The Financial Conduct Authority is looking to streamline decision making on authorisation applications and specific supervisory and enforcement decisions.
In its business plan for 2021/22 published today (July 15), the regulator said it wants to prevent and stop harm faster, and one way to do so was making changes to areas within its control, including taking "greater risks" when making decisions.
It said it will be consulting on changing the balance of decisions taken by the executive and its Regulatory Decisions Committee (RDC) so it can "intervene in real time".
It is also looking to make changes to its financial promotions regime and has put new procedures in place to fast-track its supervisory and enforcement responses so it can act faster when breaches occur.
The FCA said: “We will proactively monitor firms that repeatedly breach our rules and investigate where breaches indicate more serious issues. Further details about this are in our report, ‘Implementing the recommendations from the Independent Reviews’.
“We will shortly consult on proposals to streamline decisions about authorisation and specific supervisory and enforcement actions. We propose to change the balance of decisions taken by the FCA Executive and our Regulatory Decisions Committee.
“We expect to intervene in real-time more often to prevent harm to consumers and market integrity, including, if necessary, turning down more applications for authorisation. This will strengthen our regulatory system and, over time, reduce the overall regulatory costs of dealing with firms and individuals that fail to meet our standards.”
The FCA’s independent RDC is the final decision maker on contested enforcement, supervisory and authorisation interventions.
In April, Nikhil Rathi, who joined the FCA as chief executive in autumn last year, said the regulator was reviewing the RDC.
At the time he said: “Our review asks whether decisions on authorisation or on supervisory interventions could be made in a more streamlined way.
“And whether this would better enable quick, decisive action, particularly to prevent entry or allow removal from our markets of those unable or unwilling to meet our standards.”
In June at a Treasury Committee evidence session, the FCA boss also said the regulator was thinking about how it can streamline decision making to speed up the process.
Regulatory Nursery
In a speech today, Rathi explained that later this month the regulator is planning to consult on changes to the way it functions to place greater responsibility in the hands of managers within the FCA.
“The effectiveness of this evolving approach became clear last month when we acted quickly to ban a Lithuanian e-money firm from operating in the UK in light of concerns about its financial crime controls,” he said.
“A tougher approach will involve some contentious outcomes. There are 1,435 EEA firms currently accessing UK markets via the Temporary Permissions Regime.
“As we move to a more permanent arrangement, there will be a demanding review of all firms seeking to enter the UK authorisation gateway. And not all of those under the TPR will automatically make it through.”
However, Rathi added the FCA was not “just a gatekeeper”.
“We want to support, as well as scrutinise, new businesses in the market as part of our supervisory role,” he said.
“With this in mind, we will set up a Regulatory Nursery—a form of early-warning system where we monitor firms doing entirely new types of business and operating as fully regulated entities for the first time.
“We will work with companies as they expand to ensure their growth continues to deliver value for consumers, supports innovation and competition, and does not compromise market integrity.”
Elsewhere in the business plan, the FCA said it will begin a review of the rules on the scope and coverage of the Financial Service Compensation Scheme.
Rathi said the industry can expect to see "an FCA that looks and feels even more different" as it will change over the next year and a half to become more "innovative, adaptive and assertive", prioritising its work to clamp down on scams and improve pensions advice.
It is also exploring the option of opening an office in Leeds with at least 100 staff based there in the beginning stages.
sonia.rach@ft.com
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