By Bernadine Reese, Managing Director
Risk and Compliance, UK
The UK Financial Conduct Authority (FCA) has issued its annual business plan for fiscal year 2017-2018. The FCA is the conduct regulator for 56,000 financial services firms and financial markets in the UK and the prudential regulator for over 18,000 of those firms. Its annual business plan and mission statement gives firms and consumers greater clarity about how the regulator intends to prioritize its interventions in financial markets over the next 12 months.
The plan sets outs FCA’s cross-sector and individual sector priorities for the next 12 months. It identifies the following cross-sector priorities: culture and governance, financial crime and anti-money laundering (AML), promoting competition and innovation, technological change and resilience, treatment of existing customers, and consumer vulnerability and access.
The main individual sector priorities focus on the need to continue with the implementation of the Markets in Financial Instruments Directive (MiFID II); improving competition in all areas of financial services; supporting the implementation of ring-fencing in retail banking; and assessing the developing market for automated advice models (robo-advice) in the retail investment market.
A fundamental part of the plan is the risk outlook, which identifies key trends and emerging risks that help form the regulators’ priorities for the coming year. Technological change, cybercrime and resilience are noted as major risks. However, many of the largest risks detailed in the FCA’s risk outlook are external: international events, demographic changes, the course of the UK economy, and the impact of the UK’s decision to leave the European Union (EU), commonly known as Brexit.
We published a recent Flash Report, which lays out specifics and reasoning around each of this priorities. Financial firms in the UK are advised to familiarize themselves with the report so they can determine where to focus their compliance efforts and to better understand the regulator’s expectations.