UK financial regulator pledges to be more assertive, pro-active

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The UK’s Financial Conduct Authority (FCA) has said it is changing to become a “more, innovative, adaptive and assertive regulator”.

Launching its business plan 2021/22 yesterday, it said it would be “setting the bar high” to support market integrity and sustainable innovation, ensuring firms start with high standards and maintain them.

The business plan sets out key areas of focus for the FCA in the coming year, with one of them being to increase supervision of whether asset managers present the environmental, social and governance (ESG) properties of funds fairly, clearly and in ways that are not misleading.

The FCA also said it would monitor the exercise of investor stewardship by institutional investors, including voting at Annual General Meetings. “If there is insufficient evidence of active stewardship to advance environmental and social goals, we will consider further regulatory action,” it said.

It will also use new approaches to find issues and harm faster and plans to invest £120m (€140m) in its data strategy over the next three years.

Nikhil Rathi, the authority’s chief executive officer, said: “The FCA must continue to become a forward-looking, proactive regulator. One that is tough, assertive, confident, decisive, agile.”

The plan also noted that the FCA wants to ensure that pension providers offer good value products, and that consumers can use guidance and support to help them make effective choices.

The FCA will seek views on how it can best increase value for money in pensions and it will also consult on changes for non-workplace pension providers to help ensure consumers are offered an appropriate default solution.

The authority will also be consulting on changing the balance between decisions taken by the FCA executive and the Regulatory Decisions Committee, which is a sub-committee of the board.

The proposed changes aim to streamline decision making on authorisation applications and specific supervisory and enforcement decisions, the plan disclosed.

Last month the FCA delivered a set of proposals to extend the application of climate-related financial disclosures along the investment chain, while also seeking views on its thinking about topical ESG issues in capital markets, such as whether it should work on a UK green bond standard, and regulate ESG data and rating providers.