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FCA Decision-Making Reforms Overview:
- Who: The Financial Conduct Authority has announced changes to its process
- Why: The financial services watchdog is reforming its decision-making process so that managers can take faster action when they see harm to consumers in the financial space
- Where: The reforms will take place in the UK.
The UK’s financial services watchdog has announced reforms that it hopes will make it more effective at preventing harm to consumers from bad actors in the financial services industry.
In a notice posted Nov. 26, the Financial Conduct Authority (FCA) announced it had reformed its decision-making process to ensure it can make “faster and more effective decisions for consumers, markets and firms.”
The main change to the FCA’s process involves giving senior managers the authority to take more actions against financial services providers that are causing harm.
Previously, only the Regulatory Decisions Committee (RDC) had the authority to make these decisions, which allegedly slowed the process.
The FCA said the new process would focus on areas where it needs to prevent or stop harm to consumers or the market occurring or increasing by preventing firms from offering financial services in the first place or intervening to restrict the financial services offered to consumers.
Meanwhile, the RDC would focus its attention on significant misconduct cases where the harm has already materialised and the issue is what, if any, sanctions are appropriate. The FCA said these cases are typically less time-sensitive.
FCA Changes Reflective of Economic, Technological and Social Changes
Going forward, FCA managers will have the authority to do things like take action in straightforward cancellation cases because a firm does not meet its regulatory requirements, to commence civil proceedings, such as seeking an injunction and to commence criminal proceedings, such as a prosecution for insider dealing.
“There have been dramatic changes to the financial services regulatory landscape, reflective of the wider economic, technological and social changes, as well as the challenges of the pandemic and the UK’s exit from the EU,” the FCA said.
“To tackle the challenges faced by consumers and industry, we need to make faster and more effective decisions to promote the right outcomes for consumers, markets and firms.”
The FCA said the need for change was also made clear in recommendations made by independent reviews into its regulation of London Capital & Finance, a company that was issuing mini-bonds, an unregulated investment product that typically offers high-risk returns, and then collapsed.
The news comes as a former financial ombudsman is given the green light to file a £10 billion class action lawsuit against Mastercard on behalf of around 46 million consumers, following a reversal of course by the Competition Appeal Tribunal.
What do you think of the reforms to the FCA? Let us know in the comments!
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