The Financial Conduct Authority (FCA) has just published its Business Plan for 2023/24. In this blog, we explore what that means for financial services firms in the UK.
The plan sets out the regulator’s priorities for the year ahead as it progresses the three-year strategy it launched last year. In this latest release, the FCA signals that it will be “accelerating” its work in four areas:
- Consumer protection: The regulator reiterates its priority of “putting consumers’ needs first”. Regulated firms should already be preparing for the 31 July deadline for implementing the new Consumer Duty, as we explored in a recent blog.
- Strengthening the UK’s position in global financial markets: The FCA notes that it wants to support growth and innovation while maintaining high standards among firms. These standards will be enforced through reforming the listing rules and bringing forward proposals on asset management regulations.
- Preparing financial services for the future: The FCA says it will embed a new objective around international competitiveness and growth.
- Tackling financial crime and fraud: The regulator considers “reducing and preventing financial crime and fraud” a high priority. This includes increasing its use of data and proactive supervisory work to take enforcement action against financial crime.
External pressures shape the regulator’s focus
The four priorities outlined above have partly been selected in response to the emergence of external pressures affecting the financial services sector and consumers more broadly. These include the volatility in the financial markets and the cost-of-living crisis fuelled by rising interest rates and inflation.
The latter two factors explain why consumer protection is at the top of the regulator’s agenda at present. The new business plan says: “Our role is to make sure firms treat customers fairly, support those in difficulty and give them the information they need to make good decisions.”
The plan also suggests further regulatory intervention in this area could follow because of “potential for longer term consequences from the current cost of living pressures due to the impacts on consumers, firms and markets”. The FCA says it will carry out further work to understand these consequences, including on pensions savings, in the coming year.
fscom recently published a regulatory outlook in which our experts identified consumer duty as firms’ main area of focus to address regulatory expectations in the coming year. That report can be found here:
New investments in authorisations, enforcement and cyber security
The business plan reveals that the FCA has been actively recruiting staff, and its headcount has risen from around 3,800 in early 2022 to nearly 4,500 by the end of March 2023. This includes “significant increase” in resources in its authorisations team. The authorisation process has been subject to delays and backlogs in recent years, so this injection of resources could help to alleviate that.
The other area where staffing has significantly increased is in the FCA’s Enforcement and Market Oversight Division. The regulator says this will “build capacity and resilience in our case and investigation teams” to act faster to take enforcement actions against firms who cause harm to consumers or markets.
The FCA also says it is investing in “new digital capabilities and designing new data solutions”, as well as cyber security and operational resilience. Financial services firms should therefore increase their focus on testing their resilience and addressing their vulnerabilities in these areas.
To discuss your approach to consumer protection, cyber security, operational resilience and more, or for advice on regulatory compliance, contact fscom today.
This post contains a general summary of advice and is not a complete or definitive statement of the law. Specific advice should be obtained where appropriate.
