Earlier this month the Financial Conduct Authority published their 2020/2021 business plan. With everything going on in the world at the moment, it can be hard to keep up with Finance and Banking news – here are a few of the key inclusions that you need to know about right now.
First and foremost, the FCA’s immediate primary concern is protecting consumers, organisations and the markets from the wide-reaching economic effects of the COVID-19 pandemic. Last week saw some of these measures swiftly coming into effect, with the FCA requiring financial services to offer help to people whose financial situation has been impacted in several ways, including loan freezes and the provision of interest-free support. Since Friday, the FCA has announced a proposed package of measures to support Motor Finance and High Cost Credit Agreement customers facing difficulty, including potential payment freezes, pending input from industry this afternoon.
The regulator has also committed to combating scams, with some fraudsters using the pandemic as an opportunity to launch new types of scams and to pray on consumer’s fears about the safety of their money during the current upheaval. Some scams already seen involve persuading people to “invest” money that the criminals say will be used to produce hand sanitiser and medicine or people being contacted and told that because of the virus their current account is no longer financially safe, encouraging them to transfer the money to the fraudsters.
Other Coronavirus related concerns include a commitment to ensuring customers of smaller firms get strong and clear support such as guidance on how to make use of the Government’s Coronavirus Business Interruption Loan Scheme, and FCA fees being frozen for smaller organisations until the end of the year to help them focus on making sure they can focus on supporting their customers during this difficult time.
Looking further ahead, the business plan’s key priorities relating to consumer protection include commitments to ensuring payment systems are safe and reliable and doing more to prevent people from falling into unaffordable debt and investigating whether vulnerable customers are being offered inappropriate products. They also want to examine whether products, including those of relatively new digital and fintech services, are offering “good value”.
The FCA will continue to focus on financial crime, particularly on ensuring the systems, especially those relating to fraud, are robust and functioning efficiently. The regulator will look to increase and improve the use of data to identify organisations or sectors vulnerable to financial crime while continuing work to raise consumer awareness around scams.
In the insurance space, there’s a focus on the harm being caused by unfair pricing and remuneration practices that reduce value for customers. The FCA will work on making sure that information given to customers is clear and not misleading, especially where it relates to customers looking to switch or renew, as well as plans to examine if vulnerable customers are being wrongly excluded from some products. In line with other areas, there’s also a concentration on whether products are providing good value.
One area singled out for scrutiny in the plan is the pensions market, where they say the investment distribution process and support network around it is not working effectively. To tackle this, the FCA is setting targets set to improve retirement advice not just through more appropriate investment products, but also to try to get consumers to make more effective decisions and to make sure firms are operating to high regulatory standards and always acting in their customer’s interest. They’re also looking at culture issues especially within solo regulated firms, ensuring they’re complying with the same SM&CR (Senior Managers & Certification Regime) requirements as larger organisations, as well as a commitment to continue focussing on the 4 key culture drivers in businesses (purpose, leadership, approach to reward and managing people, and governance) and assessing their effectiveness in reducing the potential for harm to customers.
And finally, at a “big picture” level, the FCA is looking to re-assess and transform their own systems including what data they collect, how it’s analysed, managed and shared, and the processes being used to decide which firms and individuals to authorise. Part of this will include a complete replacement for the current Gabriel system, which has up til now been the primary method of firms reporting complaints data to the regulator. They’re also looking to revamp the methods used to supervise firms and how unacceptable firms are stopped and removed from the sector.
However, due to the unprecedented nature of the current pandemic and the breadth of the economic and financial consequences, the FCA says that they will probably not be able to begin work on any of their long term goals for at least three months and that they may publish a revised business plan once the virus is under control.
If you have any concerns about how the new FCA business plan will affect you and your organisation, get in touch with Kind Consultancy today for a confidential conversation about how we can support your firm through a suite of services delivered by top-tier interim Governance, Risk & Compliance talent, including complaints support, process transformation, remediation and rectification projects and SM&CR training.