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The Critical Issues in Financial Regulation – FCA View
In a recent speech, FCA CEO Nikhil Rathi outlined the current critical issues in financial services and the FCA’s perspective on these.
In full, the key areas highlighted were:
- The cost of living crisis
- New Consumer Duty
- Action on Russia
- Economic, Social and Governance (ESG) reforms
- Diversity and Inclusion
- Accountability and performance
- Innovation and crypto
- Post-Brexit
FCA data suggests that over a quarter of UK adults have low financial resilience, which is a risk factor for vulnerability. With inflation rising much faster than wages, it stands to reason that those least able to bear these costs will be hit the hardest, further exacerbating incidences of consumer vulnerability. Cost of living challenges will mean that consumers are more exposed to risk while also being more reliant on financial services, so it’s particularly important that all firms act in their customers’ interests.
The upcoming new Consumer Duty is intended to ensure that firms take account of product suitability and the impact of their services on customers. It is envisaged by the regulator that its Consumer Duty should result in fewer future rule changes, which should lower costs to regulated firms.
Final proposals for the Consumer Duty are expected in July 2022.
Other areas of consideration include ESG, diversity and inclusion, innovation and accountability. In regards to diversity and inclusion, the FCA has recently published finalised rules boosting the disclosure of diversity on listed company boards and executive committees. Note that these rules apply only to listed companies – but they indicate the FCA’s continuing focus on promoting diversity and inclusion in financial services.
The FCA’s new three-year strategy is intended to ensure that everything it does has an overarching focus on:
- reducing and preventing serious harm
- setting and testing higher standards
- promoting competition and positive changes
If you have any questions regarding the above or any other compliance issues, please contact your Business Manager or the team at RWA via 01604 709509 or helpdesk@rwagroup.co.uk.