As the year advances, there are inevitably some changes that will arise that need to be addressed by corporations. When it comes to financial regulation, there are several factors that UK firms need to be aware of when trying to deliver the best results for their customers.
At City Week 2022, the FCA’s CEO Nikhil Rathi delivered a speech that detailed some of the issues surrounding regulation that firms must be aware of. Here are further details of some of these issues.
The cost-of-living crisis
The cost-of-living crisis is affecting many different areas of our average life and is an area that needs to be considered in terms of financial regulation. Inflation was already on the rise as the economy recovered from the effects of the COVID-19 pandemic. With war in Ukraine and other issues affecting commodities and prices around the world, it will be customers who are hit the hardest.
The FCA has published a three-year strategy with outcomes that they expect their firms to deliver. Firms that do not demonstrate adequate controls will not be permitted to enter the market, and one in seven applicants are currently denied authorisation. As the cost-of-living crisis continues, the FCA are determined to ensure that their firms are still providing robust financial regulation to protect their customers.
New customer duty
New customer duty is a vital part of financial regulation. It ensures that firms are accounting for the good outcomes their consumers wish to see. With clear rules in place, costs will hopefully be able to be cut in the future. Many firms are not taking the steps needed to ensure that firms are selling the right products with the correct standards of customer service. This is something that should be a must across all areas of the financial industry, so the FCA is taking steps to ensure that this basic of business is indeed in place.
With the help of business leaders, the FCA intends to tackle competitors who are attempting to drive standards down whilst empowering the firms who uplift them. This will help to give firms great clarity when it comes to setting up their own standards on how they should treat their customers. It will also give them the flexibility needed to deliver good outcomes.
Innovation is an important part of financial regulation, and the FCA is determined to support it where they can – especially if they are to encourage economic growth and foster international competitiveness.
The FCA has worked to ensure that they are supporting innovation across a number of key areas. Firstly, they are working with the government and international partners to ensure that there are environmental, social, and governance (ESG) reforms in place. This should help to lead us to an economy that is greener and more sustainable overall. Other areas that the FCA are keen to support include diversity, accountability, and performance. It is vital that the FCA is able to put themselves forward as a credible regulator within the UK, and these are three areas where they can do so.
One of the biggest issues that also needs to be addressed is the FCA’s relationship with crypto. This is a key area of financial regulation that must be addressed – especially in terms of ensuring that anti-money laundering rules are also applied to and sustained by crypto firms.
Now that the UK has officially left the EU, post-Brexit issues are likely to pop up on a more frequent basis. The FCA are working hard to devise a system that provides cross-border services while also maintaining financial regulation protocols that aim to protect consumers and markets.
The UK government has made it clear that they wish firms that are predominantly based in the UK to operate and use permissions and authorisations in the most effective way. As the post-Brexit landscape continues to develop, there will be a strong need for financial firms and the FCA to establish where they sit and the powers and regulations they wish to uphold for firms acting in both the UK and the EU.
In 2022, there are many rising issues for financial regulation that need to be addressed. There is no denying that many of these will have a massive impact on customers if they are left unchecked. However, the FCA wishes to firmly meet this challenge. When it comes to establishing new protocols and monitoring practices, they are working with the government and international partners to ensure that all issues are met and resolved. When it comes to maintaining compliance, the FCA is determined to develop the rules and tolls financial firms will need to adequately and safely protect their customers.
If you want to learn more about financial regulation and what a compliance company can do for you, then please contact us now.