The FCA published its latest Perimeter Report on 21st October. The key takeaways from the Perimeter Report in relation to appointed representatives (‘ARs’) and principals is that the FCA set out that it is continuing to carry out targeted supervision of principals and ARs in a bid to reduce the most significant risks. The FCA set out that it will “intensify its scrutiny of all principal firms, and applicants which intend to appoint ARs”. Interestingly, since the FCA’s heightened scrutiny of principals and ARs 50% of applicant firms that intended to appoint ARs have either withdrawn their applications or have been refused authorisation.
The FCA’s Objectives and Role
The FCA reiterated, in the Perimeter Report, its strategic objective to ensure that financial markets function well and the three strategic objectives it advances to provide public value, namely (1) consumer protection, (2) effective competition and (3) market integrity. Interestingly, in the Perimeter Report, the FCA sets out, in addition to its commonly known statutory objectives, that its role focuses on two main themes which are derived from its statutory objectives. The two main themes are as follows:
- The FCA uses its authority and influence to improve overall market outcomes in financial services. The FCA enables competition and innovation to prosper in the interest of consumers and ensures market integrity.
- The FCA stops and prevents serious misconduct that leads to harm. The FCA enforces its rules to maintain trust and integrity in markets. The FCA aims to act quickly and assertively to stop immediate harm and impose sanctions to punish offenders and deter others.
In other words, the two main themes that encapsulate the FCA’s statutory objective is (1) being an enabler of healthy competition and innovation in financial services and (2) being a preventer of harm to consumers and markets. On a firm-level, we recommend that firms operate a product strategy that reviews Management Information to form a view of how its customers are interacting with its products/services and provide a factual basis for product/service improvements.