The FSA says that wealth management firms will be a "major focus" for attention from the new Financial Conduct Authority.
The Financial Services Authority has listed a number of key priorities in its new business plan and risk outlook for the Financial Conduct Authority (FCA), for 2013/14 now available on the FSA website.

On wealth management it says that the FSA has looked at standards of suitability and record-keeping recently and FCA will continue to focus on wealth management firms to ensure that recent improvements continue. It says that wealth management firms can continue to expect to see consistent regulatory attention in future.

The business plan says: "...Many wealth management firms are improving their systems to ensure their customers receive − and can be shown to receive − portfolios that match their risk appetite and meet their investment objectives.
"Often, firms are updating the information they hold on their entire client base to embed these improvements and, as these efforts continue into 2013/14, we will continue to work with firms to check that the outcomes are in line with our requirements.
"More generally, wealth management will remain a major focus of ours over the coming year and firms can expect to see more activity in this business area, both thematically and as part of their regular supervision arrangements."

The FSA will be replaced by the FCA and the Prudential Regulation Authority (PRA) on 1 April 2013 when the new tri-partite regulatory regime comes into force.

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The risk outlook sets out the challenging economic backdrop as well as outlining how the FCA will assess market conditions and identify future risks. Many of these are complex and will require several years' focus.

The business plan sets out how these risks will be managed in the first year and how the FCA will use its resources effectively to meet its objectives, which 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.

The FSA has undertaken the risk outlook to identify the key risks in the financial services industry in the year ahead. This analysis has shaped the FCA's priorities for its first year, so that the new regulator uses its powers to ensure that consumers are protected, that firms meet FCA standards and markets operate with integrity - from day one.

The key areas of focus for the year ahead include:
· A renewed focus on consumers. This will include helping to ensure that firms' strategies are aligned with producing appropriate outcomes for consumers − for example, through the work on product governance and incentive structures in firms;

· Continuing to tackle market abuse, by taking strong enforcement action to deter future misconduct. Clean markets ensure the integrity of the UK financial system. Focusing on wholesale conduct will be critical for the FCA, as will the new approach to the supervision of trading platforms;

· Ensuring a competitive financial services industry. A significant change for the FCA, this will involve building a new Competition Department to embed competition analysis across the organisation, which will take action as appropriate;

· Continuing to address ongoing misconduct, such as LIBOR, Payment Protection Insurance and interest rate swaps; and

· Carrying forward major policy initiatives such as the Mortgage Market Review, the changes to retail investment advice and extensive engagement with Europe on important Directives under consideration.
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The risk outlook underpins the business plan. The main risks identified for the coming year are:
· Firms not designing products and services that respond to real consumer needs or are in consumers' long-term interests;
· Distribution channels not promoting transparency for consumers on financial products and services;
· Over-reliance on, and inadequate oversight of, payment and product technologies.
· Shift towards more innovative, complex or risky funding strategies or structures that lack oversight, posing risks to market integrity and consumer protection; and
· Poor understanding of risk and return, combined with the search for yield or income, leads consumers to take on more risk than is appropriate.

A number of the risks identified are about what could go wrong – firms or products failing and consumers suffering detriment. However, the other side of the risk equation is the wider consumer detriment arising from people not being able to get access to the right products. The FCA will therefore also be focusing much of its efforts on these longer term risks. These include firms not investing in innovative new products to meet the changing needs of society; withdrawal of sales forces; and too few new entrants in to the industry to allow competition to flourish.

The FCA will take a risk-based approach to supervision, recognising the diversity of the firms and markets that it regulates. The new regulator will be much more proactive, acting earlier and more decisively than the FSA. This new approach will ensure that the focus is on issues that have wider, longer-term effects on consumers and market integrity. The FCA will also continue the FSA's work to use its enforcement powers to take action against firms and individuals who abuse the system to deter others from doing so.

Martin Wheatley, CEO designate of the FCA, said: "Firms need to ensure that they are putting the consumer and the integrity of markets at the heart of their business models and strategies. This includes making cultural changes which promote good conduct; establishing oversight around the design and innovation of products and services; and ensuring they are transparent in their dealings with consumers.

"Our first year as a new regulator will be an exciting and challenging time but one for which we are well prepared. We are introducing new approaches to the way we do much of our work, becoming much more proactive and consumer focussed. A risk for all regulators is becoming bound to conventional thinking. That is why the new regulator will be much more transparent, so we can learn from our mistakes. There is no room for the poor behaviour of the past. We will take action early and decisively when we see evidence of poor practices.

"We cannot succeed wholly in isolation. To achieve our aims, we need the cooperation of the firms we regulate and the vigilance of their customers. A strong, successful financial services industry is essential for consumers across the UK, and for the economic health of the whole country."

The FCA will supervise the conduct of approximately 26,000 firms across all financial industry sectors and the prudential standards of approximately 23,000 firms not regulated by the PRA.