The domestic policy agenda means that the financial services industry faces another busy year of consultation and regulatory change in 2017.
The Financial Conduct Authority (FCA) under the assured leadership of Andrew Bailey continues to consult on its future Mission. Key themes that have arisen through the consultation include clarity on the sense of direction by the FCA, vulnerable customers, rules versus principles, and how the FCA engages with firms.
The deadline for final consultation submissions is at the end of January, with the expectation that the FCA will set out a new roadmap in the 2017/2018 FCA Business Plan, due to be published in April.
The FCA also continues its market study of the asset management sector and the government is consulting on a single financial guidance body, both of which close in February. The FCA’s final report into asset management, expected in the second quarter, is likely to see the regulator introducing remedies on fees, benchmarks, client communications and increased transparency on costs. It could also have profound consequences for the industry if the FCA refers the sector to the Competition and Markets Authority.
The Spring Budget on March 8 is likely to be low-key. Expect to see more initiatives on the UK’s productivity gap, but the size of the deficit means that the Chancellor has limited room for manoeuvre, and he is not a politician prone to gimmicks. Hammond will also want to hold fire until the Autumn to review the economic data after triggering Article 50.
Pensions and advice
In April we see the launch of the Lifetime Isa, former Chancellor George Osborne’s big idea to promote saving amongst the under 40s. A bit like marmite, you either love it or hate it.
With a packed agenda for financial services in 2017, other key initiatives include the Treasury/FCA progress report on the Financial Advice Market Review, the auto-enrolment review, John Cridland’s final report into the future of the state pension age and the Government implementing a cap on early exit charges for occupational schemes.
There will also be an ongoing debate about the need for default financial guidance to help consumers understand their financial options, as they come up to retirement.
Bringing through Brexit
And of course, what about Brexit?
Political risk will continue to have a significant impact on financial services this year. Uncertainty over the Brexit negotiations and potential economic and market impacts will occupy a lot of time in boardroom strategy discussions.
The Prime Minster has committed to publishing a Great Repeal Bill in the next Queen’s Speech – expected in May or June – which will start the process of extensive government consultation on a ‘new’ UK framework for financial services, which will have implications for all sectors within the industry.
A busy year indeed.
Tom Frackowiak is executive director of UK public affairs at Cicero