Leading Point of View
How will the FCA business plan impact organisations over the next two years?

Introduction

The FCA has recently issued its business plan (1) and focus for the upcoming four quarters. Kicking off with some stats – a mix of sobering and positive, the paper gives a clear outline of its proposed, cross-sector, regulatory oversight. One of the greatest challenges for the industry at present is the implementation of MiFID II provisions.
The FCA makes the point that this will facilitate the introduction of ‘major reforms to improve resilience and strengthen integrity and competition in wholesale markets’. Furthermore, work around market abuse will be enhanced. We highlight notable elements of the business plan and their implications for organisations, below.

Cybersecurity

Across all financial sectors lies the risk of cyber-attacks. With the impending implementation and governance of the General Data Protection Regulation, and potential fines of up to 4% of company revenue, organisations’ technological and operational resilience must be second to none. The FCA deems these qualities pivotal pieces of the cyber security jigsaw; it aims to police cyber capabilities and monitor financial crime and all major outages
during the upcoming year.

Senior Managers and Certification Regime

Whilst 2015/2016 saw banks and insurers bring about the operational changes borne out of SMCR, during 2017/2018, the FCA plans to oversee the resulting culture and governance of this significant shift in responsibility. Currently under consultation is the extension, to be implemented by 2018, of SMCR to all firms covered by FSMA. This would cement the prevailing accountability of senior managers’ individual areas of business within the industry.

Customer Engagement & Competition

The theme driving the most recent directives and regulations is placing the ball in the customers’ court. The dramatically changing financial landscape is being molded by the General Data Protection Regulation, the Payment Services Directive 2, to name but a few. The Open API world further allows the customer to have greater choice and engagement with their banking decisions. The FCA is likely to zero in on firms’ development in digitisation and automation and stewardship of customer data with a critical eye, to ensure there is no abuse.

Buy-side | Asset Management

MiFID II implications are beginning to take shape, however there is much to be done. The FCA recognises MiFID II as post-crisis regulation; it is driving reforms that will promote cross-sector market integrity and competition,
and consumer protection. Firms’ annual budgets will now, more than ever, be targeted towards improving IT systems and infrastructure, develop data capabilities, and ensure operational risk is kept at bay.

 

Leading Point Financial Markets brings compelling value at the intersection of Data, Governance & Compliance, and Digital and Operating Model Change initiatives. If you would like to further consider any of these impacts on your organisation, please contact saskia.blake@leadingptconsulting.com or rajen.madan@leadingptconsulting.com.

(1) https://www.fca.org.uk/publications/corporate-documents/our-business-plan-2017-18

 

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