Financial Conduct Authority  

FCA reveals themes of mission feedback

FCA reveals themes of mission feedback

Financial services has told the Financial Conduct Authority that it needs clarity and a sense of direction from the regulator.

The FCA has published a number of themes which are "beginning to emerge" from the consultation process into its proposed mission statement.

FCA chief executive Andrew Bailey announced plans for the mission in his first month at the regulator, making the announcement to the FCA’s annual public meeting, claiming the watchdog needs to explain how it uses the powers it has.

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Since October the FCA has been consulting on its proposed mission, which includes achieving a "balance of responsibility" between consumers and firms.

Among the issues raised so far in the consultation is a desire for a clearer rationale for the FCA's decisions and how it chooses what to do and what not to do.

In its update, the FCA said: "Respondents largely agree with affording more protection to vulnerable consumers but have different views on who a vulnerable consumer is and emphasise the need for clear definitions.

"Respondents think we should adopt a more active role in sharing lessons learned and good practice. Respondents would like more tailored communications that illustrate risks for their particular market."

One area where there did not yet appear to be much consensus was on the use of rules or principles. Some respondents wanted "clear sets of principles for business" rather than prescriptive rules but others preferred more clarity on existing rules, which they felt were too vague.

The FCA's consultation runs until 26 January and following its latest update, it has issued a set of questions to clarify what the industry thinks its position should be on these themes.

For example it has asked how the industry thinks it can better communicate the choices it makes, who should be included in the definition of a vulnerable consumer and what the extra protection they get should look like.

It has also asked for clarity on the circumstances in which prescriptive rules or higher level principles are more appropriate.

The mission document published in October sought to set out when the FCA would intervene, saying it intends to be more transparent about the things it chooses to do and the things it decides not to do.

It also pledged to be clearer in communicating it's assessment of the underlying cause of harm or risk it is seeking to address.

The FCA also asked whether its approach to long-term products is working. It said they are affected by uncertainty and "present bias", making the regulation of these products "inevitably challenging".

The FCA also sought suggestions for a proposed review of its handbook.