The Financial Conduct Authority (FCA) recently published its 2014/2015 annual report showing a range of activities laying the foundations for UK financial services and their customers. The FCA strongly believes regulation in the UK’s financial industry is a critical means of establishing confidence in financial markets and in-turn, by allowing consumers to establish confidence in the market, supporting economic growth.
Report Highlights include
- The FCA is now sharpening its use of data analysis, regulatory intelligence and resource to focus on key priorities, while remaining flexible enough to respond to emerging issues.
Figure 1: Measuring performance against the statutory objectives
With an outcomes based performance framework, whilst they’re not direct measures of the FCA’s performance, they bring together measures that serve as proxies for whether or not markets are moving in the right direction.
- The FCA has taken on several new, high profile responsibilities, which will have significant long-term impact on the future, shape and direction of the UK’s financial services sector.
- The regulation of consumer credit firms
- Working towards the implementation of recommendations from the Parliamentary Commission on Banking Standards (PCBS)
- Preparation for the operational launch of the Payment Systems Regulator and competition concurrency
- During 2014/15 the FCA received:
- 1,134 applications for non-consumer credit authorisation.
- 1,803 variations of permissions applications.
- 156 payment services and e-money applications.
- 498 waiver applications
- Applications are assessed and determined as either authorised, refused or withdrawn
Figure 2: 2014/2015 FCA Application Outcomes
Between 2013/2014 and 2014/2015 the number of new complaints fell by over 35%, due to a significant decrease in complaints to the Financial Ombudsman Service relating to payment protection insurance.
Figure 3: What the complaints were about
- Enforcement is probably the most visible part of the FCA’s work and it is important that it is used fairly, effectively and proportionately. Their approach is one of credible deterrence – their aim is for those who engage in misconduct to believe they will be held to account and that meaningful sanctions will follow. This helps to protect consumers, enhance the integrity of UK markets, and increase the stability of the UK’s financial system.
- The outcomes the FCA delivered over 2014/15 show how the failures in retail and wholesale conduct can undermine the integrity of the market, cause systemic harm and have a serious impact on wider confidence in the UK financial system.
In 2014/2015 the FCA took:
- Action against 28 firms and 27 individuals
- Imposed 43 penalties totalling £1.4bn
- Issued 55 final notices (excluding threshold condition notices) and
- Secured 95 outcomes using our enforcement powers
- In 2014/15 to protect consumers the FCA would:
- Build their understanding of financial consumers, testing the way financial. decisions are made and design behaviourally informed interventions
- Communicate via consumer bodies and third parties or directly with firms and consumers
- Identify and understand current and emerging risks
- Take action to address issues identified through firm supervision, thematic reviews and market studies
- Secure redress to ensure consumers are protected and treated fairly, monitoring which firms and individuals are able to enter the financial markets, making sure that they meet the FCA standards before being authorised
The FCA report helps stakeholders assess how the directors have performed their duty to promote the success of the FCA under section 172 of the Companies Act 2006 for the benefit of its members as a whole. It also provides further insight into the financial statements and adds a forward–looking perspective to the FCA’s consolidated financial position.
In 2014/15 the FCA identified seven forward-looking areas of focus. These have now been refined along with an understanding of the potential risks in these areas, and the steps we may need to take to mitigate them. These are discussed in further details in the FCA Business Plan 2015/2016.
For the full FCA Annual Report 2014/2015 click here
*The FCA is an existing client of Xactium Cloud Solutions, read the full announcement here.