In June, the FSA published a paper and the speeches made by Hector Sants and Margaret Cole on the regulatory approach of the new FCA. Points of interest include:
- The establishment of a business and market analysis team, responsible for analysing markets and their interaction with consumer behaviour and identifying features of industry economics which may give rise to actions that are detrimental to consumer interests.
- In its new competition role, the FCA will be interested in prices and will consider the cost of products or services when determining whether consumers are being fairly treated.
- The FCA will tailor its use of regulatory tools depending on the particular risks that each sector, firm or product faces. Its focus will be on intensive, firm-specific supervision for firms that can individually cause significant consumer or market detriment.
- The FSA is developing a supervisory framework for the FCA, which includes reducing the number of relationship-managed firms significantly, and tailoring its regulation for certain wholesale small and medium-sized enterprises. The emphasis will shift from firm-specific supervision to a cross-sector issue approach.
- The FCA’s model will switch from presuming that responsibility for judging suitability rests with consumers to presuming that it is reasonable for the FCA to make judgments on behalf of the consumer.
- The FCA will require firms to publish more information on their activities to improve market discipline.