18Apr

The Financial Conduct Authority (FCA) has published its Sector Views document for 2018. This reveals what the regulator’s primary areas of focus are in its seven key markets, and consequently provides something of a checklist for firms seeking to remain compliant with its requirements.

The FCA’s areas of focus in the retail banking sector include:

  • The impact of technology and regulatory change – potential harms to consumers from increasing use of digital channels and data sharing, the impact of cyber-attacks and IT stability and security issues that may cause disruption to consumers as a result of service disruption
  • Financial crime and anti-money laundering controls
  • Whether business models encourage competition

The FCA’s areas of focus in the retail lending sector include:

  • Consumers being sold unaffordable or unsustainable products – the FCA is particularly concerned about money being lent to consumers who would be unable to continue repayments if they experienced some form of financial shock
  • Treatment of consumers with financial difficulties – this could mean for example selling them inappropriate debt solutions, or firms failing to manage an arrears situation appropriately
  • Unsuitable products – mention is made here of a tendency to focus on fixed rate mortgages without considering other options
  • Cyber-crime

The FCA’s areas of focus in the general insurance and protection sector include:

  • Operational resilience – whether firms’ IT systems are sufficiently robust, and whether they can withstand cyber-attacks
  • Data security
  • Governance and culture – including concerns over inadequate oversight of appointed representatives by principal firms, giving rise to issues over mis-selling and insufficient risk management
  • Product suitability – the tendency for consumers to concentrate on the headline price of an insurance policy, without closely examining product features
  • Access for high-risk customers – people with medical or other conditions can experience difficulties buying insurance, even if it may sometimes be doubtful whether these conditions actually increase the underwriting risk

The FCA’s areas of focus in the pensions sector include:

  • Poor value products – mention is made here of consumers’ unwillingness to shop around, and of complex charging structures
  • Unsuitable products – including customers who may enter drawdown without appreciating the risks involved, and individuals who may end up investing in non-standard areas via self-invested personal pensions
  • Unsuitable advice – especially regarding transfers out of occupational schemes where valuable benefits are being given up

The FCA’s areas of focus in the retail investments sector include:

  • Unsuitable products – the document suggests the FCA believes customers could end up with unsuitable investment products for a number of reasons, including difficulties in accessing appropriate advice
  • Poor value products – including issues over complex charging structures and lengthy switching times
  • Market confidence – mention is made here of a variety of issues, including firms having poor financial crime controls, failing to meet prudential requirements, or not having appropriate systems to safeguard client money

The FCA’s areas of focus in the investment management sector include:

  • Investment product quality and value
  • Technology and cyber-security
  • The impact of the UK’s withdrawal from the EU

The FCA’s areas of focus in the wholesale investment sector include:

  • Conflicts of interest
  • Market abuse
  • Financial crime
  • Technology and IT systems
  • Misuse of confidential information
  • The impact of the UK’s withdrawal from the EU

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.