BREXIT: FCA sets out EU withdrawal 'principles' as part of business plan for coming year

Out-Law News | 19 Apr 2017 | 4:38 pm | 2 min. read

The Financial Conduct Authority (FCA) will advise the UK government to prioritise open market access and "consistent global standards" as part of the Brexit negotiations, according to its business plan for the coming year.

The regulator will be providing the government with "technical support" during the withdrawal process, and has set out the five 'principles' it will use to guide this work. These also include continued cooperation with other international regulators; continued access to a "diverse" and skilled workforce; and retaining influence over any regulatory standards that continue to apply to the UK, according to the document.

The FCA will also begin its planned consumer awareness programme ahead of the August 2019 deadline for mis-sold payment protection insurance (PPI) claims; and continue its work on high-cost credit and retirement saving. It has also set out some of the biggest risks that UK financial firms will face over the coming year, including cyber crime, continuing low interest rates and changing demographics.

Separately, the FCA published a final version of the 'Mission' document it published for consultation last year, which is intended to give regulated firms and consumers more clarity about how it will prioritise its resources in order to deliver its statutory objectives. It will publish further documents over the coming year dealing specifically with authorisation and supervision; enforcement; encouraging competition; and influencing market design.

However, the FCA has postponed plans to simplify its regulatory Handbook "until the outcome on EU withdrawal is clear".

"Our mission is to serve the public interest through the objectives given to us by parliament," said Andrew Bailey, the FCA's chief executive. "The Mission [document] gives firms and consumers greater clarity about how and why we prioritise, protect and intervene in financial markets."

"To do this we will continue to make difficult decisions. When we make regulatory judgements, we will be more transparent about how we reached them as we know that this is something our stakeholders want," he said.

The FCA has "dedicated resource" to co-ordinate and manage its Brexit work, and "stands ready to respond to any contingencies or new obligations arising as a result of EU withdrawal", according to its business plan. It is also "working to make sure that any risks to our objectives, including any operational challenges, are identified and addressed, and that the UK's domestic markets, and the role they play in supporting the wider economy, is safeguarded", it said.

It has proposed a 1.5% increase in budget for 2017/18, to £526.9 million, which includes an additional £2.5m for Brexit costs, according to a draft consultation on fees and levies (138-page / 1.3MB PDF).

The FCA is expecting the social and economic implications of an ageing population, low interest rates and the rise in "less secure" forms of employment to have "major implications" for the pension and retirement income providers over the coming year and beyond, according to its business plan. Its work during 2017/18 will include proposing remedies to improve competition in the retirement income market; reviewing non-advised drawdown sales; and beginning a review of the non-workplace pensions market.

It will also continue to improve "trust and confidence" in the financial services sector through the Senior Managers and Certification Regime, and consult on extending individual accountability to all regulated firms in a way that is "simple, proportionate and clear" from next year, according to the business plan.