FCA annual report
The FCA annual report was published this week on 5th July 2017. Here are the highlights.
Are you sitting comfortably?
“Risks that are inherent in the financial sector: among them are overindebtedness, the ability to exploit more vulnerable consumers, the pace of technological change and its threats as well as its undoubted benefits, a lack of competition in certain sectors and meeting our long-term savings and pensions needs. “
There you have it, in the introduction a neat summary of FCA thinking.
And you're still awake.
This means the following for IFAs:
- Advising the vulnerable high risk – get it pre-approved by IFAC – we don’t charge members for that service.
- Technology – if you don’t use Reever then don’t expect spread sheets to make the grade. Get some compliance software.
- Lack of competition? Make hay while the sun shines, but without exploiting customers.
As ever... get advice and follow it. IFAC draw their knowledge from across the industry.
“This year marks the FCA’s last at Canary Wharf, as we prepare for the next stage of our work with a new office in Stratford. Our move to Stratford will give us a quality building, excellent facilities, the right infrastructure to meet our future needs and provides value for money. We will start moving in May 2018”
The CEO statement in full reads like a sensible and measured head master’s report. And so it should, it is a welcome relief from “be afraid” and “shoot first” days of old.
FCA facts from Report: 61% of people in the UK have at least one consumer credit product, with 26% of them having an outstanding debt on that product.
We estimate that two million credit cardholders have persistent levels of debt and a further two million cardholders were in arrears or defaulted on payments.
IFAC find the above facts staggering and question their validity.
Although the FCA do not quote the source, the indicator is set to red.
PPI claims has already reached £26.9 bn – close to reaching the £34bn cost of the Afghan and Iraq war combined for the UK!
This has generated more than 50 million machine based compensation cold calls (okay, I made that last bit up – but I personally account for one a fortnight for eighteen months = 36, so you have to wonder.)
One in two hundred IFAs got a whistleblower report filed on them.
3,540 consumer credit applications were completed by the FCA in 2016/17!
1,072 other new applications were completed - IFAs etc.
The FCA budget is now £554m each year.
The Pension deficit has risen again by £40m from to £174m.
IFAC believe that the focus is somewhat diluted by consumer credit which dominates the agenda.
Mortgage brokers and consumer credit brokers - watch out.