A central input to the Business Plan is the Risk Outlook, which identifies trends in the markets and firms we regulate, and risks which the FCA needs to respond to. It sets out the context in which we operate and plays an important role in influencing our priorities for the coming year. Some of the risks we face are outside our control; international events and the direction of the economy being just two. Other, indeed most, risks to conduct tend to be long term and recurring, so it is unsurprising that our priority list is not much changed year on year. Indeed, we should be concerned if it is. Of our top seven this year, two new themes are prioritised: wholesale markets and the provision of advice. The others continue to merit their status.
The pension freedoms, for example, created new possibilities but also risks, which is why they continue to be a focus for us this year. On the one hand, these freedoms have given consumers more choice and ownership of what their retirement income looks like. On the other hand, we need to ensure that people taking these often critical decisions are protected when seeking the appropriate advice and guidance they need.
‘We need to ensure that people taking these often critical decisions are protected’
Planning around risks allows us to take a proactive, market-wide approach to policy making, supervision and enforcement which, combined, seek to deter poor behaviour. It also ensures that we balance our resources appropriately between our ongoing work and what we deem to be our greatest risks, ensuring that we respond flexibly to other priorities or challenges that emerge.We also remain alive to the risk – and potential rewards – of technological innovation. Technology can drive down the cost of accessing products and services, and can push up the quality of service. But it can present challenges to markets and regulators alike, including resilience, cyber-crime and financial exclusion.
The core of our work, however, will continue to be challenging poor conduct. We identify firms’ culture and governance as one of our seven priorities because experience has demonstrated that poor culture and poor conduct are closely related. It is vital therefore that industry continues to work to deliver its own cultural change, thereby reducing regulatory infringements. Consistency and perseverance will undoubtedly be required, but the industry’s goal to restore trust can only be sustainably achieved by this route.Over the next year we will continue our valuable work with industry and consumers to develop policy and practice that both addresses current issues and takes account of emerging developments. I call this constructive deterrence, arguably the best form of regulation, seeking to prevent things from going wrong in the first place through proactive engagement. For example, our new regional programme, Live & Local, aims to take our messages more effectively to firms in our flexible category, many of whom are spread across the country.
‘Experience has demonstrated that poor culture and poor conduct are closely related’
We remain determined to ensure that markets work effectively and fairly and, where necessary, we will use our enforcement powers to reinforce our policy objectives and to provide effective deterrence from irresponsible behaviour.
The FCA will continue to be involved in the EU and international policy agenda, seeking particularly to maintain the wellbeing of the UK’s market place, reinforced by the high conduct standards expected of a global financial centre.
This summer we will welcome Andrew Bailey who joins as our new CEO, taking over from Tracey in overseeing our important work programme.
I hope that both consumers and the industry will find this Business Plan useful, and I look forward to our continued work over the coming year.