The Financial Conduct Authority (FCA) has launched their 5-year strategy “to deepen trust, rebalance risk, support growth and improve lives”. They have outlined four key goals; to be a smarter regulator, to support economic growth, to help consumers and to fight financial crime. In this article, we’ll explore these four key goals.

A Smarter Regulator

The focus on this key goal will be to ‘rebalance risk’. The FCA’s stance is that regulation should be about enabling informed risk, rather than eliminating it entirely. Three key risk areas have been highlighted.

Regulatory risk must be monitored and reviewed to support new entrants, which should have a positive impact on competition, innovation and prices. Market and firm risk is a balancing act of enabling innovation while preventing excessive risk. The focus here will be on technological advancement to generate efficiency while preventing volatility and market abuse. Consumer risk will be mitigated through reforms to financial advice to ensure consumers make the right choices around accepting higher risk for higher returns.

Supporting Growth

This will be achieved through changes to disclosure requirements and widening retail access to investment opportunities. In turn, this will help businesses to ‘seek capital, increase liquidity and provide investors with the prospect of higher returns’.

The FCA will support growth by emphasising technological advancement and embracing Artificial Intelligence. Where possible, the regulator will rely on existing standards to focus on outcomes rather than just on prescriptive rules. As the Payment Systems Regulator (PSR) is absorbed by the FCA, they will deliver the National Payments Vision in due course.

Helping Consumers

‘A smart data revolution’ will help consumers navigate their financial lives. By increasing the pace of change, the FCA aims to deliver innovation and competition, alongside flexibility, tailored services and lower costs. Developing account to account payments, Variable Recurring Payments and lower processing fees for businesses are all pledges the FCA has made.

In order to do this, Open Banking needs to be prioritised and made commercially sustainable, while protecting its free to access model. The right regulatory framework will allow the FCA to open up the data generated by consumers to financial services providers, increasing choice and personalised support. Within the next year, the FCA will publish an Open Finance Roadmap.

Fighting Financial Crime

The UK is a global financial hub, the world’s largest net exporter of financial services. The FCA aims to work with the government to maintain and improve that position. This means that the FCA will also have to meet international standards to deepen trust and take a leading role in working with global counterparts on common issues. The FCA wants to play a global role in encouraging openness and collaboration by working with other jurisdictions on specific issues and establishing a permanent presence in the US and Asia-Pacific.

Axiol’s Perspective

Given the newly outlined strategy, firms will need to maintain comprehensive oversight of their risk and compliance landscape as regulatory changes are made. A centralised Regulatory Technology solution, like Axiol, could make staying on top of regulatory changes more streamlined, seamless and efficient. Automated monitoring of risks ensures objectivity and enables timeliness while providing a single source of truth for oversight and management.

Discover how Axiol can transform your compliance processes by booking a demo today. Visit our website or contact us at info@axiol.com for more information and to explore how we can help you achieve seamless, efficient regulatory compliance.