In its latest Perimeter Report, the Financial Conduct Authority (FCA) has called for legislative change to address concerns beyond its remit.
The report recommends that duties on internet companies in the Online Safety Bill should extend to paid-for advertising, as well as user-generated content. The FCA also believes that the Bill should designate content relating to fraud offences as ‘priority’ illegal content and so require monitoring and preventative action by platforms.
The FCA publishes an annual Perimeter Report as part of its accountability to Parliament and to support regular dialogue with the Government on the regulatory regime.
The FCA has also called again for amendments to the Financial Promotions Order. Current exemptions to the order mean more ordinary investors are at risk of receiving financial promotions, including for high-risk products, that don't have to comply with the FCA's rules.
Nikhil Rathi, Chief Executive of the FCA, said:
'The annual perimeter report is an important part of our accountability to Parliament, particularly the Treasury Committee. The FCA is committed to being more innovative, assertive and adaptive. That means being more proactive at the limits of our regulation, working with partners and other agencies where we don’t have powers and setting out where we believe more powers are necessary.
'We see real risks to consumers from outside our remit from both online advertising and from those using exemptions to sell products to ordinary customers. Change is needed and we will continue to push for powers where we need them.'
The FCA remit, or perimeter, determines which activities require FCA authorisation and what level of protection consumers can expect for the financial services and products they purchase. The perimeter is decided by the Government and Parliament through legislation.
The FCA have also outlined other areas where legislative change is needed such as extending the Senior Managers and Certification Regime to payment and e-money firms. The report highlights where the FCA is working with other agencies to prevent harm when issues fall outside its perimeter. This includes work with law enforcement agencies like the Serious Fraud Office, the National Crime Agency and the National Economic Crime Centre.
Since last year’s perimeter report progress has been made on bringing funeral plans and unregulated buy now, pay later under the FCA’s regulation.
The report will form the basis of a formal discussion between Nikhil Rathi and the Economic Secretary to the Treasury (EST) before the end of the year, the minutes of which will be published.
Notes to editors
- See our Perimeter Report 2020/21
- Key sections from the report:
- Our 2021/22 business plan set out our current priorities, and our commitment to achieving measurable outcomes across these priorities. Many of these priorities are linked with our perimeter.
- One of our key consumer priorities is enabling consumers to make effective financial decisions. This includes ensuring that rules on financial promotions are fit for purpose, as we outline in Chapter 6 (‘Consumer investments’).
- Another consumer priority is ensuring that consumer credit markets work well. In Chapter 8 we discuss aspects of our perimeter linked to lending, including our work to support the Treasury in bringing Deferred Payment Credit (unregulated buy-now pay-later products) into our perimeter.
- Our wholesale markets priorities include our work on the Appointed Representatives regime. Chapter 5 (‘Firm business models’) includes an update on this work.
- A key cross-market priority is taking action to tackle fraud. We discuss in Chapter 4 action we are taking to prevent such harm where it is linked to the perimeter. Chapter 7 (‘Technological changes’) includes details on how we believe the Government’s Online Safety Bill (OSB) could be altered to help protect consumers from illegal online scams.