Fitbit, MiFIDII, Data, GDPR, Chatbot, Culture, Enforcement, supervision, FCAbusinessplan

Chris Davies

Written by Chris Davies

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