FCA’s new “game plan” – What do banks need to know about FCA’s 2021/22 business plan? | Bryan Cave Leighton Paisner

FCA’s priorities

At first glance, companies will not be surprised by many of the CFA priorities set out in the Plan. Indeed, after reading the priorities in isolation, you would be forgiven for thinking that it was “business as usual” for the FCA, in the extension of their business plan for 2020/21 and the various documents that they have delivered since then.

Basically, FCA’s priorities boil down to the following:

1. Consumers

Consumer protection remains a top priority for the FCA, and the plan contains further explanations of how the FCA will seek to pursue the four consumer priorities initially set out in its business plan for 2020/21:

  • enable consumers to make effective investment decisions;
  • ensure the proper functioning of consumer credit markets;
  • make payments secure and accessible; and
  • deliver fair value to consumers.

For more information on FCA’s focus on consumer protection, please read our blog on the new consumer law proposed by the FCA. The FCA’s proposals here are far-reaching and will affect all businesses operating in the UK financial market as they relate to the lifecycle of products and services sold to ‘retail customers’.

2. Wholesale markets

In wholesale markets, the FCA will continue to critically review and consider changes to its rules in the aftermath of Brexit, while reiterating its commitment not to deviate from minimum standards as part of the EU. Particular emphasis will remain on:

  • finalize the SAVS listing rules;
  • address the complex rules regarding pre- and post-trade transparency in the securities and derivatives markets; and
  • changes to listing rules to support Climate-Related Financial Reporting Working Group (TCFD) disclosures.

At the same time, FCA is focused on managing the orderly transition out of LIBOR, as well as a focus on reducing the risk of financial crime and ensuring access to products and services in the LIBOR. across the industry that offer choice, fair value and what is expected and needed.

3. All markets

Likewise, other cross-sectoral priorities will be familiar, deriving in part from the priorities already identified above. There is continued attention to:

Is the change coming?

What is, however, most striking about the Plan is that it seems to indicate that there will be a drastic change in the FCA’s approach under Rathi, who will become an increasingly active regulator. And it is on the back of an FCA that we have already seen in recent times not afraid to take decisive action and intervene.

In his speech launching the Plan, Rathi stated his ambition that “the FCA must continue to become a proactive and forward-looking regulator. One who is tough, assertive, confident, decisive, agile. He who acts, acts quickly – and where we cannot act, engages enthusiastically with those who can ”.

A seemingly reinvigorated FCA is not what many would expect in a post-Brexit world where the UK is keen to demonstrate it is open for business. Indeed, Rathi even acknowledged in his speech that some might view his approach as too “practical”. However, his approach appears to be motivated by a desire to learn from the past. Having worked at the Treasury at the height of the 2008 global financial crisis, he explained that he was keen to avoid a repeat of a crisis he saw as the result of a laissez-faire attitude towards with respect to the regulations.

To achieve the desired step change in FCA’s approach, the Plan explains that FCA will need to become more innovative, assertive and more adaptive. As to what this might look like in practice, Rathi’s Plan and speech provide some interesting information.

There will be significant investment of resources within the FCA to increase its capabilities. Rathi describes how the FCA will invest £ 120million in its data and technology capabilities over the next three years, to enable it to expand its operations and more easily share information within the FCA and with its partners. All of this as part of FCA’s broader plans to be increasingly innovative and harness the power of data. He also explained that the FCA will double its staff in Edinburgh over the next two years, establish a presence in Cardiff and Belfast, and potentially open a new office in Leeds (initially with 100 employees).

Rathi also clarified that the FCA would not hesitate to take on legal challenges. He explained that in his opinion, even when the FCA does not win them, it should not be considered a failure “because history shows that where our perception of risk has prevented necessary actions, we have failed. found with a more serious problem “. The recent business interruption test case is a clear example of FCA’s approach in this area. But Rathi also referred to the FCA’s first criminal case under AML powers and the slight increase in consumer alerts as other examples.

The key question for players in the banking sector will, of course, be precisely how the additional resources and renewed vigor of the FCA will be directed. In general terms, it can be assumed that this will be in the priority areas defined in the Plan as summarized above. Clearly, the FCA expects banks to prioritize these sectoral and cross-sectoral priorities; integrate them into their business plans and give them appropriate attention and resources, from the board level to the “nuts and bolts” of the organization.

However, the Plan and Rathi’s speech indicate that a particular focus of FCA’s work in the future will be on companies and their operations that are close to the regulatory perimeter. For many of the larger and more established banks, this can provide some relief. Rathi explained that the government has now agreed to jointly assess the condition of the FCA perimeter on an annual basis and that even when unwanted activities are outside the perimeter of the FCA, the FCA will not be satisfied with just stay on standby but will work with partner agencies and others to ensure they can be arrested and punished. Likewise, there will be a renewed focus on exactly which companies are allowed to obtain FCA clearance, including those switching from TPR – with an emphasis on monitoring the companies’ front door into the system. regulatory. For foreign banks currently operating under the TPR, this will naturally be a source of concern, as they may be subject to further scrutiny. We can be sure that the FCA will focus primarily on companies operating at the extremes of regulation and those considered to pose the greatest risk to consumers and the stability of UK financial markets. It won’t be most banks.

The FCA, in particular, is clearly targeting companies that use technology to generate and / or market new products to a new, younger generation of consumers of financial services. To protect these consumers and others, the FCA will now set up a “regulatory nursery” – a form of early warning system to monitor companies doing entirely new types of business. The aim seems to be to support businesses and encourage the right kind of regulatory behavior. FCA will also seek to increase its support for innovative companies wishing to test new products and services by opening its regulatory sandbox to applications year-round and making the digital sandbox permanent.


Although the Plan indicates that all companies in the banking sector are likely to be affected by the increased levels of FCA oversight and intervention in the years to come, it may be the companies that offer or market products and more innovative services to their customers and operate at the edge of the regulatory perimeter that are likely to suffer the most. Of course, these will be smaller companies in many cases and are unlikely to be in the banking sector often. Whether the FCA’s seemingly more vigorous approach to regulation strikes the right balance between maintaining the appropriate level of consumer protection while allowing businesses to innovate for the benefit of consumers while fostering a market welcoming and competitive British financier after Brexit, awaits judgment.

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