Higher interest rates, the resulting vulnerability of corporate borrowing and heightened geopolitical risks will be three key areas of focus for the Financial Conduct Authority (FCA) in the coming financial year – the final 12 months of its three-year business strategy.
Taking these all into consideration, one primary goal for the regulator is “ensuring market integrity” and subsequently finalising capital market reforms, with the FCA’s 2024/25 business plan stating: “We will continue to lead the debate on how the right form of regulation can support growth for UK markets, with a number of significant policy changes in or approaching consultation.
“We will continue to invest in our data and technology to support rigorous market oversight.”
The FCA will also focus on promoting “competition and innovation to deliver good outcomes for consumers”, therefore identifying where “more effective competition” can achieve better outcomes for clients under Consumer Duty regulation. “We will continue to look to market reforms that bring the benefits of innovation and digitalisation,” it added.
‘Test higher standards’
Also as part of Consumer Duty, the regulator will “continue to test higher standards” regarding the protection of consumers. In particular, it will focus on ensuring pension products deliver value for money, and that consumers are “better engaged” with their pensions, and rolling out AI usage to help prevent frauds and scams.
More broadly the FCA will spend the coming year aiming to make the UK wholesale market more attractive and increase its “global reach”.
“We will provide opportunities for financial services companies to invest, innovate and expand in the UK through our Sandboxes and Innovation Pathways, TechSprint programmes and our leadership of the Global Financial Innovation Network,” it said. “We will continue to make it quicker and easier for firms and people to apply for authorisation and we will strengthen our data collection processes to reduce the burden on businesses.”
The FCA also said it was aiming to improve the attractiveness of the UK stockmarket by bolstering the “international competitiveness of the UK economy”.
“By enabling the drivers of productivity, we can facilitate medium to long-term growth and competitiveness in a way that can secure better outcomes for all consumers, including through greater variety, price and quality of products and services.”
In order to achieve these objectives, the FCA has committed to increasing its workforce to 5,000 staff members by the end of March 2024, as well as to investing in the body’s “operational effectiveness and resilience”. It will also increase its annual funding requirement by 10.7% to £755m, although this remains subject to consultation and will be formally confirmed in June.
“We will make sure plans are in place in the event of disruption, to protect our colleagues and consumers, ensure market integrity and promote effective competition.”
Three-year plan
These commitments comprise the final third of the FCA’s three-year strategy, which focuses on: reducing and preventing serious harm; setting and testing higher standards; and promoting competition and positive change.
The overarching strategy encompasses 13 commitments under these three focuses, which include taking assertive action on market abuse, enabling consumers to help themselves, dealing with problem firms and preparing financial services for the future.
The FCA said it would continue to measure its progress against these commitments over the coming months and would provide updates on its performance in the summer.
