’Our approach is designed to raise transparency about what we are investigating,’ says regulator’s chief operating officer
An FCA spokesperson admitted that the regulator “can do better” at communicating its intentions or reasoning.
Speaking at a session entitled What’s next for regulation at the Biba Conference 2024 yesterday afternoon (16 May 2024), FCA chief operating officer Emily Shepperd provided an update on what the sector could expect from regulation in the future.
Shepperd noted: “[The FCA] has recently established a cost benefit analysis panel that will scrutinise every regulatory move to make sure it’s proportionate, so one thing we will keep an eye on is how regulations impact smaller firms.”
And commenting on the backlash to proposals announced by the FCA in February 2024 that would see details of ongoing enquiries into alleged misconduct made publicly available, Shepperd explained the regulator was seeking to highlight transparency.
She said: ”Our approach is designed to raise transparency about what we are investigating, with the aim of reassuring customers and investors, educating firms and encouraging witnesses to come forward to better ensure we can be held to account.”
However, as part of his questions to the FCA representative at the session, Biba regulation director David Sparkes said: ”I have to admit I’ve never seen anything have such universal pushback as the naming and shaming – guilty until proven innocent – approach.”
Shepperd accepted that the FCA was taking this “sensitive and emotive issue incredibly seriously”, but said that the approach was designed as a “public test” to determine whether naming a firm under investigation would “help the public”.
Outcomes-based regulator
Commenting on the FCA’s approach to Consumer Duty’s implementation, Shepperd said that the regulator had an outcomes focus.
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She explained: “The idea of an outcomes-based regulator is really to give some more of the control back the firms in how you’re going to operate things, although there are still some areas where we will pay particular attention.
”Price is a commercial decision, for example, but fair value is something that we do care about.”
In its approach to the Consumer Duty, Shepperd also said that the FCA had examined “the most practical way of interpreting a wide-ranging piece of legislation”.
She added: “We want regulation that works for individual consumers purchasing motor insurance, for large corporations arranging complex insurance contracts and for everything in between.
“We have been engaging with industry to further consider how we might make changes to reflect the operation and customer base in the commercial insurance market to give greater clarity on our expectations and avoid duplication, therefore reducing the burden of regulation wherever appropriate.”
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