The Financial Conduct Authority (FCA) has launched its five-year strategy and outlined the next steps in its Consumer Duty rule review.

As part of its five-year strategy, the regulator outlined four priorities it plans to focus on, including improvements to its processes and the embracing of technology in an effort to become more efficient and effective.

It will also look to support sustained economic growth by enabling investment and innovation, and ensuring the continued competitiveness of financial services, alongside a focus on fighting financial crime.

The other priority highlighted was to help consumers in navigating their financial lives by working with the industry to improve trust, product innovation, and ensuring the right information and support is available for people to take financial decisions.

The strategy set out how the FCA will change how it supervises to be more efficient, including taking a less intensive approach on firms seeking to ‘do the right thing’, streamlining how it sets its supervisory priorities, and reviewing whether it can stop requiring certain data returns.

Furthermore, authorisation processes will be digitised and simplified, with the aim of making it easier and quicker to apply, ensuring the information received is of better quality, and reducing follow-up requests.

Investments in the FCA’s technology, people, and systems will also be made, as it seeks to support its people to build their digital capability and adopt new approaches to allow it to better handle the cases it assesses every year.

It was recently announced that the Payments Systems Regulator will be integrated into the FCA, and the regulator stated it would look to build on Open Banking and launch Open Finance, which aims to allow for more seamless data-sharing, which the FCA said could unlock product innovation and deliver lower costs, more choice, and better information for consumers.

“We want to deepen trust in financial services and shift our collective attitude across financial services to risk,” commented FCA chair, Ashley Alder.

“Too often the focus has been on the risks of a decision taken rather than the lost opportunity of taking none. We want to change that so we can spur growth and improve lives.”

Consumer Duty

Alongside its strategy, the FCA also outlined the next steps for its Consumer Duty rule review, publishing an ‘action plan’ that proposes changes aimed at streamlining its rules, reducing burden on businesses, and improving outcomes for consumers.

The regulator stated there was “clear feedback” that now was not the time for wholesale changes to its rules, and that it would continue to engage with the industry to “get the balance right, without a widespread overhaul”.

Its proposals included retiring more than 100 pages of ‘outdated’ guidance to make the navigation of regulations for consumer finance, investment, and mortgage firms easier.

It will also look to withdraw ‘hundreds’ of supervisory publications, review current prescriptive disclosure rules to give firms more flexibility to tailor communications to customers’ needs and preferences, and review rules for businesses with customers outside the UK.

“Now the Consumer Duty is in full force we’re making changes quickly where stakeholders want us to, to cut unnecessary costs, support growth, and ultimately help consumers get better outcomes,” said FCA executive director of supervision, policy, competition and international, Sarah Pritchard.

“These proposals are part of our long-term efforts to future-proof our rules, reduce burdens for financial firms and will help the ambitious government targets to cut the cost of regulation.”

The Lang Cat senior regulatory consultant, Alison Gay, commented: “This morning the FCA has announced, alongside its new five-year strategy, that it will remove 100 pages of regulations from its rule book. Which is a fairly small amount, given that the whole rulebook runs to over 10,000 pages.

“What will be welcome is its response to industry complaints about the volume of regulatory material firms are expected to track.

“It’s planning to review, and withdraw, Dear CEO letters and portfolio letters pre-dating its previous five-year strategy and has committed to review future communications more regularly so that outdated material is regularly withdrawn.

“This kind of regulatory housekeeping should make life easier for firms.”

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