Steven Francis Discusses New FCA Developments With Commercial Dispute Resolution

In an article for Commercial Dispute Resolution, London insurance partner Steven Francis discussed the Financial Conduct Authority’s (FCA) switch from what he dubbed “risk-aversion” to being a “facilitating growth.” 

Francis noted that United Kingdom government leaders have pushed the FCA to support economic development since late last year. For example, the FCA is opting to use “voluntary requirement” (VREQ) agreements, where a company agrees to address FCA regulatory concerns by taking specific actions to prevent harm to consumers. While VREQs are not a new concept, Francis noted they are “sharply on the increase” and could lead to potential misuse without proper scrutiny. He added that the FCA’s biggest challenge will be “whether it can pivot to become a growth-oriented regulator” while still keeping “a lid on wrongdoing that none of us want.” 

“We are forgetting the lessons of the global financial crisis [where the signs were visible around] 2006, which is nearly 20 years ago: what guarantees are there, that some wrongdoing will not perpetuate itself if the regulator does not do anything?” Francis noted. “We are now seeing early warning signs of what happened in 2006 such as shadow banking and interconnections between certain institutions which magnify risk. So being a growth-oriented regulator while still being a diligent regulator protecting from harm, and ensuring it has the right people on board, means its remit will be more complicated in future.”

The full article is available to Commercial Dispute Resolution subscribers.