The FCA’s decision to publicly shelve one major piece of work – a market study on credit information – in favour of another – another market study, on pricing in GI – is, despite the constant theme of prioritization, extremely rare. Taken together with the other initiatives highlighted in this press release, it may also mark a major turning point.
The FCA and PRA, and the FSA before them, do prioritise and re-prioritise, constantly, but they rarely do so in public. One example, now slightly notorious but quite possibly reasonable at the time, was the decision in the early 2000s to prioritise reforms in the regulation of capital over reforms in liquidity. The former didn’t help much during the crisis while the latter was arguably much missed.
Such decisions are always difficult, and can easily be cursed by the wisdom of hindsight. And so the preference of regulators is almost invariably to try and keep all the plates spinning, but deliberately allowing some to rotate more slowly. It is true that market studies don’t carry the same acute risk as supervisory decisions, and I’ve written before about their multi-year, slow-burn nature. But it’s still not too hard to imagine future events in the provision of credit information that make this switch of priorities look unwise.
However, this is a welcome decision for everyone – inside and outside the FCA – who is in favour of regulation that is more transparent, predictable and coherent. We don’t know what it will mean in the long term for GI regulation, but at least there should be fewer surprises than has sometimes been the case.
On the theme of coherence, it’s worth, also, examining further the explicit connection the FCA is making between this new market study on GI pricing and four other initiatives:
- The supervisory thematic work in this space, and subsequent Dear CEO letter
- The Which? super complaint
- The FCA’s forthcoming consultation on vulnerability, and
- The consultation on firms having a “duty of care” towards their customers that was launched last summer
There are real perils to attempting to join these up, both internally and in the public narrative. They each have wide implications that reach across the FCA’s complex structure, and in practice the mechanisms for effective coordination are heavily dependent on informal workarounds and individual goodwill. And the problems these initiatives reflect have extensive overlaps without necessarily having the same or similar solutions.
However, as with consumer credit, which I wrote about recently, these challenges can be partly overcome by the clear CEO sponsorship that is again evident.
And, it can’t be said too often, the perils of not joining up these initiatives transparently are likely to be much greater, they’re just less obvious. And looking at such issues separately or sequentially is, overall, likely to be more attritional and costly for the industry.
The resulting debates should be more open and much better informed as a result.
We are delaying the launch of our Credit Information Market Study (CIMS) Terms of Reference until June 2019. We remain committed to launching this market study. However, we have decided to delay its launch from Q4 2018/19 to June 2019 because we have had to prioritise resource to launching the market study on general insurance pricing, which was not previously announced in our business plan as a market study.