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Navigating the Waves: Regulatory Trends

In the dynamic world of financial services, regulation acts as the anchor, steadying the ship amidst potentially turbulent waters. Regulatory frameworks continuously evolve to address emerging risks, enhance market integrity, and protect consumers – the FCA’s core objectives. If we look at the current direction of financial services regulation several key trends emerge, shaping the industry's trajectory.

Funeral Plan Providers: New FCA Regulations

RELATED ARTICLES: Consumer Duty: An Update



Embracing technology

Technology has, for many years, revolutionised financial services through bringing innovative products to the market, providing greater access to customers to a larger range of products as well as ‘internal’ technology which improves efficiency. However, this digital transformation brings new challenges related to data privacy, cybersecurity, and regulatory compliance. In response, UK regulators are trying to foster a welcoming environment for innovation while maintaining robust oversight. 

The Financial Conduct Authority (FCA), in particular, has adopted a proactive approach towards regulating fintech firms through initiatives like the Regulatory Sandbox, which allows companies to test innovative products in a controlled environment. Additionally, regulatory guidance on emerging technologies such as blockchain and artificial intelligence reflects the regulator's commitment to staying ahead of the curve.

Furthermore, both the FCA and PRA have recognised the operational resilience risk which comes with increasing use of technology, whether through cyber security risks or continuity of service-related risks. The trend from both regulators is to be more demanding, with less and less tolerance for failure, as can be seen in the case of TSB where their former CIO was punished under SM&CR.

Recently the FCA’s Chief Executive, Nikhil Rathi, gave an interesting speech on the development of regulation in this area: Navigating the UK's Digital Regulation Landscape: Where are we headed? | FCA

Sustainable Finance and ESG

Environmental, Social, and Governance (ESG) is a bit of a buzz word at the moment, nevertheless it is fair to say ESG considerations are increasingly influencing investment decisions globally. Recognising the importance of sustainability, UK regulators are incorporating ESG factors into their regulatory frameworks to promote responsible investing and to address climate-related risks.

The UK government's Green Finance Strategy, combined with regulatory initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD) and mandatory climate-related financial disclosures for certain firms, underscores the nation's commitment to building a greener financial system. This trend aligns with global efforts to achieve sustainable development goals and mitigate the impact of climate change.

The avoidance of green-washing is a central concern to the regulator, releasing guidance at the end of April with the anti-greenwashing rule coming into force at the end of May: FCA confirms anti-greenwashing guidance and proposes extending sustainability framework | FCA 

Whether your firm falls within the scope of TCFD or not it is clearly time to act to begin your journey. As a complex area, with new sets of standards which will require the development of new MI, it is certainly worth making those first steps to compliance. A great starting point is to understand the FCA’s approach in this area and their current initiatives, all helpfully set out on this webpage: Climate change and sustainable finance | FCA

Continued focus on Consumer Protection 

Protecting consumers' interests remains the cornerstone of our regulatory framework. Recent scandals, including those related to mis-selling of financial products and inadequate consumer protection, have underscored the need for stronger safeguards.

Regulators are implementing measures to enhance transparency, improve practices when helping vulnerable customers (they are starting a deep-dive review into the actions taken by firms), and ensure fair treatment of consumers. The FCA's emphasis on the consumer duty, risk management and its enforcement actions against firms for misconduct demonstrate a concerted effort to uphold market integrity and restore public trust.

The landscape is, as ever, continually changing. In addition to the above we’ve also previously written about the more comprehensive approach taken by the FCA when reviewing both firm and senior manager applications. Taken all together it is clear the trend is both progressive and increasingly burdensome.  

The FCA’s continued focus on fair treatment of vulnerable customers and the achievement of good outcomes means that staff training on this subject is more important than ever. We offer a dedicated online training course on the fair treatment of vulnerable customers. Priced at just £20 per user, the course is accessible at the delegate’s convenience and provides a certificate upon successful completion, allowing firms to track and record each user’s progress. 

For large groups, we can offer a simplified enrolment service and pricing, simply email


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