This is the first of two Grant Thornton blogs on the FCA's Business Plan 2018/19, published today. This one looks primarily at Brexit, which dominates, while the second identifies six other areas that deserve special attention.
Please get in touch with David Morrey, Gareth Miller or myself if you would like to discuss further.
Unsurprisingly, EU Withdrawal (“Brexit”) sits front-and-centre of the FCA’s Business Plan for 2018/19. However, it would be folly to believe the regulator’s focus for the next year ends there; the FCA will look to complete much in-train work before Brexit pressure builds on its resources.
We also expect the FCA to pick up the baton with renewed vigour in Spring 2019. With the EU Withdrawal (“Brexit”) date falling at end of the planning year, the Business Plan activities can be broadly categorised between:
- EU Withdrawal
- Existing work, targeted to deliver pre-Brexit
- Work on hold until after Brexit
This is very clearly covered in the Plan, as the first of the FCA’s sets of priorities. The work set out is a combination of “preparing for” and “monitoring of” EU Withdrawal over the coming 12 months. This will be resource-intensive and much of the effort will come with charting new territory, not only for the FCA but for the UK more generally. it falls into seven areas:
1. Working with Government on converting EU legislation into UK law
2. Liaising with the Bank of England, reflecting their joint responsibility for dual-regulated firms
3. Assessing the impact of transitional arrangements
4. Building the new regime for the regulation of EEA firms, including a temporary permissions regime and regulation of credit-rating agencies and trade repositories
5. Monitoring supervisory risks arising from the impact of Brexit on firms’ future operations and business models
6. Preparing the FCA’s own operations, including its systems & technology
7. Maintaining and extending international cooperation, including information sharing on firms, markets, policies and future regulatory regimes
Of course, 29 March 2019 will not mark the end of the FCA’s focus on EU Withdrawal; its activities will extend beyond this. As well as maintaining monitoring and assessing activities, it is likely that some of the building blocks of the post-Brexit regime will continue to fall into place over the course of 2019.
There is a huge body of ongoing work, which the FCA looks determined to deliver this calendar year. In other words, this is “known” activity that the regulator has calculated is deliverable before the pressures of Brexit start to build in late 2018.
A number of recent changes will be embedded over the course of the year. We know, for example, that IDD, MiFID II and PSD2 will continue to be a focus. We can see in the Business Plan an indication that the FCA will take on board the GDPR as part of its wider data agenda. The new Office for Professional Body Anti Money Laundering Supervision (OPBAS) will take shape.
As part of this embedding, one could also include commitments to review earlier work, such as RDR and FAMR. From the regulator’s perspective, this year represents a sweet spot where time elapsed will have generated sufficient material yet the subject is not “stale”.
There is also a large amount of what might be termed “shaping” the regulatory agenda. The final rules for SMCR are to be published in late 2018, the path will be laid for regulation of Claims Management Companies, the FCA intends to publish rules on crowdfunding and access to FOS for SMEs, we will see rule changes from the Asset Management Market study - and there will be a cryptocurrency review.
Notwithstanding the likely heavy continued EU Withdrawal workload mentioned above, the FCA’s Business Plan contains much that, realistically, can be viewed as groundworks for beyond March 2019. This is not to say there will be a shortage of activity for firms. In fact, the large number of reviews, studies and consultations will be of interest or merit a response (not to mention the less well defined “considering” or “developing” items).
Depending on sector, firms will need to anticipate the FCA’s interests, understand its views and adapt to any new rules. All this is telegraphed today, but will come to the fore in 2019.
The priorities in this year’s Business Plan reflect the high level of resource the FCA needs to dedicate to European Union (EU) withdrawal, given its impact both on our regulation and the firms we regulate.