FCA Business Plan and Sector Views

Today, 9 April 2018, the FCA has published its Business Plan 2018/19. The Plan covers: EU withdrawal, priorities for 2018/19, and sector priorities. 

Alongside the Business Plan, the FCA has also published:

• Sector Views: these provide an assessment of the developments, performance and risks of each financial services sector in the previous year. They give the FCA a detailed picture of financial sectors, consumers and relevant macroeconomic and demographic factors, which directly informs its activity in each sector. There are seven Sector Views:
• retail banking;
• retail lending;
• general insurance and protection;
• pensions and retirement income;
• retail investments;
• investment management; and
• wholesale financial markets.

This is the second time that the Sector Views have been published.  They are helpful in understanding the supervisory approach in each sector.

• CP18/10: FCA regulated fees and levies: Rates proposals 2018/19. Fee payers should be aware that the draft fee rates and levies in Appendix 1 are calculated using estimated fee payer populations and tariff data. This means that final periodic fee rates and levies for 2018/19, which will be made by the FCA Board in June 2018, could vary from those in the CP. The response deadline is 1 June 2018.
• DP18/3: Ex post Impact Evaluation Framework: This discussion paper sets out the FCA's framework for measuring the impact of interventions using ex post impact evaluations. The response deadline for DP18/3 is 9 July 2018.

Cross Sector Priorities

The priority areas in the Business Plan are set out as follows:

• Firms’ culture and governance which should drive behaviours and produce outcomes likely to benefit consumers and markets. Specifics include:
• Finalising rules to extend the SMCR to all FSMA firms (Policy Statement to be published in Summer 2018);
• Establishing a public register (FCA will consult in Summer 2018) ; and
• Focusing on firms' remuneration

• High-cost credit, building on the significant impact already made in the market. Specifics include:
  • Alternatives to high-cost credit; and
  • Finalising the FCA's review of high-cost credit products including: rent-to-own; home-collected credit; catalogue credit; and overdrafts.

• Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers. Specifics include:
  • Tackling money laundering;
  • Publishing findings on money-laundering in the e-money sector;
  • Embedding the new Office for Professional Body AML Supervision (OPBAS);
  • Taking account of the recommendations in the FATF evaluation (which will conclude in October 2018);
  • Fraud and scam awareness raising; and
  • Improving intelligence sharing with law enforcement partners.

• Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services. Specifics include:
  • Supervisory assessment of firms' operational resilience (also highlighted by the PRA in its Business Plan 2018/19);
  • Assessing the risks of outsourcing and third-party providers; and
  • Monitoring the roll out of technology and resilience data as part of Open Banking and the second Payment Services Directive (PSD2).

• Innovation, big data, technology and competition which are driving change in markets. Specifics include:
  • Assisting firms progressing through the FCA Innovate programme;
  • Allowing firms to test in the regulatory sandbox;
  • Testing and applying RegTech and advanced analytics to regulation;
  • Reviewing retail banking business models;
  • Reviewing firms' use of data and publishing a Memorandum of Understanding (MoU) with the Information Commissioner's Office (ICO);
  • Publishing new crowdfunding rules; and
  • A review of cryptocurrencies with the Treasury and Bank of England.

• The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers. Specifics include:
• Understanding firms’ pricing practices in retail general insurance;
• Communicating with claims management companies in advance of regulation in 2019;
• Assessing claims inflation in general insurance;
• Helping consumers make informed decisions on their insurance needs;
• Improving competition in current accounts;
• Publishing final rules to allow more Small and Medium-Sized Enterprises access to the Financial Ombudsman Service; and
• Improving competition in the cash savings market.

• Long-term savings, pensions and intergenerational differences which reflects the changing UK population and their financial needs. Specifics include:
  • Delivering a package of remedies as part of the Retirement Outcomes Review;
  • Collecting and acting on data from firms that have pension transfer permissions to assess practices across the market;
  • Understanding the levels of consumer undersaving for retirement; and
  • Publishing a feedback statement on competition in non-workplace pensions.

• On EU Withdrawal, the Business Plan outlines the following current priorites: working with the government; ensuring an appropriate transition for EEA firms; working with regulated firms and monitoring the risks to FCA objectives; working towards the FCA's own operational readiness; and cooperating with international partners.

Sector priorities

Wholesale financial markets

• Clarifying the FCA's approach to market integrity
• Reviewing money laundering in capital markets
• Monitoring firms’ compliance with new conflicts of interest requirements
• Addressing operational resilience
• Monitoring firms’ compliance with rules on IPOs
• Publishing final rules and approach to industry codes of conduct for unregulated markets

Investment Management

• Finalising rule changes following the Asset Management Market Study
• Working with European Supervisory Authorities in the implementation and review of the Packaged Retail and Insurance-Based Investments Products Regulation (PRIIPS)
• Consulting on new rules and guidance on liquidity management
• Considering the extension of governance remedies to with-profits and unit-linked funds
• Assisting the Treasury in the development of a new prudential regime for investment firms authorised under MiFID II
• Publishing research that explores the rise of passive investment

Retail Lending

• Assessing creditworthiness in consumer credit
• Launching a Market Study on Credit Information
• Publishing an interim report on the Mortgage Market Study
• Reviewing the commission between credit brokers and other firms
• Ensuring the debt management sector works well for consumers
• Reviewing the motor finance market
• Reviewing retained Consumer Credit Act (CCA) provisions

Retail Banking

• Continuing to help firms prepare for ring fencing
• Developing a payments sector strategy
• Delivering the revised PSD2
• Continuing the awareness campaign on the Payment Protection Insurance (PPI) redress deadline

Retail Investments

• Assessing the impact of the Financial Advice Market Review (FAMR) and the Retail Distribution Review (RDR)
• Reviewing High-risk and complex investments
• Evaluating the FCA's interventions on Contracts for Difference (CFDs)
• Publishing the report on the Investment Platforms Market Study
• Raising awareness of fraud and scams

General Insurance and Protection

• Implementing the Insurance Distribution Directive (IDD)
• Publishing the interim report from the Wholesale Insurance Brokers Market Study
• Concluding initial diagnostic work on general insurance distribution chains
• Publishing the findings from the Call for Input on access to travel insurance
• Evaluating the effectiveness of the FCA's 2015 rules on Guaranteed Asset Protection insurance

Pensions and Retirement Income

• Developing a joint pensions strategy with The Pensions Regulator
• Potentially extending the remit of Independent Governance Committees for workplace pension
• schemes
• Helping consumers avoid scams