FCA has published the first of what will be an annual report on its regulatory perimeter. Among other things, the report is designed to explain what challenges the perimeter is presenting and whether there might be a need for legislative or other changes to it.
The foreword to the report notes it is particularly timely as firms operating on the edges of it have recently caused significant customer harm. It also notes that technological developments are likely to test the perimeter increasingly often, and says that FCA is considering the future shape of regulation post-Brexit – which may give it the opportunity to create a simpler approach.
FCA notes one of the main challenges is customers being confused about how they are protected – which it tries to address by clarifying its role and improving customer understanding. It constantly monitors activities outside the perimeter and horizon-scans to ensure healthy innovation can take place but with the appropriate safeguards.
The paper gives a number of examples of cases where consumers may become confused, and sets out areas just outside the perimeter which FCA is looking closely at. Among other things, it has noted that the insurance perimeter is difficult because court decisions about whether a particular contract is a contract of insurance are relevant in determining whether FCA has jurisdiction over activities relating to the contract.