View more on these topics

FCA looks to target unregulated firms in new ‘mission’

Andrew-Bailey-Conference-Alt-2013-700x450.jpg

The FCA is eyeing action on unregulated firms and vulnerable customers as it sets out a new “mission”.

The FCA today began a consultation on its mission document, a set of principles that will inform the regulator’s strategy and day-to-day work.

The FCA says the purpose of the mission is to give clarity over the objectives it is set by Parliament, explain the reasoning behind its work, and to give a framework on how it chooses the tools it uses.

The regulator proposes that part of its new mission should clarify that it can go after unregulated firms if they pose a threat to consumers.

The consultation reads: “Our remit for taking action for the firms and activities we regulate is clear. However, in practice, the lines between regulated and unregulated activities have become blurred in recent years. Many of the problems we have seen in the market, from the crash of 2008 onwards, have been caused by regulated firms undertaking activities which are outside our ‘regulatory perimeter’ (i.e. activities that we do not regulate).

“Our objectives, to varying degrees, give us powers to intervene in many of these activities. But we have limited resources and must prioritise using them where we can have the biggest impact.

“We will prioritise intervening outside the perimeter when we believe our objectives are threatened, if we believe an unregulated activity is illegal or fraudulent, has the potential to undermine confidence in the UK financial system, is closely linked to, or may affect, a regulated activity, calls into question the suitability of the firm.”

While the FCA says it will continue to pay more attention to firms in the regulated space, it says it is prepared to intervene in unregulated activities if they could cause widespread damage.

It says: “Our market integrity objective applies to the overall UK financial system. This means that, if we believe that a regulated firm’s unregulated activity could affect the integrity of the financial system, for example the misselling by a firm of a product that the FCA does not regulate, we could seek to make rules or use other…powers.”

FCA05

“Many of the problems we have seen in the market, from the crash of 2008 onwards, have been caused by regulated firms undertaking activities which are outside our ‘regulatory perimeter’”

New powers

FCA chief executive Andrew Bailey first said the regulator was preparing to lay out a new mission at the regulator’s annual public meeting in July.

The regulator has also outlined several other areas for consultation as part of the mission.

They include whether it should prioritise the protection of vulnerable customers, what its role should be in redress schemes, and how it balances the responsibilities of firms and consumers in relation to consumer protection.

The mission also has a focus on transparency and disclosure around consumer information.

The mission further considers when the FCA will intervene. It says that, in future, the regulator will be more transparent about the interventions it does and does not make.

Bailey adds: “The mission will only be a success if our stakeholders engage with us through this consultation process. We want this to be a very open process. Out of it, we hope that we can set out a clear path ahead for financial conduct regulation in the UK.”

The consultation closes on 26 January.

Recommended

9

FCA questions its purpose, priorities and objectives

The FCA is to consult on producing mission statement in a bid to boost the public’s understanding of what does and its role within society. The mission, revealed by chief executive Andrew Bailey at the regulator’s annual public meeting today, will include a proposal to be published in early autumn followed by a period of […]

15

Report demands cultural change at FCA and PRA

A report has accused the two leading British financial regulators of a lack of transparency and “group-think.” The study by Cass Business School and the New City Agenda think tank argues that cultural issues at the FCA and Prudential Regulation Authority must be addressed by politicians and that “unless we change the culture of regulators […]

FCA logo glass 2 620x430
4

FCA abandons seven investigations due to ‘lack of evidence’

The FCA has abandoned seven investigations into individuals since 1 January 2015 because of a lack of evidence, Money Marketing can reveal. Money Marketing filed a Freedom of Information request after it was revealed in August the regulator ceased its investigation into Lloyds Banking Group head of gilts trading Tony Gray because there was no […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. Is this just further “hot air” from a regulator who talks the talk but does not walk the walk!
    A few worries from this article- it sates – “But we have limited resources and must prioritise using them where we can have the biggest impact.” What a get out clause – “it is prepared to intervene in unregulated activities if they could cause widespread damage” – What about the single adviser who is not regulated and causes havoc for the small investor?
    The article goes on to say that the FCA will ” lay out a new mission at the regulator’s annual public meeting in July.” Why not have a system in place that operates from now? More hot air.
    The article further states ” whether it should prioritise the protection of vulnerable customers, what its role should be in redress schemes, and how it balances the responsibilities of firms and consumers in relation to consumer protection.” Ultimately we the regulated advisers will be paying for the redress of unregulated advice.
    “FCA looks to target unregulated firms in new ‘mission’” – We will wait and see what havoc Andrew Bailley can lay upon the industry.

