This may not have necessarily have hit your radar, but did you know that since 2016, the FCA has been looking at its own performance, and publishing its findings against its Key Performance Indicators (KPIs) on its website every quarter?
In a previous blog I discussed the FCA’s likelihood to start using regulatory KPIs as an indicator of cultural change and why firms should be paying attention to this trend. But in return, it’s quite reassuring to know that we have a regulator who is publicly transparent and regularly publishes their results for all to see.
They evidence this transparency by reviewing their performance across eight different categories. Some of the over 60 service standards (yes, 60!) sitting underneath that, cover various aspects to do with its operational functions. For example, how quickly it responds to and deal with letters from MPs and complaints about its service. And how many authorisation and permission changes it’s received and processed within a set period of time. All these hard-wired measures will sound very familiar to the many of you reading this, who are involved in your firm’s operational performance.
In assessing its performance, the FCA identified there were areas it needed to improve on, and that it would work to reduce the number of standards that had fallen below its minimum target. I think what that means in layman terms is that they missed the target in some areas.
But the FCA’s self-reflection exercise goes a lot deeper than just saying how much was coming in, how much was going out and how long it took to do it. If you haven’t had a chance to have a look, it’s well worth the read. Not necessarily to pour over its findings with a fine-tooth comb while getting some satisfaction that the regulator isn’t perfect. Who is?
It’s a valuable read in order to get a greater insight into how the financial services industry is changing – with certain areas within this growing more quickly than others. It means the make-up of the financial services industry of today is very different to how it was, say even a year ago. And, if you needed another reason to have a look, this self-reflection exercise is helping to inform the FCA on how it should regulate and what’s working for consumers (or not.) So, it is not just about them, this is about us too.
In its last KPI report, the FCA commented on the steady flow of consumer credit authorisations it was receiving. What we don’t know from this data is whether this steady flow was driven by firms responding to a growing need from its customers for this type of lending (consumer led), or firms discovering the opportunity to branch out further into an attractive market they hadn’t been in before (business led). It’s a subtle difference and a bit of a chicken and egg debate, so could be a combination of both.
But either way, this shift is something the FCA closely monitoring, as the growth has been happening in areas where there has, to date, been more of a risk of consumer detriment or harm.
The FCA also reported a sizeable increase in applications for payments services and e-money – with hints of innovation and new disrupters entering the market. But interestingly, it also noted that several applicants then subsequently withdrew their applications because they weren’t able or willing to meet the current regulatory requirements.
With the FCA’s focus on vulnerability and consumer harm, it feels like there is a lot for it to grapple with and for firms to get their heads around. In response, it has come up something to raise the bar around consumer protection – a new Consumer Duty that will require firms to act to a higher standard than the current Principle 6, Treating Customers Fairly. So, for those of you reading this who aren’t involved in consumer credit, now is not the time to sit back and relax. Sorry. This is still about you. It’s about all of us. The FCA is shining its spotlight into other parts of financial services like never before.
In conclusion, there are two of the FCA’s KPIs I haven’t mentioned here, but they have played a constant role behind the scenes in all my blogs so far. And they are: the FCA’s performance on its regulatory decisions and customer feedback. And in the next blog, we’ll look at these two in more detail, to bring everything we’ve been saying throughout our series of blogs, together.
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