CEO’s introduction

CEO’s introduction

Tracey McDermott

The FCA has been given the responsibility of regulating a sector which plays a critical role in the lives of everyone in the UK and without which the modern economy could not function. It is our job to make markets work well – delivering for individuals, for businesses large and small and for our economy as a whole.


As we enter our fourth year, the external environment remains challenging. The firms we regulate are investing heavily in making the required changes to their business models, technology and culture to meet new regulatory requirements and new customer demands.

Our overall priority is to ensure an effective and proportionate regulatory approach which tackles the problems of the past without inhibiting the developments of the future. Key to this is delivering a sustainable model of regulation which allows us to focus our resources on the biggest risks to our objectives in a flexible and tailored way.

We have made significant progress on this over the past 18 months. Over the course of this year we will continue to embed sustainability in everything we do. We will impose new requirements where they are needed, encourage industry-led initiatives where appropriate and remove or adapt regulation where the benefits do not justify the costs. This year, we will review whether aspects of our rules may be outdated or no longer effective in advancing our statutory objectives, and consider which may need to be removed or redrafted to better do so. We will have a particular focus on how technology can be used to make compliance easier and more effective.

‘We will have a particular focus on how technology can be used to make compliance easier and more effective’

As in previous years, the majority of our resources will be devoted to our core business: authorising firms and individuals; maintaining an oversight of business activities, conduct and behaviour and the effectiveness of competition in the sectors we regulate; prudentially supervising 24,000 firms and developing, implementing and enforcing domestic and international policy and rules.

We will conclude the authorisation process for consumer credit firms and integrate that work fully into our core business. Following the Government’s announcement in the budget that we will take on responsibility for regulating claims management companies, we will work closely with the Ministry of Justice, the Treasury and the Claims Management Regulator (CMR) to ensure a smooth transfer of regulation.

To guide how we use our discretionary resources and provide additional focus for our core activities, this year we have highlighted seven priority themes around which we will organise that work. These are: pensions, financial crime and anti-money laundering, wholesale financial markets, advice, innovation and technology, firms’ culture and governance, and treatment of existing customers.

These themes are set out in more detail in the plan with their associated work programmes. Effective governance at firms is critical to them embedding the right culture throughout the firm and achieving the right outcomes. We will continue to work with firms and other bodies on driving culture change throughout the sector. We will ensure the effective implementation of the Senior Managers and Certification Regime in the banking sector and develop our policy for its extension across the financial services sector.

On pensions, our Retirement Outcomes review will take an in-depth look at how well the market is working following the introduction of the pension freedoms in April 2015. We will also develop a framework for the new secondary annuities market and take forward the requirement to introduce a cap on exit fees in certain pension contracts.

‘We will continue to actively protect consumers and markets from the criminals who seek to exploit them’

Our work this year also prioritises an accessible, affordable advice market that works for consumers; we will address issues in the treatment of long-standing life insurance customers and we will introduce remedies to stimulate shopping around, switching and greater transparency in the cash savings market.

Clean, efficient and effective wholesale markets are at the heart of the financial sector. This year we will deliver a major programme in support of our market integrity objective. Implementing the recommendations of the Fair and Effective Markets Review (FEMR) will see us extend key parts of the Senior Managers and Certification Regime to the wholesale Fixed Income, Currencies and Commodities markets. In the longer term, delivering the requirements of the MiFID II regime has the potential to fundamentally improve the service both retail and wholesale markets give their clients. This year we will also begin applying the new EU Market Abuse Regulation to cover new markets and platforms, further raising standards of transparency and reporting across industry.

On financial crime, we will continue to actively protect consumers and markets from the criminals who seek to exploit them. We will take tough action against wrongdoers, working closely with industry and law enforcement to do so. We will also take steps to help people to protect themselves against crime through our ScamSmart campaign. We recognise the challenges industry faces in ensuring effective controls to prevent the UK being used to launder criminal funds, while also maintaining services to the whole of society. We will explore ways in which technology solutions can help to deliver effective and proportionate anti-money laundering outcomes.

The impact of technology is one of the fastest-evolving of this year’s priority themes. In particular, the potential of technology to improve not only how products and services are designed, but also how they are distributed. This year we will foster new ways to help firms of all sizes develop novel ideas for market through our ‘Regulatory Sandbox’, which offers firms a safe space to test innovation, reducing the regulatory burden whilst achieving greater compliance.

Under each priority theme, this plan summarises the outcomes we want our work to achieve. For the majority, achieving these outcomes will take longer than a one year time frame. We have, however, included them to show the direction of travel we seek. We believe this approach will give stakeholders a better understanding of the context and drivers of our work, and how it advances our overarching aims.

Our effectiveness and ability to deliver our objectives ultimately depends on our ability to recruit, retain and develop the right people. We will continue to further develop the FCA Academy and ensure our people are supported by the most efficient and effective systems and processes.

We regulate in a collaborative way whenever possible, and the views of all our stakeholders will continue to inform how we deliver our objectives. We look forward to working with you all in the year ahead to help ensure that firms, markets and consumers are well served.

Tracey McDermott
Chief Executive Officer