With Chris Randell in the Chair the virtual FCA AGM on 24th September started, as like every other AGM, with a roundup of the regulators activity. Of course this year all activity has been over shadowed by the impact of COVID and the FCA said it had, like other firms, faced challenges moving the workforce into WFH.
Unlike previous years however, the normal panel updates were skipped and we went straight into questions from the “attendees”. Of course this was the major difference – we the audience of interested parties were all sitting at home or in the office watching the FCA’s live responses to questions we had sent in – so no heckling or shouting from the floor as seen in previous years and no follow up questions. It appeared to be much more palatable for the FCA but not half as interesting for the audience.
Charles Randell and Interim CEO Chris Woolard, (now exiting) fielded the questions firstly from the studio and then went to other Heads of area for further detailed responses, namely;
- Megan Butler, Director of Supervision – Investment, Wholesale and Specialist
- Jonathan Davidson – Director of Supervision – Retail and Authorisations
- Sheldon Mills, Director of Strategy
- Nausica Delfas – Executive Director of International
- Mark Steward – Director of Enforcement and Market Oversight
During the 2 hours, questions ranged from managing culture and diversity at the FCA, changes to complaint handling, operational resilience, sustainability within firms, Brexit (of course) and responses to independent reviews. We have picked out a few which we thought might be of interest, for those of you who had better things to do with those 2 hours of your life or just knew it wouldn’t be so entertaining this year!
Authorisations and changes to permissions – Jonathan Davidson said several thousand applications for new permissions had been processed last year meeting the statutory deadlines. However, the challenge and pinch point is coming from dispersed working and the volumes of SMFs being applied for by FCA solo regulated firms coming under the extended SMCR regime. 20 new staff and contractors are being deployed to work through the backlog.
Brexit – the work to onshore the European rulebook is progressing and the new handbook and the changes will be available soon. The EU restricting the business of UK firms is a concern, and Nausica Delfas reiterated to UK firms operating within the EU they should be checking any local conduct of business rules to ensure they are operating compliantly in the local environment. It was confirmed that the FCA is working well with other competent authorities in the EU and in particular with ESMA.
Financial Crime – Mark Steward confirmed there a number of ongoing investigations and particularly highlighted that there is often disconnect between controls and judgement. There are some serious fines likely to be issued in due course.
Working relationships – Charles Randell explained that he had made it a mission during his time, to date, in the Chair to ensure that regular meetings were established between FOS, FCSC and FCA as well as the Pensions Regulator. Through this activity he hopes clearer joint strategy will be forthcoming.
Woodford investigation – from the questions there was a suggestion that serious misconduct had taken place. The FCA confirmed that work with the BoE had resulted in clear guidance on liquidly for firms with both Dear Chair and Dear CEO letters being issued. They also confirmed the FCA board was continuing to follow the facts of the investigations. Mark Steward said the circumstances, which were complex, was a priority issue and both firm activity and individual actions were being investigated.
Scams – Charles Randell and the FCA receive daily alerts to scams and unauthorised firms trying to illicit funds from individuals. Special mention was made regarding pension scams and whether Pension Freedoms was a mistake. It was also noted that social media companies need to play their part in the protection of customers and take scam ads down as soon as they are recognised but customers still need to be more vigilant.
Operational Resilience – Whilst the FCA conceded that firms had broadly managed dispersed working well “so far” they are looking for firms to have resilient creative solutions regarding the oversight of activity and assessing performance and behaviour which they believe will become harder overtime. There were several other references to operational resilience but the overarching requirement came across as “how we incorporate operational resilience in every aspect of how we interact with consumers”.
It would be fair to say the FCA didn’t shy away from the difficult questions and the panel were candid about the 3 Independent reviews that were taking place but as an attendee I really hope attendance is physical and not virtual next year.
You can access the recording of the AGM 2020 on demand now through the FCA website here. There is also a link through to the FCA’s responses to questions not addressed in the meeting.