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ABI summary of the FCA response to Transparency discussion paper DP131

The FCA has now published its response to the discussion paper on Transparency, which the ABI responded to in April. The paper set out a number of proposals for transparency in three areas:

How the FCA could be more transparent

  • Whistleblowing
  • Publishing more details regarding enforcement activity
  • Publishing more details about supervisory activity

Information the FCA could release about firms, individuals and markets

  • Transparency about the authorisations process
  • Transparency about thematic reviews and early interventions
  • Transparency of the redress process

Information the FCA could require firms to release about their products, performance or behaviour

  • Improved transparency of the annuity market
  • Publication of claims data on insurance products
  • Contextualisation of complaints data

The responses received by FCA, including from ABI, stressed that the regulator should only pursue transparency to achieve better outcomes and is not an end in itself. The FCA agreed with this.  

We were pleased to see that the FCA has taken on board a number of the suggestions that the ABI made, such as being more open about the way decisions are made; publish more about executive committees; reporting on the FCA’s performance measures and more details of the value for money strategy, which we can now expect later this year. However, we were disappointed that despite widespread calls for publication of more in-depth information about the use of Section 166s as part of cost transparency, the regulator has decided not to proceed with this suggestion. Section 166 of the Financial Services and Markets Act gives the FCA the power to commission reports by a ‘skilled person’ as required. 

The ABI was concerned about the proposals regarding information the FCA could require firms to release. We worked closely with the FCA on these proposals and it was good to see that this was acknowledged in the feedback statement. While the regulator will proceed with these ideas in some form, the practical challenges involved were clearly recognised and the importance of waiting until the current thematic reviews are completed was also appreciated. The FCA will revisit these proposals in early 2014 once the thematic reviews on annuities and the claims handling are completed and the findings are known. The paper also sets out the benefits of introducing a pilot scheme for these proposals and the ABI will continue to work closely with the FCA over the coming months. The FCA is also keen to continue with its work on contextualisation of complaints data and will work with the industry and other stakeholders to do this.

The FCA also agreed that more information on the authorisations process could be published and aims to review the existing reporting processes and publish enhanced details in early 2014. We have already seen a change in the approach from the regulator in sharing information about thematic reviews/investigations and we welcome the commitment to continue to increase engagement with trade bodies and firms. The paper was positive about the suggestion to publish documents such as ‘Top questions asked at roadshows’, similar to documents published as part of the Retail Distribution Review and the FCA is keen to expand on this. 

The FCA intends to proceed with the proposal to publish more details about redress agreements which was the result of enforcement action. Where redress is not the result of an enforcement case, the regulator is clear that voluntary publication of redress would demonstrate that firms believe consumers are at the heart of the business. The FCA will carry out further work to investigate the most cost effective and efficient way of doing this.

The paper commits the FCA to look further at how whistleblowers are treated and offers to take any comments in improving the Annual Enforcement Performance Account, which is published on the website every April.

In addition to feedback on the discussion paper, the FCA also published its Transparency Framework, designed to set out the factors that the regulator will look at and key questions to be asked when introducing transparency initiatives. These include:

  • The contribution to the FCA statutory objectives
  • Whether there are any legal constraints to disclosing the information
  • Value, impact and what success might look like
  • Any risks, consequences and complexities

ABI view

The ABI has welcomed the feedback statement as the next step to improve transparency for customers. It builds on the work the industry has already started to help customers shop around for annuities and agree common definitions for the reporting of claims pay out rates for protection products.  We agree that it is really important that customers get the information they need to make financial decisions while not being overloaded. 

We are very keen to see more details on areas such as the cost of the regulator itself and the FCA’s proposed value for money strategy. The ABI has long been vocal in our calls for greater cost transparency and more meaningful engagement with stakeholders.

Last updated 01/07/2016