For all of us in the regulatory community, April means one thing: the FCA business plan. Every year we wait with anticipation to react to any announcements, either welcoming or criticising the measures, all the while being acutely aware of the unenviable task that the FCA has on its hands. It has to decide how assertive to be, to carve out time and resources, to diagnose precisely and prioritise ruthlessly so that only the most targeted interventions that will make a tangible difference are put forward, as well as to maintain enough capacity and energy to react to the wider geo-political and economic national and international landscape.
This year, I decided to manage my anxious wait by setting myself a challenge – could I answer a deceitfully simple question: if I was the regulator, what would I prioritise for the next twelve months for the insurance industry and the customers it serves? These are the three priorities that have made the cut:
1. Improve the advice regime
The UK retirement market is extremely competitive, with customers having an ever increasing amount of options from which to choose. To ensure that people can reap the benefits of this, an assertive reform of the advice regime is needed. The Financial Advice Market Review (FAMR) of a couple of years ago has not had the impact that is needed to make any real difference to people’s experiences and to ensure that they get the support they need. Further work on addressing the challenges posed by the advice guidance boundary is crucial so that providers can confidently help consumers make decisions. The FAMR review which is planned for this year represents a unique opportunity to change this and unlock a competitive advice market that works for all.
2. Ensure a continued competitive home and motor insurance market
The on-going Market Study on GI Pricing Practices should be prioritised and all options carefully considered. Any interventions in this highly competitive market will have a redistributive impact, creating winners and losers, with vulnerable customers inevitably being part of both groups. Prioritising one group of customers over others is never easy and this task must be particularly soul-searching for any regulator, requiring a delicate balance of deontological and utilitarian considerations.
3. Support the UK market on a global stage
As the Brexit uncertainty continues, the regulator should provide as much support and clarity as possible to both firms and customers, and minimise, to the extent possible, any disruptions for individuals. Working closely with European counterparts to ensure contracts can still be paid for customers living abroad remains a key priority. Building a global network to discuss common challenges and opportunities should also be prioritised, particularly on those areas that are relatively new for all markets, such as cyber insurance and InsurTech, and the valuable work on regulatory sandboxes should be continued. As the UK enters a new phase of its development on the world stage, the FCA should ensure that the competitiveness of UK’s financial services is protected and promoted.
While drafting this has reinforced the scale of the prioritisation exercise that the FCA has to go through, it has also had a helpful cathartic effect. So, all of you out there also waiting impatiently for the business plan, if you were the regulator, what would you prioritise for 2019/2020?