HOW WILL FCA’S VISION OF FUTURE AFFECT YOUR FIRM?

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24 May 2022

FCA chief executive, Nikhil Rathi, has set out his strategic vision and ambitions for the next three years.

He claims the organisation is now “focusing on results, rather than being driven by processes,” so we thought, given the uncertain geopolitical climate we find ourselves in, you would appreciate some clarity about what Mr Rathi has committed to deliver in the next 12 months.

The following table highlights what the FCA terms ‘distinguishing characteristics’ and how they will impact advisory firms. It will adopt these attributes to better demonstrate its accountability and progress.

FCA characteristicsImpact on firms
Data/metrics-ledFaster and more widespread scrutiny of your business operations

 

Streamlined decision-making and automationSwift intervention to restrict the financial services you offer customers and cancel/withdraw permissions

 

Transparent, diverse and inclusiveIncreased pressure to improve diversity and inclusion in the marketplace to reflect the communities and customers you serve

 

Supportive of competition and innovationThe removal of firms who are unwilling to follow the rules

 

Resourceful and proactiveIncreased correspondence from the regulator regarding:

·         Threshold Condition breaches

·         Potentially fraudulent activity

·         Misleading financial promotions

·         Unsuitable or ‘completely unreasonable’ products and services

·         Operational incidents and disruptions

 

Overhaul of the redress systemIncreased redress burden
AssertiveInsolvency processes will be started sooner to mitigate harm
Direct interactions with consumersCustomers will be able to detect poor practices more confidently

An increased level of complaints in the short term

A decline in the level of complaints long term, as customer awareness increases and Consumer Duty is fully embedded

 

Active investor stewardshipESG issues will need to be considered in FCA applications

Increased FCA engagement and monitoring of ESG disclosures

Improved sustainability strategies

 

Change for the better?

This is, of course, an over-simplified summary of how the FCA envisions creating an environment in which firms can deliver its expected outcomes. It is drawing on several key data sources, including the Financial Lives survey, Practitioner Panel survey, FOS and FSCS.

The interconnectedness of the FCA’s commitments will highlight the limitations of the data metrics it uses currently and potentially bring about new ways of measuring outcomes. Indeed, as long as they improve, according to the Impact Evaluation Programme, it will be reassured that the future financial landscape is looking brighter.

You can find an extensive list of the proposed metrics and corresponding outcomes here: FCA outcomes and metrics | FCA. If you would like to discuss how the FCA’s plans might affect your business, don’t hesitate to contact us on (0161) 521 8641 or email: [email protected]

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