So maybe it’s not as extreme as ‘adapt or die’ but there’s definitely a change in the air. This summer, the FCA issued its 2021/22 Business Plan and having read it through with a fine-tooth comb there’s no denying that change is coming.
The environment in which the FCA is operating changes rapidly as a result of economic, technological and social movements. Throw a global pandemic in there plus a bit of BREXIT and the FCA’s job suddenly becomes overwhelming.
But Nikhil Rathi, FCA Chief Executive is driving ahead with strategic change to ensure that the authority keeps pace with the needs of modern markets and continues to prevent serious misconduct that can have significant global economic impact.
What can we expect from the FCA in the next 12 months?
The organization has invested significant amounts of money in new technology and data use optimization. They’re also going to be working more closely with international as well as UK-based organizations to ensure best practice is adopted and implemented early.
How will they measure success?
Alongside their business plan for the next 12 months they’ve also set clear, quantifiable targets so that they can track progress and stay on track. The FCA has made a commitment to be a more innovative, adaptive and assertive regulator, ensuring accountability for its progress on:
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Supporting market integrity and sustainable innovation, ensuring firms start with high standards and maintain them,
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Using new approaches to find issues and harm faster, with £120m invested in its data strategy over the next three years,
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Tackling misconduct.
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Enabling consumers to make informed financial decisions, and.
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Investing in people, reshaping its culture and working with others to achieve more.
How will the FCA better support consumers?
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Consult on proposed changes to strengthen the rules for firms that approve financial promotions,
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Launch a 5-year campaign to inform consumers about high-risk investments and what is and isn’t protected,
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Publish Consumer Investments Strategy, setting out the work the FCA will deliver for retail investors.
What does their plan for digital financial markets look like?
Information was fairly limited in the plan but the top line is that the FCA is starting to take the need for regulatory solutions more seriously. As a starting point the FCA is:
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Implementing pricing and automatic renewal remedies in January 2022.
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Developing a digital markets strategy.
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Investigating harmful business practices to establish how common and harmful they are to consumers and stop them.
So what does this mean in the short to medium term?
We are expecting some changes of approach to be immediate, but we also expect the FCA to review these changes over the next 12 months. The overarching aim is to set clearer and higher standards for regulated firms' culture and conduct, so that customer interests are put at the centre of business models.
In the longer term, the FCA is aiming to reduce payouts from the FSCS. Ultimately the FCA wants firms to have appropriate capital reserves in the bank themselves to ensure that they can compensate for potential liabilities in-house.
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Editors’ Picks
EUR/USD holds losses near 1.1850 as US, China holidays keep trade muted
EUR/USD opens the week on a softer note, trading near 1.1860 during the Asian session on Monday. Activity is likely to remain muted, with United States markets closed for the Presidents’ Day holiday, while Mainland China is also shut for the week-long Lunar New Year break.
GBP/USD flat lines as traders await key UK macro data and FOMC minutes
The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.
USD/JPY stays firm around 153.00 after Japan's Q4 GDP miss
USD/JPY kicks off the new week on a positive note as Japan's weak Q4 GDP growth tempers bets for an immediate BoJ rate hike and undermines the Japanese Yen. Investors, however, seem convinced that the BoJ will stick to its policy normalization path amid hopes that PM Takaichi's policies will boost the Japanese economy. In contrast, cooling US consumer inflation reaffirmed bets for more Fed rate cuts in 2026, which acts as a headwind for the US Dollar and should cap the currency pair.
Editors’ Picks
AUD/USD defends gains below 0.7100 amid the Fed-RBA divergence
AUD/USD attracts some dip-buyers near mid-0.7000s during the Asian session on Monday, stalling last week's modest pullback from a three-year peak. The US Dollar continues with its struggle to attract any meaningful buyers amid bets for further rate cuts by the Fed, bolstered by the softer US CPI report on Friday. In contrast, the Australian Dollar retains a bullish bias on the back of the RBA's hawkish stance, which further acts as a tailwind for the currency pair.
USD/JPY stays firm around 153.00 after Japan's Q4 GDP miss
USD/JPY kicks off the new week on a positive note as Japan's weak Q4 GDP growth tempers bets for an immediate BoJ rate hike and undermines the Japanese Yen. Investors, however, seem convinced that the BoJ will stick to its policy normalization path amid hopes that PM Takaichi's policies will boost the Japanese economy. In contrast, cooling US consumer inflation reaffirmed bets for more Fed rate cuts in 2026, which acts as a headwind for the US Dollar and should cap the currency pair.
Gold remains below $5,050 despite Fed rate cut bets, uncertain geopolitical tensions
Gold edges lower after registering over 2% gains in the previous session, trading around $5,030 per troy ounce during the Asian hours on Monday. However, the non-interest-bearing Gold could further gain ground following softer January Consumer Price Index figures, which reinforced expectations that the Federal Reserve could cut rates later this year.
Top Crypto Losers: Dogecoin, Zcash, Bonk – Meme and Privacy coins under pressure
Meme coins such as Dogecoin and Bonk, alongside the privacy coin Zcash (ZEC), are leading the broader market losses over the last 24 hours. DOGE, ZEC, and BONK ended their three consecutive days of recovery with a sudden decline on Sunday, as crucial resistance levels capped the gains. Technically, the altcoins show downside risk, starting the week under pressure.
Global inflation watch: Signs of cooling services inflation
Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.
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