The FCA’s Business Plan 2024/25

The FCA called out three challenges that it will monitor:

• Higher interest rates and persistent inflation
• Global financial risks
• Geopolitical risks

The FCA has 13 public commitments that it will deliver:

1. Reduce and prevent financial crime

The FCA will invest in its systems to use data more effectively. It will continue to proactively assess AML systems and controls, target firms that are more susceptible to receiving the proceeds of fraud and strengthen supervision of firms’ sanctions systems and controls.

2. Put consumers’ needs first

This commitment is all about the Consumer Duty (CD) and wider work around the cost of living, financial inclusion and access. The FCA will do multi-firm work and market studies across sectors – specifically referencing unit-linked pensions and long-term savings. The work will also look at how quickly insurance firms respond to claims, and whether they are supporting vulnerable customers. The FCA will carry out a specific review of firms’ treatment of vulnerable customers too.

Supervisory work on the CD will include complaint handling and root cause analysis. Rule changes will cover mortgages, consumer credit and overdrafts; access to cash; and debt advice (based on consultation). The FCA will also evaluate the impact of interventions for persistent debt following its Credit Card Market Study.

3. Strengthen the UK’s position in global wholesale markets

The FCA will encourage innovation and evolving markets by supporting work on T+1 [2] settlement. The FCA will deliver Primary Market policy reforms, finish its review of the Listing Regime and publish proposals for a new public offer and admission to the trading regime. It will conclude the consultation on transparency for bonds and consult on:

• changes to introduce more options for funding investment research.
• proposals for the commodity position limits regime.

The rules for the Overseas Fund Regime applications gateway are to be confirmed and authorisation processes improved. The FCA will finalise the design and implementation of the consolidated tape for bonds, and then decide on the approach for equities. It will also increase monitoring of fixed income and commodities markets.

4. Prepare for financial services for the future

The FCA is implementing the Smarter Regulatory Framework (SRF) [3] and replacing requirements previously based on EU law. It will continue to embed previous changes to the regulatory framework, such as its secondary objective [4].

5. Deal with problem firms

The FCA will increase its auto-detection capabilities.

6. Take assertive action on market abuse

The FCA will build on advanced analytics capabilities and improve market monitoring and intervention in Fixed Income and Commodities. It will publish:

• a discussion paper on transferring MiFID data reporting regimes [5].
• results from the market abuse peer review [6].
• revised Market Cleanliness Data in Q3 2024.

The FCA will assist in delivering a proportionate market abuse regime for crypto assets. The data reporting supervision approach will be extended to European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR) and Orderbook regimes.

7. Reduce harm from firm failure

The FCA will use data and horizon scanning to identify high risk firms and respond appropriately. It will share relevant information, such as good/poor practice examples of wind down planning.

8. Environmental, Social and Governance (ESG)

The FCA will continue to integrate the Sustainability Disclosure Requirements and Investment Labels, including the anti-greenwashing rule and guidance. The regime will be expanded, starting with a consultation on Portfolio Management. The FCA will progress on Transition Finance [7] and prepare for a new regulatory principle, to have regard to ‘Nature’.

9. Shape digital markets to achieve good outcomes

The FCA will continue to monitor the impact of AI. It will publish the outcome of its Big Tech Call for Input. There is a link to the CD with plans to investigate digital consumer journeys and the use of sludge practices.

10. Improve the redress framework

The FCA will work on its redress Guidance for firms, complaints reporting, the Advice Guidance Boundary review, proposed capital deduction for redress for personal investment firms and a review of lead generation in the CMC [8] sector. The discretionary commission arrangements in motor finance are a key focus and the FCA aims to give next steps in Q3 2024.

11: Enable customers to help themselves:

The regulator will use new data sources to take quick action against firms issuing and approving non-compliant financial promotions.

12.  Minimise the impact of operational disruptions

From 31 March 2025, relevant firms need to maintain their important business services without causing intolerable harm. The FCA will consult to clarify expectations on reporting operational incidents. The consultation on critical third parties was also mentioned.

13. Improve oversight of Appointed Representatives (ARs)

The FCA will continue to analyse data, including from updated Gateway forms, new regulatory returns and a dataset covering all ARs. There is still focus on the appointment of ARs by principal firms and supervision of high risk principals.

Next steps

Financial services firms should make sure they are familiar with the focus areas relevant to their business and prioritise their work in these areas. The Consumer Duty pervades most of the commitments and underpins the FCA’s recent interventions. Motor finance was mentioned but there are other notable FCA actions in flight, such as the GAP insurance suspension and refund of investment fees. Most firms will need to prioritise the Consumer Duty, innovate responsibly and maintain robust financial crime controls to ensure regulatory compliance.

If you would like to speak with a member of our financial services team about the latest FCA Business Plan and its impact, please contact us using the button below.

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References

[1] The FCA’s operational objectives are to: (1) protect consumers, (2) protect the integrity of the UK financial system, and (3) promote effective competition in the interests of consumers.

[2] Trade plus one day.

[3] The Treasury’s Future Regulatory Framework, now referred to as SRF.

[4] To facilitate the international competitiveness of the UK economy and its growth in the medium to long term, subject to alignment with international standards.

[5] For transactions and reference data - Regulatory Technical Standard (RTS) 22 and RTS 23.

[6] Peer review of market abuse systems and controls in providers of Direct Market Access.

[7] 'Transition finance' refers to financial products and services that support higher emitting companies and activities to decarbonise over time.

[8] Claims Management Company