The UK’s Financial Conduct Authority has set out a consumer-focused approach that will last well beyond COVID-19 in its Business Plan for 2020/21.
The Business Plan was initially intended to set out the FCA’s strategic focus over the next three years. However, in light of recent events brought about by the COVID-19 pandemic, it has published its 2020/21 Business Plan now “…to outline the things we believe will continue to be important even as millions of households and businesses that rely on financial services markets wrestle with the uncertainties created by coronavirus.”
The FCA’s main priorities are predominantly consumer-centric: ensuring that financial services businesses give consumers the support they need; making sure that people don’t fall for scams; protecting the most vulnerable consumers; and ensuring that consumers are treated fairly. Amidst this consumer-focus, however, is a beacon of change and a commitment from the FCA to embrace the future. This is set out in its fifth priority: Transformation.
Under the heading of “Transformation”, the FCA is committing to transforming its own operations for a digital age: “…we need to consider how we prioritise and deliver outcomes, how we use data and technology, what capabilities we need to be fit for the future and how we work with our global partners…”, it says.
The FCA recognises that it needs to keep up with the “tech-enabled world” and places a focus on “innovation and technology” within the Business Plan. Over the coming year it intends to streamline its data and regulatory returns through Digital Regulatory Reporting. It will invest in new technologies and new skills – paying particular attention to artificial intelligence, machine learning and RegTech.
The FCA recognises that it needs to utilise and encourage the use of technology to ease the burden of regulatory reporting on firms. As such, it is charging ahead with its work on Digital Regulatory Reporting and will be putting energy into expanding its sandbox Services to “encourage the wider adoption of appropriate tech.”
The Business Plan notes that the Regulator will be committing £30m of its budget, over three years, towards realising this transformation, which will look at its entire system. The FCA admits that it needs to shape its future approach to regulation to meet the needs of the “unprecedented times” it is operating in.
The adoption of new technology has been on the Regulator’s agenda for some time now – particularly in its encouragement of financial institutions to implement and innovate with regard to tech. It’s a welcome commitment, therefore, to see that the FCA intends to invest a sizeable amount into developing its own modernised framework.