On April 9, the UK Financial Conduct Authority (FCA) published its business plan for 2018/19. The business plan divides key priorities for the FCA over the coming year into three main areas: (1) the United Kingdom’s withdrawal from the European Union (Brexit); (2) cross-sector priorities; and (3) sector-specific priorities.
The FCA’s business plan anticipates that the level of resource required with respect to Brexit will inevitably reduce the amount of work the FCA can complete in other areas. The FCA has therefore prioritized areas where the risk of harm to consumers, market integrity or competition are greatest, and its intervention will be most impactful.
Regarding Brexit, the FCA has stated that it aims to work with the UK government and ensure an appropriate transition for European Economic Area firms, while working with regulated firms to monitor the risks to its objectives.
The FCA prescribes cross-sector priorities, which include the following:
- firms’ culture and governance—which includes extension of the Senior Managers and Certification Regime to all firms authorized under the UK Financial Services and Markets Act 2000;
- financial crime (fraud and scams) and anti-money laundering;
- data security, resilience and outsourcing;
- innovation, big data and competition—which includes the FCA’s role as part of the new “cryptoassets task force” launched at the UK government’s International Fintech Conference last month; and
- treatment of existing customers.
On the same day, the UK Prudential Regulation Authority (PRA) also published its own business plan for 2018/19. The PRA’s business plan covers: (1) Brexit; (2) the implementation of ring-fencing for banks; and (3) technology, as key areas of change to which the PRA will respond this year.
Notable strategic goals in the PRA’s business plan include:
- having in place robust prudential standards comprising the post-financial crisis regulatory regime;
- ensuring that firms are adequately capitalized, and have sufficient liquidity, for the risks they are managing or planning to take;
- ensuring that banks and insurers have credible plans in place to enable them to recover from stress events, and that the PRA has a credible resolution strategy to manage a firm’s failure—proportionate to the firm’s size and systemic importance—in an orderly manner; and
- delivering a smooth transition to a sustainable and resilient UK financial regulatory framework following Brexit.
The FCA’s business plan, including the sector-specific priorities on page 8, is available here.
The PRA’s business plan is available here.