The Financial Conduct Authority has announced its policy goals for the coming year, most notably a pending review of the Financial Services Compensation Scheme.
The 48-page document, published yesterday morning (July 15), was the first business plan under new chief executive officer Nikhil Rathi, who joined in October.
The FCA pledged to become a forward-looking, proactive regulator and that it would make three distinct changes: being more innovative, testing the limits of its own powers and better engaging with partners, and being more adaptive.
Among other things it has set its focus on six key areas:
1) Bring down the FSCS levy and claims
The FCA said it will undertake a review of the scope and coverage of the Financial Services Compensation Scheme.
The regulator said it would review the compensation policy framework to ensure it is appropriate, proportionate and takes into account changes in the market, as well as its regulatory approach.
Details of the review are to be published during the next 12 months but the regulator said that in the long-term, it wants firms that fail to do so in an orderly manner by changing capital adequacy rules.
2) Streamline decision making
The FCA said it is looking to streamline decision making on authorisation applications and specific supervisory and enforcement decisions.
It 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 would 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".
3) UK authorisation gateway
There are 1,435 EEA firms currently accessing UK markets via the Temporary Permissions Regime.
Rathi said the FCA wants to take a tougher approach, which will involve some “contentious outcomes”, meaning 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.
The regulator also said it will monitor complaints about newly authorised firms in their first three years of authorisation. It anticipates that by giving more support to firms in the early years, the number of relevant Financial Ombudsman Service complaints should fall over time.
4) Faster enforcement action
The regulator said tackling misconduct to maintain trust and integrity was another area of focus.
It expects to detect signs of misconduct faster which the FCA hopes will lead to an initial increase in the number of firms whose permissions are removed either permanently or temporarily.
5) Consumer engagement
The regulator said it hopes that with increased communication with consumers, it will see a reduced number of calls to the FCA for help.
It said increased effectiveness of its ScamSmart campaigns, including increased use of the ScamSmart website and clicks through to the Financial Services Register, should support this aim.
It said: “We will publish the aggregate amount by which consumers benefit from our policy work to improve market outcomes.
“We aim to expand this metric over time to bring in other areas of our work, such as how our interventions other than new rules deliver benefits for consumers.”
6) Diversity and inclusion
Last week (July 7), the regulators published a discussion paper which set out policy options to engage with firms and stakeholders on how the industry can accelerate the pace of change on diversity and inclusion.
In its business plan, the FCA said to ensure it is as diverse and inclusive as possible, it plans to continue to monitor and set targets for itself.
“We will also drive stronger outcomes across the industry as a whole, including supporting delivery of the Women in Finance Charter, Parker Review and other economy-wide initiatives.”
sonia.rach@ft.com
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