Ciara Russell contributed to the writing of this blog post.
Last week, the Financial Conduct Authority (FCA) published its business plan for the year 2015/16. The plan covers:
- Risk outlook (previously a separate document)
- FCA strategy
- FCA’s key priorities
- Ongoing activities and deliverables
- How the FCA operates
In this blog, we summarise the risk outlook, how the insurance sector is impacted by the FCA’s upcoming activities and look at relevant market studies.
The business plan discusses some key areas of risk for the financial services market. These are summarised below:
Conflicts of interest, with a focus on wholesale markets
Unfair contract terms
|Policy, legislation and regulation||
EU and international
|Economic and market trends||Trends in growth, interest rates and inflation|
The ageing population and older consumers
Innovation in online and web-based channels
Complex systems and intermediaries and/or gatekeepers
Failure to invest and maintain
The FCA key priorities that are applicable to the insurance sector are:
- Role of Appointed Representatives – The FCA will review the role of Appointed Representatives in the distribution of general insurance products and in particular, if there are adequate and robust systems, controls and resources to effectively select and oversee Appointed Representatives.
- Technology and use of Big Data – A market study will be conducted to investigate how insurance firms use Big Data or other unconventional data sources. The FCA will consider potential risks and benefits and ensure regulations do not unduly constrain beneficial innovation in this area.
- General insurance add-ons – The FCA plan to address issues found in a 2014 market study. These include banning ‘opt-out’ selling across all products sold by an authorised firm and issuing guidance to improve the way add-ons are sold on price comparison websites.
Current and planned market studies and thematic work
Studies applicable to the insurance sector are:
|Sector||Review||Start date||End date|
Visibility of IT resilience and risks at Board Level
Performance management of staff
|General insurance and protection||
Commercial claims by SME customers
Role of Appointed Representatives
Technology: use of Big Data and access market study
Post April 2016
You can read the FCA’s business plan in full here: http://www.fca.org.uk/static/channel-page/business-plan/business-plan-2015-16.html
- Technological risks continue to feature on the FCA’s radar as can be seen in their risk outlook, priorities and market studies.
- Appointed Representatives for general insurance firms are a key priority.