My last blog on FCA priorities focused on three important speeches, made within the space of a week, that together shone a light on the regulator's longer term pressures and priorities. Since then, however, the FCA's pace of activity has apparently quickened and its perspective has arguably shortened.
In the three week period up to 13 October, the FCA website shows 7 announcements on the News section of its website, including those speeches, but in the fortnight since there have been 20. So what has changed?
Here are 4 ideas about what may be happening - they are more tentative than usual, as the picture and direction of travel are less clear - and a suggestion as to how firms should respond:
1. Normal service resumed: These signs of increased activity are part of a natural seasonal rhythm, as the FCA's governance machine is fired up to full speed after the summer. That said, mid-October is quite late for this to manifest itself, and it may be that other matters - likely including Brexit and the heavily trailed strategy papers on consumers and pensions - have been preoccupying FCA senior management.
2. Enforcement: Notably, 7 of the 20 announcements are Enforcement-related, including 3 fines. Mark Steward has spoken recently about opening more investigations and (implicitly) taking on more cases, but some of these announcements are updates and it is too soon to tell if this is the start of a trend. If, as expected, SM&CR heralds the regulator taking more individual cases, we are likely to see fewer settlements and less predictability about how long cases will take.
3. Asset management: The two speeches made during this last fortnight (one by Andrew Bailey) both focused on this sector, which also saw the launch of the Asset Management Authorisations Hub. As I've suggested before, this is part of a complex narrative stemming from the recent market study, and how it will turn out remains unclear. Historically, this sector has been relatively lightly supervised given its size, but the combination of increased policy focus and the introduction of SM&CR makes additional Supervision resources and attention almost inevitable. The Hub can therefore be seen as a precursor of the new approach.
4. Acting fast, and slow: One way of looking at regulation is in terms of the time it takes to complete the relevant action. Authorisation-type processes and Supervision tend to be at the shorter end of the spectrum (c.3mths to 2yrs), while Enforcement, Policy and Competition are towards the longer, and one of regulation's challenges is to coordinate the inevitable gaps and overlaps between these various regulatory tools. The picture presented by the FCA's output over the last fortnight is highly complex by this measure. It's hard not to conclude that some of the lead times for action are lengthening, and coordination becoming harder.
For firms, the response should be to try and take a longer view and pay proportionately greater attention to the aggregate impact of regulations. The temptation is to focus on individual timelines in isolation and deal with these sequentially. However, when these timelines stretch and become less reliable, there is a strong case for focusing on the commonalities and connections between different initiatives and paying less attention to the (provisional) individual milestones. Spotting these connections will be the key.
I want to use my remaining time to cover three issues of the day which are highly relevant for investment management, namely: Brexit; the Asset Management Market Study; and innovation and how we can support it. This is going to be at a pace I’m afraid.