Failures in recent years, among various high profile investment funds, and the broad impact this has had on many investors has led to widespread criticism of the Financial Conduct Authority (FCA), the body that regulates the UK’s Financial Services industry.
After last week’s speech by Nikhil Rathi, the boss of the FCA, during which he outlined his vision for a different kind of regulator – one that in his own words “delivers for the consumers that we serve”, there will be many who say, ‘not before time’.
In his speech delivered during a webinar, Rathi, who took up his role as Chief Executive in October, said; “The FCA must continue to become a forward-looking, proactive regulator. One that is tough, assertive, confident, decisive, agile. One that acts, acts fast—and where we can’t act, engages enthusiastically with those who can”.
Following Rathi’s comments, and the publication of the FCA Business Plan for 2021/22, I asked Courtiers Compliance Officer, Maggi Tuck, for her thoughts. What changes is Maggi seeing and how does Courtiers measure up to the standards of compliance and governance that the FCA expects? And does Maggi think the FCA is on track to deliver on its CEO’s promises, especially those to consumers?
Starting to see changes
“Well it’s true that we are starting to see changes in how we are being supervised and anything the FCA proposes to become more effective has to be a good thing.
“Historically, firms have been left to figure out some hard-to-interpret regulations, and attempts to obtain clarification from the FCA (and predecessors) have had their challenges. It has not been uncommon for firms to be simply told to refer to the very clause in the FCA Handbook they were seeking guidance on.
“With regard to supervision we have definitely seen a shift over the last couple of years – resulting initially in many more requests for information (RFIs) on a range of topics from Covid arrangements to DB pensions (Defined Benefit) transfer advice. Some of these dialogues have continued over a number of weeks.”
Always room to improve
“Courtiers has recently taken part in two supervisory assessments; one conducted by conference call and the other by video conference. These assessments gave us the opportunity to question the FCA directly on its expectations, ask for clarification on a number of grey areas, and get some feedback on how we are doing. It’s fair to say that while the FCA is keen to advise on what you could do better, the extent of its praise can be limited simply to “no feedback”. While concise, I suppose this affords the FCA more time to focus on what it might seek to improve.”
Outcomes of Courtiers assessments
“We’ve been very pleased with the outcomes of the assessments, from which we feel confident that our focus on meeting regulatory obligations is sufficient and well maintained. Being able to talk directly to the assessors is a real benefit, and works well both ways as we get the opportunity to explain why we do what we do.
“The FCA has got better at providing real examples of good practice in their Guidance and Policy Statements, and my aim is for them to use an example of good practice that has originated from Courtiers.”
Everyone can benefit
“I think that essentially if the FCA pulls its socks up and does everything it can to support firms, then firms will respond positively and this will ultimately benefit clients and consumers.”
FCA promises Business Plan 2021/22 (fca.org.uk)
A tougher approach for authorising new firms to prevent harm to consumers and the costs of firms failing.
Better use of data to identify issues and harm to consumers.
Streamlining the financial promotions regime to proactively monitor repeated breaches and investigate serious issues.
Improve information and warnings for consumers to help them make informed financial decisions.
Improving asset management by
- Increasing supervision of the way firms present ESG (ethical, social and governance) funds.
- Identifying and work with firms that our outliers to their peers – say higher fees.
Improving pension advice.
Raising standards in the Appointed Representatives (AR) regime. (An AR is someone who runs regulated activities and acts as an agent of a firm that the FCA authorises.)
Working with partners to help drive down fraud.