On 19 March 2024, the Financial Conduct AuthorityFCA) has published its business plan for 2024/25, setting out the work it will do over the next 12 months to deliver on its commitments in the third year of its three-year strategy, aiming to achieve better outcomes for consumers and markets.
The workplan highlights several challenges to the UK economic and geopolitical situation that the FCA will monitor over the coming year, including rising interest rates and continued inflation, global financial risks, and geopolitical risks that could cause significant disruption. The workplan is intended to enable the FCA to continue working towards delivering on the 13 commitments in its three-year strategy.
The FCA's focus areas for the coming year include:
Consumer Protection
The FCA notes that it will continue to test firms to see if they meet the high standards set by the consumer duty, which has already led to firms making changes to savings rates and fees.The business plan also explains that it will support consumers' long-term financial well-being through its advice guidance boundaries review and strive to ensure pension products offer value for money.
Another key activity for the FCA in this regard is a multi-firm exercise and market research across sectors aimed at raising standards, which will begin in 2024/25. This will include looking at unit-linked pensions and long-term savings products, testing fee transparency across the value chain, how firms value their overall product value and what they do when they identify unreasonable valuation. The multi-firm exercise will also examine how quickly the insurance industry responds to claims, including when customers are more likely to exhibit characteristics of vulnerability. The FCA will also begin a review of firms' responses to vulnerable customers in 2024/25.
Fostering competition and positive change
Another focus area of the FCA's three-year strategy highlighted in the business plan is the FCA's efforts to promote competition to improve the attractiveness and reach of the UK's wholesale market by supporting businesses to invest, innovate and expand. The FCA will also continue to work to make it faster and easier for businesses to apply for authorisation. Further strengthening its commitment to strengthening the UK's position in global wholesale markets, the FCA explains that it intends to encourage innovation and market development by supporting industry efforts on T+1 settlement, aiming to improve efficiencies.
Data and Innovation
The business plan also outlines the wider role that data will play in the FCA's goal of becoming a world-class, data-driven regulator, by driving automation of analytical tools to detect and respond to consumer harm more quickly.artificial intelligence), and uses data and horizon scanning mechanisms to predict which companies are at risk of failure, with the aim of protecting consumers and ensuring market integrity.
Reducing and preventing financial crime
Financial crime is another focus area highlighted in the Business Plan. The FCA notes that it has published two national strategy documents in the past 12 months, the Economic Crime Plan and the Fraud Strategy, and confirms that it will continue its data-driven approach to identify potential harms for supervisory and enforcement action. The Business Plan therefore notes that in 2024/25 the FCA will increase investment in its systems to enable it to use intelligence and data more effectively in financial crime activities to target higher risk companies and activities. It also commits to continue taking decisive action to tackle fraudulent and fraudulent websites, working with partners to help improve the whole system, as well as using its powers through the professional body, the Anti-Money Laundering Office, to improve standards in the legal and accounting sectors.
Commenting on the 2024/25 business plan, Nikhil Rathi, chief executive of the FCA, said: “We have already made great progress towards delivering the bold vision we set out in our strategy two years ago, including the introduction of a ground-breaking consumer tax and proposing the most far-reaching reforms to wholesale market regulation and listing regimes for decades. We remain resolute in our support of the vital role the financial sector plays in the UK's long-term economic growth and will continue to protect consumers and ensure market integrity whilst embracing the potential benefits that technology can bring both to us and the firms we regulate.”
New Webpage
In addition to the business plan, the FCA has also published three new webpages:
- The FCA's approach to supervision, which sets out how it carries out regulatory supervision, including its rationale, methods of supervision, supervisory principles and decision-making framework.
- The FCA's approach to consumers, covering how the FCA uses its powers and tools to protect consumers of financial services, in line with the FCA's consumer protection objectives.
- The FCA's approach to competition, which explains the FCA's objectives and obligations with respect to competition, how it identifies potential harm caused by a lack of competition, how it diagnoses the causes of such harm, potential remedies, and how it measures the impact of its efforts.
- The FCA's approach to international firms, which sets out the standards expected of international firms providing financial services in the UK or preparing to apply for full UK authorisation.