  2. “We want this to be a very open process.”

    It would make a very nice change for the FCA to open up, but I’m not holding my breath. The FSA/FCA’s contributions to the financial services industry have been a huge negative and I think that they are more a part of the problem than they are part of the solution.

    They should tackle the problems and, only when they’ve done that, they should look at the everyday firms who are just trying to give decent advice. Their focus has been the wrong way around and the big problems (the banks and the UCIS merchants) have been able to carry on with very little ‘interference’ from the regulator.

    Just one point: when the FCA discovers that a firm or an individual is acting dubiously, they should immediately look at their status as the general public has been led to believe that an authorised firm or individual has been vetted and approved by the FCA – the general public should be able to trust authorised firms and individuals.

  3. Almost every day the FCA publishes a note regarding clone firms, unauthorised firms and those from overseas that are carrying out regulated activities without permissions. If you go on the website addresses that the FCA refers to in the notices they are almost always still operational. I’m sure that the man in the street doesn’t look at the FCA website every day to check out fraudsters so why isn’t the regulator doing more to shut them down? If they know they are operating illegally they should be reported to the Fraud squad or similar and the websites should be shut down. Oh, and why not publish the details in the Daily Fail as the public might take some notice then.

  4. The problem is whilst the FCA is not bound by the laws of the land so can do what it wants with the regulated and does. It is only the regulated that they can victimise because they control registration. In the real world the unregulated are judged via the laws of the land in court should the need arise rather than their latest retrospective, ill conceived, jobs for the boys empire building principles.

    What worries me is its the regulated who will be required to pay for these leeches to mount this pointless, headline grabbing crusade.

  5. Oh please !!!

    Limited resources….. (i go to the foot of my stairs) what pay tell do you do with the £1.3 billion budget you have ?

    If the FCA is the cure, then roll on the disease…… i will put up with a snotty nose rather than suffer the cholera that is the FCA !

  6. The problem for the FCA with trying to wield its axe over unregulated firms is that, unless it has proof that they’re committing a criminal offence, they can simply tell it to get lost and slam down the phone.

    Also, as I understand it, the FCA has no powers to act directly against any unregulated entity committing what it perceives to be a criminal offence. If it did, it would have to use resources funded by the regulated community and I don’t think we’d be very happy about that. All it can do is refer the matter to the relevant police authority and, from what we hear and read, the police already have on their plates as much as they cope with, not to mention that their budgets are under growing pressure. Try reporting CMC or mortgage fraud to the police and see what they do about it.

  7. Quis custodiet ipsos custodes?

  8. They should have been screaming at Govt to permit this a few years ago when it was clearly deemed to be a threat to the public and our industry. I’ve seen glaciers move more rapidly! As for not being within their remit… it most certainly can be (and should have been) if it involves authorised firms using their FCA status to promote unregulated schemes.

  9. As the unregulated don’t register with the regulator, pray tell how the regulator is going to identify them? They seem to have their work cut out controlling the nefarious activities of some of the rogue regulated firms. (Unauthorised investments anyone?)

  10. I was just about to post something very much along the same lines, Harry. The FCA can’t even regulate authorised firms competently so what possible chances of success can it have in trying now to go after unauthorised firms? A better strategy might be for Mr Bailey to take a good hard look at the dog’s dinner that’s already on its plate and try to sort that out.

  11. Sounds to me more like a nocturnal e-mission.

Leave a comment