Assessing the virtuous circle for effective competition in the UK
UK conduct regulator promotes its work to foster and promote effective UK competition
In a report issued in mid-July the FCA has set-out a broad but virtuous circle for effective competition, as it has sought to consolidate and summarise its work in this area through the period 2013-16. This period marks the first 3 years of the FCA organisation In an output forming part of a UK Government led assessment of the productivity of UK regulators, it covers specific market sectors where FCA work and efforts have and are being applied, such as banking, insurance, pensions, investment and asset management etc. and notably extending across both the ‘retail’ and ‘wholesale’ environments. As such, it reflects how the FCA is moving forward and delivering against the operational objective to promote and drive innovation and competition in the interests of consumers.
The specific ‘overview’ section of report contains and overview and assessment of past and current developments and ongoing challenges in pursuing this particular aspect of its statutory purpose, role and objectives. It outlines the various measures and work initiatives undertaken during the period, giving detail on numerous market reviews and sector thematic work driven by the FCA to analyse, evidence and understand the current drivers, risks and future challenges and dependencies within and across market sectors and products. In addition, the FCA’s Project Innovate has continued to identify and drive work to aid successful market entry and to back an innovative approach to the opportunities and developments across financial-services. Overall, the FCA’s approach has encompassed a large number of initiatives and studies designed to improve competition and/or support innovation. But in addition, it has also been willing to identify, investigate and if necessary enforce any necessary findings and circumstances which do not acceptably reflect the interests or the suitable protections or outcomes for consumers.
Looking ahead, then certain sectors such as the wholesale market and infrastructure remain fundamental to the integrity and growth of the UK financial market and economy, and will therefore remain a priority theme for the FCA in the latest 2016/17 plans. Overall, firms can expect the FCA will continue pursuing a breadth of studies, actions and initiatives which delivers effective and efficient competition across the UK industry, and to advocate and foster the opportunities for innovation to thrive and succeed where there are clear and tangible benefits to UK consumers in terms of access, choice, service, quality, costs and security etc. A recent notable measure towards this has of course been the recent introduction of a ‘Regulatory Sandbox’ to enable firms to develop successful future products and processes. But also, the incoming CEO of the FCA has outlined in a recent speech that developments such as the EU Referendum result heightens the need for a healthy and competitive UK industry and market, with the FCA expected to set-out proposals for a new ‘mission’ in early-autumn.
In a separate but overlapping development, with issues involving pensions and retirement income being a top FCA priority it has also recently issued an intended Terms of Reference for further sector review work around UK options provisions in the wake of the recent material ‘pension reform’ changes during 2015 and further changes expected during 2017. As a follow-up to its Retirement Income Market Study published early during 2015, this latest Retirement Outcomes Review (ROR) work will analyse and focus on specific competition developments and challenges to assess how firms and consumers have responded and adapted to these reforms and the wider freedoms of choice. A final report is expected to be issued in the summer of 2017.