The Financial Conduct Authority Business Plan 2020/21
May 11, 2020
In April 2020, the Financial Conduct Authority (FCA) released its annual Business Plan (the Plan) for the year 2020/21. It focuses on the challenges posed by Brexit, and more significantly, the financial impact of COVID-19. It sets out the FCA’s key objectives; seeking to ensure that the UK remains at the centre of the financial markets and that consumers are protected in an uncertain economy.
Key Priority Areas
Just as Brexit has been at the centre of the Plan for the last few years, COVID-19 is frequently referred to in all of the Plan’s five key priorities. These are:
- Enabling effective consumer investment decisions
- Ensuring consumer credit markets work well
- Making payments safe and accessible
- Delivering fair value in a digital age
- Transforming how the FCA works and operates
Each of the first four priorities focus on protecting consumers. This is not surprising, given that historically, consumer scams have increased in times of global crises. There is a particular emphasis on protecting consumers from fraud and related misconduct, to be achieved through the imposition of higher regulatory standards and increased evaluation of existing systems and controls.
The Plan impresses on the reader that while the FCA considers that consumers are currently provided with appropriate credit and investment options, there is more that can be done in the protection of vulnerable individuals. Specifically the FCA states that it will further ensure that vulnerable consumers are neither exploited nor targeted with poor value products, such as those which claim to provide ‘quick fixes’ but which could adversely affect their medium to long term financial status. On this matter the Plan refers to a proposal for a consumer harm campaign; designed to assist consumers in making better-informed investment decisions.
While the first four priorities perhaps focus on the ‘what is the Plan’ the fifth focuses on the ‘how’ to implement it. The FCA set out its proposed transformation of its approach to regulatory services, noting particularly a clear desire to “make faster and more effective decisions” through the provision of a more integrated operation; a ‘One FCA’ approach. Furthermore the Plan builds on the FCA’s ambition to deliver a “regulatory approach which focuses on outcomes”. For organisations regulated by the FCA, this should mean a more holistic approach for both markets and consumers in the preparation and delivery of services they provide.
The Plan outlines the FCA’s continued commitment to fighting financial crime with a clear emphasis on misconduct relating to money laundering and fraud. This follows on from commitments laid out in the UK’s 2019 National Economic Crime Plan. In particular, the Plan sets out the FCA’s ambition to test the implementation of anti-money laundering (AML) strategies within professional body supervisors; in the legal and accountancy sectors specifically. Ultimately, for those organisations supervised by professional bodies, this is likely to lead to increased scrutiny when questioned about the suitability of their internal AML systems and controls.
Additionally, the Plan demonstrates a focus on climate change, operational resilience, culture in financial services, and innovation and technology to lessen the burden of regulatory reporting on firms. Similarly there are also plans for the FCA to strengthen its working relationship with international regulators to ensure the development of robust financial standards.
Whilst, understandably, the immediate areas addressed in the Plan focus on minimising the impact of COVID-19 and protecting vulnerable individuals, it is clear that this pandemic will not prevent the FCA from continuing its long standing regulatory commitments and ambitions. The aim for improvements in efficiency and efficacy alongside an ever increasingly stringent approach in reducing financial crime should be welcome by most firms and consumers, especially in a time of such uncertainty and upheaval, but it may take several years to know how transformative the regulator’s operational effectiveness has been.
For more information contact PwC’s Regulatory Disputes Team (Legal).