In October 2016, the Financial Conduct Authority (FCA) launched a consultation on its ‘mission’. Chief executive Andrew Bailey said at the time that the exercise was “a framework within which we prioritise our work, ensuring we focus our resources in the right places.” He went on to say that it “will improve accountability and transparency of how and why we make the choices that we do.”
Now, in January 2017, the financial regulator has given details of some of the key themes emerging from the initial replies to the consultation.
The four main issues on which feedback has been received to date are:
Desire for clarity and sense of direction. Respondents would like to see the FCA be clearer about what it chooses to do, and why it has decided to act in that way.
Vulnerable customers. Most respondents agree with the principle that authorised firms need to treat vulnerable customers with extra care. However, the FCA bulletin says that there is less of a consensus regarding the exact definition of a vulnerable customer, or what protections it is appropriate to give them.
All firms need to have documented procedures for the treatment of vulnerable customers, and ensure that these procedures are followed when applicable. They must ensure that their staff are able to identify vulnerable customers, which might include those with mental capacity issues, those with limited financial knowledge, the elderly or the disabled. This is an especially important issue for debt counsellors, debt adjusters, lenders and debt collectors, as many customers seeking debt advice or who have fallen into arrears are likely to be ‘vulnerable’ in some way.
Rules vs principles. The FCA says opinion is divided as to whether it should have a lengthy, detailed and prescriptive rulebook; or should concentrate more on a series of higher level principles. Some firms feel burdened by the existence of a large rulebook, while others might be unclear as to what their obligations are should a more principles-based approach be used.
Engagement with firms. Some respondents would appreciate more detail from the FCA on lessons learned, and on what constitutes good practice. In the meantime, firms should ensure they read all FCA publications that are relevant to their business sector, especially thematic reviews that assess the conduct of firms.
The key themes of the Mission are:
• Protecting consumers – noting that consumers are increasingly expected to take responsibility for their own financial decisions, the Mission asks what level of consumer protection should a regulator provide and how should the FCA balance the differing responsibilities of firms and consumers in this respect?
• Vulnerable consumers – should protection of vulnerable consumers be a priority, and if so what steps should the FCA take to achieve this?
• Delivering consumer redress – to what extent should the FCA get involved in consumer redress schemes? How should it decide what redress is paid, to whom, and when; and how should it communicate with consumers regarding these schemes?
• When the FCA intervenes – how does the FCA identify wrongdoing within firms, how does it decide what action to take against offending firms and how can it better explain what action it is taking and why?
• The scope of regulation –in what circumstances can the FCA take action against firms? In what circumstances can it intervene regarding unregulated activity?
• The interaction between regulation and public policy – how does the role of the regulator tie in with government policy?
• Competition, supervision and enforcement – here the FCA is seeking feedback on its current approach to using its various powers
• FCA Handbook – here the regulator is looking for suggestions on how the rulebook could be reviewed
The consultation on the FCA’s Mission continues until January 26.
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.