The Financial Conduct Authority (FCA) has released its business plan for 2020/21, in which the regulator identified five overall priorities including its own transformation.
Over the next one to three years, the FCA will focus on transforming how it works and regulates; enabling effective consumer investment decisions; ensuring consumer credit markets work well; making payments safe and accessible; and delivering fair value in a digital age.
In addition, the regulator cited cross-cutting priorities as well as sector-specific areas it will zero in on in the medium term.
“Where we can progress this work now, without undermining the focus on the coronavirus response, we will do so,” said the FCA. “But we recognise that it may be weeks or months before we are in a more stable position and can turn ourselves fully to the activities in this plan.”
As for its current objectives throughout the pandemic, the watchdog said it will protect the most vulnerable; tackle scams; ensure fair treatment for consumers and small firms; keep markets working well; and mitigate firm failures.
Commenting on the priorities, former FCA deputy chief risk officer Paul Dyer issued something of a warning.
Dyer, who is currently head of regulatory risk and assurance at regulatory specialist Huntswood, stated: “It’s clear that the FCA has been forced to prioritise short-term interventions given the coronavirus pandemic. This raises a broader concern that with many areas put on hold until the current crisis is averted, consumer harm will undoubtedly persist in other areas and may even be exacerbated by the crisis.
“However, the affordability of credit has been emphasised by the FCA as part of an immediate focus on core services, and supported by the instruction for firms to proactively identify at-risk consumers and show forbearance. This is a huge ask for the sector, particularly given current market conditions.”
The ex-FCA official believes further guidance from the regulator is needed but stressed that firms who wish to succeed in the long term must also evolve and improve the fairness of their business models.
Meanwhile Personal Finance Society (PFS) chief executive Keith Richards had this to say: “Given the impact of COVID-19, it is important that the FCA continues to recognise the financial pressure being placed on advice firms and the proposed freezing of minimum fees for many small firms as well as limiting an increase of the overall levy by 1.6% for the A13 advisory arrangers, dealers, or brokers group.”
Also, Richards commended the watchdog for consulting on whether there is industry support for the FCA undertaking a communications and information campaign to tackle areas where it sees real risk of consumer harm.
“The Personal Finance Society raised the need for this campaign in its initial COVID-19 discussions and recommendations,” noted Richards. “We believe it is time for a united consumer campaign rather than a regulatory warning against scams or the sign-posting of FSCS (Financial Services Compensation Scheme), as this alone may further erode the public’s confidence and trust in the sector, and could further push them into the path of fraudsters.
“Government, regulators, and the regulated sector need to work together to better engage, inform, and empower people to make the right decisions about their current and future financial wellbeing.”
The PFS also took the opportunity to reiterate its plea for government intervention for a complete overhaul of the current method of funding consumer compensation, which in its view is unsustainable.
“To achieve this,” declared the CEO, “we must remove the volatility and uncertainty around the availability of professional indemnity insurance and the Financial Services Compensation Scheme levy.
“This can be achieved by pooling the cost of compensation at the highest level: funds under management. This would mean the entire investment sector would share the cost of compensation, without consumers losing out on access to advice that could leave them tens of thousands of pounds better off.”
