ENSURING FIRMS CONTINUE TO MEET OUR STANDARDS
Our response could be prompted, for example by a whistleblower alleging misconduct in a firm, or a spike in reported complaints at a firm. We will have a consistent and efficient process to ensure that ‘event-driven’ cases are dealt with quickly and we get the right outcomes for consumers.
3. Issues and products
Being more flexible in how we deploy supervisors means we can react promptly to emerging issues, and carry out more reviews on products and issues across a sector or market.
We will use a sector risk assessment (SRA) to drive this issue and product work. As the name suggests, this will provide an assessment of the conduct risks across a sector (such as the investment intermediary sector, or the retail banking sector). This will complement our firm-specific work, so together they identify risks, whether they are cross-firm issues, firm-specific issues or product issues.
Working with colleagues from across the organisation, we will use a range of data, information and intelligence from firms, consumers and trade bodies for example, to help us identify the biggest risks and to prioritise our work.
The key questions we will use the SRA to answer are:
• what are the cross-firm and product issues that are behind poor outcomes for consumers or endanger market integrity?
• what is the degree of potential harm?
• what is the discovery or mitigation work proposed?
Specialist sector teams will work together to deliver these assessments, making appropriate use of external data and market intelligence.
Case study: example of issue and product work
Issue: market intelligence suggests that a product is sold to customers who do not need it or do not fully understand it. We quickly make further enquiries and discover that the product may have been mis-sold, and that this is likely to have caused loss to those customers.
Action taken: we design a thematic project to look across the firms selling this product consistently, with input from the firms themselves and other industry participants. Our project quickly identifies some mis-selling. We immediately ask firms to stop any further sales of the product, and we take action to ensure that firms rapidly pay out redress to the appropriate customers. We ask the appropriate significant influence function holders to confirm to us these actions have been taken.
How this differs from the previous FSA approach: there are a number of differences that highlight our change in culture. In this case we are:
• acting on market intelligence earlier from a wider range of market participants, including consumers, trade bodies and individual firms;
• more willing to act on some hard evidence, rather than waiting for a comprehensive search for all possible evidence; and
• more willing to engage with the industry and trade bodies at an earlier stage.
As a result, initial identification work, and remediation, will take place more quickly. Where appropriate, we will require the whole sector to consider the need for remedial action. We will place the onus on firms and their significant influence function holders to complete remediation without ongoing regulatory intervention.
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