The Financial Conduct Authority (FCA) has released its Business Plan for the financial year 2014/15.
In the foreword, chief executive Martin Wheatley says that, in its first 12 months, the FCA has made “good progress in advancing our objectives, embedding consumer protection, market integrity and the promotion of competition.” He highlights the interventions the FCA has made in areas such as interest-only mortgages, general insurance add-ons and introductory interest rates.
He then looks forward to the first 12 months of consumer credit regulation at the FCA, and refers to the new requirements for firms in this area, and the forthcoming price cap on payday lending. He also says he expects culture changes to take hold in high street bank branches.
This message is enhanced further in the Executive Summary section, where the FCA promises to be “judgement-based, forward-looking and pre-emptive in assessing potential and emerging risks.”
New activities for the FCA in 2014/15 are said to be:
- The integration of 50,000 consumer credit firms into the FCA regime, which trebles the number of firms it regulates. Consumer credit regulation will have a “direct impact on significantly higher numbers of consumers, ensuring that they are treated fairly when obtaining credit or debt advice.”
- Implementation of the recommendations of the Parliamentary Commission on Banking Standards, working in conjunction with the Prudential Regulation Authority, which regulates prudential matters for banks and other large firms.
- The establishment of a new retail payment systems regulator, which will be a subsidiary of the FCA
Other key activities for the financial year will be:
- More market studies to assess competition standards, including studies on wholesale markets and credit cards
- More thematic reviews in areas where customers are being put at risk, or market integrity is threatened. Areas of focus will include life insurance, consumer credit and benchmarks.
- Considering the case for a 15 year ‘long stop’, i.e. an overriding time limit on how long after the advice a complaint can be made
- Looking at payment protection insurance (PPI) complaint handling standards, and at how providers go about contacting customers who may have been mis-sold PPI but who have not yet complained
- Further work on assessing implementation standards of the Retail Distribution Review requirements
- Implementing the Mortgage Market Review, which will deliver wide-ranging changes to the mortgage marketplace
Much of the report focuses on what the FCA will do for customers’ interests. Activities in this area will include work on: packaged current accounts, sales practices concerning retirement income products, quality of investment advice, client money protection and data security.
Specific activities the FCA will undertake surrounding consumer credit include:
- Thematic reviews into competition in the credit card industry; payday lenders’ debt collection practices and treatment of borrowers in difficulty; and advice standards at debt management firms
- Reviewing credit promotions to ensure they are clear, fair and not misleading
- Consulting over the price cap for payday loans
- Encouraging the implementation of real-time data sharing
Specific mention is made of the fact that the five largest payday lenders will be visited by the FCA.