Individual accountability and changing the culture of regulated firms remain high on the list of the Financial Conduct Authority’s priorities.
In line with comments made by Tracey McDermott, former chief executive of the FCA, that the level of enforcement action was “not sustainable – for regulators or for the industry” there is less emphasis on enforcement action.
The FCA has reiterated the culture of regulated firms has been, and remains, a priority following the scrapping of the thematic review of banking culture.
The FCA seems to suggest that they will concentrate on working with firms on an individual basis, but the exact manner this will be done remains, at best, uncertain.
The authority seeks to establish a culture of accountability at all levels; but how the success of this will be judged is unclear.
Focus continues on enhancing individual accountability in senior positions.
The senior managers and certification regime, will assist in this.
Management for an area may now be held accountable if a firm contravenes requirements: the FCA is looking to rely on this, and the new data collection requirements, to continually assess key individuals within regulated firms and inform them as to what is expected of their senior management.
The FCA has also made clear that it intends to extend this accountability regime to all FSMA regulated firms in the future.
A focus on market abuse was added this year on the back of the Fair and Effective Markets Review.
It is clear that the FCA views implementing the 21 recommendations made by FEMR as a major step in its wholesale markets agenda and will look to work with the Treasury on any of the recommendations which require primary legislation.
Financial advice is another addition to the business plan this year, following the Financial Advice Market Review.
FAMR was, as with FEMR above, run in conjunction with the Treasury, and it is no surprise the FCA wants to focus attention on its plans for implementing two of its widest-ranging reviews.
This year will see the Financial Crime Annual Data Return being rolled out.
It is hoped it will allow for the identification of firms with material weaknesses in their anti-money laundering; controls which the FCA can focus on and work with to resolve any issues.
The FCA will give each regulated firm a scoring, highlighting those which need improvement, increasing accountability for both the FCA and regulated firms.
Firms with a low score and which need improvement may find themselves on the authority’s radar for potential enforcement action.
A key theme throughout the Business Plan is that the FCA is looking to be proactive in its supervisory role and look to work with firms on an individual basis.