The Financial Conduct Authority has launched its new five year strategy which reinforces its commitment to both support the UK economy and encourage investors to take more risk with their money.
Both are likely to drive policy when it comes to encouraging DC investment into productive finance in the UK, with its goal to to ‘rebalance risk’ will see pension savers invested in a broader spread of assets.
Overall the FCA outlined four key priorities for the next five years to support growth, rebalance risk, deepen trust and improve lives.
As part of this strategies it says it wants to be a smarter regulator by improving processes and more fully embracing technology. It is also looking to support sustained economic growth by enabling investment and innovation to ensure the UK financial services sector remains competitive on a global stage.
The FCA said it also wants to help consumers navigate their financial lives, by working with the industry to boost trust, and product innovation, but also ensuring the right information is available to help people make financial decisions.
The FCA said it also has a priority to fight financial crime.
The strategy sets out how the FCA will change how it supervises to be more efficient. This includes taking a less intensive approach for those firms seeking to do the right thing, and streamlining how it sets its supervisory priorities, and reviewing whether it can stop requiring certain data returns.
It will also digitise and simplify the authorisation processes so it is easier and quicker to apply.
The FCA adds it will invest in its technology, people and systems, so it can better handle the 100,000 cases its supervisors assess every year — enabling it to act more quickly when it identifies potential harms.
As the FCA is also integrating the Payment Systems Regulator and many of its functions. It says this will enable it to will build on the success of Open Banking and launch Open Finance, allowing more seamless data-sharing which could unlock product innovation and deliver lower costs and more choice for consumers.
Broadstone head of policy David Brooks says: “[This] marks a doubling-down of two emerging priorities in the financial services market for both consumers and institutions – the encouragement for greater risk-taking and increasing desire to stimulate investment in the UK stock market.
“Currently, the FCA estimates that 70 per cent of adults aged 18-54 have a pension in accumulation and just over half (56 per cent) of consumers with £10,000 or more in investible assets hold any mainstream investments. It is aiming to grow these metrics to address low financial capability, build financial resilience and help consumers plan for the future.
“It is positive to see fighting financial crime and scams as another key plank of the FCA’s five year plan given the immense financial damage this can cause as well as the wider impact it has on a person’s wellbeing and confidence.
“The FCA states that it is aiming to strip back unnecessary costs to drive growth and create improved consumer outcomes but there is likely to be nervousness around the extent to which consumer protections are diminished such as its review of mortgage affordability requirements.”
FCA chair Ashley Alder adds: ”We want to deepen trust in financial services and shift our collective attitude across financial services to risk. Too often the focus has been on the risks of a decision taken rather than the lost opportunity of taking none. We want to change that so we can spur growth and improve lives.”
FCA chief executive Nikhil Rathi adds: ”Our last strategy set high standards and bolstered our operational effectiveness. We are committed to going further, delivering at pace to meet the scale of change we are facing over the next 5 years.
“This strategy sets out our priorities, how we’ll become more efficient and effective and make the choices that shape the financial system.
“Our four priorities reinforce one another and we look forward to collaborating with our partners as we become a smarter regulator, support growth, help consumers and fight crime.”
