Operational Resilience
The FCA is actively evaluating the contingency plans of a wide range of firms. The FCA expects all firms to have contingency plans to deal with major events and to test these plans.
In December 2019, joint Consultation Papers were published on operational resilience. The FCA expects firms to take ownership of their operational resilience and to account for this in their plans and investments.
Under the proposals, firms should identify important business services by considering how disruption to these services could cause harm to their customers (retail and wholesale) or market integrity. The proposals require firms to set a tolerance for disruption, and to ensure they can continue to deliver their important business services during severe but plausible scenarios.
The consultation period is now open until 1st October 2020 due to the impact of the coronavirus on the industry. The FCA will then publish a Policy Statement with its response and final rules.
Financial Crime
This year the FCA will start to implement changes to reduce financial crime. These include making greater use of data to identify firms or areas that are potentially vulnerable. It also expects payments firms to be taking steps to reduce the number of incidents that need to be reported on regulatory returns.
It will continue to take enforcement action where it uncovers serious misconduct, particularly where there is a high risk of money laundering.
The FCA has highlighted that fraud falls within its priority of reducing the risk of financial crime. It will focus on ensuring that firms have effective systems and controls to detect, disrupt and reduce the risk of financial crime including fraud.
It has also implemented a new registration and supervision regime for cryptoasset activities.
Transforming how the FCA works and regulates
The above sit within a framework of transforming the way the FCA works moving forward. This framework includes 4 external priorities the FCA will be focusing on over the next 1-3 years:
- Make faster and more effective decisions
- Prioritise end outcomes for consumers, markets and firms
- Intelligence and information
- Influence internationally on issues that affect UK markets and consumers
The FCA hopes that this transformation will help strengthen the UK financial system and better protect consumers.
Within the Business Plan the FCA states that it must learn the lessons from the current emergency, its own experiments with data and the forthcoming reviews of past regulation, then embed them deeply into the way the FCA operates.
It must actively meet the challenges from market developments, EU withdrawal, new technology and consumers’ changing needs.
The FCA states that it will need to shape its future approach to regulation to meet the needs of the unprecedented times we are operating in. It will not compromise on our expectations of firms, particularly that they make consumers’ interests the foundation of their business models and behave accordingly.
