On April 9, 2018, the UK’s Financial Conduct Authority (FCA) published its Business Plan for 2018/19 which highlights the key priorities for this year. This year’s priorities reflect the resources the FCA needs to prepare for withdrawal from the European Union (EU).  Brexit is a key priority for the FCA as it seeks a smooth transition to the new UK regime. The business plan outlines seven cross-sector priorities and seven sector-specific priorities.

The seven cross-sector priorities include:

• firms’ culture and governance which should drive behaviors and produce outcomes likely to benefit consumers and markets;
• high-cost credit, building on the significant impact already made in the market;
• tackling financial crime, including fraud, scams and anti-money laundering (AML) to make the UK financial services sector a hostile place for criminals and a safe place for consumers;
• data security, resilience, and outsourcing since technology plays a pivotal role in delivering financial products and services;
• innovation, big data, technology, and competition, which are driving change in markets;
• the treatment of existing customers to ensure that they do not get less attention or receive poorer outcomes than new customers; and
• long-term savings, pensions and intergenerational differences, which reflects the changing UK population and their financial needs.

Many of these areas are already a focus for FCA Sector-specific priorities listed in the Business Plan cover financial markets, investment management, retail lending, pensions, retail investment, retail banking and general insurance.

FCA has also published its proposed fees and levies for 2018/19. It said its annual funding requirement for the year was £543.9m, “an increase of 3.2%” from the previous year. Reasons cited for the increase included additional ongoing regulatory responsibility and European Union withdrawal costs.

Takeaway:

The pivotal role of technology is highlighted throughout the Business Plan. Firms are encouraged to use technology to enable innovation and to support their business strategies. FCA notes that technology plays a central and developing role in wholesale financial markets. Fast-paced technological changes will result in faster decision making, innovation, increased competition, and reduced costs. New technology presents opportunities for helping firms meet AML requirements more efficiently.

Financial crime and AML remains a priority for FCA. The new Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will take effect this year. OPBAS oversees AML supervisors and aims to ensure a robust and consistent standard of AML supervision across the regulatory landscape.

To keep up with these developments, partner with a vendor that has the technology capabilities and innovation to help meet regulatory requirements. You can set up an archiving platform to detect risk with lexicons focused on AML, financial crime, fraud, and get instant notifications when a user is non-compliant.  AML lexicon examples include: “an offshore account,” “a tax haven,” and “money was illegal.” Lexicon policies greatly enhance your supervisory controls and help meet regulatory requirements.

Activity around MiFID II and GDPR compliance will be significant areas of focus going forward. MiFID II requires that financial services firms retain records, including recordings of phone conversations on fixed line or mobile devices, as well as all electronic communications, including email, social media, instant messaging, text/SMS messaging, and so on. The MiFID II rules apply to relevant communications from any personal or business device.

This year, firms can expect to see increased enforcement against firms and individuals. The increase in annual funding for regulatory oversight will support the enforcement functions. Enforcement has a particularly visible role in FCA regulation. The FCA will continue to tackle consequences of misconduct, seeking redress or remedy for those harmed.