Around this time of the year the FCA publishes its Risk Outlook (identifying the most important areas of focus) and its Business Plan (setting out the Regulator’s priorities for the year ahead).
In a break with tradition the FCA has decided to combine the two in the publication of its Business Plan 2015/16.
The Risk Outlook for 2014 identified seven ‘forward-looking areas of focus’ (summaries of both the previous Risk Outlook and Business Plan can be found in Regulatory Roundup 54); the seven areas of focus this time around are largely unchanged save that the importance of firms’ systems and controls in preventing financial crime replaces concerns relating to house price growth. ‘Financial crime’ should be read in the broadest sense; not just anti-money laundering (and terrorist financing and sanctions) but will also encompass anti-bribery and corruption and fraud.
It may be recalled that in December the FCA announced a strategy review (see Regulatory Roundup 61) in which the Regulator proposed the need to provide a ‘sharper focus’ in its approach – particularly given the FCA now regulates around 73,000 firms (consumer credit business added circa 50,000 in April 2014) – which will place more emphasis on sector and market-wide analysis.
The Business Plan sets out the FCA’s priorities which include but are not limited to:
- asset management – full scope to be developed but will include charges paid by investors and the drivers behind those charges
- asset management – will look at whether segregated mandates and authorised funds are operated in line with expectations and mandates
- investment and corporate banking – will look at competition in this sector
- appointed representatives – a review of their role in the distribution of general insurance products
- MiFID 2 & MAR – a commitment to ‘educate and prepare’ firms for the implementation of the new rules
- individual accountability – focus on enforcement action against individuals to continue
Annexes to the publication which may of interest include:
- Annex 1: current and planned market studies and thematic work
- Annex 2: current EU initiatives
- Annex 3: FCA organisation chart
With ‘financial crime’ moving in to the ‘top seven areas of focus’, and the FCA’s recent update of its ‘Financial Crime: a guide for firms’ firms should ensure that a review of their systems and controls in preventing financial crime is high up on the ‘to do’ list.