This weekend's blog is the first in a series, over the next couple of months, that will try to interpret what the FCA's Business Plan, published last Monday, means in practice for both firms and the regulator. How will it play out on the ground in the year leading up to Brexit - when the FCA is moving to Stratford, trying to embed its Mission, and continuing its always heavy existing agenda?
At the start of the year I posted a couple of blogs, on 2nd and 7th January - about what to expect in regulation in 2018, and six signs of Brexit pressure to watch for. And on 1st April, a third blog looked at how the FCA's Mission and approach documents might be expected to influence the Business Plan.
So, using these as a starting point, here are four initial reactions to the Business Plan:
1. Prioritisation may not go far enough: A lot is made in the plan of the hard choices Brexit has entailed, but in truth there is limited sign of major work streams being halted, while there aren't noticeably fewer sector priorities than last year. I suspect the "hard choices" were instead about not funding new areas of work and not providing additional funding to existing areas. If so, further work will be deprioritised through the year as the imperatives of Brexit start to bite.
2. Experienced supervisors will be at a premium: As key regulators are drawn from their current roles into Brexit's web, there is likely to be a churn of backfilling to plug the gaps. The greatest impact of this is likely to be felt in Supervision, which could see a high proportion of acting roles, with relatively inexperienced staff having to learn on the job.
3. Deeper silos: Another indicator of Brexit pressures, deeper silos, is likely to become apparent in at least two ways: through reduced opportunities for career development as non-Brexit moves are delayed (more important than usual as the regulator seeks to minimise turnover while it moves to Stratford); and through lower importance being given to cross-divisional work. As a result the relationship between Supervision and Policy in particular is likely to become weaker as each focuses on its own priorities.
4. Mission not yet accomplished: It was unrealistic to expect more, but a first reading of the Business Plan doesn't reveal much discernible "post-Mission" shift. There is a greater consistency in the rhetoric and language used to describe the FCA's activities, but this isn't yet having an obvious effect on the activities themselves. To take two examples,, there is little sign yet of how vulnerable consumers are being defined or prioritised, and references to outcome indicators (evaluation) remain very general.
Overall, I suspect that, initially, firms will see little difference in the FCA's approach. However, from about July onwards, there may well be increasing slippage of planned work as Brexit prioritisation takes effect and resources become increasingly stretched.
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.