Preparing for the UK’s departure from the European Union will cost the Financial Conduct Authority £30m over the next year, the City regulator said today.
It said the money, which is seen as a significant sum, will be found by setting “non-critical” work to one side, in order to come up with £14m, while the rest is expected to come from reserves and fees obtained from the financial services industry.
The £30m figure was contained in the FCA’s Business Plan 2018/19, which spells out the organisation’s priorities, and how much it intends to allocate to them, over the year ahead.
Last year the FCA needed to find an extra £2.5m to fund its Brexit-related expenditures. The UK is currently scheduled to leave the EU on 29 March 2019.
The 62-page Business Plan contains an introduction by FCA chief executive Andrew Bailey, who acknowledges that the plan’s priorities “reflect the high level of resource we need to dedicate to EU withdrawal, given its impact both on our regulation and on the firms we regulate”.
“This inevitably affects the amount of work we can undertake in other areas,” he adds.
“As a result, agreeing our 2018/19 priorities has involved particularly rigorous scrutiny and challenge.”
Also contained in the Business Plan are detailed explanations of other FCA priority areas, broken down by sectors, including corporate culture and governance, financial crime and anti money-laundering, “big data” and technology, treatment of existing customers, and pensions and retirement income – where “helping consumers avoid [pension] scams” is listed among the priorities.
About the latter, Bailey notes that “the shift to consumers having to take more responsibility for their financial choices has coincided with increasingly complex needs…perhaps nowhere more clearly illustrated than in the retirement income savings and pension market”.
On this point, he adds: “In the past year, we have been extremely concerned about some firms exploiting consumers’ lack of knowledge of pension products when advising them to transfer out of defined benefit pension schemes,” and notes that the FCA’s recently-published new rules aim to “improve the quality of pension transfer advice to help consumers make informed decisions for their individual circumstances”.
Elephant in the Business Plan: Brexit
It is Brexit, though, that is the dominant issue in the FCA’s report, as its authors concede, observing at one point that “a significant proportion of our resources are already focused on the forthcoming exit,
including arrangements to implement the change…[and that] to fulfil our regulatory objectives and provide technical support to the government in the run-up to withdrawal, we have increased the level of resource dedicated to co-ordinating and managing this work”.
Alongside the Business Plan, the FCA today also published its annual fees Consultation Paper, Sector Views and a Discussion Paper on its evaluation framework. To see these, click here, and then on the relevant links.
To view a five-minute video of Bailey, pictured left, discussing the FCA Business Plan, click here.
Among the changes 2018/19 will see at the FCA, meanwhile, will be a move of its offices out of its current Canary Wharf location, pictured above, to the “International Quarter” in the Stratford district east of London. The “improved technological infrastructure” there “will allow us to work more effectively and collaboratively, meeting our public interest objectives”.