The Financial Conduct Authority’s(FCA) mandate to ensure there is effective competition in financial services markets represents the most significant change to the new regulatory regime, said chief executive Martin Wheatley this week.
Publishing the latest guidance on how the FCA intended to deliver its statutory responsibilities, The FCA Approach To Advancing Its Objectives, Martin Wheatley focused on the objective to promote effective competition in consumers’ interests. He said markets that work well offer consumers the best chance to get the products they need at the right terms. This will also benefit those firms that place consumers at the heart of their business.
The FCA will examine whether consumers are in a position to drive healthy competitive markets and if not, what needs to change. This will include how easily new businesses can enter the markets, whether existing regulation distorts competition and the ease with which consumers can understand their needs, access suitable products and change suppliers.
When, after detailed analysis of the markets regulated by the FCA, markets are identified where competition is ineffective, the FCA will not hesitate to act to take proportionate action to enhance competition. This could be through industry self-regulation, enhancing consumer awareness, introducing new rules or changes to existing rules to support competition or action against regulated firms.
Chief executive Martin Wheatley said “Markets that work well for consumers and for firms benefit everyone and benefit the UK economy. Our competition mandate is the single most significant change in our objectives as a regulator.
This is important because in a more competitive environment, with firms meeting the needs of engaged and informed consumers, consumers will be better off. Competition can lead to lower prices, greater innovation, better design, better quality and wider choice, which ultimately leads to growth in the economy. This benefits everyone.”
Based around the FCA’s three operational objectives of protecting consumers, ensuring market integrity, and promoting effective competition, the guidance sets out what firms and consumers can expect from the regulator.
It reaffirms that the FCA will seek to be more judgement-based in its action, dealing with potential issues at the earliest possible stage. The guidance also says the FCA will collate the widest source of information from behavioural insight to market analysis to inform any required action to potential market problems.
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