The FCA has published a speech given by Tracey McDermott (Director of Enforcement and Financial Crime, FCA) entitled Sustainability.
At the beginning of her speech Mrs McDermott discusses what the FCA has been up to and states that the regulator has made significant progress in 2014 and that regulation feels quite different to regulation of the past. In addition to taking on the regulation of consumer credit, the FCA has also started to embed the competition objective into the way it thinks about problems. The FCA will commence certain market studies into credit cards, general insurance add-on products, cash savings and SME banking. It will also be carrying out a review of how competition operates in various areas of wholesale markets.
Mrs McDermott explains that one of the FCA’s aims was to put conduct in the board room – to ensure that firms put consumers and the integrity of the markets at the heart of their business. She states that senior management and boards are now engaged much more actively with the conduct agenda.
Mrs McDermott then describes some of the lessons that firms should have learnt from the FCA’s work over the past year:
- it cares about consumer outcomes. Misleading advertisements, the mis-selling of low value insurance and poor complaints handling contribute significantly to the general public’s mistrust of financial services. The FCA has brought cases in all these areas recently;
- it cares about the integrity of the markets. The FCA will take steps to tackle those who undermine it. The FCA is continuing to prosecute insider dealing cases and has a number of investigations and prosecutions in the pipeline;
- it cares about the culture of firms. Mrs McDermott states that financial incentive schemes are often a good clue to a firm’s culture;
- it has high expectations of approved persons. The FCA expects approved persons to be part of the solution not the problem. They should act as gatekeepers, seeking to help their clients (and their colleagues) do the right thing and telling the regulator when they don’t; and
- it expects firms to be open with it and do what they say they will. For the regulatory regime to work it must also be right that the regulator can rely on assurances given to it by the firms that it regulates.
At the end of her speech Mrs McDermott discusses some of the FCA’s future priorities. In particular it will work with the PRA to implement the measures set out in the Financial Services (Banking Reform) Act 2013 to give effect to the recommendations of the Parliamentary Commission on Banking Standards, such as the senior managers and certified persons regimes. The FCA will also focus on how well firms analyse consumer complaints about payment protection insurance and proactively contact those who may have been mis-sold but have yet to complain. The FCA will also continue to assess anti-money laundering processes and controls in major banks and those staff responsible for them. The regulator will extend this during 2014/15 to some smaller firms that might present high levels of money laundering risk, as well as carrying out focused thematic work.
View Sustainability, 22 July 2014