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 characteristics||Impact on firms|
|Data/metrics-led||Faster and more widespread scrutiny of your business operations|
|Streamlined decision-making and automation||Swift intervention to restrict the financial services you offer customers and cancel/withdraw permissions|
|Transparent, diverse and inclusive||Increased pressure to improve diversity and inclusion in the marketplace to reflect the communities and customers you serve|
|Supportive of competition and innovation||The removal of firms who are unwilling to follow the rules|
|Resourceful and proactive||Increased 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 system||Increased redress burden|
|Assertive||Insolvency processes will be started sooner to mitigate harm|
|Direct interactions with consumers||Customers 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 stewardship||ESG 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]