FCA commits to being more ‘innovative, assertive and adaptive’

interactive investor comments on the regulator’s latest business plan.

Moira O’Neill, Head of Personal Finance, interactive investor, says: “Today’s commitment to become more ‘innovative, assertive and adaptive’ may raise a few wry smiles - proactive regulation has been the FCA’s ‘mantra’ since it was introduced. But the less cynical will welcome this new tone.

“The Business Plan looks all new and shiny and it would be hard to argue with the priorities identified, but the proof of the pudding is in the eating. There continue to be massive numbers of FSCS claims in the pensions space, which many would argue are ‘legacy’ issues, but only time will tell. Scams are increasing, and still very few individuals seem to be banned under SMCR – ‘robust’ policy is all very well, but supervision needs to be equally robust.

“Identifying potential future detriment isn’t always hard. Leaving aside the ongoing Woodford investigation, plenty of us have been highlighting the issues around open-ended funds investing in direct property for years, and the raft of suspensions following the UK referendum five years ago was an example of detriment. Yet we had to wait until 2020 for a consultation on the liquidity mismatch, all the while racking up more rounds of property fund suspensions and closures.

“That said, news that the FCA are finally waking up to the need for firms to hold capital resources which are more proportionate to the risks they pose to consumers is welcomed, if not a little overdue. The number of high-risk businesses which have failed over recent years, linked to providing poor advice to investors, has led to significant costs on the rest of the industry in the form of ever increasing FSCS levies. 

“We would welcome a genuinely new approach to a notoriously hard task, which involves investing in data and using new approaches to educate consumers, and find issues and harm faster.”