The publication of the FCA Business Plan 2014/15 (see separate article in this Regulatory Roundup) was accompanied by the FCA Risk Outlook 2014.
The FCA Risk Outlook identifies potential issues which require monitoring by the FCA to determine when and how it should intervene whereas the Business Plan sets out the work planned for 2014/15 to address identified risks.
Under the section devoted to the underlying drivers of risk, the paper suggests that financial capability is becoming increasingly important for consumers, although research shows that general understanding is weak. Some alarming findings include around 1 in 6 people being unable to identify the available balance when shown a bank statement and 44% of those aged under 35 failing to identify that inflation at 5% would erode the purchasing power of money in an account paying 3% interest.
The latter part of the Risk outlook identifies seven ‘Forward-Looking Areas of Focus’ (summarised in a one-pager – see link) and which are also referenced in the FCA Business Plan mentioned above. They have, of course, been overshadowed by the furore following the Clive Adamson interview, before the release of the Risk Outlook, in the Daily Telegraph which suggested that the FCA was planning an inquiry into 30 million pensions and savings policies sold from the 1970s to 2000 which was, somewhat later that day, retracted/clarified by the FCA.
The issue, as published in both the Risk Outlook and the Business Plan, is the fair treatment of customers with no apparent mention of reviews going back 40 years. Other areas of focus include excessively complex product terms and conditions, the growth of consumer credit and poor culture and controls continuing to threaten market integrity.
