The UK’s Financial Conduct Authority has laid out its business priorities for the year ahead, but warns that it will focus on the challenges presented by the coronavirus epidemic, which could lead to a shift in priorities as the year progresses.
The FCA identifies four primary objectives for the coming year: including enabling effective consumer investment decisions, ensuring consumer credit markets work well, making payments safe and accessible, and delivering fair value amidst the ongoing digitisation of the financial markets. A fifth priority is to transform its own operations, including from a data and technology perspective, reviewing how it analyses, manages and shares intelligence across the organisation.
In addition the regulator has identified specific sectors of importance that have a broad market impact, including a commitment to invest in innovations and technology in order to reduce the burden of regulatory reporting on firms, the replacement of its existing Gabriel system with a new platform for collecting regulatory data, and continued work on its Digital Regulatory Reporting initiative. In the field of financial crime, the FCA plans to make greater use of data to identify vulnerable firms, and promises increased enforcement action to crack down on serious misconduct, especially in the area of money laundering.
Operational resilience is another key focus, following on from its December 2019 consultation that laid out requirements and expectations for firms and financial market infrastructures to identify their important business services, consider how disruption to these services could cause harm to their customers or market integrity, set a tolerance for disruption, and ensure that they could continue to deliver a business service during severe scenarios. Due to the impact of COVID-19 the consultation period will now remain open until October 2020, at which point a policy statement will be issued – but the regulator stresses that it already expects all firms to have tested contingency plans to deal with major events.
However, for the foreseeable future, the spotlight will remain firmly fixed on ensuring orderly markets throughout the coronavirus crisis.
“The magnitude and duration of the economic shock resulting from coronavirus is highly uncertain,” warns the FCA in its Business Plan. “This shock is not like previous economic downturns, but nor will it follow the pattern of a natural catastrophe, where the damage can be sized relatively quickly.”
The regulator has already delayed some planned activities that it deemed were not urgent and might distract firms from the immediate priority of handling the outbreak.
In terms of its future business plan: “Where we can progress this work now, without undermining the focus on the coronavirus response, we will do so,” it confirms. “But we recognise that it may be weeks or months before we are in a more stable position and can turn ourselves fully to the activities in this plan.
Even then, the shape and scale of the issues it needs to address may change significantly as a result of the virus. An updated business plan may be required, warns the regulator, if this turns out to be the case.