The FCA has published for consultation a document on its future mission. The document is designed to provide a guiding set of principles around the strategic choices the FCA makes and will inform the FCA’s future strategy and day-to-day work. Key themes that the FCA consults on include the following:
- protecting consumers. The FCA believes that a market where consumers never make poor choices is not feasible. The FCA’s focus is on ensuring the appropriate degree of protection for consumers. What is appropriate will depend to a large extent on the capability of the consumer and the complexity of the product or service. The FCA also believes that it should take steps to make clearer to consumers the degree of protection it can, and cannot, give them;
- consumer redress. The FCA believes that alongside the Financial Ombudsman Service and the Financial Services Compensation Scheme, it has a role in ensuring consumers can receive redress thorough cheaper and quicker routes than the courts. The FCA will use a 3 step criteria (how quickly and urgently the redress is needed; the number of consumers affected; and if the activity that led to the harm occurs inside or outside its regulatory perimeter) to help inform its decisions about whether or not to effect redress and will communicate more regularly with firms and consumers about redress schemes so they know what to expect;
- protecting vulnerable consumers. The FCA believes it has a specific role to protect vulnerable consumers and that low income exacerbates any individual vulnerability. This means that the FCA gives some consumer groups, in some markets, higher levels of protection than others. However, given that new vulnerabilities arise in groups which may not have previously been seen as vulnerable, such as retirees at risk of financial scams following the introduction of the pensions freedoms, the FCA will keep who it views as vulnerable under review;
- defining harm. In this regard, the FCA takes a diagnostic approach. The FCA looks at the cause of the harm as well as its impact and uses its intervention framework to decide the most proportionate and effective use of its tools to tackle it. This can range from direct action with one firm to a market-wide approach which modifies the way markets are designed to ensure the potential for harm is minimised and less likely to occur in the future;
- transparency and disclosure. The FCA believes that it can play a greater role in helping consumers access the right services for their needs by influencing how they make decisions. This can include changing the way firms present choices to consumers and ‘nudging’ them towards decisions that are more appropriate for them. The FCA will consider placing greater restrictions on a market where it feels that nudges and other ways of presenting consumers with information are not working but it will do so cautiously;
- when the FCA intervenes. The FCA will prioritise its decisions against a number of factors which include the cumulative and individual impact on affected consumers and markets;
- enforcing FCA rules. The FCA acknowledges that it needs to be clear about the terms it uses. For example the term ‘referred to Enforcement’ is often misunderstood. It will also review its use of ‘private warnings’; and
- measuring what the FCA does. To measure how effectively it meets its statutory objectives the FCA will use a three tier approach: by measuring its operational efficiency using a value for money framework, measuring the impact of its policy interventions and measuring the outcomes in markets as a whole.
The deadline for comments on the document is 26 January 2017.
A final mission statement is expected to be published next Spring.
View FCA consults on its future mission, 26 October 2016