The Financial Services Authority (FSA) has set out its business plan for the new regulatory regime and promised that there will be “no room for the poor behaviour of the past”.
In a document published today (25 March) the FSA has stated that there will be a renewed focus on consumers under the Financial Conduct Authority (FCA).
The FCA, which is due to replace the current regulator on 1 April 2013, will be “proactive and forward-looking” in a bid to protect consumers from risks before they happen and will work to secure redress for those consumers “when things do go wrong”.
The FSA said that under the new regime it will continue to oversee the compensation process for those consumers mis-sold payment protection insurance (PPI).
It also confirmed that Barclays, HSBC, Lloyds and RBS will start the full review of their sales of interest rate hedging products to small businesses this year, and that the FCA will review the process to ensure that “fair and reasonable” outcomes are reached.
The business plan stated that the new regulator will continue to tackle market abuse using strong enforcement action and ensure a competitive financial services industry, while it continues to address ongoing misconduct.
The document comes a few weeks after the FSA released its consultation paper on the transfer to the FCA, which detailed that it will take a risk-based approach to supervision of the consumer credit market.
In 2013/14, the FCA expects to make around 40,000 regulatory decisions across a range of applications for authorisation, variation of permissions, cancellation, approved persons, change in control, waivers, passporting and the registration of mutual societies, according to the document.
Martin Wheatley, chief executive designate of the FCA, said: “Firms need to ensure that they are putting the consumer and the integrity of markets at the heart of their business models and strategies.
“This includes making cultural changes which promote good conduct; establishing oversight around the design and innovation of products and services; and ensuring they are transparent in their dealings with consumers.”
He acknowledged that its first year as a new regulator will be “challenging” but claimed that the FCA is “well prepared”.
Wheatley added: “A risk for all regulators is becoming bound to conventional thinking. That is why the new regulator will be much more transparent, so we can learn from our mistakes.
“There is no room for the poor behaviour of the past. We will take action early and decisively when we see evidence of poor practices.”
Financial crime will also be a priority under the new regime, with the FCA embedding risk-based “proportionate” supervision in an effort to tackle this.
The Systematic Anti-Money Laundering Programme will investigate anti-money laundering, terrorist financing, and sanctions systems and controls, while anti-bribery and corruption will be added to the programme in the second half of 2013.
In the document, the FSA announced that the Mortgage Market Review (MMR) will ensure that the mortgage market works better for consumers.
It will tackle responsible lending, distribution and disclosure, arrears management and prudential requirements for non-deposit taking mortgage lenders, with the final rules due to come into effect on 26 April 2014.
The FSA revealed that it will be reporting shortly on the findings of its initial review into the maturity of interest-only mortgages after considering the risk of existing interest-only mortgage customers who are unable to repay the amount due at the end of their mortgage term.
It has pledged to intervene where there are concerns about particular products in this market.
By Ellie Duncan