The FCA recently published its Business Plan for 2020/21.
In the introduction, the plan highlights that much of it is in response to what the FCA sees as:
“… significant risk of harm (to consumers) … in part driven by the way consumers have been given additional responsibility for complex investment decisions, through the shift to Defined Contribution (DC) pensions and the Government’s 2015 pension freedoms …”
The FCA is also concerned that consumers are currently exposed to significant market volatility caused by coronavirus. The plan states:
“We want to make sure they are supported to make effective investment choices in a fair market.”
To this end, the FCA intends to target the following three outcomes:
- Investment products are appropriate for consumer needs;
- Consumers make effective decisions about their investments;
- Firms and individuals operate under high regulatory standards and act in consumers’ interests.
Like many things at this time, the plan is subject to change dependent on the measures the country needs to take to deal effectively with the Covid-19 threat and the impact on UK and global financial markets. Indeed, the Plan has a whole section based on the subject.
The FCA’s key priorities over the next 1-3 years are:
- Transforming how the FCA works and regulates;
- Enabling effective consumer investment decisions;
- Ensuring consumer credit markets work well;
- Making payments safe and accessible;
- Delivering fair value in a digital age.
It is not appropriate to try to cover all these points in this brief article. Instead, we draw your attention to the following extracts, which should provide a quick grasp of the FCA’s thought processes.
- “Over the coming year we will be shifting our focus towards smaller firms. Many, but not all, of the 60,000 firms we regulate are committed to acting in line with our rules and principles. Some are not. We will shift our focus towards those firms that consistently fail to meet our required standards. We will move more swiftly to enforcement action against those that fail to do this and so cause harm.”
- “There are those that see these times as an opportunity for poor behaviour – including market abuse, capitalising on investor’s concerns or reneging on commitments to consumers. Where we find poor practice, we will clamp down with all relevant force”.
- “We want to ensure firms have higher standards of governance, a stronger grip over networks of individuals in their distribution chains and that the regulatory system can better tackle the significant cost of misconduct we see in this market’.
The plan states that progress will be measured by assessing a variety of indicators, including:
- Commencing assessment suitability of decumulation advice;
- Continuing assessment of the suitability of defined benefit (DB) to defined contribution (DC) transfer advice;
- Continuing assessment of developments in the financial support market, through the Retail Distribution Review and Financial Advice Market Review evaluations, in order to ensure they are meeting consumer needs.