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FCA warns on biggest risk areas for 2014/15

The FCA has warned conflicts of interest, developments in technology and rapid house-price growth are set to come under the regulatory spotlight during 2014/15.

The regulator published its risk outlook this week, setting out key areas of supervisory focus over the coming year.

The FCA believes large firms could find it challenging to adapt legacy systems and transfer customer data and online services to newer systems. The regulator is also concerned about the risk of cybercrime.

The FCA plans to investigate how investment banks manage conflicts of interest and how wealth managers and private banks manage conflicts when clients invest in-house.

Following the leaked announcement of its work into closed-book policies last week, the FCA is concerned that firms with large back-books may not act in customers’ best interests.

The regulator will also monitor the impact of any rise in interest rates on lenders’ forbearance polices and whether “substantial and rapid” house-price growth causes lenders’ underwriting standards to drop.

FCA chairman John Griffith-Jones says: “The risks set out in this document should not just be of concern to the FCA but to the industry as a whole.”


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