Today the FCA launched its business plan for 2019/2020. Much like previous business plans interpreting its impact on both firms and sectors can be quite confusing.
The FCA provides much of the detail for of openness and transparency – but the plan remains, in general, poorly understood. Part of the problem, is that the majority of the FCA staff spend their time on the normal work of regulation and on dealing with events, activities that rarely feature in the plan.
Here are the seven key takeaways from this year’s plan and an assessment of how they fit with the FCA’s cross-sector (corporate) priorities for the year ahead.
1 Culture and governance
A variation of this has been a priority virtually since the first years of the FSA in the early 2000s. SMCR is a key feature of the current approach, and while the FCA has partly played down the “stick” element of the regime, it’s clear from Mark Steward’s recent speech that SMCR will be a foundation of enforcement action for the foreseeable future. Meanwhile, the FCA’s efforts to collaborate with the industry to explore the role of ‘purpose’ in culture – the “carrot” element if you like - deserves support.
Assessment: This area is probably the most important priority for any conduct regulator.
2 Operational resilience (OR)
This was also a corporate priority last year but now carries more weight, given impetus by the joint PRA/FCA Discussion Paper. OR is one of the rare areas that ticks every box – partly event-driven but with heavy policy input, high profile in terms of public rhetoric, and resource intensive for regulator and industry alike. It helps that he PRA care about this at least as much – from cyber to outsourcing to the cloud.
Assessment: OR will be a major priority for both regulators over the coming years.
3 Financial crime and anti money laundering
Another ever-present priority and increasing in importance, partly in response to external pressures. These include last year’s FATF recommendations and next year’s implementation of AMLD5. As with some other areas, such as OR, the FCA is constrained by the relatively limited specialist resource it has in house. It’s worth noting that the FCA, collaboratively with the industry, is actively exploring RegTech solutions to FinCrime.
Assessment: FinCrime is definitely a growth area for FCA activity.
Navigating the regulatory landscape: FCA business plan
Despite ongoing political uncertainty surrounding Brexit, firms can expect the FCA to refocus their attention on regulatory compliance in this year’s business plan.