Response to FCA ‘Finance for Positive Sustainable Change’ discussion paper
Publication date:
24 February 2023
Last updated:
18 December 2023
Author(s):
Dr Matthew Connell, Director, Policy and Public Affairs, Chartered Insurance Institute
We welcome the FCA’s paper on this key subject, and particularly welcome the emphasis the FCA puts on Diversity and Inclusion. As the FCA has made clear, the financial services professions should serve all groups in society – and we look forward to working with the FCA to ensure that there is the right balance of talent and regulation in the market to increase access to advice.
The paper addresses the issue of governance within firms – this is a significant and ongoing challenge for all organisations. The FCA paper makes reference to work that has been done with very large, systemically significant firms by the Financial Stability Board. We welcome the commitment in the paper to ‘consider proportionality’ in this area, since it will clearly not be appropriate to cut and paste requirements for global firms and apply them to small and medium-sized businesses that are well-known and rooted in their local community.
We are disappointed that the paper does not make any reference to the work the FCA is doing around ESG and suitability requirements for advisers. In 2019, the FCA said ‘Amendments are also being made to… EU financial regulation… relevant to… investment advisors and other intermediaries, requiring them to consider sustainability risks in their activities…. We… will continue to consider, with the Government and other regulators, what actions might be necessary to match this ambition.’ Three years later, in October 2022, the FCA said it would ‘explore how best to introduce rules on product suitability for financial advisers in due course. While we would not expect a discussion paper to include draft proposals, it is disappointing that there is still no firm timetable for these rules.