The FCA Releases Its Business Plan For 2018/19

N News

April 17, 2018

The Financial Conduct Authority (FCA) has released it’s Business Plan for 2018/19. The priorities of the plan reflect the high level of resource the FCA needs to dedicate to European Union (EU) withdrawal, given its impact both on FCA regulation and the firms it regulates. They have announced that they expect to incur £30m in costs over Brexit, which is equivalent to just under 6 per cent of its total operating budget. This will be funded in a variety of ways, including through reserves, reprioritisation of work and extra levies to cover new responsibilities.

 

The FCA will absorb £14m of this within the ORA budget by reprioritising; delaying or reducing non-critical activity and finding more effective ways to deliver their regulatory requirements. This leaves a requirement for funding for the remaining £16m for EU withdrawal activity. The FCA will raise £5m of this through the fees they charge firms, with a focus on the firms that are most likely to be affected by EU withdrawal. This is consistent with their approach to raising additional EU withdrawal funding in 2017/18. A further £5m will be funded through using ORA reserves. The remaining £6m will be funded from specific firms in the same manner as Scope Change, where the FCA will recover the costs of implementing new regulatory responsibilities, such as passporting and on-shoring credit rating agencies and trade repositories, once they know the final costs and number of firms’ affected. There is still considerable uncertainty about the scale and timing of various activities in connection with EU withdrawal. The FCA will closely monitor the progress of negotiations and the potential for any further impact to the cost base.

 

Alongside this work, the FCA will focus on seven cross sector priority areas, based on assessments of where there is the greatest harm or potential for harm, and where intervention can have the greatest impact. The priority areas are:

 

  • Firms’ culture and governance which should drive behaviours and produce outcomes likely to benefit consumers and markets.
  • High-cost credit, building on the significant impact already made in the market.
  • Tackling financial crime, including fraud, scams and anti-money laundering to make the UK financial services sector a hostile place for criminals and a safe place for consumers.
  • Data security, resilience and outsourcing since technology plays a pivotal role in delivering financial products and services.
  • Innovation, big data, technology and competition which are driving change in markets.
  • The treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers.
  • Long-term savings, pensions and intergenerational differences which reflects the changing UK population and their financial needs.

 

Andrew Bailey, FCA Chief Executive said: 'The Business Plan is an important way in which we are transparent about our priorities for the year. We recognise that this year we need to dedicate a significant amount of resource to withdrawal from the EU. As a result, setting our priorities this year has involved a particularly rigorous level of scrutiny and challenge to focus on areas where we see the greatest potential for harm.'

 

Follow the link below for a short video of Andrew Bailey discussing the business plan.

https://www.fca.org.uk/media/video-business-plan-2018-19