The City regulator has pledged to ensure that financial firms remain strong in the face of Brexit in its annual list of priorities, which also includes protecting vulnerable customers from overly expensive loans.
Andrew Bailey, chief executive of the Financial Conduct Authority, said the regulator’s lawyers were scrutinising EU financial sector rules as part of the government’s “great repeal bill”, which will transfer thousands of EU regulations into UK legislation after Brexit.
“The UK’s decision to leave the European Union creates uncertainty for both the UK’s financial industry and the FCA,” said Bailey, who was setting out his first annual priorities since taking the helm last year. “Both we and the government are keen to ensure that the financial services industry remains resilient and can make the most of opportunities in a post-Brexit world.
“The UK’s withdrawal from the European Union will have important implications for the FCA over the coming years. We are liaising closely with the Treasury and the Bank of England to ensure a smooth transfer of EU rules and legislation into the domestic framework.”
Bailey, a former Bank of England deputy governor, said the FCA intended to maintain its good relationship with other EU regulators after Brexit and would be alert to firms that may try to create complex business models in an effort to gain access to the 27 remaining countries in the EU.
Last month, the Bank of England revealed it had asked financial institutions to draw up comprehensive plans for how they would deal with Brexit. “Firms will need to assess the impact that a changed relationship with Europe and any changes to the regulatory regime will have on their business models,” the FCA said.
As well as supporting the government’s withdrawal from the EU, the FCA listed a number of other priorities for the coming year including alerting customers to the August 2019 deadline to lodge claims for payment protection insurance (PPI), protecting vulnerable customers, continuing to scrutinise high cost credit and looking at the way people save for pensions.
The FCA pointed to customers locked in to mortgage deals they signed before the financial crisis, which they would not be offered now under a new regime requiring lenders to assess the affordability of the loan. Some 1.8 million customers have interest-only mortgages and many do not have strategies to repay them, including some that must be repaid by 2020.
Its risk outlook warns of “intergenerational wealth inequality”, which will force younger people to work longer than their elders if they want to retire on similar terms. It also listed cybercrime and money laundering as potential risks. “Increasing terrorist activity across the globe presents new types of threats to market integrity,” it said.
Bailey said the FCA intended to work with firms to see how technology might help them tackle money laundering. Last month the Guardian revealed how at least $20bn (£15.6bn) was moved out of Russia during a four-year period from 2010.
Bailey was also asked about the importance of the whistleblowing regime, a focus since last week’s revelations that Jes Staley, chief executive of Barclays, was being investigated for trying to identify a whistleblower. “[Whistleblowing] is very important,” said Bailey. “We take it very seriously.”
The wide-ranging work of the FCA, which oversees 56,000 firms, will also involve looking at the business models of retail banks and “free banking” for current account customers who do not use unauthorised overdrafts following on from the Competition and Markets Authority investigation last year.
Source: The Guardian