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What has happened?

In March 2024, the FCA issued its Business Plan for 2024/25, which it describes as “an ambitious programme of work for the final year of its 3-year strategy to achieve better outcomes for consumers and markets”.

What are the key points?

The key points of interest to Thistle’s clients are listed below.

Key areas of focus for 2024/25

These areas are protecting consumers, ensuring market integrity, promoting effective competition and the secondary international competitiveness and growth objective.

The FCA commitments

Work to be done on meeting the thirteen commitments will include the following key initiatives.

Commitment 1: Reducing and preventing financial crime

The FCA will continue to take a data-led approach to identify potential harm for supervisory and/or enforcement action. This will include continuing to take assertive action to tackle scams and fraudulent websites. It will continue to work with partners to support system-wide improvements as well as using powers through the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) to improve standards in the legal and accountancy sectors.

Commitment 2: Putting consumers’ needs first

From 31 July 2024, firms need to ensure that both open and closed products are delivering the right outcomes for consumers. The FCA will continue to focus on interventions where there is the greatest risk of harm or where more work is needed by firms to identify and address gaps and to meet the higher standards of the Consumer Duty.

The FCA will carry out multi-firm work and market studies across different sectors to drive up standards. For example, it will look at unit-linked pensions and long-term savings products to test the transparency of charges across value chains, how firms assess overall product value and their response where they identify unfair value. The multi-firm work will also look at how swiftly the insurance industry responds to claims, including where customers are more likely to show characteristics of vulnerability.

A review of firms’ treatment of customers in vulnerable circumstances will also be carried out.

Commitment 3: Strengthening the UK’s position in global wholesale markets

The FCA will encourage innovation and evolving markets by supporting industry work on T+1 settlement, which will increase efficiency.

It will deliver its Primary Market policy reforms, concluding its review of the Listing Regime and publishing proposals for a new public offer and admission to the trading regime.

It will consult on regulatory changes to introduce more options on how to pay for investment research.

It will ensure that venues are able to deal with and remain resilient in extreme events, including consulting on the proposals for the commodity position limits regime.

It will ensure derivative markets are ready to implement the new derivative reporting rules under the UK European Market Infrastructure Regulation (UK EMIR) in September 2024.

It will confirm its final rules for the Overseas Fund Regime applications gateway and will be modernising its authorisations processes during 2024.

Commitments 4 to 13

Preparing financial services for the future

The Financial Services and Markets Act 2023 enables firm-facing requirements in assimilated law (formerly known as retained EU law) to be moved to the responsibility of independent regulators. The FCA will continue to work with the Treasury and other regulatory authorities to ensure an efficient and appropriately sequenced workflow of the repeal of this assimilated law and its replacement, where appropriate, with FCA rules. It will tailor provisions appropriately to better suit UK markets.

The FCA will also continue to embed the changes to the regulatory framework, including its secondary objective, its cost benefit analysis, the review of rules and its accountability.

Dealing with problem firms

The FCA intends to increase its auto-detection capabilities of problem firms and individuals, to quickly identify, and where necessary cancel, those firms that do not meet Threshold Conditions, to use the full range of regulatory tools to prevent harm to consumers and markets and identify any barriers in its regulatory framework that might constrain its ability to take action.

Taking assertive action on market abuse

The FCA will increase its ability to detect and pursue cross-asset class market abuse. It will also build on advanced analytics capabilities such as network analysis and cross-asset class visualisations. It will develop improved market monitoring and intervention in fixed income and commodities, covering both market abuse and market integrity.

As part of the SRF process, the FCA will issue a discussion paper on transferring the MiFID data reporting regimes for transactions (RTS 22), and reference data (RTS 23). It will assist in delivering a proportionate market abuse regime for Crypto Assets and the PISCES facility.

The FCA will extend its data reporting supervision approach to the European Market Infrastructure Regulation (EMIR), Securities Financing Transactions Regulation (SFTR) and Orderbook regimes. It will increase its resources and capability to influence international market data strategy.

