What the FCA’s new Business Plan means for you

Apr 24th '17

The Financial Conduct Authority (FCA) has published its 2017/18 Business Plan.


For the first time, the regulator launched its Business Plan in tandem with its Sector Views, which highlight issues and developments in the sectors it regulates, and its Mission, identifying its future path.


What are the FCA’s priorities for the year ahead?

This insight, we look at the Business Plan. From it, we can identify the regulator’s areas of focus for the next twelve months.


The plan sets out sector-specific and cross-sector priorities.


Cross-sector priorities cover:


  1. Firms’ culture and governance – the FCA will:
  • Consult on the accountability regime for all FSMA firms (those regulated under the Financial Services and Markets Act 2000)
  • Continue to review the regulatory framework that governs remuneration


  1. Financial crime and money-laundering – it will:
  • Prepare to take on responsibility for reviewing the quality of professional bodies’ AML supervision
  • Investigate how new technology can improve the efficiency of AML processes
  • Roll out a further ScamSmart campaign warning of investment fraud


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  1. Promoting competition and innovation – the regulator plans to:
  • Publish resources to help firms developing ‘robo-advice’ services
  • Engage with regional and Scottish FinTech hubs
  • Investigate how near and real-time compliance monitoring can reduce the regulatory burden


  1. Technological change and resilience – it will:
  • Establish cyber co-ordination groups across five sectors to share experiences and foster innovation
  • Undertake technology and cyber-capability assessment on all firms considered ’high impact’
  • Analyse resilience risks in major initiatives, including ring fencing and the Payment Services Directive II


  1. Treatment of existing customers – the FCA will:
  • Analyse the effect of wake-up packs on consumers’ decisions at the point of retirement
  • Look at how firms treat borrowers whose interest-only mortgages are approaching maturity


  1. Consumer vulnerability and access – it will:
  • Publish its ‘Consumer Approach’ to define its overarching approach to addressing UK consumers’ needs
  • Continue its work in the consumer credit sector, including its continued focus on high-cost credit and overdraft


Sector-specific priorities are set out for the various strands of the financial services market:


  • Wholesale financial markets
  • Investment management
  • Pensions and retirement income
  • Retail banking
  • Retail lending – with particular focus on the debt management, mortgage and motor finance industries
  • General insurance and protection
  • Retail investments


What does this mean for you?

Most if not all of the themes in the plan are unsurprising.


  • Culture

The link between culture and governance, for instance, is a drum the regulator has been banging for a long while.


In his introduction to the plan, Chairman John Griffith-Jones says that ‘There is a clear link between poor culture and poor conduct, and the industry must continue its work to achieve and embed cultural change’.


  • Competition and innovation

The FCA has been vocal in its support of innovative approaches, with its Project Innovate and regulatory Sandbox initiatives. The need to innovate in a compliant way, though, can hold regulated firms back.


  • Effective communications

The ways financial services firms engage with customers – particularly those who are long-standing or particularly vulnerable – is an underlying theme of many of the priorities.


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  • Debt and consumer credit

If you work in this area of the industry, you will once again be under the regulator’s spotlight this year. The cross-sector priorities include a resolution to continue work in this area, particularly on vulnerability, and to make sure the debt management industry is ‘fit for purpose’ is a stated aim.


The business plan is a long read – 102 pages! – but it’s worth looking at least at the headlines, as it will give you an invaluable insight into the issues the regulator will focus on in the coming year.


This gives you a head start when it comes to your own priorities.


One thing is clear – the need for good conduct that carries through to all areas of the organisation. This is a long-standing concern for the FCA – and one that isn’t going away.


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