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- Robert Bell
FCA publishes The 2024/25 Business Plan
The conduct regulator for the UK’s financial services industry has published its 2024/25 business plan. Chief Executive Nikhil Rathi said that the FCA had made good progress against the three-year strategy published in 2022 and that the new business plan aims to continue with their priorities of preventing serious harm, setting higher standards and promoting competition.
Given that this will be the final year of that three-year strategy, it’s no surprise to see that the business plan includes “an ambitious programme of work” to stay ahead of the challenges posed by higher interest rates and persistent inflation and by global financial and geopolitical risks, whilst driving higher standards. The use of AI and auto-detection of problem firms and individuals will support the regulator in speedy cancellations where necessary.
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Built around 13 commitments – focusing on reducing and preventing financial crime, putting consumers’ needs first, and strengthening the UK’s position in global wholesale markets – the business plan sets out the FCA’s priorities and plans to guide changes, while making clear that it will take assertive action where it sees potential harms.
And the regulator is clear about the actions it will take to drive the required cultural and compliance changes in the industry. An accompanying press release outlines that its commitment to reducing and preventing harm “remains unwavering and the introduction of the Consumer Duty reaffirms this.”
The Duty continues as a priority, with the regulator planning to use the Duty to test firms’ standards and as a tool to support the long-term financial wellbeing of consumers.
Referencing a slew of actions, the FCA set out its key achievements to support its statements around making real changes in the industry. It highlights action against GAP insurers which came after data revealed that the products could be providing poor value, savings rate increases, the referral fee ban for debt advisors, and its work on financial difficulties as all resulting from the Duty.
In particular, the regulator wants to see the Duty encourage firms to innovate and grow and hopes it will drive effective competition in the interests of consumers. The FCA will increase its supervisory work this year to test firm implementation of the Duty, with the aim of driving the delivery of good customer outcomes. It has said it will focus on complaints handling and root-cause analysis, consumer understanding and fair value.
This continued focus will mean that firms cannot rest on their laurels when it comes to the Duty. Regular reviews of value, potential harm, and the quality of customer support should now be standard. Firms should also be able to identify harms and act quickly where any indicators should reasonably be spotted – the FCA’s focus on root-cause analysis highlights they’ll be checking that firms that should have identified a problem have done just that at the soonest opportunity.
Reducing and preventing financial crime is commitment number 1 this year. The regulator plans to use AI to support its role in achieving the national ambition to reduce and stop financial crime.
The FCA will build on previous years’ data-led approach in identifying harm, accompanied by assertive action to tackle fraud and scams. The FCA will increase the investment in its systems to be able to use intelligence and data in their financial crime work, to be able to target higher risk firms and activities. Sanctions against firms committing or enabling financial crime are a major focus this year – expect enforcement action to ramp up.
Long term financial well-being of consumers will be invested in this year; the FCA will spend £1.9m around the advice guidance boundary review to support customers in their investment and pension decisions. £2m will be invested in the new regulatory regime to ensure access to cash.
Also on the cards this year is multi-firm work and market studies across different sectors with the aim of “driving up standards”. The focus seems to be on pensions and long-term savings products, particularly transparency of charges and the assessment of fair value. The regulator will also look at insurers’ response times, particularly concerning vulnerable customers. A new review of firm treatment of customers in vulnerable circumstances will also take place this year.
The business plan offers a perfect opportunity to align with the regulator’s expectations and to elevate compliance and standards. Our Complaints Handling course is designed to equip all staff with a deep understanding of root cause analysis, what it is, why it's important, and how to support it in practice – vitally important where staff in different departments need to understand how to report and categorise root causes. With our AML and Financial Crime course, staff will learn how to combat financial crime in practice. Directly aligned with the FCA’s intensified focus on reducing financial crime, this course offers critical skills and insights to detect, prevent and address fraud effectively.
