The FCA’s 12-month plan unveiled

The United Kingdom’s (UK) Financial Conduct Authority (FCA) has replenished its resources and investment to keep up with technological advancement. On 5 April 2023, the FCA announced four areas it aims to progress in the next 12 months as part of its three-year strategy.

To achieve better outcomes for financial markets and its consumers, the FCA has established an ambitious vision of what they would like to be recognised for. Nikhil Rathi, Chief Executive of the FCA, said that they are “well underway to achieving” their “objectives thanks to…talented colleagues and the better use of technology and data.”

“With many consumers across the UK struggling with the cost of living and markets events causing concern, we have put in place vital changes over the past few years which mean we’re better set up to face these challenges.”

What are the FCA’s four areas of focus?

1. Putting consumers’ needs first

The cost-of-living crisis has affected many families in the UK, rising prices are squeezing wallets and a sufficient level of information is needed from financial institutions so that consumers can make better-informed decisions. In this economic crisis, customers will look to receive support on how to responsibly save or invest their funds.

The FCA formulated a quick plan last year to help people with the cost of living. This included requesting lenders to support and treat borrowers or customers far better. The FCA advanced their ‘put customers first’ cause by implementing the Consumer Duty, which ensures fair treatment. The Duty, which will come into force in July 2023, primarily aims to ensure customers have sufficient information about the product or service they are purchasing and that they are thoroughly informed when making financial decisions. The Duty demonstrates the FCA’s priority of putting customers’ needs first, setting high standards of customer protection to increase trust and transparency in financial services.

“The FCA aims to use the Duty to encourage more innovation and competition, as it could lead to a more simplified approach to regulation.”

2. Transforming financial services, ready for the future

The FCA is committed to working with its partners to deliver the outcomes of the Future Regulatory Framework (FRF) and the Edinburgh Reforms. Over £12 million will be invested in the FRF to support the UK’s economic growth and international competitiveness.

Additionally, new cost-benefit analysis panels will be introduced to support the FCA’s work.

“The FCA will continue to support innovative and high growth firms, including through its world-leading Sandbox and its Early and High Growth Oversight function.”

3. Enhancing the UK’s competitiveness in International Wholesale Markets

To increase the competitiveness of UK financial services, the FCA will reform the listing regime to attract the most renowned firms in the world. The FCA is seeking views on improvements to asset management regulation and will look to create proposals dependent on the feedback received.

“As part of the Edinburgh Reforms, the FCA will consult this year on consolidated tapes, which could improve the overall cost, quality and accessibility of wholesale data. Consolidated tapes take data from across the wholesale market and distribute it in single, standardised feeds.”

4. Mitigating financial conduct

Reducing crime in financial services is a top priority for the FCA as well as looking for more innovative ways of doing so, with the aim of ensuring fairness and transparency of services. This includes:

• A robust authorisation process
• Improved assessments of firms
• Increased staff to investigate and prosecute wrongdoers
• Developing tools to identify scam websites
• Using machine learning to identify and remove scams – this resulted in hundreds of websites being taken down and over 1,800 alerts being issued in 2022.

“Much of the work to deliver on its commitments is well underway and the FCA wants to prioritise its work to bring the most benefits to consumers, firms and the wider economy. Later this year, the FCA will publish the first set of results against the outcomes and performance metrics included in its strategy.”  

CUBE comment

Safeguarding consumers and promoting transparency of financial services is more crucial than ever with regulatory developments focussing on consumers. The FCA has taken steps in combatting financial crime and implementing rules that enforce firms to better treat their consumers and set a high standard of service.

Firms should brace themselves for heightened regulatory scrutiny that aligns with the FCA’s strategy. To stay ahead of compliance risks, use regulatory change management software to streamline your end-to-end compliance processes in real time.

Get in touch today to discover how CUBE can help your firm with Consumer Duty regulation.