FCA Business Plan 2024/25: Regulator sets out its plan of action for the next 12 months
The FCA has published its Business Plan for 2024/25, outlining its objectives over the next 12 months to deliver what it promised in its 3-year strategy, launched in April 2022. The FCA describes an "ambitious programme" of work ahead, seeking to achieve better outcomes for consumers and markets.
When launching the Business Plan, FCA Chief Executive Nikhil Rathi explained that the regulator has made significant progress already on delivering its 3-year strategy which focuses on reducing and preventing serious harm, setting and testing higher standards and promoting competition and positive change.
The FCA says that there are encouraging signs for the year ahead but that consumers and businesses are still struggling with high inflation and borrowing costs with volatile interest rates, persistent inflation, global financial risks and geopolitical risks likely to have a significant impact on markets in the coming year.
The year ahead will focus on three of the FCA's public commitments: reducing and preventing financial crime (with a focus on fraud, specifically APP scams, and fraudulent websites), putting consumers' needs first (with the implementation of the Consumer Duty being noted as a first step towards this) and strengthening the UK's position in global wholesale markets.
As well as these areas of focus, the FCA will continue to deliver on its remaining 10 commitments, with a general theme here being the prevention of consumer harm.
Key takeaways
The Consumer Duty very much remains at the forefront of the FCA's mind. The FCA emphasises that it will be focusing interventions where there is the greatest risk of harm or where firms need to do more to identify and address gaps and meet the higher standards expected. Given the general focus on preventing consumer harm, the FCA then discusses a raft of measures aimed at ensuring consumers have access to redress and that bad actors are penalised.
The Business Plan starts by discussing improvements to the redress framework, since the FCA wants to ensure that firms who cause harm bear the costs of redress. This ties in with the FCA's consultation on requiring personal investment firms to set aside capital for redress liabilities at an early stage. The FCA also mentions that CMCs need to deliver fair value and that they will be reviewing lead generation in this sector. There is also mention of the Advice Guidance Boundary Review, which the FCA hopes will allow consumers to access the help they need at a fair price.
Following on from this, the FCA is keen to highlight its ongoing work in dealing with problem firms, noting that it intends to increase its auto-detection capabilities and "cancel" firms that do not meet Threshold Conditions. Given an anticipated rise in corporate insolvencies, the FCA will also use "data and horizon canning mechanisms" to spot failing firms and respond appropriately.
Financial services firms will also note the FCA's focus on oversight of appointed representatives (ARs). The FCA alleges that many principals do not adequately oversee their ARs' activities and consumers are at risk of being misled and mis-sold, while AR misconduct can undermine market integrity.
In general, the word "data" features prominently, with a stated commitment from the FCA to invest in data and strengthen data collection (which is in line with the FCA's intention to be a "data led regulator"). There is also a brief mention of AI, with the FCA looking to assess the impact of this on UK markets.
In summary, whilst recent economic news has perhaps been positive, the FCA clearly believes it still has work to do. It's likely that we will continue to see early intervention from the FCA when it detects issues and perhaps a focus on making examples of firms which it believes are not meeting the required standard.