RegulationJul 19 2016

New FCA chief reveals plan for mission overhaul

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New FCA chief reveals plan for mission overhaul

A review of the Financial Conduct Authority’s mission is taking place which could lead to some consumers being prioritised over others, Andrew Bailey has said.

The FCA’s new chief executive said he is reviewing the regulator’s mission after joining earlier this month.

Speaking at the regulator’s annual public meeting in London today (19 July), Mr Bailey said the regulator had its duties set out in statute, but this left “a large piece missing”.

The FCA should acknowledge there is a “general principle” that consumers should take responsibility for their decisions, he said, but added there were other important principles, like establishing a level of consumer care appropriate to the product risk.

Mr Bailey, the former chief executive of the Prudential Regulation Authority, said the question of how to balance the duty of care towards consumers and the duty of responsibility of consumers for their decisions “has not been adequately answered”.

He stated: “Like all public bodies, the FCA has objectives given in statute, and these are critical, but they are necessarily very high level and leave important questions unanswered.

“We have experienced, and continue to experience, a crisis of financial conduct which has damaging consequences for the economy and society. Out of this experience we must establish and embed the mission of the FCA, and give it the much needed underpinning.

“This mission should also be the basis of answering a number of other very important questions which shape how we operate,” continued Mr Bailey.

“Among these, I would highlight whether we should prioritise some consumers over others, how we would do this and the need to explain and justify how the FCA decides among its tools when it sees a need for action.”

The FCA should acknowledge there is a “general principle” that consumers should take responsibility for their decisions, but Mr Bailey said there were other important principles, like establishing a level of consumer care appropriate to the product risk.

He told the meeting that the FCA has begun to put together a proposal on its mission, which he hoped would be published in the early autumn and would be followed by a period of “intensive public consultation”.

The FCA’s current objectives are to:

Protect consumers – secure an appropriate degree of protection for consumers.

Protect financial markets – protect and enhance the integrity of the UK financial system.

Promote competition – promote effective competition in the interests of consumers.