The FCA has set out a new ‘mission’ eyeing action on unregulated firms and vulnerable customers.
The regulator today began a consultation on its mission document, a set of principles that will inform it’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.”
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 also 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.