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FCA Business Plan 2015 16

The FCA has published its Business Plan 2015/16. The ABI's Conduct Regulation team has produced a useful summary of the key headlines and important dates.

FCA ways of working

  • Overall approach – more emphasis on sector and market-wide analysis, allowing the FCA to look across regulated sectors and their products and have fewer but more detailed studies
  • The development of a common view of markets and sectors, providing firms and stakeholders with more certainty about what the FCA thinks on these issues and what can be expected from the FCA
  • Emphasis that the FCA will have the power to act against anti-competitive behaviour, concurrent with the CMA

Pensions and Retirement Income

  • Annuities sales practices: The FCA will continue to engage firms involved in this work, trying to ascertain whether there is a widespread problem and/or whether it has led to poor consumer outcomes. On-going; finishing Q1 2016
  • Fair treatment of long-standing customers in life insurance: Concludes end of Q2 2015
  • Retirement income market study: Following this work, the FCA will review the wake-up packs and introduce further measures to improve communication with pension savers, supporting choice and competition in the retirement income market. Publication expected March 2015
  • Retirement sales practices: The FCA will review how retirement sales practices of pension providers have changed, in relation to their vesting customers. In particular, this is aims to assess how firms are supporting customers to make the right choices given the wider range of options available. FCA’s key objectives are to ensure that firms have stepped up and improved their practices since the publication of the thematic report in December 2014 and to ensure that firms do not seek to undermine or circumvent the Pension Wise service for the purposes of retention. Q2 – Q3 2015 TBC
  • Retirement outcomes – consumer outcomes from advised and non-advised sales: The FCA scope and plan from April 2015 a follow up to the market study into the outcomes consumers receive from the products and services they buy at retirement. This will review how well the market is working after the reforms and the guidance guarantee have been introduced, in particular after the full pensions flexibilities are introduced in April 2015. The FCA will look at both advised purchases (reviewing the suitability of advice given) and non-advised purchases (reviewing the information provided). From Q1 2016

General Insurance

  • Add-ons: Confirmed rules for GAP sales will be published in June, following the recent consultation. The FCA will consult on banning pre-ticked boxes, information on PCWs and publication of monetary value measures including claims ratios. Consultation paper March 2015
  • Commercial claims: The FCA will conclude review of SME claims and delegated authority. Publication May/June 2015
  • Appointed Representatives: New review of role of ARs within GI distribution, with a particular focus on the oversight of principle firms. Thematic review Q2 2015 – Q4 2015

Technology and use of Big Data

  • The FCA will conduct a market study to investigate how insurance firms use Big Data, such as web analytics and behavioural data tools (including the increasing use of social media) as well as other unconventional data sources. The FCA will identify potential risks and benefits for consumers, including whether the use of Big Data creates barriers to access products or services. The FCA will also examine the regulatory regime to ensure that it does not unduly constrain beneficial innovation in this area. Market Study Q3 2015 – Q2 2016

Consumer behaviour

  • Information asymmetries: Focus on impact for commercial and retail customers, including potential for mis-selling and reduced trust
  • Consumer inertia: Lack of confidence or desire to switch providers or products can lead firms to offer poor value to those on their back-books, when compared with the offering made to new customers. We expect the FCA to publish research on renewal pricing in June
  • Vulnerability: Work to improve providers’ awareness of the needs of vulnerable consumers, including access to products and services, so they put policies in place to serve their interests better. This follows initial work in this space by the FCA last year, which included their consumer segmentation model
  • Smarter consumer communication (disclosure): The FCA will work with firms to identify improvements in the industry’s communications with consumers about products or services they are considering buying or already hold. As part of this, the FCA will draw on behavioural insights and innovative practices from the financial services and other sectors. We expect the FCA to publish a paper on this in the first half of the year

Consumer credit

  • Particular focus on affordability assessments. The FCA will review CONC rules, with possible changes to address new and emerging issues

Financial crime

  • The FCA intend to dedicate more regulatory resource to anti-money laundering, bribery and corruption, recognising that firms appear to have stronger mechanisms to identify consumer fraud
  • The FCA recognises that fraudsters might attempt to capitalise on incoming pension reforms and will continue to actively monitor this area and work with other organisations, including the ABI

Individual accountability

  • Performance management: On-going consultation, with a focus on organisational culture and its impact on potential mis-selling. Final guidance expected Q3 2015
  • Senior Managers and Certified Persons Regime: Following the Parliamentary Commission on Banking Standards recommendations, the FCA will propose changes to the Senior Managers Insurers Regime. On-going consultation. Final rules due by summer; implementation March 2016
  • Whistleblowing: Final rules will be issued this year
  • The FCA will reform of existing accountability regime for insurance firms
  • There will be a continued focus on individual accountability in the FCA enforcement work

International issues

  • Recognition that the FCA should engage early in international debates, taking a lead in negotiating where appropriate and drafting standards
  • On-going negotiations on several EU Directives, including IMD II and Fourth Anti-Money Laundering Directive
  • Technical standards work being done on PRIIPs
  • ADR at implementation stage

Last updated 01/07/2016