The FCA Business Plan and Risk Outlook form the cornerstone documents for regulated firms to remain ahead of the curve for regulatory change. These documents effectively signpost the major regulatory focuses for the coming year and outline the FCA’s view on key risks, its priorities, and planned activities.
The 2016/17 Business Plan, published on 5 April, outlines seven priorities for the FCA, the majority of which are effectively rolled over from last year, yet continue to be of significant interest to the regulator. However, one additional priority has been introduced this year, namely the provision of professional advice.
Below we have summarised the FCA’s key priorities for 2016/17 that firms should be aware of.
fair treatment for consumers, stronger competition and a market that meets consumer needs.
The FCA wants to achieve a greater level of customer satisfaction with their pension providers, fewer complaints, increased product range and increased consumer awareness and understanding. This will be achieved mainly through more competition, better value for money products with appropriate advice and guidance for consumers to avoid fraud.
Financial crime and anti-money laundering (AML):
better, proportionate and more efficient AML controls and avoidance of consumer scams.
The FCA aims to develop a UK financial system that is a hostile arena for money launderers, whilst simultaneously ensuring that AML procedures do not unfairly exclude customers. The FCA expects to see an improvement in firms’ AML controls and an improvement in the perception of the UK’s AML regime from international assessors and overseas authorities. The FCA also wishes to reduce the harm to consumers from investment scams.
Wholesale financial markets:
stronger controls capable of ensuring market integrity and efficiency.
The FCA will be endeavouring to enhance its own monitoring and surveillance capability and seeking to ensure market participants and infrastructures detect, disrupt and deter market misconduct. The FCA also expects both corporate and individual market participants to take responsibility for their part in maintaining clean, fair and effective markets.
During 2016 the FCA will start applying the new EU Market Abuse Regulation (MAR) helping to strengthen the existing UK market abuse framework. In addition, under the Markets in Financial Instruments Regulation (MiFIR) from January 2018, firms will be required to report across a wider range of fields and assets classes. The outcome should be an increase in confidence in relevant markets and an upward trend in the reputation of the UK as a financial centre.
affordable, professional advice to meet consumers’ changing and complex needs.
This aim will build on the processes introduced through the outcome of the Financial Advice Market Review, published in March 2016. The key priority is to ensure that advice provided to consumers is suitable and of appropriate quality, with full transparency of the costs involved.
Innovation and technology:
resilient systems and new sources of competition.
The FCA will continue to develop regulation to encourage innovation to the benefit of consumers. However, the importance of testing technology against cyber-attacks is one of the outcomes now sought by the FCA including ensuring there are plans in place to mitigate against such attacks.
Firms' culture and governance:
strong culture and governance.
The FCA wishes to see firms develop a culture of accountability at all levels and ensure senior individuals are fully accountable for defined business activities and material risks. The FCA also states it wants to see firms managed in a way that promotes appropriate culture and behaviours.
Treatment of existing customers:
effective competition to the benefit of the consumer.
The FCA will seek to ensure all consumers receive a fair deal and long-standing customers are offered more transparent information on pricing. They will also help firms promote good customer outcomes through increased competition and product innovation.
Other areas of work for the FCA set out in its Business Plan include:
– the FCA intends to review current regulatory provision and identify areas which may no longer meet the statutory objectives or have ceased to be effective. These will either be redrafted or removed.
Payment protection insurance (PPI)
– Following consultation in the previous year on proposals to implement a cut-off date for PPI complaints, the FCA will consider responses and finalise its approach.
– The focus for the FCA, in this context, will be the Capital Requirements Directive (CRD IV) and the Recovery and Resolution Directive (RRD).
– The FCA’s work on ring-fencing will involve supporting the PRA in aiding firms to complete their ring-fencing plans and monitoring the market for any negative effects which may occur as a result.
The FCA has also confirmed it will continue to pursue their strategy of credible deterrence and take enforcement action against firms and individuals who break the rules.
Tracey McDermott, acting Chief Executive of the FCA said: “The majority of our resources remain devoted to our core business and today we have set out the outcomes we want our work to achieve. Transparency is important to us, and this plan will give all stakeholders an understanding of our focus for the year ahead.”
To discuss how this may affect your business, or to discuss any other regulatory areas that are important to you and your business, please contact Andrew Jacobs