Annual Report and Accounts 2020/21 - fca.org.uk

1 Annual Report and Accounts 2020/21 . (for the year ended 31 March 2021). HC 372. Financial Conduct Authority Annual Report and Accounts 2020/21 . (for the year ended 31 March 2021). Presented to Parliament pursuant to paragraphs 11(4) and 15(3) of Schedule 1ZA of the Financial Services and Markets Act 2000 as amended by the Financial Services Act 2012 and the Financial Services (Banking Reform) Act 2013. Ordered by the House of Commons to be printed on 15 July 2021. HC 372. Financial Conduct Authority copyright 2021. This publication is licensed under the terms of the Open Government Licence except where otherwise stated. To view this licence, visit Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

2 This publication is available at Any enquiries regarding this publication should be sent to us at Financial Conduct Authority 12 Endeavour Square London E20 1JN. ISBN 978-1-5286-2738-2. CCS0321310670 07/21. Printed on paper containing 75% recycled fibre content minimum Printed in the UK by the APS Group on behalf of the Controller of Her Majesty's Stationery Office 4. Contents Chair's foreword 6. Highlights from 2020/21 8. Strategic Report 1 Our role 10. 2 Our response to coronavirus 17. 3 International and EU withdrawal 22. 4 Transforming the way we carry out our role as a regulator 24. 5 Our response to the independent reviews 28. 6 Our key priorities 29. 7 Cross-cutting work 39. 8 Sector work 49.

3 9 Our section 172 statement 58. 10 Group operational overview 67. Financial statements and corporate governance 11 Directors' Report and corporate governance statement 79. 12 Financial statements of the Financial Conduct Authority for the period ended 31 March 2021 104. Appendices 1. Exercise of sub-delegated powers by the Financial Conduct Authority under the European Union (Withdrawal) Act 2018 144. 2. Use of Skilled Person Reports 147. 3. RDC Annual Review to the year to 31 March 2021 149. 4. Sustainability Report 157. 5. Financial Conduct Authority | Annual Report and Accounts 2020/21 . Chair's foreword Charles Randell Chair Chair's foreword 2020/21 was a challenging year for everyone the people we serve, the industry we regulate, and all of us at the Financial Conduct Authority.

4 We prioritised protecting vulnerable Our transformation plans reflect our people. We helped millions of people and need to prepare for the future, as well hundreds of thousands of businesses, as to learn from the past. Last year, we large and small, through the Covid-19 received two of the three independent pandemic. Our targeted litigation reviews into the past performance of achieved fairer and faster outcomes for the FCA and its predecessor the FSA. business interruption policyholders. We We took immediate action in response continued our work to reduce the harm to their recommendations and have from unsustainable credit and unfair published an update on our actions today. pricing. We also made sure that essential financial services weren't disrupted when I am grateful to the many people who the UK left the EU transition period.

5 Contributed to our work last year. I. am proud of the way we responded At the same time, we continued to to the pandemic. But we wouldn't transform the FCA to better support have been able to do it without the consumers and markets in a fast- essential insights into the needs of changing digital age. Our new leadership consumers and small businesses that team led by Chief Executive Nikhil our independent panels and network of Rathi is driving forward our programme consumer organisations gave us. I am to become more efficient and also grateful to Christopher Woolard effective. Our Business Plan sets out who, as interim Chief Executive, led the the next steps we'll take to complete first stage of our pandemic response.

6 Our transformation programme. Our transformation plans reflect our need to prepare for the future, as well as to learn from the past 6. Financial Conduct Authority | Annual Report and Accounts 2020/21 . Chair's foreword Finally, I would like to thank everyone who actors, focusing on scams and other helped keep essential financial services financial crimes in the areas we regulate. running. Your work meant people across These are essential foundations for a the UK could access the support they world-leading financial sector which needed, with very little disruption. serves the interests of our society. Despite the many challenges of the last year, I am confident that, through our transformation plans, we will realise our ambition to be a more agile, preventative and data-driven regulator and reinforce our commitment to demonstrating the public value we create.

7 We will be clear about the measurable improvements we aim to deliver in outcomes for Charles Randell consumers as they use financial services Chair to meet their everyday needs. We will Financial Conduct Authority also redouble our efforts to tackle bad I would like to thank everyone who helped keep essential financial services running 7. Financial Conduct Authority | Annual Report and Accounts 2020/21 . Highlights Chapter X | X. from 2020/21 . Protecting consumers Our guidance to firms ensured million payment deferrals for mortgage and credit customers during the pandemic Issued 1,292 consumer warnings Our ScamSmart high risk investment campaign drove over 150,000 visits to the ScamSmart site Our Supervision Hub answered 150,000 queries from consumers Number of clients advised to transfer out of a DB.

8 Pension fell from 69% to 57%. Our changes to general insurance pricing will save consumers an estimated billion over 10 years 8. Financial Conduct Authority | Annual Report and Accounts 2020/21 . Taking action against firms Chapter X | X. Ensured in consumer redress for unauthorised investment business and froze nearly 7m of funds following our enforcement work Opened 1,715 supervision cases into high-risk investments or scams Imposed financial penalties totalling Opened 1,293 Enforcement enquiry cases Keeping markets clean and resilient Handled 223 applications for registration from cryptoasset businesses to assess their anti-money laundering (AML) measures Assessed 1,046 whistleblower reports with 2,754 separate allegations 1 in 6 firms either withdrew their applications for authorisation or had it refused Handled 175 applications to our Direct Support service for innovative products Over 1,500 EEA-based firms are now in the Temporary Permissions Regime 9.

9 Financial Conduct Authority | Annual Report and Accounts 2020/21 . Chapter 1 | Our role 1 Our role Our 2020/21 Annual Report gives updates on what we have delivered and achieved over the past year. It demonstrates how we have targeted our resources to respond to the pandemic, while also delivering the best results for consumers, firms and markets against our strategic and operational objectives set by Parliament. The Report is structured to outline the work we have undertaken in response to the pandemic, our key priorities, our cross-cutting priorities and our work with specific sectors. Many of the activities deliver against multiple objectives. Our work and purpose is defined by the Financial Services and Markets Act 2000 (FSMA).

10 FSMA sets out our single strategic objective which is to ensure that the relevant markets function well. To achieve this, FSMA gives us 3 operational objectives. These are: to secure an appropriate degree of protection for consumers to protect and enhance the integrity of the UK financial system to promote effective competition in the interests of consumers Our regulatory principles and functions Under FSMA, we have a number of functions. These include making rules and giving general guidance, as well as authorising and supervising firms. When carrying out these functions, we take the following principles for good regulation into account: efficiency and economy proportionality sustainable growth consumers' own responsibility the responsibility of firms' senior management to comply with the regulatory framework recognising the differences in different types of businesses openness and disclosure transparency These principles underpin all our work and are all equally important.