The Financial Conduct Authority has published its annual business plan, with several new reviews scheduled for the pensions industry.
It outlines seven priority themes to guide how the FCA will use its resources and provide additional focus for core activities.
| The seven themes are: |
| Pensions |
| Financial crime and anti-money laundering |
| Wholesale financial markets |
| Advice |
| Innovation and technology |
| Firms’ culture and governance |
| Treatment of existing customers |
The business plan sets out a number of pieces of work scheduled for 2016 to 2017, including the launch of a market study looking at retirement outcomes, implementing the recommendations of the Financial Advice Market Review, developing a policy to extend the senior managers and certification regime to all FSMA firms and launching the ‘regulatory sandbox’ to give firms a safe space to test innovative products and services.
Starting with the retirement market review, the plan stated this will consider the impact of the pension reforms on competition and switching, with the timing allowing integration with its ongoing consultation on changes to pension rules and guidance, data collection exercises and the government’s next steps on exit charges and pension transfers.
“We will conduct work to help us understand how consumers react to ‘wake-up packs’, which encourage them to take action, and how they use and respond to the various annuity comparison tools,” the paper noted.
“Parliament has given us a duty to impose a cap on early exit charges, and we will develop and consult on proposals to discharge this duty,” it stated, adding that the FCA will consult on this.
Also on the slate in terms of pensions is a review of the effectiveness of Independent Governance Committees, a review of firms’ disclosures to existing customers about enhanced annuities through non-advised sales processes, and work on the secondary annuity market’s implementation next April.
As for implementing the many recommendations within the Financial Advice Market Review, these will be worked on throughout the year in order to develop “clear policies to support the development of the advice market”.
A review into Financial Services Compensation Scheme funding will commence this month, with the FCA and HM Treasury reporting jointly to the economic secretary and FCA board in 2017 on the progress made towards implementation.
“Our supervisory focus will continue to be on supporting increased professionalism in the financial advice sector,” read the plan, adding the FCA will increase communications with the sector and continue to assess how suitable advice is.
Within the innovation and technology theme, the regulator said it accepted the FAMR’s recommendation to create an ‘Advice Unit’ to support automated advice models with the potential to deliver affordable and accessible advice to consumers.
Alongside its business plan the FCA also published its fees consultation paper for the next 12 months. Its annual funding requirement for the year will be £519.3m, an increase of 7.8 per cent on the previous year, due to the inclusion of consumer credit in operating costs for the first time.
The FCA was keen to point out that excluding consumer credit, its budget has reduced by £7.6m.
However, staff costs have also risen significantly, from £279.9m during 2015 to 2016 to an estimated 316.8m for 2016 to 2017.
A move from Canary Wharf to Stratford is also planned for 2018, with the plans explaining that fit out cost will be incurred to get the building ready for occupation. “Our current intention is to fund these costs by external financing, the cost of which will be recovered against the rent free period.”
Acting chief executive Tracey McDermott stated ensuring effective and proportionate regulation, which tackles the problems of the past without inhibiting developments of the future, is at the heart of what the regulator does.
“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.”
peter.walker@ft.com
