FCA issued its business plan for the year ahead, with focus on the challenges presented by the COVID-19 pandemic. The annual Business Plan describes the key priorities and the planned activities for the next year. In the Business Plan, FCA has set out the priority areas on which it will work over the next 1 to 3 years as well as other cross-cutting and sector work. The key priorities and planned activities are set out under five overall priorities, six cross-cutting priorities, and the four sector-specific area. The key cross-cutting priorities encompass the areas of brexit, fintech and regtech, climate change risk, and operational resilience.
FCA highlighted that it may be weeks or months before there is a more stable position and can turn fully to the activities in this plan. The key priority areas in the Business Plan are to focus on transforming the FCA operations, deliver fair value in a digital age, make payments safe and accessible, enable effective consumer investment decisions, and ensure that consumer credit markets work well. In relation to the five key priorities, FCA will work across sectors in the following areas that have a broad market impact:
- Brexit—FCA will continue to work closely with European and global stakeholders on developing robust global financial standards and effective supervision and addressing issues of mutual interest, in areas such as conduct, market integrity, and operational resilience. FCA will take steps to ensure that FCA and the UK financial services industry are prepared for the end of the transition period.
- Climate change—The financial sector needs to adapt to manage the physical and transition risks that climate change poses. The regulatory approach of FCA needs to support that. In the coming year, FCA will assess the feedback to its recent consultation on new climate-related disclosure rules for some issuers. The consultation period has been extended and is now open until October 01, 2020. FCA plans to continue the policy research to better understand how retail investment products are designed, the accuracy of disclosure, and whether this enables consumers to make effective decisions on green products.
- Innovation and technology—FCA will invest in new technologies and skills to make better use of data to regulate efficiently and effectively. FCA will deepen its engagement with industry and society on artificial intelligence, specifically machine learning, and focus on how to enable safe, appropriate, and ethical use of new technologies. FCA will replace the data collection system GABRIEL with a new platform for collecting data from firms. It will maintain its international collaboration through the Global Financial Innovation Network, including seeking to facilitate international sandbox experiments and deepening international knowledge-sharing of innovation approaches and new market trends. It will explore if and how to expand its sandbox services to foster and encourage the wider adoption of appropriate technologies, particularly for regtech.
- Operational resilience—FCA aims to set new requirements that strengthen operational resilience. In December 2019, along with PRA and BoE, FCA published joint consultation papers on operational resilience. The consultation period has now been extended until October 01, 2020 due to the impact of COVID-19 on the industry. FCA expects all firms to have contingency plans to deal with major events and expects that the plans have been tested.
Keywords: Europe, UK, Banking, Securities, Business Plan, COVID-19, Brexit, Climate Change Risk, Fintech, Operational Risk, Regtech, ESG, FCA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous ArticleEIOPA Publishes Opinion on Supervision of Remuneration Principles
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.
The Prudential Regulation Authority (PRA) issued a statement on PRA buffer adjustment while the Bank of England (BoE) published a notice on the statistical reporting requirements for banks.
The Basel Committee on Banking Supervision (BCBS) issued principles for the effective management and supervision of climate-related financial risks.