The UK’s Financial Conduct Authority published its third annual Business Plan in March 2015. For the first time, the FCA’s Risk Outlook (which has historically been published as a separate document) has been incorporated within the body of the Business Plan. John Griffith-Jones notes in his Chairman’s foreword that, “that will more clearly show how our analysis of risk is connected to our regulatory actions and how we seek to advance our objectives”.

Practical advice

Authorised firms and those applying for regulatory permissions are encouraged to consider carefully the implications of the FCA’s Business Plan and Risk Outlook for their businesses. Regard should be had to the seven areas of focus in the Risk Outlook:

  1. Technology;
  2. Poor culture and controls;
  3. Large back books;
  4. Pensions, retirement income products and distribution methods which may deliver poor consumer outcomes;
  5. Poor culture and practice in consumer credit affordability assessments which could result in unaffordable debt;
  6. The range of issues that need to be considered in unfair contract terms is given sharper focus; and
  7. The importance of firms’ systems and controls in preventing financial crime.

Boards and senior management should be aware that conduct risk remains a key area of FCA focus. Firms should review their own business models and risk assessments to ensure that they are appropriately identifying and managing risks within their business.