Shearman & Sterling LLP | FinReg | UK Conduct Regulator Publishes 2020/2021 Business Plan
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  • UK Conduct Regulator Publishes 2020/2021 Business Plan

    The U.K. Financial Conduct Authority has published its Business Plan for 2020/2021, which sets out its five key priorities for the next one to three years as follows:
    1. Transforming how it works and regulates financial markets: this will include making faster and more effective decisions, prioritizing end outcomes for consumers, markets and firms, making better use of the information it receives about financial markets and working with international partners to prepare for the future of financial regulation post-Brexit; 
    2. Enabling effective consumer investment decisions: the FCA will support consumers in making good investment decisions, including by ensuring investment products are appropriate for consumers’ needs, improving consumer access to financial advice (which may include a consumer harm campaign currently under consultation), and enforcing higher standards of governance within firms; 
    3. Ensuring consumer credit markets work well: the FCA plans to grant firms more power to exercise flexibility where that is in the best interests of consumers and to help consumers find the financial products that best serve their needs through improved access to information; 
    4. Making payments safe and accessible: the FCA will work with the Payment Systems Regulator and the Bank of England to ensure consumers contract safely with payment firms, that payment firms comply with their regulatory responsibilities and that consumers and small- and medium-sized businesses can access a variety of payments services; and 
    5. Delivering fair value in a digital age: the FCA will ensure consumers continue to be offered financial products at a fair value, that the FCA’s own regulatory processes keep up with digital innovation in the offering of financial products, and that vulnerable consumers are not exploited by firms that may target them with poor value products and services.
    The Business Plan also includes commentary on the FCA’s regulatory perimeter and the scope of its regulation of the financial services sector. The FCA regulates the wholesale financial markets sector (the key concerns for which include an orderly transition away from LIBOR, combatting market abuse and the use of market data to deliver high-quality products and services), the investment management sector (for which the FCA is exploring more effective disclosure to support consumer investment decisions and the implementation of the Senior Managers & Certification Regime), the retail banking sector and general insurance and protection. The FCA acknowledges that some firms fail to clearly communicate which of their activities are FCA-regulated and that the scope of the FCA regulatory framework can be difficult for consumers and firms to interpret. The FCA is working with HM Treasury on areas where harm may occur outside the established perimeter and intends to provide more detail in its annual Perimeter Report, due to be published later in 2020. HM Treasury's investigation into the FCA's regulation of London Capital and Finance, a firm currently in administration and responsible for the loss of hundreds of millions of pounds of investors' money, is ongoing. The FCA acknowledges in the Business Plan that HM Treasury's review could identify lessons to be learnt by it and states that it will consider the findings of the review "extremely carefully". The FCA also considers that its existing regulatory framework is too rules- and process-based. It plans to move towards a system based on principles and outcomes to more effectively protect consumers.
    The FCA also acknowledges the major challenges facing the U.K. and global economies, including from COVID-19 and the U.K.’s exit from the EU. In the short term, it has established a series of measures to combat the immediate threats of COVID-19. Looking forward, the FCA will focus on tackling what it views as potential sources of enduring harm in various areas (including payment systems and consumer credit markets) and continues to work on cross-sectoral issues such as climate change, technology, operational resilience and financial crime.
    The Prudential Regulation Authority also separately published its 2020/2021 Business Plan this week.
    View the FCA's 2020/2021 Business Plan.
    View details of the PRA’s 2020/2021 Business Plan.
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