The FCA published its 2021/22 Business Plan on 15th July setting out the following cross-sectoral highlights:
- A commitment from the FCA to be more innovative, more assertive and more adaptive. The FCA’s CEO, Nikhil Rathi, set out in a webinar accompanying the communication of the Business Plan what these mean in practice for firms, namely (1) being more innovative means that the FCA will take advantage of data and technology to increase its ability to act decisively, (2) being more assertive means acting decisively and being clear about its actions and (3) being more adaptive means constantly learning and adjusting its approach vis-à-vis the evolution in consumer choices, markets, services and products. Note the repeated use of the word decisive which communicates the regulator’s intention with unambiguous clarity.
- A commitment to strengthen the authorisation gateway by employing ‘more intensive assessment and greater scrutiny of firms’ financials and business models’. The objective is to operate a ‘tougher’ but ‘more straightforward authorisation assessment process. Linked to this, the FCA proposes to streamline decisions about authorisations and also supervisory and enforcement actions so that they will be made by the FCA Executive (i.e. FCA staff) as opposed to having to be referred to the Regulatory Decisions Committee for decision-making.
- An intention to operate a hybrid authorisation/supervision model for newly authorised firms by subjecting the same to a regulatory ‘nursery’ where the FCA will closely supervise the implementation of its business plan in their early stages. In our view, having close supervision as a newly authorised firm is a positive as it allows firms to partner with the FCA as they implement their theoretical systems and controls into a live environment. This potentially inspire confidence in newly authorised firms following their ‘graduation’ from the regulatory ‘nursery’.
The tone of the cross-sectoral themes in FCA’s Business Plan 2021/22 is that firms must be genuinely set up and operate in a manner that is consistent with the FCA’s current thought leadership on consumer protection, namely treating consumers as they would treat their own family members. Our recommendation to firms is that you allocate appropriate resources to regulatory compliance management including financial and non-financial (i.e. people (suitable and frequent training to relevant staff), processes (i.e. documented policies, procedures supported by compliance monitoring activity and amelioration processes) and systems (e.g. IT infrastructures that are resilience to ensure business continuity).