United Kingdom (and EU regulation)

FCA speech – Critical issues in financial regulation: The FCA’s perspective

By Simon Lovegrove (UK) on April 27, 2022 Posted in Regulation and compliance, United Kingdom

On 26 April 2022, the Financial Conduct Authority (FCA) published a speech by its CEO, Nikhil Rathi, entitled Critical issues in financial regulation: The FCA’s perspective.

In a wide-ranging speech, Mr Rathi touches on the following:

Last 12 months – the FCA has empowered more colleagues to take more decisions, so it can act faster and be more proactive even where it does not have powers.
Cost of living crisis – the FCA’s focus is on ensuring all firms we oversee act in their customers’ interests.
New consumer duty – the new consumer duty is progressing well, with final proposals coming in July.
Action on Russia – the FCA will publish proposals allowing the exceptional use of side pockets in investment funds, given the challenges of disposing of Russian and Belarussian assets.
Economic, social and governance reforms – the FCA is supporting international partners who are beginning to mandate climate related disclosures while it continues to build on the changes it introduced in the UK last January.
Diversity and inclusion – the FCA recently confirmed positive diversity targets for listed companies, which firms must comply with or explain to their investors why they are not. These are that women should hold 40% of board seats and a minority ethnic director should hold at least one position. The FCA has broken new ground in asking firms explicitly to aim for at least one of the four most senior board positions to be held by a woman.
Accountability and performance – the FCA has published metrics to which it can be held accountable to.
Innovation and crypto – in May, the FCA will host its first ever CryptoSprint, having been overwhelmed by applications – more than 500 so far.
Post Brexit – an international firm can operate in the UK without FCA authorisation, through the Overseas Persons Exclusion (OPE). For example, if a firms’ UK business is just a handful of wholesale market clients. However, in the FCA’s view the OPE is not intended to run a UK-focussed business. The Government has been clear that firms with significant UK business must continue to maintain the appropriate operations, permissions and authorisations in the UK.