In its Business Plan for 2024-25, the Financial Conduct Authority (FCA) has today set out an ambitious programme of work for the final year of its 3-year strategy to achieve better outcomes for consumers and markets.
Nikhil Rathi, Chief Executive of the FCA, said: “We’ve already made significant progress in delivering against the bold vision we set out in our strategy two years ago, including the game-changing introduction of the Consumer Duty and proposing the most far-reaching reforms to wholesale market regulation and the listing regime in decades.
“We remain resolute in supporting the vital role the financial sector plays in the UK’s long-term economic growth, embracing the potential benefits that technology presents both for us and the firms we regulate, while also continuing to protect consumers and ensure market integrity.”
The FCA will continue to deliver the 13 commitments in its strategy, which focuses on preventing serious harm, setting higher standards and promoting competition. Specific issues it will prioritise include:
- Protecting consumers by testing if firms are meeting the high standards set by the Consumer Duty, supporting people’s long term financial wellbeing through the Advice Guidance Boundary Review and making sure pension products deliver value for money.
- Contributing to UK competitiveness and growth by improving the attractiveness and reach of UK wholesale markets, supporting firms to invest, innovate and expand through our innovation services and continuing to make it quicker and easier for firms to apply for authorisation.
- Building on the significant progress already made to become a world-class data-led regulator by automating more of its analytics tools to help detect and respond to consumer harms faster and working with firms on the safe deployment of artificial intelligence.
The planned programme of work builds on the progress made over recent years to become a more outcomes-based, assertive and data-led regulator.
The introduction of the Consumer Duty marked a major shift by setting higher and clearer standards of consumer protection and has already led to firms making changes to savings rates and fees.
The FCA is making better use of data to spot and stop harm faster and is being tougher on the firms that could cause harm. It removed over 10,000 potentially misleading adverts in 2023 and sent out 2,243 warnings about unauthorised firms and individuals. It also more than doubled the number of firm permissions cancelled, compared to the previous year, for failing to meet its minimum standards.
It has adapted its rules and improved its processes to ensure the UK remains an attractive place to invest. This includes proposing the most far-reaching package of reforms to the listing regime for decades to encourage a greater range of companies to list in the UK and compete on the global stage.
Simon Turner, UK Financial Services Regulation Partner at EY, comments on the FCA Business Plan, saying: “Now in the final year of its three-year strategy, the FCA’s new Business Plan has today very succinctly reinforced its continued commitment to safeguarding the UK’s financial services sector, supporting and protecting consumers, and delivering on its set objectives. What is reinforced this year is the heightened focus on holding firms across all sectors to account.
“A focus on multi-firm work, cross-market studies and supervisory interactions with individual firms – alongside the recently announced strategic approach to enforcement – highlights the FCA’s intention to use data and the principle of the Consumer Duty to better identify, understand and take action in response to key issues facing the industry.
“The annual funding requirement is set to increase 10.7% year-on-year, and it is positive to see £11.3m is earmarked to continue implementation of the Treasury’s Smarter Regulatory Framework (SRF). Despite the second and final implementation deadline being just four months away, a further £5.3m for the Consumer Duty is also planned, suggesting ongoing multi-firm work and enforcement action will be a priority.
“This year’s Business Plan sends a clear message; the FCA will be a data-led and action-focused regulator in the year ahead, and now more than ever, firms should be aware there is no leeway for non-compliance.”
Commenting on the FCA’s business plan, Imogen Makin, counsel at WilmerHale, said:
“The FCA’s continued focus on reducing and preventing financial crime, together with putting consumers’ needs first (with a specific focus on pensions) means that we’re likely to see a continuing stream of assertive supervision and enforcement cases featuring these topics.
“In terms of the fight against financial crime, the FCA has explicitly stated that it will increase investment in its systems in 2024/25 “to use intelligence and data more effectively within our financial crime work” and we may see an increase in the volume of early interventions through variations of permission, or the use of supervisory notices, for example, as a result.
“Further, the FCA’s stated intention to take assertive action on market abuse will likely mean that we see an increase in the use of the FCA’s supervisory and enforcement powers in this area specifically. As firms are aware, they should proactively review and stress-test their anti-financial crime systems and controls on a regular basis such that they identify any issues at any early stage, enhance and update their systems and controls accordingly, and implement any amendments necessary to take regulatory and legal developments into account.
“Finally, the Prime Minister when he was Chancellor said that he wanted to make the UK a crypto hub and it’s good to see that the FCA is trying to deliver a proportionate market abuse regime for crypto assets.”
Also commenting on the plan, David Brooks, Head of Policy at leading independent consultancy Broadstone, said:
“The FCA’s focus is quite rightly on outcomes for savers and ensuring they get good value from their financial services providers.
“We’re really pleased to see scrutiny on attacking the scourge of rogue advisers and adverts which mislead and scam people out of their hard-earned pensions savings. The Trustees that we work with want their members to be able to enter the world of financial advice with confidence when preparing for their futures and that these professionals will give them the best possible care.”
