Firms will need to consider the metrics this report will capture, the methodology for assessing good outcomes and how the document should be formatted to ensure the board is provided with sufficient detail and narrative to make informed decisions.
For those firms who are working to implement necessary controls for their closed books, which will come into scope in July 2024, the FCA will be expecting to see significant progress.
Priority should be given to those areas of the closed books with the highest level of risk of poor outcomes, with clearly set out project plans to have all closed books compliant by the July deadline.
Those who fear they may be running behind may wish to take the regulator up on the collaborative approach by informing it ahead of time, setting out the challenges faced and their roadmap to comply.
The price and value dynamics call for a nuanced approach to fee structures and revenue streams.
Firms should do a regular assessment of the overall cost and value for money of their products and services.
Rectifying poor value, where identified, becomes a strategic imperative to uphold not just regulatory compliance but also to protect the firm's reputation and brand equity.
Wider regulatory expectations, including considerations for operational resilience, client money handling, market abuse prevention, and ESG considerations, call for a comprehensive review of internal policies and procedures.
The ongoing DEI consultation paper introduces a new layer of considerations, prompting firms to reassess their DEI practices.
Conclusion
Wealth management firms, entrusted with steering the financial journeys of millions, are standing at the precipice of a regulatory paradigm shift.
The FCA's expectations, while challenging, present an opportunity for firms to re-evaluate, fortify, and enhance their practices, setting the stage for not only regulatory compliance but also industry leadership.
Navigating this evolving landscape requires strategic foresight, a commitment to transparency, and a collaborative approach with regulators.
By embracing these principles, wealth management entities can not only weather the regulatory storm but emerge stronger, more resilient, and well-positioned for sustained success in a dynamic financial services sector.
Michael McCormick is managing consultant at RSM UK
