FCA: culture and governance remains a priority and staffing costs increases

The Financial Conduct Authority has outlined that firm culture and governance, innovation and technology, as well as treatment of existing customers will be a priority for the coming 12 months in its 2016/17 Business Plan.

The FCA wrote: "As regulators, our focus is on the most significant drivers of good or poor mindsets and behaviours, such as incentives and remuneration, and the steps firms take which address associated risks."

The regulator highlighted that it will continue its focus on remuneration. It said it plans to continue its regulatory review of the area, and will look to support firms in understanding and implementing remuneration requirements.

It added: "We will also continue to support and drive culture change as the conduct regulator. We will promote constructive discussions with various stakeholders, including industry and consumer groups, to gain a better understanding of how to achieve long-lasting cultural change across markets."

When looking at the treatment of existing customers, the FCA said tougher economic conditions and a growing number of over-indebted mortgage holders provided risks.

The FCA also said it planned to review whether some of its rules are outdated, or no longer an effective way of advancing its objectives.

Staff costs

The total operating costs for the FCA for its 2016/17 period will come to £502.9m, up from £479.0m in the previous period.

An increase in staff costs (up from £279.9m to £316.8m) will be the main reason for this increase. The FCA said this was solely down to the introduction of consumer credit into its ‘ongoing regulatory activity’. Excluding this, it said its budget for the year was down by £7.6m.

According to Citywire, the regulator increased the number of staff in its authorisation team from 283 in 2013 to 580 by 2015, in order to process the tens of thousands of consumer credit authorisation applications it was due to receive.

These numbers may still have not been high enough, as the FCA recently admitted that only eight p2p firms had received their full authorisation as of 30 March, with 86 still awaiting a decision.

Despite the expected increase in staffing costs over the year ahead, the FCA said it expected to cut the size of its authorisation team to 535 in 2016 in response to a Freedom of Information request submitted by New Model Adviser.