Even though the FCA is entirely funded by taxpayers and is not a business, it still has a business plan. Here’s the word;
In its Business Plan for 2024-25, the Financial Conduct Authority (FCA) has set out an ambitious programme of work for the final year of its 3-year strategy to achieve better outcomes for consumers and markets.
Nikhil Rathi, Chief Executive of the FCA, said:
“We’ve already made significant progress in delivering against the bold vision we set out in our strategy two years ago, including the game-changing introduction of the Consumer Duty and proposing the most far-reaching reforms to wholesale market regulation and the listing regime in decades. We remain resolute in supporting the vital role the financial sector plays in the UK’s long-term economic growth, embracing the potential benefits that technology presents both for us and the firms we regulate, while also continuing to protect consumers and ensure market integrity.”
IE Comment: Perhaps the trickiest phase of the FCA’s role in future will be its checks and balances on the use of AI in pricing cover, settling claims and checking ID during transactions. There is scope for activists to essentially hijack a commercial, data-driven process here, by insisting that favourable rates are given to groups who tick the right diversity boxes, irrespective of any data which suggests there is a higher risk of certain behaviours or incidents within a postcode. A good example is the propensity that young men have to race cars, drive uninsured, or take extra risks at speed whilst driving on public roads.
This currently underpins the high under-25 rates, which can range between £3000-£6000pa. How can the FCA square that hard data circle with `consumer harm’ regulations?
The FCA will continue to deliver the 13 commitments in its strategy, which focuses on preventing serious harm, setting higher standards and promoting competition. Specific issues it will prioritise include:
- Protecting consumers by testing if firms are meeting the high standards set by the Consumer Duty, supporting people’s long term financial wellbeing through the Advice Guidance Boundary Review and making sure pension products deliver value for money.
- Contributing to UK competitiveness and growth by improving the attractiveness and reach of UK wholesale markets, supporting firms to invest, innovate and expand through our innovation services and continuing to make it quicker and easier for firms to apply for authorisation.
- Building on the significant progress already made to become a world-class data-led regulator by automating more of its analytics tools to help detect and respond to consumer harms faster and working with firms on the safe deployment of artificial intelligence.
The planned programme of work builds on the progress made over recent years to become a more outcomes-based, assertive and data-led regulator.
The introduction of the Consumer Duty marked a major shift by setting higher and clearer standards of consumer protection and has already led to firms making changes to savings rates and fees.
The FCA is making better use of data to spot and stop harm faster and is being tougher on the firms that could cause harm. It removed over 10,000 potentially misleading adverts in 2023 and sent out 2,243 warnings about unauthorised firms and individuals. It also more than doubled the number of firm permissions cancelled, compared to the previous year, for failing to meet its minimum standards.
It has adapted its rules and improved its processes to ensure the UK remains an attractive place to invest. This includes proposing the most far-reaching package of reforms to the listing regime for decades to encourage a greater range of companies to list in the UK and compete on the global stage.
INDUSTRY COMMENT
Commenting on the FCA’s Business Plan 2024/25, published today, Imogen Makin, counsel at WilmerHale, said:
“The FCA’s continued focus on reducing and preventing financial crime, together with putting consumers’ needs first (with a specific focus on pensions) means that we’re likely to see a continuing stream of assertive supervision and enforcement cases featuring these topics.
“In terms of the fight against financial crime, the FCA has explicitly stated that it will increase investment in its systems in 2024/25 “to use intelligence and data more effectively within our financial crime work” and we may see an increase in the volume of early interventions through variations of permission, or the use of supervisory notices, for example, as a result.
“Further, the FCA’s stated intention to take assertive action on market abuse will likely mean that we see an increase in the use of the FCA’s supervisory and enforcement powers in this area specifically. As firms are aware, they should proactively review and stress-test their anti-financial crime systems and controls on a regular basis such that they identify any issues at any early stage, enhance and update their systems and controls accordingly, and implement any amendments necessary to take regulatory and legal developments into account.
“Finally, the Prime Minister when he was Chancellor said that he wanted to make the UK a crypto hub and it’s good to see that the FCA is trying to deliver a proportionate market abuse regime for crypto assets.”
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