WMA’s Barrass: ‘FCA communication is key in a changing market’

The FCA’s Future Mission consultation aims to usher in an era of improved communication between industry stakeholders, which could prove key as London readies to defend its position as a global centre of excellence in financial services.

Industry associations and others have welcomed the regulator’s exercise as a
helpful initiative that will encourage widespread participation, resulting in more efficient stewardship as markets grapple with Brexit.

As a vital element in successful policy-making, the WMA particularly welcomes the regulator’s interest in gathering 360° feedback from all market participants.

This, together with recent initiatives to stimulate greater information flow including a push to simplify key messages, will be crucial in boosting transparency and accountability by the regulator towards the 56,000 firms it supervises.

Businesses such as private banking and wealth management, the remit of the WMA, are positioned at the intersection of retail and wholesale markets.

For us, it is important for future policy initiatives to be measured and appropriate, recognising the unique composition of our member base – ranging from small boutique firms to larger established private banks. All the while protecting the end consumer and their ability to participate more broadly in financial markets.

Joint initiatives that promote enhanced communication flows and feedback gathering from an industry-wide group of trade associations are a step in the right direction.

They create an umbrella discussion format under which all stakeholders can refine key industry messages, providing a sounding board for the regulator and aiding the fine-tuning of its policy responses to a wide variety of market participants, including the wealth management and financial planning community.

Regulation: A balancing act 

One of the key requirements of the FCA is to ensure that any future regulation is targeted, efficient and appropriate to allow financial markets to operate seamlessly, while continuing to provide for retail access to investment on as broad a base as possible.

This balancing act will be closely watched by market participants. Recent research substantiates concerns that the regulatory pipeline is driving up operational costs which lead to fee increases for clients, thus excluding many from accessing services.

In the same vein, while stakeholders are keen to ensure regulatory issues are treated with proper attention to detail, they also want there to be full oversight of policy initiatives as a whole. Changes in policy wording have a knock-on effect on other areas which can be especially critical as implementation dates draw closer, so this oversight will prove crucial to ensuring that best outcomes are delivered.

As uncertainty around the implications of Brexit continues, the need for measured, appropriate and forward-looking regulation that ensures client protection while avoiding unintended consequences and sharp changes, but instead creating an optimal operating environment, is now more important than ever.

Brexit may lead to a shake-up and recontouring of organisational structures and business flows in the market, and tracking these developments while being able to handle the small print of regulatory change will be a significant task for all financial services firms.

They will require as much continuity and certainty as possible to underpin ongoing commercial development and investment planning.

Innovation: Key leverage for the future

This brings us to the second theme: innovation. Adapting to innovation will prove crucial for the UK, a developed and sophisticated market economy that is seeking to position itself even more as a global trading hub.

WMA applauds the FCA’s expansion of Project Innovate to include the regulatory Sandbox, which allows firms the opportunity to have a safe space to test “innovative products, services, business models and delivery mechanisms” without immediately incurring all the normal regulatory consequences of pilot activities.

John Barrass is deputy chief executive of the Wealth Management Association