In his keynote speech to the FCA's annual public meeting on Tuesday, Andrew Bailey (CEO) described how the balance of risks the FCA has to tackle has shifted towards operational risks, which fall broadly across four themes: operational resilience, technological change, financial crime, and data.
- Operational resilience and the consequences of its loss. The environment for ensuring operational resilience has become more challenging given the increased occurrences, and greater complexity, of cyber-attacks, and large scale technological changes to operational platforms. As recent events have illustrated, the failure of firms to effectively respond to, and cope with, operational disruption can cause significant harm to consumers and businesses, and to the stability of financial systems. As its statutory objectives include the protection of consumers and maintaining financial stability, it is only natural that the FCA sees operational resilience as a key focus area for the year ahead. We therefore expect to see more engagement and challenge by the FCA in this regard. Operational resilience is also on the radar of the PRA, having itself hosted a roundtable discussion this week on the topic.
- Technological change and innovation. The FCA recognises the usefulness of new technologies and innovation in the financial market, although these new technologies bring about new risks and threats, which the FCA is concerned to balance (for example, exposing consumers to higher risks of online fraud and misuse of data). The FCA has and continues to support innovation through its Project Innovate (a programme that provides direct support and advice to firms creating new technology in the market) and provides firms with the opportunity to test new technologies in a controlled environment, the "FCA's Sandbox".
- Financial crime. This continues to be a key focus for the FCA. Both Charles Randell (Chair) and Mr Bailey emphasised the FCA's continued and serious approach to tackling financial crime, and to making sure that the UK remains inhospitable to criminals. This year saw the establishment of the Office for Professional Body Anti-Money Laundering Supervision, which is housed in the FCA, and which will allow relevant authorities to collaborate better and share information more efficiently.
- Data. The FCA is especially focused on how firms use and manage their customers' data and Mr Bailey described this as an issue that is "high up [on] our agenda". Given the introduction of the GDPR and the increase in potential penalties firms may face for the misuse, loss, or mismanagement of customer data, we expect that this will also be high on your firm's agenda too.
