Published: 2nd November 2012

A speech by Martin Wheatley, FCA CEO Designate, on 16 October announced the launch of ‘Journey to the FCA’ which sets out how the FCA will approach its regulatory objectives when it takes over from the FSA (‘Day One’ and beyond).

The publication is important to firms in that it provides a picture of what will be new under the FCA and what will be business as usual.

As far as business as usual is concerned we are told that the FCA will maintain the policy of credible deterrence, pursuing cases to punish wrongdoing, and in particular will carry on the FSA’s fight against insider dealing which has secured 20 criminal convictions since 2008.

What will be seen as good news by firms is that Mr Wheatley believes that the FCA “offers a huge opportunity for the regulator and firms to start afresh, and work in partnership to reset how we deal with conduct in financial services”. With this in mind, Annex A of the ‘Journey’ invites feedback on both the contents of the publication and on specific questions.

We are reminded again – see e.g. the article on Clive Adamson’s speech at the FSA Asset Management Conference in Regulatory Roundup 44 – that the FCA will view the wholesale market and the retail market as linked and that risks caused by poor wholesale conduct can be transmitted between them. The new regulator will not accept that there are some categories of relationship in which it should not be interested just because of the sophistication of the parties involved and will take a more assertive and interventionist approach to risks caused by wholesale activities.

We, of course, already know that the FCA will be prepared to intervene earlier (the recent consultation paper on unregulated collective investment schemes and non-mainstream pooled investments is an example of this: see Regulatory Roundup 43) and this approach is reinforced in the publication. For now, the concept of a product pre-approval scheme (which may have had interesting repercussions for the regulator should a consumer-detriment issue arise in respect of one such product in the future) has been ruled out.

Apart from ‘Day One’, another expression we will be seeing more of in the future is the concept of ‘super-complaints’ in which certain consumer bodies will be able to complain to the FCA about goods or services which appear to be harming consumer interests. More on the super-complaints mechanism is expected in early 2013.

Further details on the move from ‘ARROW’ to the ‘Firm Systematic Framework’ (FSF) and the impact upon C1 to C4 firms (see Regulatory Roundup 44) can be found on page 28 onwards.

As for communications, firms should find that the Contact Centre will be able to handle more issues at the first point of contact without needing to refer them on. Newly authorised firms will find the FCA ‘proactively contacting’ them to explain their regulatory obligations and reporting requirements. Anyone that has struggled to navigate the FSA website will be pleased to learn that the FCA website will be better signposted and with a dedicated firms section from Day One.

Those that can’t face the full 60 page journey can take a short cut and make use of the 8 page Key Points document.

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