The FCA has published its Business Priorities for 2019. This gives a good indication of its priorities, both immediate and for the year ahead. Below we overview some of the key priorities likely to be of interest to our readers.
- EU Withdrawal
Unsurprisingly, this is the most pressing priority area for the FCA, especially with the possibility of a no deal BREXIT. See here for our recent article on the topic.
- Extending the Senior Managers and Certification Regime to all FSMA firms
This takes effect in December 2019 and we are preparing some guidance for firms.
- Establishing a public register
When the FCA proposed in 2018 that advisers would be removed from the FCA Register, there was widespread and deserved criticism, which only increased following the British Steel transfer problems. The FCA is now working on a more consumer friendly version of the register. A beta version can be viewed on the FCA Register website.
- Focusing on firms’ remuneration arrangements
The FCA and its predecessors have always proclaimed that they are not price regulators. However, with a continued focus on client best interests and value for money in the entire investment chain, there is a continuing pressure for the FCA to intervene in some way regarding fees and charges, and the debate around contingent charging just does not want to go away.
- Supervisory assessment of firms’ operational resilience
While this really refers to Banks and other large institutions, all firms have an obligation to have adequate arrangements in place to continue to operate in the event of cyber attacks and other threats to their business.
- Assessing the risks of outsourcing and third-party providers
Similarly, many firms outsource aspects of their business. It is worth remembering that the firm always retains full regulatory responsibility for any outsourced aspects. There is also a recognition that many firms use platforms as part of solutions recommended to clients but that many platforms rely on underlying technology from just a small number of IT firms.
- Reviewing firms’ use of data and publishing a Memorandum of Understanding with the Information Commissioner’s Office
GDPR will soon be a year old. There remain concerns about privacy issues. We will be doing a follow up to GDPR in the coming months to help firms identify how well they are implementing the rules.
- Publishing final rules to allow more Small and Medium-Sized Enterprises access to the Financial Ombudsman Service
Self explanatory – firms with small corporate clients should be aware.
- Collecting and acting on data from firms that have pension transfer permissions to assess practices across the market
Yet another escalation in the FCA’s attempts to tame the transfer advice market. This focus on pension transfers is not going away any time soon and firms involved in transfer advice should review what they do, how they do it and make sure that the transfer advice process is absolutely watertight. ATEB has enviable experience in helping firms to advise on pension transfers compliantly and safely so get in touch if you would like some help in this area.
- Developing a joint pensions strategy with The Pensions Regulator (TPR)
The FCA seems to recognise that there are significant issues around pensions, and not only in relation to poor transfer advice. It appears to be trying to influence changes beyond its immediate remit by working with TPR and government around fundamental pension legislation.
- Finalising rule changes following the Asset Management Market Study and working with European Supervisory Authorities in the implementation and review of the Packaged Retail and Insurance-Based Investments Products Regulation (PRIIPS)
This could well throw up some major changes to practices in the industry. Watch this space.
- Publishing research that explores the rise of passive investment
While active investment still dominates the solutions offered by adviser firms, there is undoubtedly a continuing increase in the use of passive investments. There are arguments for (cost) and against (no alpha) passive investment but there could also be some unintended consequences, for example around the impact of automated trading and IT driven investment markets. The FCA’s findings should prove interesting reading.
- Publishing the final report on the Mortgage Market Study
This has been brewing for a long time, with interim reports in both 2016 and 2018. The final report is expected Q1 2019. Mortgage firms should keep an eye out for the report.
- Assessing the impact of the Financial Advice Market Review (FAMR) and the Retail Distribution Review (RDR)
It might seem a little late to be reviewing the impact of the RDR more than seven years after implementation and some two years after the review was supposed to take place. Better late than never. Expect some focus on fees and disclosure. The FAMR review will cover at least some of the same ground – cost of advice, advice gap etc.
- Implementing the Insurance Distribution Directive
Finally effective from 1 October 2018, it is likely that the regulator will be scrutinising firms’ implementation of IDD over the coming year.