The five priority conduct risks Page 58 of the Risk Outlook outlines the action the FCA will take in relation to its five priority risks in In addition the plan provides, in section 2. Over-reliance on, and inadequate oversight of, payment and product technologies The FCA recognises the risks that may result from poor oversight of technology or from consumers not being adequately informed about how to protect themselves from financial crime or use technology correctly.
This briefing note will focus mainly on the Risk Outlook, referring to the Business Plan where it discusses specific conduct risks. The content of this article is intended to provide a general guide to the subject matter. The FCA plans to follow up on its thematic reviews into financial incentive schemes and conflicts of interest in the asset management sector and will continue to take action following the Fca 2013/14 business plan Review of LIBOR.
Fund fee structure", the FCA says it will undertake a project that will highlight the behaviours and practices of asset management firms in relation to charging structures that harm consumers. Risk outlook Contrary to previous years, the FCA has not published a separate Risk Outlook, but has instead included this as part of the Business Plan.
This means that it will use its enforcement powers to take action against firms and individuals who abuse the system and to deter others from doing so. We have commented in the past on how thematic reviews frequently give rise to enforcement action.
They may also have implications for consumer protection if firms increasingly prioritise funding needs over consumer needs. The Risk Outlook addresses the drivers of conduct risk and identifies five priority risks for the FCA in achieving its consumer protection, market integrity and competition objectives.
Having taken action against a number of firms for client asset failures, the FCA threatens to take tough action and impose fines on those firms that still do not have adequate arrangements in place. As regards enforcement, although no particular surprise, it is worth stating that the FCA declares early on that it is committed to a credible deterrence strategy through its enforcement actions.
What should firms be doing? The FCA says in the Business Plan that there is evidence that the level of transparency and market conduct among TM participants is not to the standard it requires. When discussing "Product Design and Oversight: The FCA says it will take action against individual firms that are not managing the risks from their incentive schemes.
The seven areas of focus in the Risk Outlook set out the risks that firms should be mindful of over the coming years when developing their strategies and as part of their product governance processes. Shift towards more innovative, complex or risky funding strategies or structures that lack adequate oversight, posing risks to market integrity and consumer protection Incumbent firms and new entrants may use increasingly innovative, complex and risky funding sources and structures.
It says that may involve greater use of supervisory and enforcement powers. Here, key enforcement priorities include: Now the FCA seems to have made up its mind, although there is no indication of what has caused it to reach this conclusion so quickly.
Boards and senior management should be questioning staff on the extent to which these risks apply to their activities, and how they are taken into account when trying to ensure that conduct risk management information is forward-looking.
This means that the discussion is relatively less detailed and descriptive. Second, what does the new FCA structure hold? Many of these are areas on which the FSA has already started work e. However, the paper does highlight a new area of focus related to innovation and new market entrants.
It says that "taking actions against individuals is a key part of our credible deterrence strategy. Strategy and priorities The FCA identified five key priorities for Drivers of conduct risk and the evolving risk landscape Three main drivers of conduct risk have been identified: Retail Distribution Review RDR implementation will continue to be a focus, with the FCA conducting thematic reviews into the retail investment advice market.
It will also undertake supervisory work to ensure that firms offering new and mobile payment methods are providing sufficient information to consumers. New market studies for will focus on non-advised sales of investment and protection products; how insurance firms use Big Data; retirement sales practices and outcomes; investment and corporate banking; charges paid by investors in asset management; and the mortgage market.
These documents are important for firms as, together, they provide an indication of where the FCA intends to focus its activities over the coming year.
What should firms be doing?
It says it will adopt a more streamlined and robust approach to firms that consistently produce promotions that can mislead, confuse or be unfair to consumers.
In terms of financial promotions, the FCA now of course has enhanced powers.
The FCA commits to this, saying that it will take action where necessary to ensure that firms and individuals comply with their reporting obligations. The FCA has trumpeted its product intervention approach for some time now. Click to Login as an existing user or Register so you can print this article.
We anticipate that the FCA will build on this approach in subsequent years.
Specialist advice should be sought about your specific circumstances. To print this article, all you need is to be registered on Mondaq.Business Plan / /14 Financial Conduct Authority 5 The Financial Conduct Authority (FCA) is coming into existence at a critical time in the history of.
Annual Report /14 3 This is the FCA Practitioner Panel’s first report on the FCA’s first year in operation. There is In the Business Plan forthe FCA stated that it was considering eight key success measures to represent the milestones it should achieve in the next two to three.
On 25 Marchthe FCA published its first Business Plan. The Business Plan is a rather dense document, setting out in some detail how the FCA intends to operate in the following 12 months.
4 Press briefing of the FCA's Business Plan for /15 The FCA’s responsibilities expanded further in Aprilwhen it took over regulation of consumer credit from the Office of Fair Trading. First referred to in its Business Plan, the FCA has set out some further detail on how its “outcome-based performance framework” can be used to measure how well it delivers on its statutory objectives.
Home» FCA (and PRA) Fees /14 Published: 30th April As advised in Regulatory Roundup 47, the FCA Business Plan identified an Annual Funding Requirement (AFR) of £m which, of course, has to be met by fees.Download