So maybe it’s not as extreme as ‘adapt or die’, but there is definitely a change in the air. This summer, the FCA released its 2021/22 business plan and after reading it with a fine tooth comb, there’s no denying that change is coming.
The environment in which FCA operates is changing rapidly as a result of economic, technological and social movements. Throw in a global pandemic plus a little BREXIT and the FCA’s work suddenly becomes overwhelming.
But FCA Managing Director Nikhil Rathi is pursuing strategic change to ensure that the authority keeps pace with the needs of modern markets and continues to prevent serious misconduct that can have a significant global economic impact.
What can we expect from FCA in the next 12 months?
The organization has invested significant sums in new technologies and optimizing the use of data. They will also work more closely with international and UK organizations to ensure best practices are adopted and implemented from the start.
How will they measure success?
Along with their business plan for the next 12 months, they also set clear and quantifiable goals so that they can track progress and stay on track. The FCA is committed to being a more innovative, adaptive and assertive regulator, ensuring accountability for its progress on:
Support market integrity and sustainable innovation, ensuring that companies start with and maintain high standards,
Using new approaches to find problems and damage faster, with £ 120million invested in its data strategy over the next three years,
Enable consumers to make informed financial decisions, and.
Invest in people, reshape your culture and work with others to do more.
How will the FCA best support consumers?
Consult on proposed changes to strengthen the rules for companies that approve financial promotions,
Launch a 5 year campaign to educate consumers about high risk investments and what is and is not,
Publish the Consumer Investment Strategy, outlining the work the FCA will provide to retail investors.
What does their plan for digital financial markets look like?
Information was quite limited in the plan, but the bottom line is that the FCA is starting to take the need for regulatory solutions more seriously. As a starting point, the FCA is:
Implementation of pricing and automatic renewal remedies in January 2022.
Development of a digital markets strategy.
Investigate and stop harmful business practices to establish how common and harmful they are to consumers.
So what does this mean in the short and medium term?
We expect some changes in approach to be immediate, but we also expect the FCA to review these changes over the next 12 months. The overall goal is to set clearer and stricter standards for the culture and conduct of regulated businesses, so that the interests of customers are placed at the center of business models.
In the longer term, the FCA aims to reduce FSCS payments. Ultimately, the FCA wants companies themselves to have adequate capital reserves in the bank to ensure they can offset potential liabilities internally.