The message communicated the FCA’s strategy and its overall focus, including:
- reducing and preventing serious harm
- setting and testing higher standards
- promoting competition and positive changes
Some of the salient messages:
- to be more rigorous on firms seeking approval to operate
- at the end of the TPR (“Temporary Permissions Regime”), applications should meet the regulators expectations, but in some cases the FCA has asked firms to reconsider.
- The FCA are cognizant of the cost of living with inflation set to reach a 40 year high this year with energy bills rising much faster than wages. Those least able to bear the hikes will be hit the hardest, thus exacerbating the need to act in the consumer’s interest. The FCA is stopping firms with inadequate controls from entering the market, with 1 in 7 applicants not obtaining licensing.
- Changing the FCA’s operating model was critical in responding to the war in Ukraine, particularly responding to a range of globally coordinated sanctions. Further proposals on the use of side pockets will be published, in light of the challenges of disposing Russian and Belarussian assets.
- In line with the government’s commitment to help firms transition to net zero, the FCA is tailoring its rules to play a leadership role in supporting the market-led transition to a more sustainable economy.
- The FCA recently confirmed positive diversity targets for listed companies, which firms must comply with or explain to their investors why they are not. This includes 40% of board seats that should be held by women, and at least one position held by a minority ethnic director. The FCA has broken new ground in asking firms explicitly to aim for at least one of the four most senior board positions to be held by a woman.
- In crypto, the FCA’s remit is currently limited to ensuring anti-money laundering rules apply to crypto firms. Minimum standards are expected of firms that are regulated (and some that are not), from notaries to estate agents, to make sure firms are not used to funnel money to fuel crime, terrorism or war, with 33 crypto firms having gained registration under the anti-money laundering rules.
- Tougher sanctions are levied on firms causing harm, as evidenced by the first ever criminal prosecution under anti-money laundering regulations and against individuals carrying out regulated activities without authorisation.
