Episode 52: Regulatory update – Horizon scanning and regulatory developments
Jan 18, 2024
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David Morrey and Ben Farmer discuss regulatory topics for 2024, including the Consumer Duty, operational resilience, and expected supervisory activity. They also talk about successful prosecutions, the potential impact of the Consumer Duty on various sectors, and challenges in the financial services industry.
The application of the consumer duty to closed products starting on July 31st will be an important test for firms in ensuring compliance and addressing any non-compliant products.
The FCA will conduct skilled person reviews and thematic reviews on areas such as car finance lending practices, retirement advice, and private asset valuations, potentially leading to further regulatory actions.
Deep dives
Regulatory developments in the past month
Over the past month, there have been limited regulatory developments due to the holiday season. The FCA put out press releases about the expiration of the temporary permissions regime, the consumer duty, and a recap of their activities in 2023.
Anticipated regulatory developments for the coming year
Looking ahead, there are several regulatory developments expected in 2024. One key focus will be the application of the consumer duty to closed products starting on July 31st. This will be an important test for firms in ensuring compliance and addressing any non-compliant products. Additionally, discussions and analysis will continue on topics such as advice and guidance boundaries, with the potential for significant changes in the new regime. Other areas of interest include expected changes to the SMCR, regulations on crypto assets, and the regulation of private asset valuations. The review of the guidance for fair treatment of vulnerable customers is also on the horizon and could potentially lead to supervisory follow-up actions.
Expected regulatory actions and areas of focus
In terms of specific supervisory actions and interventions, there are a few areas to watch. The FCA has initiated a skilled person review of car finance providers to assess lending practices and ensure fair value and customer interests are upheld. Thematic reviews on retirement advice and private asset valuations are also anticipated, which could lead to further regulatory actions. The FCA is expected to use tools like Dear CEO letters and guidance to nudge firms into compliance with the consumer duty and address issues related to product governance and fair value assessments. Operational resilience, particularly oversight of critical third parties, will also be a focal point for supervisory attention.
Potential impact of a change in government
While a change in government through a general election might not have an immediate and significant impact on financial services regulation, there could be some changes in emphasis and priorities. It is likely that consumer protection, environmental, social, and governance (ESG) considerations, and trading arrangements will be areas of continued focus. The impact on the regulatory environment may be secondary to changes in taxation or international trading arrangements. Overall, a steady and gradual evolution of regulatory activity is expected.
David Morrey and Ben Farmer discuss regulatory topics for 2024 that will have a significant impact on institutions operating in the financial services space. They also touch upon Consumer Duty next steps, operational resilience and expected supervisory activity over the next 12 months.
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