In mid-March as the likely impact of Covid-19 started to hit home, the Financial Conduct Authority was faced with the major task of looking at ways to prevent consumer and market detriment.
At the time, the regulator said: “We stand ready to take any steps necessary to ensure customers are protected and markets continue to function well.” Since then it has rolled out measure after measure, but has it gone as far as it can?
Keith Richards, chief executive of the Personal Finance Society, says: “The FCA has been actively engaged since the start of lockdown and continues to encourage and listen to input.
“The suspension of the 10 per cent Mifid reporting requirement and the clarification on client verification will make a genuine difference for advisers, and in turn free them up to focus on clients. The measures the FCA have taken are unprecedented, and demonstrate that it is taking the effects on consumers and the sector seriously.”
Mark Turner, managing director in Duff & Phelps’ compliance and regulatory consulting practice, says: “The government itself through the Treasury is looking to support the economy and individuals who are under a massive shock with something that has happened without warning and is more far-reaching than we have ever experienced.
“The FCA is also seeking to ensure that those government measures are implemented and accessible, because time to market is critical, and for some institutions something that might be happening in two or three months may well be too late.”
- The FCA has taken steps to ensure customers are protected
- These include helping advisers conduct their work in a challenging environment
- There are requests to extend this understanding to advisers without PI cover
The list of measures so far has been long and wide ranging. They include mortgage payment holidays, allowing advisers to take a flexible approach on the 10 per cent depreciation, and flexibility on capital adequacy for advisers.
A raft of consultations and investigations have also been delayed. These include the vulnerability guidance and vulnerability research, investment platforms exit fees remedy, pension transfer advice, contingent charging and other proposed changes, and prudential requirement for Mifid investment companies.
As the lockdown continues, the FCA is poised to respond to the changes.
Simon Thomas, regulatory consultant at Quilter, says: “With a vast number of measures coming from all sides, advisers and consumers may feel a bit underwater. It would be useful if the FCA found another medium to present its guidance, such as infographics, video and audio content.”
Mr Turner adds: “It is important the FCA remains nimble as this crisis unfolds. We are potentially at the beginning of something that could have quite far-reaching consequences.”
“Having said all that, I don’t think the FCA has the resource to manage every issue a company has. Firms have to manage themselves.”
He also notes the regulator has a job to do to manage occasions where conflicts could arise between what is in the best interest of the consumer, the companies that service the consumer and the economy as it rolls out measures.
Echoing his words, Mr Thomas adds: “The FCA does have a competition objective, and so its actions have to walk the tightrope ensuring that the market both operates effectively and in the interests of consumers.