The UK’s Financial Conduct Authority (FCA) released its 2021/22 business plan on July 15, outlining its future role, priorities and how it intends to implement them. The FCA website has a summary and a full copy of the business plan.
FCA General Manager Nikhil Rathi said that over the next year “[the FCA] will be more innovative, more assertive and more adaptive.
The complete business plan is divided into six sections. The four key sections are:
- The role of the FCA
- Consumer priorities
- Wholesale market priorities
- Priorities in all markets
THE ROLE OF THE FCA
The FCA states that its two main tasks are “to improve the functioning of markets and to stop and prevent serious wrongdoing which can cause damage”. To achieve this, the FCA is doing a number of things, including investing in new technologies and placing more emphasis on the use of data.
The FCA has a clear focus on consumer protection. Some of FCA’s key proposals are:
- Increased scrutiny of how businesses support financially troubled consumers
- Work with the UK government to implement a new regulatory gateway for financial promotions
- Proactive reviews of payment service companies to identify those at risk of not being financially strong
- Introduction of pricing and automatic renewal measures to ensure the fair value of home and auto insurance products
- Potential changes to the rules on business obligations to consumers, based on responses to consultation which ends July 31, 2021
WHOLESALE MARKET PRIORITIES
Market integrity is a key objective for FCA when it comes to wholesale financial markets. Some of FCA’s key proposals in this area are:
- Updated rules to adapt to UK markets while maintaining consistent standards internationally, including updated listing rules regarding Special Purpose Acquisition Companies and financial disclosures related to the weather
- Simplification of pre and post-trade transparency rules on securities and derivatives markets
- Complete the LIBOR transition
- Increased oversight to ensure that the environmental, social and governance (ESG) properties of funds are presented in a fair, clear and non-misleading manner
- Introduction of a long-term asset fund to invest with confidence in less liquid assets
- Increased focus on retirement products, especially value for money
- Increased oversight of corporate due diligence and oversight of appointed representatives
PRIORITIES IN ALL MARKETS
FCA also wants to work on a cross-market basis to tackle broader issues and influence change, including:
FCA is also piloting a program to remove permits when companies do not undertake the activities they have been authorized to undertake – a ‘use it or lose it’ approach.
IMPACT ON COMPANIES
The business plan is comprehensive and makes it clear that the FCA will focus on a number of areas and may introduce a number of new requirements for companies to comply in the short to medium term.
With the proposal for a much more proactive and data-driven FCA, companies may see changes in the number of contacts and oversight from the FCA. Newly licensed and fast growing companies should expect to benefit from increased scrutiny. There may also be changes in the way FCA collects data from companies, including the automation of the collection – with a view to reducing data costs.
Companies will need to assess whether they are undertaking their licensed activities in order to maintain their licenses under the “use it or lose it” pilot project.