The FCA announces important changes to its strategy
Key changes to organisational structure and personnel
The Financial Conduct Authority (FCA) has unveiled a new strategy, which will aim to provide a "sharper focus" on how firms are regulated and on delivering the right outcome for consumers and the markets. It also announced a number of key changes to organisational structure and personnel. As part of this, Clive Adamson (Director of Supervision), Victoria Raffe (Director of Authorisations) and Zitah McMillan (Director of Communications and International) are all leaving the FCA.
- The FCA will bring together the current Authorisations and Supervision Divisions, with specialist supervision functions such as financial crime and client assets. Two Divisions will be created from April 2015 allowing for a clearer distinction between approaches to the regulation of large and smaller firms. Tracey McDermott will take responsibility for managing this transition and will subsequently lead one of the new Divisions.
- A new Strategy and Competition Division led by Christopher Woolard will build on the FCA’s competition capabilities, bringing together more market-based work supported by an enhanced data, intelligence and research capability to enable better prioritisation and focus across the organisation.
- A Market Oversight Division will be created incorporating the FCA’s UKLA and Market Monitoring functions. This will be led on an acting basis by Marc Teasdale. Other specialist market supervision functions will be integrated with Supervision.
- Sustainable model of regulation:
- The FCA plans to remove the distinction between C3 and C4 firms. These smaller firms will be supervised on a more risk-based model and the FCA will remove much of its standard Pillar 1 activity for these firms. For larger firms (i.e. C1 and C2 firms), the FCA will largely continue the existing three pillar supervision model and will take a whole of market, as well as firm-specific, view of each firm.
- While multi-firm supervisory activity will remain in Supervision, the FCA will merge its market intervention work together, so that cross-market thematic and market study work comes together in the competition division. The aim is to do fewer, more focused pieces of market-based work that look broadly across regulated sectors and products. To support this horizontal view, the FCA will build out its strategy and competition agenda, with a greater focus on market intelligence, data and analysis.
- Common FCA view: the FCA will seek to make better use of its data, information and intelligence to create a common FCA view in each of its regulated markets and segments.
- Priority setting: a prioritisation framework to find new ways to prioritise work as part of looking at streamlining governance.
- Strategic approach to risk: improve second line of defence by bringing together the Risk and Supervisory Oversight functions to form a new Risk Division, headed by Richard Sutcliffe.
- Engaging more strategically and proactively influencing: the FCA will bring together its International and Markets Policy functions to provide more coordination on international activity and increase the FCA’s influence on the EU stage. This new division will be led by David Lawton.
- Increasing internal ability to respond flexibly (within FCA divisions) e.g. through sharing resources more strategically across the organisation.
- Making more use of FCA’s own resources: the FCA is reviewing its decision-making processes to enable fast decision-making and more effective prioritisation.
Key implications for clients
- Firms should familiarise themselves with the organisational changes and consider what it means for their interactions with the FCA.
- The merging of the FCA’s C3 and C4 categories will mean that these smaller firms will receive less pillar 1 (proactive firm) supervision as part of the FCA’s three-pillar supervisory model
- The FCA has stated that it will seek to better prioritise its work and do fewer, more focused market-based work, with cross-market thematic and market study work brought together under the competition division. Considering the new competition powers that the FCA will receive in April, firms may find that the FCA’s focus and responses to these reviews increasingly seek to address issues from a market-based / competition perspective.
The FCA will make the above changes to its organisational structure with all changes effective 1 April 2015.