It will publish the results of the peer review of market abuse systems and controls in providers of Direct Market Access.

Reducing harm from firm failure

As the increase in corporate insolvencies is expected to persist in 2024, the FCA will continue to use data and horizon-scanning mechanisms to anticipate firms that are at risk of failure and ensure that it can respond appropriately in the event that they do fail, to protect consumers and ensure market integrity.

It will also continue to support firms by sharing relevant information it identifies through its data, its new financial resilience return, and its everyday work, such as examples of good and poor practice of wind down planning.

Environmental, social and governance (ESG) priorities

The FCA will integrate the Sustainability Disclosure Requirements and Investment Labels across the market, including the anti-greenwashing rule and guidance. It will continue to expand the regime, starting with a consultation on Portfolio Management in 2024.

The FCA is continuing to engage on new and emerging risks with UK and international partners. It will be progressing work on Transition Finance and preparing to have regard to a ‘Nature’ regulatory principle coming into force.

Shaping digital markets to achieve good outcomes

The FCA will be working with stakeholders at home and abroad and is assessing the impact of AI on UK markets to better understand the risks and benefits. It will build on its pro-innovation and technology-agnostic approach to ensure that the outcomes for consumers and markets are beneficial while recognising there are risks and opportunities.

It will continue to robustly investigate digital consumer journeys and firms using sludge practices.

Improving the redress framework

The FCA will continue to work on redress guidance for firms, complaints reporting, the Advice Guidance Boundary Review, the proposed capital deduction for redress for personal investment firms and a review of lead generation in the claims management company (CMC) sector.

It will also continue work on historic discretionary commission arrangements in the motor finance market, during the ongoing pause in the deadline for firms having to resolve complaints and its analysis of the issues and legal steps which may be necessary. The FCA aims to set out its next steps on this in Q3 2024.

Enabling consumers to help themselves

The FCA will continue assessments of firms’ applications to approve financial promotions for unauthorised firms. Since February 2024, the Register now includes information about firms’ permissions to approve promotions.

Using new sources of data, it intends to act quickly against authorised firms approving and issuing non-compliant financial promotions and unauthorised firms whose activity could lead to mis-selling and financial losses.

The FCA will continue its supervision of cryptoasset firms’ financial promotions, increase its technological capability to detect harmful financial promotions, develop the InvestSmart and Consumer Awareness (currently ScamSmart) campaigns and work with social media platforms and search engines.

It will also publish a response following 2023’s Advice Guidance Boundary Review discussion paper. This will set out options for future legislative and regulatory reform to enable consumers to have access to the help and guidance they need, at a cost they can afford, to make informed decisions.

Minimising the impact of operational disruptions

The FCA continues to deal with firms that cannot meet the required standards of operational resilience. From 31 March 2025, all relevant firms will need to maintain their important business services without intolerable harm to consumers and markets.

It intends to publish a consultation paper clarifying expectations on how firms should report operational incidents.

Improving oversight of Appointed Representatives

The FCA will continue to target resources through deeper analysis of existing data and using significantly improved data, including from updated Gateway forms, new regulatory returns and a dataset covering all ARs.

It will continue to strengthen scrutiny and engagement with principal firms as they appoint ARs and will continue assertive supervision of high-risk principals through regulatory tools and appropriate enforcement action.

How can we help you? 

Thistle Initiatives has supported firms for over 10 years as a trusted compliance and regulatory advisor. In addition to assisting firms as-and-when, our team of specialists can serve as your right hand in meeting and complying with FCA regulations. We understand the importance of staying up-to-date and compliant and are dedicated to providing the guidance and support needed to do so.

Are you looking for help with your FCA regulatory and compliance arrangements, or more general regulatory questions? Contact our specialist team now to schedule a free consultation. Get in touch with us by calling 020 7436 0630 or sending an email to info@thistleinitiatives.co.uk.