It's spring and the lambs are in the fields, which means it’s time for FCA’s annual business plan. Unsurprisingly, the 2020 edition is a short read. But if we are honest, how many of us even expected the FCA to release a business plan at all during the current crisis, or not at least so close to its usual release date?
So, what made the cut?
With things changing so rapidly now, it isn’t a surprise that what the FCA has produced is not in its usual form. It doesn’t contain as much detail or as much rationale. It is best described as a wish list of four outcomes that the FCA tells us will drive their activities and interventions over the coming months and years. Those outcomes are simple and defensive in nature:
1 To keep the markets functioning
2 To protect consumers, particularly vulnerable ones
3 To limit the number of firm’s failing
4 To ensure scams are identified early and tackled
It has outlined some key expectations for each sector as well, but they are kept at a high-level, and we are given a glimpse of the transformation work the FCA is undertaking as it moves away from its role as a regulator in the EU, but it clearly wants to maintain its position as a leading international regulator.
What do you need to do?
The FCA expects you to be proactively checking the risk your firm and its activities could pose to the four outcomes listed above. It is intervening where it needs to, but with limited resources, it clearly expects firm’s to be able to assess their own risk and act promptly if any problems are identified. Make sure it features in your next round of governance meetings!
Exactly what you will need to focus on will vary by sector, but it is clear, in the near term, credit firms are in the FCA’s spotlight. Consumers will need to turn to support themselves during the short to medium term to make up for dwindling incomes, which poses a dilemma: firms are asked to offer credit, but not so much that repayment becomes unaffordable.
- How do you assess affordability and monitoring changing vulnerabilities?
- How do you protect customers from scams or actions that make their situation worse?
This doesn’t mean other firms have been given a pass though.
The FCA continues to be keen to ensure the quality of service, advice and products is improved so that customers can make effective decisions. You should be proactively checking what impact the crisis has already had and what it is likely to mean over the medium term.
Digital issues feature too. As you read this, you may be working from your bedroom, or from a dining room table with a toddler on your lap. This is not lost on the FCA and it expects the crisis that has driven us from our air-conditioned offices, will accelerate social changes so that even more of interactions between firms and its consumers will be delivered digitally.
Your ‘to do’ list:
- If it isn’t already, make sure the business plan and these four outcomes are being discussed as senior levels. The FCA will expect you to act and it will come knocking at a future date for any failures
- Take the time to reflect on the initial period of the crisis and learn lessons as we continue to move through it
- Review the sector specific sections and act where you need to!
For more information on the FCA’s business plan, or how we can help you interpret its impact on you, please read our summary or contact us for more information on the above and how we can help you.