In a speech, Woolard, executive director of strategy and competition at the FCA, said times had changed since the rules that govern financial services were put in place.
He said: “The rules of the game have been shifting, especially in the ten years since the financial crisis. I don’t just mean the formal rules set at global, European and domestic level but also the unwritten rules, the expectations users of financial services have of companies that serve them and the wider context in which those interactions take place.”
Woolard said the FCA would move away from the regulatory approach that places the most importance on whether its rules were followed to one which looks at how well customers were served, in spite of firms’ compliance with regulation.
He said: “One thing is already clear – we are moving from a narrower compliance with the rules, to a focus on delivering the outcomes we want for the users of financial services.”
He added: “The demand from the public is clear, they don’t care if a set of rules has been followed, they care about the outcome they receive.”
Woolard said the FCA first needed to establish what results it wanted financial services markets to deliver, and then use all its regulatory powers to affect that change. It also plans to simplify its rules, principles and handbook which it said was most difficult for small businesses without their own compliance team to decipher.
Woolard used one of the Principles for Business as example. He said: “[It] requires firms to communicate in a way which is fair, clear and not misleading and pays due regard to the information of its clients. Reading this in 2019 is quite difficult, a mouthful actually.
“Its focus is the firm’s processes rather than the outcome we want to see – consumers understanding their options.”
The emphasis on firms disclosing information to consumers at fixed points of the sale process, said Woolard, was no guarantee that they had understood what they had been told. Instead the FCA was looking at a new approach where firms have to make sure consumers have understood what they have been told.
The use of technology will also be reviewed.
“Our rules feel increasingly analogue in a digital world,” he said.
The regulator will invite the industry to share its views on what changes should be made.