Andrew Bailey, Chief Executive of the Financial Conduct Authority (FCA), told his organisation’s 2018 Annual Public Meeting that much of the regulator’s focus in recent times has switched to monitoring of operational risks, such as resilience, technological change and financial crime.

According to the definition used by the FCA, operational resilience encompasses both cyber-risk and issues relating to the growing complexity of systems used by firms. Cybersecurity should be a high priority area for all authorised firms, large and small, across all business sectors – the threats in this area are increasing all the time and the consequences of falling victim to an attack can be severe. There have also been a number of high-profile IT glitches which have sometimes led to significant disruption for customers.

Mr Bailey also said that data issues were “the fastest rising risk on our landscape.” This could refer both to whether firms process data in accordance with new legislation, and whether they take appropriate measures to prevent data loss.

However, he did also highlight that a great deal of time has been spent monitoring the conduct of consumer credit firms, especially those offering high cost credit. Mr Bailey described this as “the largest single task the FCA has undertaken in its history.”

Ushering in what he hopes will be a new era of personal accountability across the industry, he commented on the fact that it was ten years since the financial crisis, and that the Senior Managers & Certification Regime will soon allow the FCA to hold key individuals responsible for the failings within their firms. Here the FCA chief commented:

“Ten years on from the crisis, there is no question that we saw behaviour in the past which was well below what we should expect. The regulatory regime did not create the correct incentives – emphasising individual culpability rather than the responsibility of senior people for the firm’s activities as a whole. A defence that the individual did not personally make a bad loan or mis-sell a product is not good enough. We are now implementing the new Senior Managers and Certification Regime across our landscape, extending it out from banks. This is a very important change.”

FCA chairman Charles Randell also addressed the meeting. In his speech, he commented that protection of vulnerable customers was one of the key priorities in the regulator’s Mission document. Firms must therefore ensure they have robust procedures in place for identifying vulnerable customers, and for ensuring they are treated fairly.

Like Mr Bailey, Mr Randell also addressed the issue of technological change. He said that in some ways this had been “enormously positive” for financial services, in that it could help firms manage money laundering risks, reduce market entry costs, increase product differentiation and boost competition across the market.

Conversely however, technology has also created new risks, exposing more people to issues such as online fraud and data misuse. Furthermore, technological advances can also leave some consumers feeling left behind, especially those who may be classed as vulnerable.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article