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FCA cuts back on non-Brexit activities in business plan
09/04/2018 , News Team

The Financial Conduct Authority (FCA) has published its Business Plan for 2018/19 setting out the key priorities for the coming year which is to be dominated by Brexit.

The regulator has put aside £30 million to deal with Brexit preparations over the next 12 months, £14 million of which will come from “reprioritising, delaying or reducing non-critical activity”. A further £11 million will be paid by the firms that will be affected by withdrawal, with the remainder funded through the FCA’s reserves.

This means that the regulator has had to scale back on non-Brexit activities in the year ahead. Seven cross sector priority areas have made the cut, based on assessments of where there is the greatest harm or potential for harm, and where intervention can have the greatest impact. 

The first priority is to improve firms’ culture and governance to produce outcomes likely to benefit consumers and markets. The FCA aims to increase accountability through the Senior Managers and Certification Regime (SM&CR) which is being finalised.

Tackling financial crime, including fraud, scams and anti-money laundering, is the second area of focus. The regulators' permanent programme of work includes regular inspections of forums it believes present high money laundering risk as well as supervision, authorisation frameworks and liasing with other regulators. In the coming year, the FCA is looking to build a better picture of money laundering by undertaking diagnostic work in order to implement better systems. 

Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services, said the FCA. Its aim is to help firms to become more resilient to cyber-attacks, to enhance market integrity and to protect consumers. Over the next year, the FCA will strengthen supervisory assessments of the highest impact firms and will also review how governance, strategy, systems architecture, risk management and culture contribute to firms’ data security. The FCA will also conduct focused thematic work with ‘lower impact’ firms, based on harms it has identified in each sector. 

Also within the digial sphere, the FCA has identitifed innovation, big data, technology and competition as a priority area. The regulator will continue with its various programmes to encourage innovation. The FCA will also undertake reviews of how firms use data, crowdfunding and cryptocurrencies. 

The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers will also be another area of focus of the regulator alongside long-term savings and pensions and high-cost credit.  

Andrew Bailey, FCA chief executive, said: “The Business Plan is an important way in which we are transparent about our priorities for the year. We recognise that this year we need to dedicate a significant amount of resource to withdrawal from the EU. As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.”

Hargreaves Lansdown said in a statement: “There are still vital policy interventions needed to stimulate consumer engagement and competition."

The firm's head of policy Tom McPhail added: “There’s a strong case to be made for extending the FCA’s statutory remit beyond its current three objectives*, to include an additional provision around actively seeking improvements to individuals’ long-term financial well-being. In the meantime, a paper looking at savings adequacy will be a step in the right direction.”

*The FCA’s three operational objectives are: Protect consumers; Protect the integrity of the market; Promote competition.

 

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