FCA Business Plan - Three Year Strategy

Customers are put front and centre of the FCA’s three-year strategy as firms come under greater scrutiny to prevent harm and ensure positive outcomes.

 

Last month’s new business plan from the FCA strikes a very different note from previous ones, with an emphasis on a cross market approach and ensuring that consumers are protected in a rapidly developing financial ecosystem. Moreover, it also comes with a pledge to hold itself more accountable, with a focus driven by outcomes.

 

The FCA’s plan

The plan relies on three pillars:

·        Preventing customers from serious harm

·        Setting and testing higher standards

·        Promoting competition and positive change

 

They all have one unifying theme – to protect the interests of customers in a world in which the range of financial products available is growing along with the risks. Firmly at the front of the regulator’s sights are the “problem firms”, such as Freetrade, who received a second supervisory notice in March 2022 for its social media promotions. One video, for example, failed to display a capital-at-risk warning. Under the terms of the notice, the company was required to remove all paid-for social media promotions and existing advertisements over their connection to an unnamed social media influencer.

 

Rules to be strengthened

Rules will be strengthened to prevent such misleading promotions and shut down the firms that make them. There will be a new consumer duty to protect the interest of customers and a renewed focus on fair value, suitability and treatment, as well as ‘confidence’ and ‘access’. This means customers should receive fair prices and quality, have reasonable access to products, and be protected from any damage they may suffer from financial crime and fraud.

The FCA’s focus will also continue to build on maintaining the levels of operational resilience and ensuring that institutions are set up to meet the growing diversification of customer needs. It recognises a world in which customers need to access financial services through a wider range of channels: From those who want the latest digital features to those who still rely on in-person banking.

 

Accountability

The overriding theme of this new business plan is one of accountability and raising the bar to ensure transparency, diversity and consumer protection. That also extends to the FCA who will, for the first time, be holding itself accountable. The regulator will be developing a set of metrics by which it will judge its own performance.

The regulator has set itself some ambitious goals, including a target of ensuring that every Pound spent on its operations will see consumers and small businesses benefit. Setting metrics which can show how it is working towards those goals will require a greater control over its data and levels of transparency that it has not previously achieved.

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