Although the FCA is working jointly with the Prudential Regulation Authority (PRA) and Bank of England in a new Climate Financial Risk Forum, climate change is not a specific FCA priority for 2019/20. However, with the PRA’s expectations for the management of financial risks from climate change now set out in a supervisory statement for banks and insurers, we could well see climate change become an FCA priority in 2020/21.
Banking and capital markets
The impact of the EU Withdrawal will be the primary focus for the wholesale sector over the coming year. The FCA will continue their work on market abuse and will emphasise the importance of the transition from LIBOR. Data is also a key theme, where the FCA is analysing who has access to data and how it is used within wholesale financial markets.
Consumer protection across all demographics remains a key priority. The FCA aims to implement their interventions in the High Cost Credit Review whilst also focussing on supporting consumers to switch their mortgages. Additionally, the regulator intends to identify and take action on business models that drive unaffordable lending. The FCA also aims to ensure that payment services are accessible, safe, reliable and resilient through the promotion of high standards of conduct from firms.
Wealth and asset management
Following on from the Asset Management Market Study (AMMS), the FCA’s focus remains on ensuring that asset managers are providing consumers with access to a range of products that are of good value. Further work will be undertaken in the upcoming year to improve stewardship within the existing structure of UK capital markets.
Concern remains in the retail investments sector around the suitability of advice, particularly in two areas where there is greater risk of consumer harm: defined benefit pension transfer advice and advice on high risk investments. The FCA’s issuance of a number of ‘Dear CEO’ letters to Contracts for Difference (CFDs) providers has demonstrated the FCA’s serious concern in this area.
Insurance and pensions
In line with recent findings published by the FCA, protecting consumers through fair pricing strategies and products that deliver value are the key priorities within the insurance and pensions sector. The regulator’s key focus will be on understanding pricing practices and the governance and oversight across the distribution network, as well as consumer accessibility of products.
“The future will bring a need to be smarter, focusing more on the outcomes we seek, making greater use of technology, improving our business processes and streamlining our handbook. The world is changing and so must we,” says Charles Randell, Chair of the FCA.