The FCA recently published its Business Plan for 2022/23.
The plan explains the programme of work for this year to achieve the three-year strategy also published recently.
The plan states that the FCA has grouped its commitments into three areas:
- reducing and preventing serious harm – our focus is on protecting consumers from the harm that authorised firms can cause, including tackling fraud and poor treatment.
- setting and testing higher standards – we’re focusing on the impact that authorised firms’ actions have on consumers and markets. We expect all firms we regulate to adopt the same high standards, and have an open and cooperative approach.
- promoting competition and positive change – we want to use competition as a force for better consumer and market outcomes. We will support UK growth and innovation that serves our society, underpinned by widely recognised and respected high standards.
And, that it is using resources effectively and efficiently to deliver across the commitments.
To reduce and prevent serious harm they say they will be:
- dealing with problem firms – removing firms who don’t meet our minimum standards from financial services markets
- improving the redress framework – so it’s fairer for consumers and firms in a global context
- reducing harm from firm failure – to minimise wider fallout
- improving oversight of Appointed Representatives – to reduce poor conduct
- reducing and preventing financial crime – by joining up our actions across sectors and working with partner agencies on a ‘whole system’ response
- delivering assertive action on market abuse – by increasing the resilience of financial services markets and detecting and taking decisive action.
When setting and testing higher standards they will be:
- putting consumers’ needs first – with a focus on our proposed new Consumer Duty and the outcomes consumers get
- enabling consumers to help themselves – through targeted action to make sure promotions are clear, fair and not misleading
- a strategy for positive change – by delivering our recent environmental, social and governance (ESG) strategy
- minimising the impact of operational disruptions – by testing firms’ resilience to inevitable operational disruptions
And, when promoting competition and positive change they will be:
- preparing financial services for the future – by tailoring our rules to better suit UK markets in a global context
- strengthening the UK’s position in global wholesale markets – so that the UK is one of the leading markets of choice for issuers, intermediaries and investors alike
- shaping digital markets to achieve good outcomes
The paper goes on to explain that they will be data gathering and have built analytical tools to help them identify risks through automated interventions. We have summarised some of the key areas below.
Key activities of the FCA will be the continuation of the project to intervene and cancel firms that do not meet the Threshold Conditions, this will include removing firms that consistently show they are unwilling to follow the rules quickly and effectively.
The Claims Management (CMC) sector will come under further scrutiny to ensure the provide fair value, as will firms who fail to deliver timely complaint resolution.
One key outcome is the FCA’s desire to focus on “firms that create a redress burden bear the associated cost themselves” which will of course take time to measure the impact – we look forward to seeing how this develops.
To reduce the harm of firm failure focus will be on firms meeting financial their resource requirement, client assets are appropriately held and that firms under financial stress are quickly identified and that the firm rectifies the situation.
The FCA will be strengthening the oversight it has over Appointed Representatives (ARs) by engaging with principal firms at authorisation, publishing the updated rules from CP21/34, further assessing the need for policy updates and taking more assertive supervision of higher risk principals.
The FCA will focus on reduction in financial crime by lowering the incidence of money laundering through the firms it supervises directly and by improving the effectiveness of supervision by professional body supervisors. Part of how it will do this will be through a small number of assessments of firms’ anti-fraud systems and controls.
The FCA will continue to focus on redress for members that were given unsuitable advice to transfer out of the British Steel Pension Scheme.
It will also focus, quite rightly, on putting customers’ needs first. To paraphrase, they want customers to be sold products that meet their demands and needs, that provide fair value, are understandable, consumers get good customer support, increase in confidence and access to appropriate financial services is maintained. The FCA will use its regulatory toolkit, including enforcement, to achieve this.
The FCA want consumers to be enabled to help themselves by using digital services but want to reduce the potential for consumer financial loss through illegal, or unclear, unfair and misleading targeted financial promotions. This will include the reduction in the proportion of consumers investing in high-risk investments whose general tolerance to risk is very low or who demonstrate characteristics of vulnerability (measured through the Financial Lives survey). Part of how this will be achieved is a proposal for an increase in information consumers get to help them make informed decisions.
Environmental, social and governance (ESG) investments are included in the strategy to drive positive change, reduce the incidence of misleading marketing and drive fair value.