The city watchdog has promised to make sure that financial firms stay strong in the face of Brexit in its yearly list of priorities and this even involves shielding vulnerable consumers from excessively expensive loans.
The Chief Executive of Financial Conduct Authority, Andrew Bailey mentioned that, the watchdog’s solicitors were examining EU financial sector regulations as a part of government’s ‘great repeal bill’ that would transfer thousands of EU rules into UK legislation after Brexit.
While setting out his first yearly priorities as taking the helm previous year, Bailey said that UK’s decision to leave the European Union has created an uncertainty for both the FCA and UK’s financial sector. Both the government and FCA is keen to make sure that the financial services industry stays flexible and could make the most of chances in a post-Brexit world.
UK’s withdrawal from the EU would have significant implications for the FCA over the coming years. But, they’re communicating closely with the Treasury and Bank of England to make sure a smooth transfer of EU regulations and legislation is in the domestic framework.
As a former Bank of England Deputy Governor, Bailey says that the FCA planned to maintain good relationships with other EU watchdogs after Brexit and will be alert to companies that might try creating intricate business models as an effort to acquire access to the 27 remaining countries in EU.
In the month of March, Bank of England had revealed that it had asked several financial institutions to draw up an all-inclusive plan for how they’d deal with Brexit. As per FCA, every firm would have to assess the impact that a transformed relationship with Europe and any transformation to the regulatory government would have on their business models.
Along with supporting government’s withdrawal from EU, FCA also listed multiple other priorities for the upcoming years, which comprised of alerting consumers about the August 2019 deadline in order to lodge a claim for Payment Protection Insurance (PPI), continuing to examine high cost credit, shielding vulnerable consumers and taking a look at the way individuals save for their pension.
FCA pointed out to consumers locked in mortgage deals they had signed before the financial crisis that they wouldn’t be offered now under the new government requiring providers to assess the affordability of loan. Around 1.8 million consumers have signed up for interest-only mortgage and most of the don’t have any strategies to pay them off, including a few that should be repaid at least by 2020.
Its risk viewpoint cautions of “intergenerational wealth inequality” that would force youngsters to work even longer in comparison to their elders, especially if the wish to retire on same terms.
FCA even listed money laundering and cybercrime as potential risks, as the ever-increasing terrorist activity all across the globe present new sort of threats to the market integrity.
The across-the-board work of FCA that supervises 56,000 firms would also involve taking a look at the business models of retail banks and free banking, specifically for current account consumers who don’t make use of unauthorised overdrafts.