FCA Publishes Risk Outlook for 2014
This is FCA's second annual Risk Outlook publication which sets out our current thinking on the main drivers of risks to our statutory objectives and signals the types of forward-looking areas the FCA will focus on.
Technological developments continue to affect the way consumers engage with financial services and how products and services are distributed. Technology may create effective and cost-efficient distribution channels, increasing competitiveness, innovation and efficiency, but can also be limited by vulnerabilities in the design and management of systems and infrastructure. The growing demand and increased dependence on digital connectivity may result in increased exposure to these potential disruptive capabilities and resilience issues. Technology can affect decision making by creating information asymmetries and may help increase financial exclusion. Consumers purchasing directly through distribution channels may also come across products and services that are unsuitable for execution only sales. Technological developments have also increased the availability and use of data insights as firms are increasingly able to capitalise on this knowledge, potentially affecting price formation and product features, as well as increasing the potential profits of cybercrime. The policy and regulatory environment is bringing about changes to the structure of markets and the financial sector. Legislative and regulatory policies impact firms’ funding strategies, positions and performance and affect consumers’ financial needs and demands, influencing the products and services developed and alter the way firms conduct their business.