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Compliance Tip of the Week: FCA’s outlook for 2014

The FCA recently published its annual risk outlook. So what’s new? 

The outlook shows the FCA is keenly driven by macro environmental factors and inherent risks in the market. What is also clear is that the FCA is prepared to make judgements on consumer behaviours as well as market participant behaviours. The culture displayed in firms and amongst the senior executives remains a focus area; as are the following key aspects:

  • Product and services transparency – The FCA is focussed on consumers not being adequately informed. So this means transparency of services as well as products. This extends to non consumer facing firms and it is clear the FCA will be challenging the information these firms provide to consumer facing firms.
  • Consumer Behaviours – Our reading of the risk outlook suggests the FCA is expecting firms to challenge consumer inertia in a proactive way rather than continuing to generate profits / revenue from this inertia.
  • Short Term Outcomes – The FCA is concerned that consumers continue to place too much emphasis on short term outcomes and firms are not proactively encouraging consumers to look at the longer term outlook.
  • Conflicts of interest – The FCA is prepared to challenge what firms have considered as ‘managed conflicts’. This focus area is driven by continued growth through acquisition and the complexity of product and service offerings in the industry.
  • Over Confidence – The FCA wants firms to temper over confidence in their own products and services as well as helping consumers to be more realistic about the outcomes which can be achieved.
  • Technology – Due to increased market complexity and the plateau of consumer awareness the FCA is looking at technology. Have fast paced technology systems led to poor behaviours?

Simon Collins is managing director of RGP Compliance



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