Following a review of its strategy, priorities and ways of working, which was completed in late 2014, the FCA released a paper detailing the way in which it intends to achieve its objectives in the most effective way for consumers and the financial services industry. As the regulator's remit has been substantially extended in the 18 months since the FCA was established, the new approach promises a "sharper focus" on the regulatory challenges ahead. FCA chief executive Martin Wheatley stated in an FCA press release that "the financial industry continually evolves and to regulate it effectively we must evolve too". Whilst the FCA's strategic and operational objectives remain unaltered, a number of structural changes will implement the results of the strategic review on a practical level.

Internal Restructure

Supervision – The Authorisations and Supervision divisions will be combined with the Financial Crime division and Specialist Market Supervision functions. From April 2015, this will be split into a further two units, clearly separating the FCA's regulation of large and smaller firms. This move follows an admission by the FCA that the scale and scope of their new remit has put their supervisory model for small firms under strain; the recent additional responsibility for consumer credit means that the number of firms regulated by the FCA has increased threefold over the past 18 months. This transition will be overseen by Tracey McDermott, previously the FCA's Director of Enforcement and Financial Crime, who was promoted to Director of Supervision and Authorisations in January 2015. Ms McDermott will head up one of the new divisions from April 2015.

Competition Powers – Also from April 2015, the FCA will have "concurrent powers" with the Competition and Markets Authority, making the FCA a "concurrent regulator" in the competition sphere. This will be in addition to the FCA's ability to use powers under the Financial Services and Markets Act in pursuit of the competition objective. From January 2015, a new Strategy and Competition Division will be established, with a view to the regulator taking a more market-driven approach to competition regulation. Led by Christopher Woolard, former FCA Director of Policy, Risk and Research, the new Division aims to build on the FCA's competition capabilities by bringing together market-based work supported by enhanced data, intelligence and research capability. The FCA state that the new division will enable better prioritisation and focus across the organisation. This should go some way to achieving the objective described by Deb Jones, Director of Competition at the FCA, in November 2014: "Competition does not sit in a discrete function within the FCA. Instead we have to bring competition thinking, as it relates to our objectives and remit, into every decision, rule and action we take".

International – Whilst the Strategy and Competition Division should place the FCA in a stronger position to effectively engage with cross-border competition issues, financial regulators around the world are becoming increasingly international in their focus, with many regulatory functions now having a multi-jurisdictional element. The new FCA Markets Policy and International Division, to be led by FCA Director of Markets David Lawson, will combine the International and Markets Policy functions, to co-ordinate international activity. In doing so, the FCA aims to influence strategic international developments at an earlier stage, recognising the importance of the European and international agenda.

Risk Division – The Risk and Supervisory Oversight functions will be combined to form a new Risk Division, with the aim of providing a strategic approach to the management of internal and external risk. Richard Sutcliffe, former FCA Head of Client Assets, will be the acting Director for this Division.

Market Oversight Division – A new Market Oversight division will also be created, which will incorporate the UK Listing Authority and market monitoring functions, led on an acting basis by the current head of the UKLA, Marc Teasdale.

The Davis Report

The results of the strategic review were announced a few days before the publication of the report by an independent inquiry into mistakes made by the FCA in March 2014, in relation to the announcement of the 2014/2015 FCA Business Plan (the "Davis Report"). The Davis Report focused on the exclusive pre-briefing given to the Daily Telegraph about the planned Life Insurance Review, which was authorised by Clive Adamson, then the FCA Director of Supervision. The briefing resulted in the Telegraph publishing an article on the front page of their online edition at 10pm on 27 March 2014, announcing a planned FCA review into 30 million policies sold by insurance companies between 1970 and 2000 and now in so-called "zombie funds". Particularly problematic was the statement that "savers locked into rip off pensions and investments could be given a free exit or moved to better deals, regulators will say next week".

When the London financial markets opened the next morning, the market view was that the FCA were considering banning exit charges as part of a retrospective review, which caused a swift drop in value of shares in a number of leading insurance firms specialising in pools of potentially affected insurance policies. A clarifying statement issued by the FCA at 2.30pm confirmed that the planned review would be forward-looking rather than focused on applying current standards retrospectively. Following the statement, the share prices in the affected insurance companies recovered substantially but not entirely.

The Davis Report criticised the FCA for the delay in taking corrective steps after the article was published, in what the Report described as a well-intentioned yet "high risk, poorly supervised and inadequately controlled" media strategy. The FCA had arranged the pre-briefing with the Telegraph to try to ensure that the nature and scope of the Life Insurance Review was properly understood, but there was no appreciation within the FCA that they were communicating information which could be price-sensitive. The FCA announced, prior to the release of the Davis Report, that Clive Adamson will leave the organisation as part of the wider strategic restructure, along with other Executive Committee members. In their written response to the Davis Report, the FCA state that they accept all of the recommendations made in the Davis Report, and have already made progress in acting on them. In particular, the FCA note that they have made substantial improvements to the procedures relating to the identification, control and release of price-sensitive information, with training and awareness initiatives being put in place for managers and staff.

A Treasury Select Committee inquiry into the Telegraph pre-briefing is currently underway. The Committee has heard evidence about the briefing and the recommendations made in the Davis Report from Simon Davis, who led the independent inquiry, and from various FCA stakeholders. Although the internal restructure was not announced as a direct response to the recommendations of the Davis Report, the FCA have stated that the strategic review and the subsequent changes to the FCA's structure and operational model will address some of the issues and challenges identified in the Davis Report.