The FCA will also develop how it monitors firms’ progress against diversity outcomes; and continue to adapt its regulatory framework in support of environmental, social and governance (ESG) criteria and the UK’s transition to a net zero economy.
Financial regulation expert Jonathan Cavill of Pinsent Masons, the law firm behind Out-Law, said: “The FCA has a monumental challenge ahead of it, driven by pre-pandemic market issues, the pandemic itself no doubt having a long-term global and national impact, and also the profound need to respond to Brexit, digitisation and technological developments, ESG considerations and unforeseen future risks”.
“The business plan sets out the FCA’s ambitions to be an agile, proactive, innovative and digitally driven regulator. Not only does it set out its focuses for the year ahead, but it looks to reform its own future strategy and objective setting by imposing on itself the requirement to release wholesale and retail objectives early next year, against which future business plans will be designed. The FCA also describes a step change in its approach, led by data and technology,” he said.
“It seems that, this year, the regulator fully appreciates the need for it to make a number of material operational improvements within the organisation to tackle the risks it has identified in the market. For a while, market participants have felt that the regulator needed to make many of the changes highlighted in this year’s plan, and no doubt there will be scepticism in some corners over whether the organisation is capable of such dramatic change quickly or effectively enough. But that doesn’t detract from the fact that change is needed, and it’s positive to see the FCA challenging itself and assessing how it can improve to make real positive change in the financial services sector,” Cavill said.
FCA chief executive Nikhil Rathi, who took over the role in October 2020, said that the FCA was in the process of “transforming” to better meet its goals of making markets work better and stopping and preventing serious misconduct that leads to harm. To achieve this transformation it is investing in new technology and making better use of data, with the anticipation that it will “intervene in real-time more often” to prevent harm to consumers and market integrity as a result.