RegulationApr 30 2020

How the FCA is handling crisis

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search sponsored by
How the FCA is handling crisis
ByIma Jackson-Obot

“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. 

“Too much regulation can be as harmful to its competition objective, as can too little. Its competition powers, however, do enable the FCA to intervene where it sees there is harm or potential for harm to consumers.”

Back in July 2013, in ‘The FCA’s approach to advancing its objective’ it said it would target resources on the areas that it considers carry the greatest potential consumer harm, and where it believes it can intervene and help consumers most. 

Martin Bamford, director of client education at Informed Choice, says: “The FCA’s crisis response to date has been reasonably good, but it could go further. I know many IFAs are hurting financially already, with relatively few able to access the small business grant scheme or salary support in furlough.

“The FCA was slow to issue its guidance around the 10 per cent drop letters, taking nearly a week after advisers were forced to start working from home to communicate their measures.

“Advisers are doing their very best during these trying times. We need the FCA to show strong leadership, fully relaxing capital adequacy requirements until the crisis is resolved. 

“There’s no sense in companies holding capital unless they can access that money in a genuine emergency, and then have the time to rebuild reserves when things improve.”

Following a Dear CEO letter from the FCA at the end of March outlining temporary changes within the regulatory framework, such as the 10 per cent depreciation notification, this was welcomed by adviser trade body Pimfa.

Chief executive Liz Field says she was “greatly encouraged” by the response from the FCA in the letter.

She adds: “It also shows the FCA has not only been in ‘listening mode’, but has also taken the concerns of our members seriously and has been willing to act and show the regulatory forbearance our members need to continue to serve their customers in these extraordinary times.

“To have done so at a time when the FCA’s resources are being stretched and it is being inundated with queries from companies is to its credit.”

PAGE 2 OF 3